How Financial Institutions Can Adapt To Consumers’ Expectations

Stephen Bohanon, founder and chief strategy officer at Alkami, a leading cloud-based digital banking solutions provider.

From the perspective of today’s consumer, instant gratification is no longer a differentiator. Thanks to same-day delivery and streaming, consumers have become accustomed to getting what they want when they want it. And these “on-demand” expectations have expanded from consumer goods and entertainment to the financial services industry.

Rapid digital transformation, and a maturing population of digital-natives, have created a productive environment for financial technology innovation. This innovation has also bred account holders who expect 24/7 access to their banking information and functions. Financial institutions that fail to keep up with these shifts risk losing market share. And with the final rule on open banking recently released, banks and credit unions need to be mindful that the average account holder’s access to financial services will expand, which will make comparing products and services easier than ever before.

Account Holders’ Expectations

The rate of account holders using digital banking checking account services increased year-over-year from 74% in 2023 to 77% in 2024, according to research commissioned by my digital banking company and published in partnership with Cornerstone Advisors. Our study, the 2024 Digital Banking Performance Metrics report, analyzed self-reported 2023 fiscal year data from 81 financial institutions. Mobile banking has followed this trend, with mobile deposit adoption also seeing an increase in usage.

These trends are reflected in account holders who expect 24/7 access to their balances and other baseline account information. Our report also shows that many people want person-to-person payments with mobile banking capabilities, budgeting tools, credit score information and more.

However, research indicates that many banks and other financial institutions are not fully meeting account holders’ expectations. The 2023 Global Banking Consumer Study by Accenture found only 34% of consumers surveyed would rate their financial institution’s mobile application as nine out of 10. Less than a third would give their bank’s customer service the same score.

At the same time, it is important to keep in mind that account holders still value access to support via multiple channels. Zendesk’s 2024 CX Trends Report (registration required) found that 29% of consumers surveyed prefer to resolve “complex or nuanced problems” over the phone, compared to 13% who prefer email, 13% who prefer in-person interaction and 10% who prefer live chat on a company’s website.

This means the goal for financial institutions should be to expand the footprint and reach of the in-branch experience digitally so account holders can access services on any channel they prefer.

The Forces Driving Demand For Digital Banking Experiences

Streaming services and same-day delivery are not the only drivers of consumers’ growing appetite for instant gratification. I believe fintech solutions like Apple Pay, Square, PayPal and Chime have also influenced account holders’ expectations for digital experiences. It’s critical to accept that many consumers are positively responding to these features, particularly the ease of use and the mobile options.

Salesforce’s Connected Financial Services Report (registration required) found that 71% of financial service customers want their provider “to have a clear digital process for opening an account.” Think about the digital account opening process available at your bank or credit union, and then consider this: Current or prospective account holders who use an iPhone, which represents about 60% of the U.S. smartphone market, can open their phone and apply for, receive and begin using an Apple Card within minutes.

If these consumers can already open a brand new credit card in such a way, why would they choose to wait for other account features or services that offer faster access and greater convenience? These are no longer innovations of the distant future; these are account holders’ expectations regardless of a financial institution’s current offering.

Satisfying Account Holders’ Expectations Starts With Identifying Their Priorities

There is no question that integrating features and tools into the digital banking experience is crucial for financial institutions of all sizes. As I see it, account holders understand that brands today are using their data to inform marketing and customer service strategies, and as a result, they expect those institutions to understand their priorities. If their data is not used to enhance their experience in a personalized way, many account holders are not afraid to take their business elsewhere.

In our 2024 Generational Trends in Digital Banking study, which surveyed 1,500 digital banking consumers, we found that compared to older generations, Millennials are nearly 58% more likely to switch financial institutions if another provider offers a better digital banking experience. The industry broadly has found the same to be true, as more than half of the customers in the previously mentioned Salesforce survey indicated they would switch providers if they felt the service was impersonal.

As financial institutions continue to face a competitive environment, listening to their account holders and using data to understand their spending patterns and behaviors is critical to growth. This can be executed in multiple ways, but here are a few guiding principles to follow while you find what works best in your organization:

• Define clear values and goals. Technology initiatives should directly support the overall business objectives and reflect the organization’s mission, vision and values.

• Regularly reassess alignment. As technology and market conditions change, leaders should routinely evaluate whether their tech strategies align with their core values and make adjustments as necessary.

• Improve data security. As new programs and initiatives are executed, security will always need to be prioritized, and technology and security teams should be involved throughout the process to ensure appropriate security measures are in place.

• Gather account holder feedback. Use internal and external feedback channels to assess the success of programs. This can include surveys and focus groups as well as online and social media reviews.

Embracing the opportunities presented by both technology innovation and consumer demand is critical to success. They present new opportunities for better customer service, creating new products and pathways for revenue. Business leaders who approach digital technologies and tools in a way that holds true to their organizations’ values and goals and makes the end-user experience exceptional will always be better equipped to meet changing expectations and make the best decisions for their businesses.

Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?