How Do Banks Keep Up With Growing Competition?

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Just like any other industry, financial services must keep up with the growing competition that constantly emerges.

We see banks compete with each other frequently, challenging one another for the most innovative and transformative tools that successfully reach their customer base.

These tools include things like the most innovative mobile apps, credit card rewards, and constantly having an up to date banking system, in order to meet customer’s expectations.

As digital transformation grows rapidly, a shift in banking is occurring as well. As tech companies like Apple and Google grow, they begin to incorporate banking tools into their services, which can cause banks to question their position.

These enterprises offer customers a new set of innovative trades that traditional banking must learn to keep up with.

“Most senior bankers knew the challenge was coming. “[They] all want to eat our lunch,” Jamie Dimon, chief executive of JPMorgan Chase, said in February, referring to the big technology groups, such as Apple, Google and Facebook. “I mean every single one of them, and they’re going to try.” Financial Times reports. 

Let’s take a look at some tech companies that have incorporated banking tools into its business structure.

Apple And Apple Pay

Apple has disrupted the tech industry, by releasing state of the art technology and building a loyal fan base. Now, they want to incorporate banking.

We saw Apple Pay emerge from Apple in 2014, which enabled customers to make payments with the touch of a finger. Apple worked to make sure this application was as secure as possible for customers.

“Apple Pay is designed to protect the user’s personal information. It doesn’t collect any transaction information that can be tied back to a user and payment transactions are between the user, the merchant, and the user’s bank.” Apple reports.

You can use Apple Pay through the wallet app on any Apple device, such as and version of iPads or iPhones. It simply reads your card and enables you to purchase through your phone. It’s that easy.

This easy to use tool has been disruptive in the banking industry. Since banks offer similar tools, Apple Pay is a spin-off of many popular banking models. Thus, competition arises. Some banks have actually adapted their techniques to integrate Apple Pay into their services.

You can view the full list of banks compatible with Apple Pay, here.

So, for banks who are not working with Apple, what are they to do, in order to keep up with this competition?

For starters, experts advise banks to leverage the fact that they hold all of their customer’s banking data, which means they have more of an established relationship with them, as opposed to other competitors.

In order to keep the attention of their audience, and find out where they can provide real value to their customers. Using analytics and data, they can get a real sense of where their customers are looking for.

“Exhibit customer orientation, innovate around the customer – and with the customer, showing clear value for the customer, using an outside-in point of view as opposed to the current inside-out one.” Customerthink reports.

Facebook And Banking Chatbot

Facebook and Citibank have come together to launch a Citi Bot, that allows users to digitally bank through Facebook.

Users are able to check account balances, and transactions, credit card bill summaries, rewards, and point balances. If this proves to be successful, the goal of Citi Bot is to be able to link Facebook and bank accounts using secure login information, in order to lock and unlock credit cards.

Facebook director and head of financial services partnerships, Ms Kahina Van Dyke, said 1.2 billion people use Messenger every month. “Banks, financial service and fintech firms are increasingly finding value in reaching their customers where they are already.” Straitstimes reports. 

As Citibank moves toward more innovative territory, its competitors, like Bank of America, must learn to adapt those features into its structures as well, in order to keep their customers.

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