Digital transformation is a hot topic, especially during the ongoing pandemic. But while the focus has largely been around mobile banking capabilities, there’s another area where change will matter even more to customers: payment cards.
To take an in-depth look at why payments are crucial for enhancing the digital customer experience and how they’re a key differentiator to remain competitive in financial services, Ondot recently released a whitepaper, “Why payment cards should be at the center of the digital banking transformation.”
Payments are the biggest source of interaction between banks and customers
Between making purchases, paying bills, activating cards, and so on, 80% of banking interactions revolve around payments. The average customer interacts with their bank at least twice a day for payment-related matters, making it the only banking activity that involves multiple interactions a day.
Therefore, digital capabilities are no longer a differentiator for banks: they’re a necessity. Nearly half of consumers (43%) rank digitally managing their card as the number one driver of card choice. If a financial services provider doesn’t offer digital card management tools, they risk losing customers to someone that will.
By offering the right digital tools, financial institutions can solve customer pain points and offer frictionless and seamless payment experiences that boost customer satisfaction.
Big Tech disruptors pose real threats to banks
Gone are the days where banks were only competing with other banks. Tech industry challengers like Apple, Google, and Samsung have entered the financial services game and pose a viable threat to traditional banks and credit unions.
Apple Pay had 441 million users worldwide as of September 2019, meaning it’s the most popular mobile payment option in the U.S. Google plans to launch checking accounts focused on digital cards in 2021, and Samsung recently launched its Samsung Money debit card account.
Further, consumers have shown a willingness and desire to engage with tech companies for banking services. A consumer survey conducted by Ondot systems earlier this year found that 64% of Americans would consider purchasing or applying for financial products from a tech company over a traditional financial service provider. Among consumers ages 18 to 34, this rises to 81%.
Mercator Advisory Group’s Director of Credit Advisory Service Brian Riley echoed this sentiment in a PaymentsJournal article: “Many looked at fintechs as a threat to traditional banks, but… it might be Big Techs that are the real challenge.”
There are ways banks can keep up. “They need to keep an eye on the ball, stay focused, and not be slow to innovate,” Riley added. This means making virtual payment experiences that are as or more compelling than those offered by tech disruptors. A digital-first payment card with a few key components can help them accomplish that task.
Banks of all sizes can enable digital-first card experiences
Consumers want better, easier, and faster payment experiences, and Big Tech’s ability to provide them has raised the bar for digital transformation. There are four key components to a digital-first card experience, each of which are explored in more detail in Ondot’s whitepaper:
- Cards are quick to obtain and use
- Tracking spending is simple and easy
- Self-service card management is seamless
- Engaging on-the-go perks, incentives, and rewards are available
While megabanks have more resources at their disposal to stay competitive, that doesn’t mean small banks can’t digitize. Financial institutions of all sizes can enhance their card portfolio by partnering with the right fintech company.
To learn more about why payments should be the focus for digital transformation, the legitimate threats posed by Big Tech companies, and how financial institutions small and large can modernize their payment card portfolios to stay competitive in an increasingly crowded financial services landscape, consider reading Ondot’s whitepaper.
Access Ondot’s complimentary whitepaper, “Why payment cards should be at the center of the digital banking transformation”, by filling out the form below.