Gen Z are the first generation to arrive with a smartphone under their arms and they prefer to use mobile banking, digital payment Apps and group expense management tools over traditional banking methods. They have more information regarding economic issues –since their birth they have already experienced two crises– and they ask for transparency in the management of their personal finances.
They also show more interest in sustainable and socially responsible products than their predecessors. To attract and retain them, it is necessary to use an impeccable UX: simple and visually attractive applications that include all the functionalities mentioned above.
How to achieve it? Here are the keys to collaborate with a partner in banking innovation:
1º Keeping track of income and expenses is vital for users and also for financial institutions
We generate billions of data daily with our banking transactions. Cash inflows and outflows are reflected in our transactional history but, without categorizing it, this data has no value. Imagine for a moment being able to analyze each transaction and organize it into the right category.
Due to machine learning and natural language processing, raw data is organized so that both users and entities have all the information and can make the best decisions. Categorization tools can find out that a Spotify transaction is a “subscription” expense and a Repsol purchase belongs to “energy.”
Once you understand the habits of your users, you drive better business decisions.
2º Enrichment of transactional data represents the future and, moreover, it will be mandatory
Another clear reason to find a partner in banking is to comply with legislation.
Mastercard released a regulation in December 2022 requiring all issuers in its network to have an enrichment solution by October 14, 2023. Visa is working on a similar measure. The good news is that there are already solutions available that meet the requirements of both.
Why is it so important to add this layer of enrichment to bank data?
The answer is that information is power.
With the value of knowing “what” and “where” your customer is spending, it is possible to personalize communications, products and services. This leads to a trust relationship between financial institutions and final users. Data enrichment is also the ultimate tool for banks to improve their services and minimize risk.
3º Offer recommendations that improve financial health to retain your customers
You already know the first two steps to improve your products, what comes next? Discover valuable insights for your business strategy.
Once you have understood what the financial habits of your users are due to a perfectly ordered and categorized view of their transactions, it is time to automate messages, offers and alerts.
The best way to retain and build customer loyalty is to position yourself as an ally. You should help them identify areas of improvement and display personalized automatic recommendations, as well as alerts that help them avoid surprises. Warnings about overdraft risks are a good example, but also the expiration of insurance, the detection of subscriptions, duplicate charges or showing the expected monthly income and expenses.
By helping your customers manage their finances, you guarantee a longer usage time of your platform and discover additional and cross-selling opportunities.
4º It is increasingly important to be shielded against possible online fraud
Bank data enrichment can help financial institutions detect suspicious transactions that may hide fraud. Banks and insurers will be able to identify movements that do not fit with normal customer behavior, react quickly and take measures that minimize the potential risks associated with fraudulent activity.
PSD2 (Payment Services Directive 2) is the European banking and payment services regulation that affects banking transactions and online purchases. It guarantees the security of movements, opens bank payment services to third-party companies and uses Strong Customer Authentication (SCA), among others.
All these technologies, added to data enrichment, represent a guarantee for financial institutions and end users. Find a good partner in banking to protect your customers!
5º Positioning your bank as a leader in innovation is a competitive advantage in the finance sector
For years partners in banking have been flourishing between FinTech startups and financial institutions. This paradigm shift has been driven by the elevated cost for banks and insurers to develop innovative technology internally. We must keep in mind that FinTech companies have the knowledge and experience necessary to launch these tools in weeks.
Another interesting aspect for companies is being able to integrate new developments into their platform through APIs (Application Programming Interface). It can be hosted on the entity’s servers, in a private cloud or in the service provider’s cloud. It is important to request that the installation be fully flexible and multilanguage.
Now that you have all the information, you can start to improve your digital banking platform and turn your customers into brand evangelists.
If you have any questions, please let us know. We will be happy to help.