Financial Institutions: The New Quiet Quitting, Your Customers
It appears financial institutions have become complacent in the marketplace to just simply “offer” the products that their vendors offer rather than thinking through what the customer really wants from them.? If that statement stings a little, that is probably a good thing for everyone involved.
Over the past few decades there hadn’t been a tremendous amount of change in the types of products and services that financial institutions were offering, specifically when it came to the payments sector. ?In fact, in that same amount of time, financial institutions have done more to educate their customers to become payments professionals rather than focusing on simplifying the experience. Some of this may be due to older deprecated technology that was hard to customize, or maybe it was the interpretation of rules and regulations by their compliance and legal organizations that were interpreted to pass on liability to their customers, or quite possibly it was just the lack of focus by many financial institutions on payments as a strategic opportunity.
No matter what the reason, as financial institutions have been required to change due to the need for digital transformation or because of new instant payment capabilities like The Clearing House ’s RTP? network or the Federal Reserve Financial Services FedNow? network, financial institutions have fallen into the same old paradigm of presenting payment product offerings to their customer like a Fast Food value menu.
This approach only complicates customers’ lives and puts the task on them to understand the nomenclature that we finance and payments professionals must learn to do our jobs.? This was really crystallized for me in a board meeting a few years ago, where one financial institution was talking about how well they were doing in selling RTP to a large corporate customer.? While I was happy to hear that the network was being embraced, I stopped the meeting and pointed out that how they were driving these new capabilities in the marketplace was contrary to the vision that we all had laid out in the Faster Payments Task Force and in the development of the RTP network.
”If you are a financial institution and you are selling RTP or FedNow to your customer, you are doing it wrong.”?
The value proposition of designing a new network like RTP or FedNow was to bring payments into the 21st Century allowing them to be integrated, automated and largely disappear into the background of a customer’s real intent, whether that is to fund an account, pay a bill, invoice a customer, pay an invoice or refund a customer.?
Yes, you read that right, I used the intent of the customer to explain what we should be doing.? This means that as you continue to digitally transform your financial institutions you should focus on building experiences that meet customer intent, which may mean a complete rethink about how you offer products to our customers.
My colleague JP Nicols penned an article earlier this year with some good guidance as to how financial institutions should think about this journey.? That article can be found here:? https://www.dhirubhai.net/pulse/product-puzzle-beyond-vendor-risk-management-jp-nicols-apy5c?utm_source=share&utm_medium=member_ios&utm_campaign=share_via
My mantra for over the past decade has been ”A Payment is a Payment is a Payment” and while I recognize that accomplishing this goal for customers has some hurdles (rules, technology, product design) it should be how all financial institutions think about their strategy and what they should strive to deliver to their customers either directly through online tools or indirectly through API interfaces you build that enable business customer applications to connect through their applications.?
领英推荐
To achieve this, you must be better at building products that accomplish the tasks that your customer is trying to achieve rather than just enabling the products that vendors provide to via upgrades to our systems.
Financial institutions need to understand the role they should be playing in their customers’ payment lives. Senior management & board awareness of the strategic role payments play for their financial institution is key.
Remember, as financial institutions you have three main jobs in your customers minds:
??Store/Protect Money
??Lend Money
?? Move Money
‘Move money’ is the one where I think most of the industry has been complacent.? While deposits may appear to be staying strong, the data could be showing that your customers are “quietly quitting” by moving their transaction processing to other companies.?
Now is the time to address that problem, but it starts with the right product mindset!
Would love to further the discussion below ?? Let me know what you think the top barriers are to securing a true place in your customers payments lives.
Principal Digital Strategist at Q2
4 个月Great perspective Peter - I couldn’t agree more. The best phrase I have heard that aligns with your perspective is “Banks sell rails, FinTechs sell use cases”. If Banks wonder why businesses of all sizes are turning to FinTechs it’s because FinTechs solve real problems. Banks need to wrap value-add solutions around the emerging payment capabilities to win and retain business relationships - otherwise, someone else will.
Executive Product Pro | Inclusive Leader | Aspiring CRO
4 个月A little sanctimony to stir up the complacent, I see. As for the value menu, this has to be just the cover page to voluminous book of hybrid permutations between checks and ACH; the complications of the laws for payments: Regulations E, J, CC, P; Bank Secrecy and Anti Money Laundering; then throw in NACHA rules, UCC, and myriad of bank terms and conditions agreements - and there becomes some cause and effect to bankers complacency. By the way the value menu cut out cash, cards and international payments. Perhaps it’s not complacency at all, but more of gluttonous coma.
Tech & Product Leader - Customer Advocate - Data Products, API Architecture, Web, iOS / Android Digital Servicing - Real Estate Broker / Investor
5 个月Timely. Ran across this with a new FI I’m using for a promo rate. New FI’s vendor held and rejected a bank to bank transfer, and LOCKED my bank to bank transfer ability. Existing FI says everything is fine on their end. New FI is trying to gaslight me into believing it’s a problem with my existing FI, despite me using that account for hundreds of transfers over the last 15+ years. ?? Customer service with the new FI is clueless. Does not understand their vendor or their vendor’s ability to lock customers out of external transfers. Wild.
Director of Customer Success at SWIVEL
5 个月This is a really good read! Thank you, Peter!
Partner at SeatonHill Partners
5 个月Absolutely! I can't tell you how many of my fellow CFO's just glaze over when different types of payments come up when we are networking with bankers. The average finance executive doesn't have time to keep up with all the changes in payments. We just need to understand appropriate scenarios for each one and the cost benefit vs risk. The only reason I get it is my time at ePay. Most of us don't have that education!