Innovation in Banking Your Institution Needs to Embrace for Success
The only constant is change, but many fear the unknown that change often brings. From FinTech and EMV to the rise of big data, new developments are challenging financial institutions to enter into unknown territory. As technology continues to evolve at a rapid pace, institutions that embrace these innovations will find themselves on the road to success. Let’s explore the disrupters that are driving change in banking today, and the innovations that can help your institution remain relevant.
Short for financial technology, FinTech companies are leveraging the latest technology to make financial transactions easier and more-cost effective for merchants and consumers. FinTechs like TransferWise, Lending Club, and Orchard are disrupting financial sectors such as money transfers, loans, and asset management, challenging financial institutions that are still operating in a more traditional way.
Although large financial institutions and card issuers in the U.S. began preparing for EMV far in advance of the liability shift, the full impact of the shift has yet to be seen. Although counterfeit card fraud dropped 56 percent when the U.K. shifted to EMV cards, card-not-present fraud increased by nearly 80 percent in the first three years after the shift. Experts say this is indicative of what will happen in the U.S., and we have witnessed within our own fraud management system.
Already being used by other industries, big data refers to large, complex data sets that cannot be processed or deciphered by traditional management tools. Online retail giants like Amazon and Zappos, for example, use powerful data analysis engines to make customer recommendations. Analysts note that big data is helping companies move from being profit-centric to being customer-centric, and from being a collateral-damage culture to a comprehensive risk-management culture.
With FinTechs offering financial services that were once only available through financial institutions, it’s become even more important for institutions to offer a differentiated product and solution set in order to attract and retain customers. But what consumers should institutions target? Accounting for two-thirds of newly created jobs and nearly half of all private sector jobs, small businesses represent a highly attractive profit pool for institutions to focus on.
Institutions have three ways to invest in growing their SMB base: 1) Developing deeper customer relationships, 2) Investing in quality of service, and 3) Developing a core payments product line that is simple, customizable, easy to deliver, and priced to maximize the value. Without the resources in-house to create and deliver these types of payments solutions on their own, institutions can partner with a provider like Vantiv, with SMB experts, proven solutions, and turn-key programs.
The emergence of EMV has brought security to the forefront of all payments discussions. Institutions can stay relevant by taking steps to secure their position as a trusted advisor for their customers by:
- Being proactive on security by issuing EMV chip cards.
- Providing more fraud protection by offering mobile card controls that empower cardholders to mitigate fraud.
- Improving the customer experience by facilitating mobile transactions, and card rewards.
- Offering programs that drive customer acquisition like portfolio optimization and card marketing.
Again, institutions may not have the resources to provide these offerings, but a payment provider like Vantiv does.
The huge amount of data funneled through financial institutions on a daily basis holds significant potential for institutions, but industry regulations and other obstacles can make it difficult for institutions to handle big data on their own. A partner like Vantiv can help here, too. With a view into nearly 75 percent of the total “everyday spend” on debit and credit cards, Vantiv has unparalleled insight into the shopping behaviors of the most active cardholders. With these insights and data, Vantiv can help institutions activate new sources of revenue and help you stay relevant in the payments ecosystem.
As financial institutions face changes driven by disruptors in the marketplace including FinTech, EMV and big data, a partner like Vantiv can offer the support, resources, and solutions to help drive future growth and relevancy.