In 2018, the United States made up 23.89% of the world’s economy with $20.49 trillion worth of business transacted. The U.S. banking system had $17.9 trillion in assets and a net income of $236.8 billion. Let these figures sink in a moment. These are huge numbers. And remember, this is just the U.S. The banking industry is vast, underpins the global economy and directly impacts us all.
When most people think and talk about ‘banking’ though, what they are really talking about is retail banking, the part of the industry which deals with offering financial services such as mortgages, personal loans, cards (debit and credit) and account facilities (current and savings) to members of the general public. But what is general public really and how should banks best engage with them?
The average age of a person in the developing world is decreasing whilst the converse is happening in the developed world. One engagement approach cannot hope to address all markets and demographics effectively and strategies absolutely have to be tailored.
Mitto is seeing a lot of our retail banking clients really trying to get their heads around how best to cater to Gen Z and millennials whilst also having to deal effectively with older generations. Banks have to adapt their solutions to match the digital-first preferences of younger people or else risk losing them to the emerging fintech players entirely.
Running a network of physical bank branches is expensive and we are seeing more and more retail banks retreating from the high street and placing more importance on their online and app. presence. The more cynical amongst us might be thinking these moves are simply to accelerate cost-cutting but digital transformation is really required to retain/attract the business of younger clients who are becoming some of society’s biggest earners.
According to global research company director IDC, some of the largest incumbent banks are spending over 40% of their IT budgets on digital transformation. Many customers are frustrated with the service they receive with incumbents and much of this is down to the timeframe it can take to receive a response to even the most basic enquiry. But there is something which has been around 25+ years that can improve the customer experience markedly, almost overnight – SMS.
SMS has become a key pillar of mobile banking and a bank’s mobile capabilities have become a key decision-making criterion for customers when choosing who to bank with.
Only a third of people globally with a mobile have a smartphone so banks must ensure services people find important are available to all customers, irrespective of their device. Much research has shown that the most sought-after feature of mobile banking by nearly half of all customers is the ability to temporarily deactivate a payment card using their mobile phone.
2-way SMS used in conjunction with a short code allows customers to easily text commands which enable actions and deliver information almost instantaneously. You want to know your balance? You want a min-statement listing the last half dozen account transactions? Want to transfer some money from your current account into your savings? Well, all of these actions and far more can be carried out using the humble SMS.
As more and more transactions move online, so the number of fraud incidences globally increases. Scams are increasingly ingenious and banks can let their whole client base know about serious instances that arise by sending a global broadcast via SMS. Clients can also be notified by their card provider of potentially suspect transactions and, with a simple SMS response, can confirm the situation one way or the other.
Mitto facilitates set up of all this rapidly and securely for banks and their customers can then register for these mobile services either online or by visiting a branch. SMS is truly versatile and its use in the world of retail banking is set to continue. It isn’t going anywhere…