Need for speed: New technologies meet consumer demand for faster banking

The banking industry is going through a period of unprecedented rapid change, driven mainly by new technologies, which is allowing banks to grow. Those new technologies, however, enable new entrants to come into a field where they could never go before. With new technologies available, consumer demand changes across all industries, particularly for things to be faster, more convenient and easier than ever.

As highlighted by the Mintel Trend FSTR HYPR, the advent and mass adoption of the internet and mobile technology has kicked the speed of life into overdrive and created the expectation on the part of consumers that they can have anything in an instant. As it pertains to financial services, consumers want faster transactions, from faster applications and account opening processes to instantaneous payments. Currently, the new entrants into the banking industry do a better job of responding to these demands than traditional players.

Fidor Bank – launched out of Germany in 2009 – has sped up all banking transactions, promising “60-second banking,” allowing customers to complete any financial transaction within one minute. In addition to faster banking, like most new banks, Fidor’s main selling point is its customer-friendly, community-based approach. Millennials, of course, are accustomed to having their opinions being heard, and playing a role in how things get shaped. Fidor appeals to this mindset by allowing customers to play a role in how it develops its products and services.

Traditional banks are taking consumer demands seriously, taking steps to speed up the application process

Traditional banks have long referenced speed, ease, simplicity and convenience in offers, but now there is evidence that the traditional banks take speed seriously and have taken steps to speed up the application process. Bank of America informs applicants at the start of the application that the process should take “around 10 minutes.” USAA promises, “Get your account in less than 5 minutes.” Capital One has the most aggressive messaging in its credit card offers, promising a response in 60 seconds.

New banks are moving beyond just speedy transactions and are taking steps to make the whole account opening process faster. Earlier this year, Equifax and Zoot released a new product, MobilityPlus, that assists with filling in new account applications and authenticates a customer’s identity. MobilityPlus allows customers to photograph their driver’s license from their smartphone to help auto-fill the application.

This new technology potentially positions mobile as the next acquisition tool, particularly since Millennials and the iGeneration are accustomed to managing their entire lives on their phones. The most interesting thing about this approach is that although traffic to branches is dwindling, they continue to be the number one place where sales are made. This means that banks need to be prepared to continue to evolve the role of the branch and think about a new type of branch experience for these new “mobile first” customers.

Finally, consumers express a desire for faster payments – the most difficult aspect of banking to change. Despite the challenges, other countries have successfully made changes to their payments systems. The UK tackled this issue almost a decade ago with its launch of “Faster Payments.” The system allows customers to transfer money between accounts, or pay a bill or a person in real time. In January of this year the US Federal Reserve released its plan for real-time payments. The Fed’s research suggests that consumers are eager for faster debit payment processing, while businesses want funds to be available faster. Both groups express a strong preference for payments that clear instantly or within the hour.

In the absence of good options from banks, consumers are already migrating to options outside the banking system, such as PayPal and Venmo, which have demonstrated an ability to have a significant impact on P2P payments. There are already a number of P2P services in the marketplace that consumers use over their bank’s services. Unfortunately, the task force convened by the Fed won’t have a recommendation until the end of 2016. With consumers demanding faster payments now, and with the non-traditional banks already providing better, faster services than the traditional banks, some customers are already establishing loyalties that a new system won’t be able to overcome.

While many of these new entrants will come and go, they will forever have an impact on the banking industry. Banks, regardless of size, need to pay attention and carefully consider how their customers of the future will want to bank. A huge opportunity exists for banks to partner and learn from these startups; those that do can expect big rewards.

Susan Wolfe is the VP of Financial Services at Mintel Comperemedia. She focuses on the banking and investment industries, bringing over 20 years of experience in marketing and research to her role.