At NXTsoft, we’re focused on bringing in next generation technologies that financial institutions can leverage in the future.

Changing Buying Habits

 As the financial industry goes more digital, a big trend we’re seeing is a change in buying habits. We’re seeing organizations, financial institutions, banks, and credit unions really start to think outside of their traditional core banking provider relationships and looking to build out a “best of breed” or “ecosystem.” There are a number of reasons for this. In the past, it’s been really challenging for financial institutions to manage multiple vendors. The risk management that regulators have put upon banks and credit unions has made it very, very difficult. But now, with newer and newer technologies coming out, more and more organizations are looking to adopt bleeding edge, leading edge technologies that many core banking providers can’t offer. In those situations, we are seeing this improvement in integration capabilities coming from the core banking providers themselves, and then this influx of potential technology partners that allow financial institutions to leverage that integration to provide some type of new capability. So, industry terms like “best of breed” and “ecosystem” are about financial institutions bringing in new technologies to their environment that allow them to differentiate in one way or another.

Putting Consumers and Small Business Owners in Control

When we’re considering digital trends and why everything’s changing, we’ve heard a lot about the pandemic and this rush to digital, but what we really have seen is that the new technologies are giving control back to the consumer, back to that retail client, back to that small business owner. And I think that becomes critical. In the financial industry, we tend to overuse the term “customer experience.” I think everyone hears “customer experience” a lot, but what does that really mean? In my mind, it means giving control. So as financial institutions think about their own digital offerings, they need to ask: How do we provide more control to that end consumer or to that business owner to do anything that they want in any way that they want in a fairly immediate fashion?

Omni-Channel Experience: Banking on Your Terms

That brings us to our next trend, which is omni-channel experience – again, in some cases an overused term, but what we mean when we say “omni-channel” is providing the same type of experience regardless of what channel a client is banking through. That could be a branch, that could be an ATM, that can be an ITM, that could be a mobile device, that can be a computer. But how do we go ahead and provide the same type of capabilities? How do we provide the same type of customer experience regardless of how they are banking? This goes back to our first point of putting consumers and small business owners in control. And what allows for a lot of that is the work that NXTsoft is doing from an integration perspective, from allowing these new technology vendors to go ahead and access core data via real time APIs. It’s really what goes ahead and brings all of this together to allow for these digital trends to occur.

Design Will Command the Digital Banking Stage

When you take a look at digital trends, it’s not just functionality, but it’s also about design. And when we talk about design, I really think about my own personal use and what it means: What kind of apps are attractive? What kind of apps do I enjoy using? What kind of apps do I want to use versus what kind of apps do I get in and get out of as quickly as I can, because there’s nothing else for me to do there other than a single function? So when we think about design, we have to consider what the next generation of an online banking solution looks like. Regardless of if you’re accessing it from an iPad or a Microsoft Surface or an iPhone or an Android-based device, that design element becomes critical. That’s something that is not going to change. The whole design element of digital trends is going to continue to be more and more important. When you think about the design aspect, it goes in a number of flavors. Sometimes it’s color, sometimes it’s functionality. But all of us are getting more and more used to the design element that puts payments at the forefront of everything that we do.

Real-Time Payments Continue to Rise to the Top

Moving money doesn’t necessarily need to be a traditional type of payment, but it’s some type of money movement. That brings us to real-time payments. This can be your typical peer-to-peer type stuff, whether that’s PayPal, Venmo, or Zelle. It can be something like RTP or FedNow when you start to think about more small business and commercial-type use cases. It really is going to change the way we think about digital, because most of us now have moved away from using cash. Most of us have moved away from using checks. Those things aren’t going away totally, but they’ve certainly gone away. So how do we go ahead and think about utilizing real-time payments? How do we think about utilizing that digital device to go ahead and move money in an easy way, in a frictionless way, and in something that’s happening from an instant gratification perspective? Many of us are doing that today, real-time via our friends and families. We’re moving back and forth in those traditional apps. But I think what you’re going to find in the future, as we see real-time payments, real-time ECH, as we see access to FedNow becoming relevant, and as financial institutions start rolling out access to that, you’re going to start to see new use cases.

You’re going to start to see the ability for real-time payments where you’re going to scan a QR code on an invoice and move money to that vendor immediately. Paying a doctor’s bill by scanning and paying real-time, moving money directly from your bank account to that vendor – as well as utility bills and more along those lines. So again, as we think about putting consumers and small businesses in control, you’re going to see real-time payments becoming a backbone for a lot of those new initiatives. And it’s all going to be about in a frictionless environment: How do you really easily move money?

How Do You Differentiate?

If everything’s happening through your bank’s mobile app, if you’re moving money and you’re checking balances and maybe rewards, how do banks and credit unions expand the usage of that digital experience to keep their clients coming back to their digital app first? All of those ideas fall into this concept: How do you differentiate? I’ve got some banking apps where the only thing I do is log in because I have to. I’ve got other types of apps where I find myself going back to that app over and over and over again. So I think as we think about banking applications and as we think about some of the new competitors that are now offering banking services, the secret here is how do you differentiate? How do you make that offering different?

The answer is about everything I just described. How do I go ahead and use this for real-time payments? How do I use it for rewards? How do I use it to check my balance? How do I make that customer experience something special? And if banks and credit unions consider those things, that’s going to allow them to better compete not only against traditional competitors – the normal brick and mortar banks and credit unions – but also against non-traditional competitors, everyone that’s coming into this market wanting to offer the same types of services financial institutions typically would today.

I hope that gives you valuable insight into the digital and industry trends that we’re seeing in the market, looking at new partners and looking at different opportunities to bring better integration to you all.

Transcript from a November 2022 Webinar