Don't pitch The Bank. Sell banking.
Lifestyle banking is a framework for raising the next generation of wealth banking customers.
Many folks are left questioning the value of banks in their lives simply because they’re not in the wealth circle.
Considering the long-term wealth creation and preservation journey, banks should aim to build enduring customer relationships, providing continuous support and guidance.
While expanding these services may present challenges, the potential to assist millions, if not billions, in creating generational wealth makes it worthwhile, as institutions can now reach broader audiences at lower costs to develop the private banking customers of the future.
The Last Few Years Haven't Been The Best. But they've been great.
- In 16 key markets, 13% of respondents used online banking for the first time in 2020-2021, with 12% utilizing mobile banking services. Some markets reported even higher adoption rates.
- Over 60% of retail customers prefer digital payment methods, indicating a shift in behavior.
- Cashless banking adoption rates among younger generations exceed 80% in many markets.
And it's happening faster than you think.
A recent study by Vericast has revealed that Gen Z is approaching their financial education and planning in wildly different ways than in the past.
Over two-thirds of respondents identified TikTok and Youtube as their sources for financial guidance, and only 25% sought advice from traditional financial advisors and banks. (Source: Vericast, Consumers Seek Financial Guidance and Comfort from Non-Traditional Sources Like TikTok).
The most successful banks will adapt and refine their digital services, focusing on their customers' lifestyles and experiences regardless of what occurs in times of uncertainty.
Transform Retail Banking from Loss Leader to a Profit Machine.
Everyone talks about it. The Fintechs did it.
The Role of Design Thinking.
Fintechs prioritize a customer-centric approach, while traditional banks tend to focus on preserving and maintaining existing services.
- Democratize Wealth Management: Recognize the untapped market of potential wealth customers and expand offerings to include digital wealth management services to a broader customer base.
- Leverage AI and Technology for Personalization: Use technology to deliver personalized advice and interactive financial planning tools.
- Promote Financial Literacy: Emphasize financial literacy by providing resources and educational tools targeting underserved audiences. Build new customer relationships, promote growth, and help many create generational wealth, building a substantial customer base for future private banking.
Design Thinking in Retail Banking.
The next evolutionary step in banking is not about better banking apps; it's about delivering personalized services that align with customer lifestyles.
- User-Centric Approach: Design Thinking in banking prioritizes user needs and expectations, tailoring solutions to their unique preferences. This approach is central to the design process.
- Collaboration and Co-Creation: Foster joint efforts with users, employees, business partners, and regulators, ensuring alignment with objectives.
- Rapid Iteration and Experimentation: A fast trial and refinement process allows for constantly evolving ideas based on user feedback and testing.
- Data-Informed Decision Making: Utilizing data and analytics, the design process is guided towards informed choices about which solutions to enhance and pursue.
- Continuous Learning and Improvement: This approach champions an environment of constant learning and improvement, encouraging designers to incorporate frequent user feedback into their refinement process.
For example, I've been traveling for a few months and have never had to withdraw cash from an ATM. And I'm not the only one.
The rise of contactless payments has transformed how people engage in day-to-day transactions. Over 60% of retail banking customers prefer digital payment methods, with adoption rates exceeding 80% among Gen-Z.
People want the convenience, speed, and security of digital payment solutions such as tap-to-pay, contactless payments, and digital wallets.
Today's banking customers seek simple, transparent finance solutions that fit their lifestyles. Be customer-friendly and deliver intuitive digital services for a seamless and convenient banking experience.
And trust that your customers will love you for it.
- Ally Bank reached $100 billion in personal deposits in 10 years, with a customer retention rate of over 90%. In H1 2019, they gained 200,000 new customers and increased personal deposits by $9.5 billion. (Source: Ally Bank, Ally Bank Surpasses $100 Billion in Retail Deposits in Just 10 Years.)
- DBS Bank performed well in 2022, achieving a 4% increase in share price despite a tough year for the banking industry. JPMorgan Chase and Bank of America saw declines of 20% and 30% respectively. DBS demonstrated strong momentum with impressive asset quality and loan growth, resulting in a record-high net profit growth of 23% in Q3 and a 16.3% ROE. The bank's cost-control measures also led to a 4% drop in its cost-income ratio, now at 40%. (Source: Retail Banker International, Mastering the AI advantage: how DBS transformed into a digital leader.)
- ING Bank's user-centric approach to digital technology has paid off with a Net Promoter Score of 50 and an 80% digital adoption rate. Their pioneering spirit serves as a valuable lesson for us all. (Source: KPMG, The new competitive advantage: Customer Experience Excellence.)
The Challenges of Innovation.
The Cost of Investing in Technology and Training.
The Impact of Cultural Change.
Privacy and Security.
Banks can significantly improve customer satisfaction and increase profitability by putting users at the center of service design and leveraging technology to reduce costs and improve service delivery.
The innovation and exploration of new technologies and customer-centered solutions have been an excellent test-bed for traditional banking to learn what works and what doesn't. There are unprecedented opportunities for institutional banking to transform retail into a profitable business with minimal risk.