Traditional banking institutions are facing three major trends and market forces that have a catalyzed a bunch of new consumer banking products and services. First, they are realizing that their trading divisions are best focused on automated trading practices. Second, they’re realizing how important and profitable their consumer banking divisions have become. And third, banks are afraid that the consumer banking market is poachable through tech companies that are offering new kinds of consumer banking services—and Amazon especially which already has a strong foothold in many U.S. households.
Traditional Bank + Tech Company Partnerships
Rather than try to fight new tech companies on their own turf, many traditional banks are looking to partner with these tech companies. The result has been the introduction of entirely new types of personal banking services and a new level of convenience and security to traditional banking. These aren’t the only examples, but here is a selection of new products and services that have come out of these partnerships.
HSBC + Amount: If you’re like a lot of today’s banking consumers, you want to be able to view multiple loan options to find the right balance of interest rates, repayment schedule, and loan terms. Then, consumers can go ahead and complete an online loan application. Amount is the tech company that powers HSBC’s ability to offer this kind of personal lending platform. Reportedly, loan amounts of up to $30k could be available as soon as the next day.
Rhinebeck + Zelle: Many new products and services are as simple as integrating platforms and features to deliver a great consumer experience. A lot of people who use personal online payment services like Paypal, Venmo, or Zelle wonder why their bank can’t offer this feature. Many banks now do—by partnering with the payments tech company. One recent example is the partnership between Rhinebeck and Zelle. Customers can make a Zelle payment on their phone through Rhinebeck’s mobile app. In fact, Zelle is automatically available on your phone when you download the mobile app.
Goldman Sachs + Apple: Looking to use your phone as a credit card? The Apple Card is a virtual credit card that combines the security of your iPhone and the ability to process credit card payments—including traditional cash back bonuses. It’s backed by Goldman Sachs, who is looking to promote Marcus its consumer banking brand. The early experience and information about Apple Card shows that even new consumer banking products have drawbacks. If you lose your iPhone, it can get really cumbersome to pay off your Apple Card balance.
Citigroup Checking with Credit Card Perks: Having already launched a fancy new digital banking platform, Citigroup is preparing to launch a new product that has long been on the wish list of people who wish they could have their cake and eat it, too. Credit card perks without the credit card. There has long been a gap between Citigroup’s general strength with its consumer banking and its lackluster credit card division. Recently, the bank has been taking an inside-out approach by further incentivizing its consumer banking products with credit-card-style perks.
How to Choose Products and Services
So, in conclusion, financial institutions are getting creative in the products and services they offer consumers in the hopes that they will be able to develop a greater sense of customer loyalty. In few areas of the economy is the “lifetime value of the customer” so keenly understood as the consumer banking industry. In turn, we customers should look around at the products and services that are available to us at any given time—but also that our choice of bank is earning our loyalty in the broadest sense of the word.