For 2018, the big news in finance was generally positive. Zero bank failures, record earnings and easing of the regulatory environment all created a rosy environment for the US banking system. Some storm clouds rolled through, but in general 2018 was a banner year for traditional banks and for fintech companies.
With this positive momentum, financial institutions (FIs) and their customers are in a great position to continue growing. More available capital means more opportunities to provide credit to consumers, and leading FIs will be working to expand their customer and deposit bases.
Capturing those two things can be a challenge, though. There are pundits arguing that 2019 will be a year for fierce competition as banks vie for consumer deposits. Because the Fed increased interest rates throughout 2018, banks saw deposits moving around as consumers sought out the highest returns. And with no signs of rates dropping any time soon, banks will be in a head-to-head contest for all of the dollars that they can acquire.
New Customers, New Cards
While the fight for deposits rages, banks and other FIs can pursue other channels to boost the business. One way to increase their customer base while driving profitability is to bring new credit card customers on board. Card issuers have been working to improve financial inclusion, and as a result “[m]ore consumers than ever before are carrying a credit card”.
Many of these cards are issued to consumers with prime or near-prime credit scores, providing a window into the decreased appetite for risk that issuers have. But estimates for card balances are indicating a 4% growth over last year, with expectations for 2019 topping $840 billion.
This all points to another robust year for banks, but questions remain as to how lenders are going to compete – and win – when it comes to originating new credit card business.
Customer Experience is King
The main differentiator for FIs boils down to the experience that they deliver for customers. We’ve explored this topic before (here, here and here), but it’s worth reiterating. Banks essentially offer the same commoditized products, and standing out from the competition means creating an experience that delights each individual. This holds true whether the person visits your website, uses your mobile app, or walks through the door of a branch.
Banks that adopt a customer-first mindset will benefit by investing in the tools and technologies to best serve their consumers. As these FIs are fighting for new deposits, new card origination and other channels of growth, tools that help automate and streamline applications will create value far beyond business efficiency.
For example, if your FI were to implement an automated origination solution, the company would certainly see internal efficiencies. Less manual touches can drive real revenue, as our recent commissioned study shows.
That’s one line of overall improvement, and an important one. Perhaps of greater value, though, is the impact to a customer’s experience as they apply for a credit card or loan.
A typical origination process can force a customer to wait days for an approve/decline decision. Banks that use an instant decision engine can cut that time to milliseconds, and give customers a yes or no answer immediately. Banks can also provide that information online, through an app or in person, creating a seamless experience that caters to customer preference.
By improving the customer experience with an immediate response through the customer’s channel of choice, banks deliver value that customers appreciate. And an appreciative customer is a loyal customer, leading to longer relationships and more profit.
Get Focused to Get Ahead
To succeed in bringing on new customers and providing the best experiences, banks need to focus. That focus needs to be on the right tools to provide immediate decisions for card applicants, DDA applicants and anyone looking to engage with the institution.
Those come in all shapes and sizes, but like anything in life it helps to have the right tool to do the job. In the case of automated decisioning engines, the right tool is an Origination platform from Zoot.
Our flexible, nimble platforms enable real time decision making, so your customers can get the answers they need at the speed of life. With a channel-agnostic architecture, Zoot supports you wherever you connect with customers. And with the fastest speed to market in the industry, you can get out ahead of your competition.