Google is preparing to launch a checking account that is backed by Citigroup and a Stanford University credit union. What does this mean for traditional banking?
Novantas believes this development is another shot across the bow for regional banks that are already struggling to attract new customers as they compete with the power of national brands and the whiz-bang appeal of new entrants. While it may take years for Google to build market share, consumers are increasingly attracted to big-name tech companies for their financial services. Indeed, 60% of consumers who are actively shopping for a new checking account or are likely to switch said they would be likely to open one that was offered by a tech company, according to Novantas research.
There is no doubt that the lines between technology and banking will continue to blur in 2020. Apple’s move into credit cards, the rise of digital checking accounts from non-banks and Facebook’s new payments tool make it increasingly clear that banks are losing their traditional hold on payment systems.
While we don’t know if any of these new ventures will ultimately succeed, Pandora’s box is now open. Regional banks must respond. There are a number of levers to pull:
- Build a targeted and distinctive (local/segment) brand
- Partner with fintechs to capitalize on their digital experience and distribution
- Deepen the loyalty of cash-management customers by offering more advice and ancillary services
Such strategies will be critical in an increasingly-crowded field of competitors.