Overcoming industry disrupters is built on establishing trust, while investing in the technologies that banking customers want.

How banks can learn and grow from industry disruption

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To paraphrase a line from "Star Wars," there's a disturbance in the Force.

Technology, consumer appetite, human ingenuity and good old-fashioned entrepreneurship are a few of the factors causing more organizations to venture outside their orbits. From small businesses to major conglomerates – the likes of which include Amazon, Walmart, Apple and Uber – companies are expanding their services to appeal to a convenience-oriented public. With nearly 95% of Americans having access to a bank account, you can understand why many of these industry disrupters have their sights set on the financial services sector.

Based on a newly released study, banking services now provided by many non-traditional FIs are good enough for account holders to consider making the switch, putting the onus on banks and credit unions to re-evaluate how they can improve their own customer experience.

"60% would consider using banking services provided by non-bank entities."

According to a recent survey from PYMNTS.com, nearly 60% of respondents indicate they would at the very least think about utilizing the banking capabilities made available by non-bank entities. Further, more than 14% said they were "very" or "extremely" interested in this option, assuming they're offered by the likes of Walmart, Apple, Google or PayPal.

This is particularly true for Generation X, with 54% of them very much intrigued by the prospect of switching to non-banking entities, the survey found. Millennials were similarly open to this possibility, with 46% indicating as such.

FI industry disrupters have always existed
Industry disrupters aren't exclusive to the financial services domain, nor are they new. From electronic and print media to e-commerce, brick-and-mortar retail or commercial transportation, many different industries are filling up with competitors vying for customers' loyalty.

In some respects, the Apples and Amazons that shake things up serve as foils by prompting long-tenured businesses to adapt, invest, improve or add on to what they do already so they're never comfortable with the status quo. At the same time, though, they can endanger businesses' bottom line. That more than half of Americans would consider jumping ship to a non-banking alternative is rather eye-opening, considering the fact that more than three-quarters of local bank customers have been banking with the same financial institution for five years or longer, according to the same PYMNTS.com study.

What has precipitated this shift? Convenient options. This is the same thing that drove mass adoption of online banking. Indeed, in 2009, only a small fraction of retail banks offered mobile banking capabilities to their customers. Today, not only is mobile banking more widely available, a majority of Americans with checking accounts use it, according to analysis from J.D. Power.

When it comes down to it, though, Americans want a financial institution whose services are in lockstep with their needs. Nearly 58% of respondents in the PYMNTs.com report said easy-to-use online banking was among the main reasons they were with their current FI.

However, as the study found, online banking was hardly the end-all, be-all. What was more important? Trust. Over 63% said this was what they valued most about the relationship they had with their financial institution. Among local banks in particular, trust was cited by over 72% of respondents, with online banking and convenient locations in a distant second and third, respectively.And in an effort to optimize trust and keep up with consumer needs, many banks are investing in state-of-the-art technologies, evaluating consumer trends and relying on data, all core functions of future-proofing.

Branch locations as important as ever 
Close to 80% of bank customers said face-to-face interaction was their preferred channel when their needs involved advice, according to a study done by Samsung.  So despite the growth in online and digital banking, many Americans aren't turning their backs on the branch.

Bob Meara, analyst at Celent, said that as important as investing in state-of-the-art technologies is, nothing can replace the trust factor physical branch locations help foster.

"These results highlight the continued premium placed on face-to-face interactions when it comes to banking," Meara explained. "Yet as these institutions continue to modernize, they must continue to invest in delivering excellent customer service."

As the growth in industry disrupters has demonstrated, banks and credit unions can't afford to sit idly by while technology and innovation allow more businesses to enter the FI space. But nothing can replace the trust that branches bring, which can be further fostered via open concept banking and fully integrated equipment. Trust in BranchServ to help you meet your customer satisfaction and account holder loyalty objectives.