Consumer preferences have shifted rapidly toward digital-first banking; yet very few institutions provide high-quality, brand-unique online banking experiences. Hesitancy abounds in the banking industry as common misconceptions stop large and small institutions alike from pursuing change. However, as the market evolves and digitalization becomes more of a competitive necessity, institutions that stick to their status quo will struggle to survive and thrive. In this white paper, we:

  • Describe how changing customer expectations have made digitalization a competitive necessity
  • Outline and debunk five popular and persistent misconceptions that prevent banking institutions from embracing transformationembracing transformation
  • Empower financial services institutions to make educated decisions about their own journeys

After a brief post-pandemic account opening slump, research shows us that consumer preferences have shifted rapidly toward digital-first banking experiences.1 With U.S. consumers having opened over 13.1 million new accounts through digital channels in 2022, it’s clear that this rapidly developing market presents financial services providers with a lucrative competitive opportunity – if they are willing and able to seize it.

Yet, few institutions are empowered to provide brand-unique digital services for their customers. Insider Intelligence notes that larger institutions are more poised to make a large-scale pivot towards digital offerings than smaller banks, as many have already begun a slow transition toward digital banking. However, analysts state that financial services providers will likely support their respective pivots with legacy technology that can barely sustain demand. In contrast, smaller institutions are more likely to be unfamiliar with digital banking and will either be slow to adopt it or partner with third-party providers to do so.

Institutions are trying to meet a rapid surge in demand for digitally-enabled experiences; yet, they often miss the mark. This is because while organizations want to provide direct-to-value digital banking functionality, many are reluctant to invest in large-scale digitalization initiatives.

“Banking as an institution is pre-technology,” Kirbie Pillette, Gerent’s Senior Director of Product Strategy for Financial Services, explained in an interview. “It’s been around for hundreds of years, and the status quo is firmly established. There’s this pervasive question of, ‘Why invest in large-scale change when what we’ve been doing is working for us?’ The implications of making a significant investment in change can be frightening, as institutions don’t 100% know the outcome.

“However, consumer preferences have seismically shifted and will continue to do so over the coming years,” Pillette continued. “And the foundation of the old status quo won’t be strong enough to support financial institutions moving forward. Banks must abandon the notion that patchwork improvements will provide the support they need to stay competitive and pivot their focus toward building something new.”

This hesitance to invest in transformation hinges upon five common misconceptions that we will debunk in this paper. As we move forward, we’ll examine why financial services institutions are reluctant to embrace change and unpack what institutions can realistically expect from the digitalization process.

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