The financial exchange between an online consumer and a retailer depends on banks. However, the experience of that transaction occurs on e-commerce sites, mobile apps, or even on social media platforms.
Consumers have become accustomed to this process and the seamlessness of these experiences. They’ve grown to expect the same speed, convenience, and personalisation from their banks as they do from their favourite e-commerce sites.
Moreover, with social platforms like Facebook and Instagram having entered the game, customers have also become accustomed to the rapidly blurring boundaries between browsing and shopping.
To stay competitive, banks need to deliver experiences that match these elevated expectations and focus on experience- and discovery-based interactions.
The best way of doing that is to embrace the growing integration between banking and commerce, a road already being paved by disruptors like fintech companies and open banking initiatives:
- Fintech companies have challenged banks to enhance their digital offering through innovative and user-friendly financial solutions.
- Open banking initiatives have enabled customers to access a wider range of financial products and services from different providers through a single platform.
The opportunity
The rise of financial disruptors isn’t just a trend, it’s a wake-up call for banks to innovate and adapt. The good news, however, is that the benefits of investing in innovation can be huge.
By integrating commerce into their platforms, banks can provide a more seamless and convenient experience for customers: Users can manage finances, shop, redeem rewards, and access various financial products and services—all within a single ecosystem.
By creating a one-stop-shop for a variety of products and services banks can turn their platforms into places where customers want to spend more time. In turn, shifting focus from creating transactional utility to creating an engaging experience will lead to increased customer satisfaction and retention.
The financial benefits are also substantial. Participating in e-commerce transactions, offering loyalty programs, and facilitating transactions between customers and merchants all enable banks to tap into new revenue streams.
In turn, the wealth of data generated through an integrated experience like this provides invaluable insights into customer behaviour, helping banks craft more personalised financial products and targeted marketing strategies to drive engagement even further.
Unlocking success
If we think about the integration of e-commerce within banking as a spectrum, the most significant investment in that integration that banks could make would be to build their own e-commerce marketplace within their existing platform.
While this would streamline the behind-the-scenes process of online transactions and eliminate the need for third-party processors, this type of investment represents a massive leap forward for traditional banks. The risk vs. reward factor will likely remain too high for banks to realistically consider in the short term.
Fortunately, there are other types of investments that fall along the middle of the spectrum that are more realistic for banks to explore as a worthwhile experiment.
- Instead of integrating a full-scale marketplace into their platform, for example, banks could create a platform for their customers to redeem their credit card points and loyalty rewards. This simplified marketplace encourages engagement while enhancing the value of existing banking platforms—driving increased spending and loyalty.
- Banks could also double down on consolidating their financial products and evolving their platforms into cohesive digital ecosystems. This would create a centralised place for customers to manage everything from savings accounts and credit cards, to investment and insurance—simplifying financial management while positioning banks as trusted advisors.
- Personalisation poses perhaps the most low-risk/high-reward opportunity of all. By leveraging customer data and insights, banks can offer highly personalized financial advice, portfolio management suggestions, and tailored product recommendations—improving customer relationships in a big way while creating new avenues for cross-selling.
The future of banking
The future of banking is here—and it’s all about the seamless, integrated experiences that make life a little easier and a lot more connected. To this end, it’s time to stop looking at banking and commerce as separate entities.
By meeting the growing integration of banking and e-commerce head-on, banks can adapt to the evolving digital landscape, meet modern customer needs, and secure their place in an increasingly competitive industry.