[Editor’s note: This is a blog post from LiveVox. LiveVox is a bronze sponsor at LendIt Fintech USA 2019, which will take place on April 8-9 in San Francisco. On Wednesday, March 20 at 2:00 PM ET LiveVox will be hosting a webinar called Keys to Optimizing Digital Engagement for Online Lending. You can learn more and register for free on the LendIt Webinars page.]
Alternative banking options, such as online lending and fintech, are rapidly becoming some of the fastest growing financial services sectors. A recent trend report by Clarity Services, a credit reporting provider, showed that online funded loan volumes grew by almost 500% between 2013 and 2017.
What type of customer is fueling this growth? The vast majority of the adopters are younger and more affluent customers, as shown in a recent survey by Ernst and Young*. E&Y found:
- 1 in 4 respondents aged 25 to 34 has used at least two FinTech products in the last six months (25%)
- FinTech use is also higher than average among 35 to 44 year-olds (21.3%)
- Among those in the 18 to 24 cohort (17.7%).
- For each cohort above age 44, the proportion of FinTech users declines and is below the average of all users
In addition, 44% of fintech users have an average income of $150k.
This specific customer segment is one of the most digitally adept of all customers. Being able to meet and exceed their expectations for digital engagement will be key.
In this blog, we’ll explore where financial institutions are in their path to digital transformation and how innovation is accelerating its evolution. In a recent survey of financial institutions by BDO**, they found that he majority of businesses have not been able to make significant advancements in their digital transformation. Below we share some of there findings:
How Far are Most in their Digital Transformation Strategy?
- 54% of financial institutions have developed a digital strategy, but have not yet implemented it
- 29% of financial institutions are currently developing a digital transformation strategy
- Only 14% of financial institutions are in the process of implementing a digital transformation strategy
How Much Will They Be Investing In Digital Transformation in the Next 12-18 Months?:
- 65% are planning to increase spending by 10%
- 26% are planning to increase spending by 1-9%
- 6% have no plans to change spending
What will They be investing in over the next 12-18 Months?
- Replace or upgrade legacy IT systems — 88%
- Reduce operational inefficiency — 76%
- Improve customer experience — 74%
One major takeaway from these survey findings is that budget restraints and technology hurdles are key drivers impacting the speed of digital adoption, with the majority of budget increases being focused on upgrading legacy technology. Considering that these upgrades often require millions of dollars and months to achieve, a 10% increase in budget may not get most financial institutions very far in their journey.
As the number of channels increase and customer expectations rise – how can financial institutions accelerate their path to digital engagement?
Join a webinar “Keys to Optimizing Digital Engagement for Online Banking Customers” on Wednesday, March 20th at 2pm ET as digital innovation and financial services leaders from First National Bank of Omaha, American First Finance, and LiveVox as they discuss how innovation is helping financial institutions simplify the path from evolving from primarily voice to digital engagement.
In the meantime, click here to read the latest survey report on the sate of digital engagement for credit unions.