As family banking apps grow in popularity, banks and credit unions need to navigate complex data regulations if they hope to attract younger customers.
American Banker recently hosted a webinar to discuss the impact of these changes, inviting REGO and REGO’s partner Q2 to the panel. Will Furrer, Chief Strategy Officer at Q2, shared insights on the strategic challenges and benefits these regulatory changes can have for financial institutions and their customers.
Q: What are the main challenges banks and credit unions are experiencing with mass adoption of technology and a cashless society?
Will Furrer: The biggest challenge banks and credit unions face is the aging of their customer base. Many financial institutions have approximately 60 – 70% of their account holders over the age of 30. When thinking about the next generation of customer – whether it be business owners, families, etc. that will come from a younger demographic, a demographic whose needs vary from their current customer base. So they search for ways to not only find, but locate these new customers and figure out ways to engage them and win them over.
Q: Other than engaging customers, what is a strategic priority for financial institutions’ leadership teams?
Will Furrer: Creating unique products that allow younger account holders and customers to engage with financial institutions while developing financial literacy and learning the benefits of banking is one of the strongest strategic priorities for financial leadership teams. And this starts with the deposit. Younger account holders love to gain access to deposits almost instantly.
A strategic priority of community banks, specifically, is to focus on banking with the family unit as a whole – be it the mother, father, grandparents, and even the grandchildren. Making the family a central principle of the foundation of the bank can combat the challenges of attracting and retaining younger account holders by developing generational brand loyalty.
Q: Why would banks want to offer a family digital wallet?
Will Furrer: From the bank or credit union’s perspective, the data that comes along with behaviors associated with family digital wallet solutions or card solutions is really important, especially when analyzing those transactions with account holders. It gives a better understanding of the account holder and enables banks and credit unions to get closer to their account holders by way of personalization. This is something all financial institutions aim for to develop a relevant credible reputation to account holders over time.
Q: How do you think the proposed changes to child protection regulations and requirements will affect banks and credit unions?
Will Furrer: I believe they are going to have to have really good disclosures that describe very clearly what they would like to do with the data and how they would like to utilize data. They will then have to strategize how to inform the entire family unit.
Banks and credit unions are also going to have to adopt a posture of data for good, meaning that the data they are utilizing is used to deliver better experiences inside the application or website for the account holders. This is a very important part of the journey and something they will continue to face challenges with, but are investing in as quickly as possible.
Q: How can a family digital wallet help with financial literacy of account holders?
Will Furrer: With accounts being tied – both the child’s and the parent’s – in a family digital wallet, this encourages natural conversations about money, budgeting, and the like. Traditionally, there isn’t a lot of conversation being had about finances between children and parents, and solutions like this create the opportunity for that discussion. A family digital wallet also gamifies a curriculum already in place with banks and credit unions and creates an engaging icebreaker to the topic.
To learn more, watch REGO and American Banker’s webinar, How New Child Protections Could Impact Financial Institutions on-demand today or schedule a demo with the REGO team.