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New Competition For Traditional Banks Serving Small Business

As the U.S. economy slowly emerges from the impacts of COVID-19, many individuals are re-opening their small businesses, others have left corporate jobs to start businesses, and many recently retired baby boomers started micro-businesses as a way to help supplement retirement income.

For traditional financial institutions, there are many opportunities to become the primary bank for these small businesses.  Traditional financial institutions are readily equipped to service these small businesses with checking accounts, credit cards, business loans, and merchant services.  However, the payment landscape is continually changing with modern technologies and new competitors are working to attract more of the traditional banking relationship of these small businesses.  

The Changing Payments Landscape

An example of a company changing the payments landscape is called Ayden, which was highlighted in a recent article by Fortune.  Ayden is a payment company based in Amsterdam that allows businesses to accept e-commerce, mobile, and point-of-sale payments.  The value proposition of the company is that they can make payments choices easy for merchants by providing a full end-to-end solution, managing the entire payment flow from checkout through to final settlement.  A single platform that is a payment gateway, risk management system, and acquirer rolled into one is an alternative to the payment processing offered by many legacy banks that still use disparate tech that was developed as far back as the 1980s.

 

Traditional vs Ayden Payment Platform

 

Ayden is expanding beyond its payments business to specifically target bank services to small businesses that operate on Ebay, Etsy, and AirBNB.  Adyen has grown its payments business by 70% in 2021 and is looking to continue its rapid growth.

The Fortune article also mentions Block (formerly Square) and Stripe are also providing banking services to small businesses.  The primary difference between Block and Stripe is that Stripe is best suited for e-Commerce while Block is a specialist for in-person transactions.  Regardless of the platform, there is a lot of information for small business owners to consider before identifying which solution can best meet their needs.

Small business owners getting started in the post-COVID economy are presented with a jaw-dropping number of options to accept payments into their business.  Innovators such as Ayden, Block, and Stripe are enabling businesses to gain access to hundreds of payment methods and many different currencies to help them streamline operations, reduce costs, and optimize results.

Understanding the rapid change in the payments space is critical to enabling an effective strategy to grow and retain your relationships with existing customers. Financial technology firms and non-traditional financial services firms are providing more products and services that encroach on traditional FI’s core business banking relationships. IFM can provide deep insight into your business customer’s external relationships (merchant services, lending, credit cards, etc.) and assist with leveraging this insight to identify opportunities to deepen relationships with your existing customers.

To learn more about IFM’s strategy and analytical capabilities you can communicate directly with me at [email protected], or visit our website at www.infimark.com.

 

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A Quick Guide To Bank Deposit Growth

 

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Personalized Marketing to Bank Customers

Right now, the transactional profile of a consumer checking customer at financial institutions across the US is likely to include a P2P account with either PayPal or CashApp and a newly established Coinbase account as customers’ education and investment in cryptocurrency continues to grow.  They are making regular monthly payments to a SoFi student loan, Rocket Mortgage, or Prosper personal loan, many are using their Apple credit card, and are regularly adding and storing money onto their Starbucks or Dunkin apps.  From a small business customer perspective, many are using QuickBooks for their accounting and payroll, using Square’s merchant services, or have a small business loan from PayPal or American Express.

 

A Quick Guide To Bank Deposit Growth

 

As consumers and businesses have rapidly adopted app-based financial tools and services, many-core transactions are conducted with competing institutions.  Given these customer scenarios, how will your financial institution (FI) grow loans, prevent customer attrition, and maximize profitability?  Can your bank’s strategy compete in today’s digital and fast-changing world? 

Regardless of the geographic area your traditional bank or credit union serves, these might be the profiles of many of your consumer and business checking customers.  Understanding what attracted them to engage with competitors is paramount to the development of a strategy to win them back.  Proactive strategies that include identifying the changes in your customers’ financial behavior, life events, and lifestyle changes, on a daily basis, can effectively provide your FI with the insight to help implement a direct, specialized, and personalized experience for customers that will in effect strengthen their relationship with your FI instead of continuing to send them to the competition.  

For 20 years, IFM (Insight Financial Marketing LLC) has worked with financial institutions of all sizes across the US to provide cutting-edge data science technology to financial services firms.  IFM’s data tools offer an industry-leading customer intelligence solution that enables personalized communication with your FI’s consumer and business customers.  

If you’re interested in learning how your FI can leverage daily customer intelligence, data, marketing tools, and strategic guidance to compete more effectively today and in the future, we invite you to communicate with us directly at our website www.infimark.com or contact me at [email protected]. 

 

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The Financial Services Industry of the Future

The past year has brought many changes to the Financial Services Industry and so far in 2021 the indications are there is more to come. Mergers and acquisitions within the top 50 largest banks in the U.S. are reshaping the landscape, changes at the periphery of the industry are also having an impact.  Several of these developments include Lending Club’s acquisition of Radius Bank, Square receiving an industrial bank charter, the growth of SoFI and Cryptocurrency (One Bitcoin > $50,000), as well as usage increases of retail merchant apps (i.e. Starbucks and Chick-Fil-a), and digital signature technology.  Additionally, the payments environment is also shifting as ACH transaction volume surges and P2P transaction volume continues to increase with more usage of PayPal, Venmo, Square’s Cash App, Apple Pay, Apple Cash and the Apple Card, and Zelle (btw… JPMorgan has ended its ChasePay service).

How will your Financial Institution adapt to these changes?

 

These changes indicate that your FI’s customers are being enticed to move an ever-increasing portion of their financial relationships away from your institution.  What steps can you take to mitigate the depletion of deposits, loans, credit, and payments?  One critical step will be to identify when to communicate with your customers and with what message.  Using advanced data analytics that can shed light on customer behavior changes and provide customer insights are critically important.  Being able to predict future needs, and delivering timely offers that provide solutions, will give your institution an early ability to retain and grow relationships with your consumer and business customers.

Technology is available today to protect your tomorrow.

 

IFM’s industry-leading solution can help alleviate your institution from flying blind when it comes to understanding current and future trends and identifying opportunities to deepen engagement with your customers.  When FinTech firms like Venmo and Robinhood were launched, early transaction volumes and dollar amounts were low. However, what was significant was the tremendous rate of growth.  In today’s environment, it doesn’t take long for new technology to go viral and impact behavior.   When your customers experience life-changing and lifestyle events your ability to be there, in a timely manner to support your customers as they navigate through these experiences, is increasingly important. Now is the time to implement IFM’s solution to protect your institution from competitive forces in your ever-changing industry.   Contact us today to learn how your FI can leverage our free evaluation and industry-leading customer insights.

 

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How Personalized Marketing is Disrupting the Banking Industry

As Digital Banking takes off, Personalized Marketing will become more important for the Banking Industry

A recent Bain & Company article mentions that financial institutions should be concerned that “many consumers look outside their primary bank for high-margin products”.   However, the article also contains recent survey results that note “most customers who received direct offers would be willing to buy more from their primary bank if it made a personalized offer”.

The article discusses how the rise of digital banking, in part caused by the global pandemic, has led to the hidden defection of bank customers.   As more consumers turn to digital banking it will be imperative for banks to personalize their messaging to customers to compete more effectively in today’s challenging environment.

What is Personalized Marketing?

The term personalization means reaching consumers with messages, pricing, and offers tailored specifically for them. This form of one-to-one marketing uses sophisticated analytic tools to analyze customer data to determine customer needs.

Banks are moving rapidly to leverage personalized messaging by using machine learning and data science tools to process a vast amount of customer data. Insight Financial Marketing is a leading innovator in this segment of the industry. IFM’s service enables banks to analyze the patterns in their transaction data to anticipate specific customer needs. A customer is more likely to purchase a bank product or service if the right offer is presented to them at the right time. This creates a win-win situation where the customer gets the service or product they need, and the bank generates revenue.

The Future of Bank Marketing

By leveraging IFM’s technology, financial service firms will be able to utilize customer intelligence to structure their products, services, and pricing based on customer needs.

For instance, combining artificial intelligence and machine learning with customer insights via IFM’s service has the potential to be a real game-changer. By leveraging IFM’s technology, financial institutions have greater precision in assessing risks, predicting life events, and lifestyle changes.

Personalization has made it possible for customers to save money by presenting the right products and services that meet their current and future needs, while also allowing financial institutions to prosper by developing deeper relationships with their customers. The future of marketing in the financial services industry is being shaped by a rapid shift to the personalization of communications brought on by modern data analysis tools provided by IFM.

Conclusion

With IFM’s industry-leading customer intelligence solution, financial institutions will have the technology and experience to leverage personalized marketing that will drive revenue growth and enable your firm to compete more effectively in today’s challenging environment. To discover how your firm can engage IFM’s solution please contact me via our website, Infimark.com, or via my LinkedIn page.

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Data Driven Intelligence Will Enable Banks to Compete More Effectively

Cutting edge technology has fostered rapid innovation throughout various industries over the past ten years. This rapid change is impacting the financial services industry with full force, especially during this difficult COVID environment. Consumers and businesses are rapidly searching for solutions to meet their needs. Examples of this change include real-time P2P and contactless payments, investment robo-advisors, free stock trading, and app-based financial technology such as Dave™, Chime™, and Square’s CashApp.  

Additionally, historically low-interest rates, coupled with an uncertain economic environment that has stunted the appetite for lending at many institutions, have put pressure on banks to find ways to generate revenue.

Deepening relationships with existing customers is one avenue financial institutions will travel as they revamp their strategy to generate revenue while also helping customers navigate their financial journey. One challenge with this strategy is the fact that every customer has a unique journey. A one-sized approach to helping consumer and business customers in their time of need is no longer effective. Data-driven intelligence is necessary in today’s world to create personalized solutions for customers that meet their immediate and future financial needs. A powerful way to develop insights that will assist FI’s in deepening relationships is through analysis and evaluation of electronic financial transactions. IFM provides an easy to deploy solution that provides near real-time customer insights.  

Using IFM’s service and capabilities, FI’s can –

  • Utilize powerful customer insights to aid in the development of new and innovative products and services
  • Identify changes in customer behavior and predict future needs in near real-time
  • Have a resource that provides clean data to power AI and machine learning initiatives
  • Know whom to communicate with and when to communicate personalized messages

If you’d like additional information on IFM’s service and capabilities, or would like to learn more about IFM’s free, no-obligation evaluation of ACH and Card data, please contact us via our website, or reach out to me directly via my LinkedIn page or my email address at [email protected]. I’ll look forward to communicating with you and helping you along your journey toward developing an enhanced data-driven customer intelligence capability.  

Check out my latest vlog where I share more about the challenges customers are facing during the global pandemic.

 

 

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