Consumer trends changing banking

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Consumer trends changing banking


This content is contributed or sourced from third parties but has been subject to Finextra editorial review.

This is an excerpt from Finextra’s report, 'The Future of Digital Banking North America 2023'.

Lauren was five months pregnant. For the past few months, she and her husband had been making plans to welcome their new child. As she drove her trusty 2016 Toyota Yaris to run errands, she began thinking about getting around with her child. She looked in the rear-view mirror at the back seat when she suddenly realised how cramped it would be with a car seat.

When she arrived at the store, Lauren texted her husband, Mark, I think we need to look into getting an SUV. Within seconds she received a response from Mark, I’m on it. Lauren smiled knowing that Mark loved to research big purchases like a car.

Mark googled “Best performing inexpensive SUVs 2022.” Under the sponsored results was a link for the 2022 Toyota RAV4. Mark clicked on the link. The doorbell rang. It was an Amazon order. As he walked back to his desk, he thought to himself, Why can’t buying a car be as easy as getting an Amazon order? Shortly after he sat back down, his phone pinged. Lauren sent a text that said, That was quick. You know I love my Toyota. Mark was confused. He was about to respond when he saw an email to him and Lauren with the subject “In the market for a 2022 Toyota RAV4?” from their local Toyota dealer.

The email talked about all the features of the RAV4. In addition, Toyota offered a pre-approved loan specific to him and Lauren at rates below market. A couple of days later, their new RAV4 was delivered to their home, having done all the ‘paperwork’ on their mobile phones directly with Toyota. Mark’s wish of getting a car as easy as ordering something from Amazon became a reality.

This story exemplifies three big consumer trends impacting financial services firms. The first one is personalisation, providing the right offer to the right customer at the right time. It’s as if Lauren and Mark’s text conversation also included Toyota. The second trend is embedded finance. Whatever triggered the personalisation was further enabled by Toyota’s capability to pre-approve and offer a loan, cutting out banks or credit unions before they even knew Mark and Lauren might be in the market for a loan provider. Finally, digital ubiquity facilitated the whole chain of events.

As noted by EPAM’s vice president of account management Panos Archondakis in a recent article:

“Particularly in the last two years, client engagements for all types of services are seeing greater use of digital channels across all demographic segments. Interactions are becoming bite-sized, instantaneous and ‘train-of-thought’ driven.”

Let’s look at these trends more in depth.


Generally, there have been significant improvements in targeted marketing evolving from ‘batch and blast’ or ‘spray and pray’ to more tailored messaging and defined segments, but the promise of delivering one-to-one highly contextual and relevant messaging has eluded most marketers. Yet, as an industry, the hype curve continues as personalisation is reframed to “personalisation at scale” or “hyper personalisation” with a promise of increased revenue.

The hype curve may be discouraging many marketers at smaller financial institutions (FIs) as it seems unattainable. The journey from one-to-many to one-to-one seems daunting with the constraints that many marketers face. Marketers are facing pressure on all fronts – the need to justify media spend, increased privacy concerns, expanded customer control of their information, a crowded, confusing, and rapidly changing AdTech and MarTech landscape, and shifts in customer behaviour from in-person interactions to digital, to name a few.

Those challenges are real but create an opportunity to double down on personalisation with a focus on existing customers. The need to engage customers with relevant messaging (product offers, service offers, content, next best action) is more important now than ever before. The shift to digital limits the ability for FIs to engage the customer and drive awareness of additional products and services. FIs need to go beyond transactional to deepen the customer relationship. Smart personalisation can be the answer.

Embedded finance

In a recent report from EPAM and Mambu, we wrote: “A new era of financial technology known as embedded finance is emerging, driven by regulatory mandates, advances in technology, and consumer appetite for innovative and seamless digital experiences.”

We further warned, “while embedded finance revolutionises the way we buy goods and services, it could also reset how we bank — and even redefine what we think of as a bank.”

Examples of existing embedded finance continue to grow throughout the industry, from the no click payments on the Uber app to the point-of-sale loans from buy-now-pay-later (BNPL) providers, like Affirm, built into mobile shopping apps.

Embedded finance reduces barriers to complete an experience with consumer brands, enhancing customer experience and encouraging loyalty. According to a recent article by Insider Intelligence, embedded finance is predicted to become a $7.2 trillion opportunity by 2030.

Embedded finance is enabled by partner financial service companies, including both legacy banks and insurers, as well as fintech firms. As in the example of Lauren and Mark, a simpler and more convenient process is resulting in financial services companies being cut out of the process. FIs should look at this growing trend and define how they want to adjust their strategy.

Digital ubiquity

With the debut of the iPhone on January 9, 2007, financial service companies began to talk about alternative delivery channels, which encompass what we call ‘digital’ today. A few years later, it was online and mobile channels, followed by a series of pseudo words like omni-channel, opti-channel or the phygital channel. The reality is that we are living in the age of digital ubiquity, where digital is the main way consumers interact with all brands, including financial services.

Digital ubiquity has put consumers in the driver’s seat. Consumers carry out market research while eating lunch, check out product reviews in digital forums, compare prices on their devices while at a store, and share shopping experiences on social media. Easily accessible knowledge allows consumers to choose whatever channel is most convenient at the time, but always informed by their digital device.

Ultimately, digital ubiquity results in a unique buyer journey for each customer. Contextual personalisation allows a brand to be there – if and when a consumer has a need.

In the example of Laura and Mike, Toyota might have been aware that Laura had an older car and her history showed that she was a new car buyer. Toyota might have offered them a deal for a 2022 Prius or Corolla. However, they learned that they were looking at SUVs, which prompted an offer for a RAV4 instead. Toyota picked up on that contextual hint.


American banks continue to face a myriad of challenges. The trends that we note, personalisation, embedded finance, and digital ubiquity, require a reimagining of the standard banking business models. More importantly, these new models must be centred around current expectations as it concerns the customer experience.


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This content is contributed or sourced from third parties but has been subject to Finextra editorial review.