We all have seen how the music industry has transformed in the last decade. Banks and financial marketers can learn a lot from this change. Having worked in both industries tempted me to explore and draw comparison between both these worlds in detail.
1. Adapting change in consumer behavior:
The music industry has demonstrated that just because customers consume a product or service in one way, doesn’t mean that the method will remain the preferred means of consumption forever. With the arrival of the digital era, on-demand culture, customers now expect all services, including banking, to be available anytime, anywhere and from any device.
Sony was the first company which triggered the disruption in this behavior by providing favorite music on the go. They were the pioneers of making music portable. Then in 2001, IPod created another disruption, making music available for just 0.99 cents. All of a sudden consumers were in control since they don’t have to buy the whole album. They could simply download their favorite songs and convert them into a playlist. This was the new version of the classic mixed tape. Remember those days?
Most recently, the music industry has been revamped by subscription based services like Spotify and Pandora. Instead of paying per song, consumers can simply pay a monthly subscription fee and have access to unlimited tracks, delivering the service from anywhere, anytime and on any device.
2. Speed and Convenience is everything:
This new shift has somehow trained consumers to access whatever they want at the very moment / instantly. The new wave of subscription service providers such as Netflix has caused ripples across all sectors and is giving banks a run for their money, challenging them to change the way they look at the overall customer experience and journey. Customers are demanding on the go and swift access and experience unlike anything seen before.
In the wake of this shift in expectations around accessibility, alternative lenders have entered the financial services scene. These new players have recognized that consumers’ primary concern is now speed and convenience, even ahead of cost. By using automation to render instant decisions and expediting access to funds, these third parties have managed to fill the need gap of consumers i.e. desire for instant gratification.
3. More is required from the banks:
Bankers proactively preparing for the future are embracing business process re-engineering. Financial institutions are examining their internal processes and evaluating how to transform those processes to be as convenient, efficient and digitally optimized as Spotify or Amazon while still meeting compliance standards, ‘hassle-free’ if you may.
For example, by fusing new technologies with responsible banking practices, savvy banks are delivering the advantages of an alternative lending strategy without the risk.
Banks that incorporate automation to run requests against their existing, proven credit policies, are streamlining the lending process, expediting consumers’ access to funds and meeting evolving demands.
4. A Whole New World: The Cloud and Millennials:
Banks are now working to secure their competitive position by adjusting the way they interact with customers. The digital age has changed the way we think about communities. The cloud has changed how financial institutions operate, securely store and manage data, and deliver valuable customer service.
Millennials will be valuable in meeting evolving customer preferences, largely because this generation grew up in the digital age. They will be instrumental in developing strategies to attract millennial customers, who will soon outspend boomers for the first time. By prioritizing the development of the next generation of employees, banks are wisely investing in their own future.
With an exciting yet challenging path ahead, banks must be mindful of the lessons learned in other industries when preparing for the future, ensuring their institutions are not only offering the products and services consumers want, but offering those services the way consumers want them. The good news is, many banks have already recognized this, and are taking steps and revamping processes to meet consumers’ shifting needs.
Banks that invest now in delivering an efficient, digitally engaging experience similar to Spotify will be well-positioned for decades to come.