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Banking’s Netflix Problem
On April 19, Netflix reported its first loss in subscribers — 200,000 in the first quarter, with 2 million projected for the second — resulting in a steep decline in its stock price, as well as layoffs and budget cuts. Why the drop? Although the company blames consumers sharing passwords with each other, the legacy streamer also faces increased competition such as HBO Max and Disney Plus. That also creates more choice for the 85% of U.S. households that use a streaming service, according to the U.K. brand consulting firm Kantar. The average household subscribes to 4.7 of them.
Our financial lives are just as complicated — and there’s a lot more at stake when it comes to managing our money. A 2021 survey conducted by Plaid found that 88% of Americans use digital services to help manage their money, representing a 30-point increase from 2020. Americans use a lot of financial apps, and the majority want their bank to connect to these providers. Baby boomers use an average of 2.6 of these apps, which include digital banking and lending, payments, investments, budgeting and financial management. Gen Z consumers average 4.6 financial apps.
“Banks can be material to simplifying the complexity that’s causing everybody to struggle and not have clarity on their financial picture,” said Lee Wetherington, senior director of corporate strategy at the core provider Jack Henry & Associates. He described this fractured competitive landscape as “financial fragmentation,” which formed the focus of his presentation at Experience FinXTech, a tech-focused event that took place May 5 and 6 in Austin, Texas.
During the event, Wetherington revealed results from a new Jack Henry survey finding that more than 90% of community financial institutions plan to embed fintech — integrating innovative, third-party products and services into banks’ own product offerings and processes — over the next two years.
Successful banks will figure out how to make their app the central hub for their customers, he said in an interview conducted in advance of the conference. “This is where I see the opportunity for community financial institutions to lever open banking rails to bring [those relationships] back home.”
For more, check out the longer article on BankDirector.com.
• Emily McCormick, vice president of research at Bank Director
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