‘Financial Harmony’ might just be the ticket for survival for regional banks in a digitalizing, Covid-19-ridden world. This is according to a new report from global innovation consultancy R/GA.
Financial Harmony is a “new value proposition” focused on helping banking customers balance their current needs with their future plans, while staying true to individual values.
“Net worth and bank balances have long been the markers of financial success, but Financial Harmony is emerging as a modern, individually-defined measure. It’s also a better indicator of quality of life because it’s unique to the personal values, needs, context, and circumstances of any given person,” explained Saneel Radia, chief innovation officer at R/GA.
According to a new R/GA study, Financial Harmony is right up the street for regional banks in the US, as they toe the line between their legacy differentiators and the rapid pace of the modern market. Once the cornerstone of the US financial landscape, regional banks have always prided themselves on the human connection that they provide.
Today, these banks find themselves struggling to compete in the digital banking age. No doubt, the scale and resources available to national and global banks allowed them to invest rapidly in the latest technology. Nearly every major bank now has sophisticated digital offerings, while regional banks are pushing to keep up. With the arrival of Covid-19 and the lockdown paradigm, a digital offering is worth its weight in gold.
“As regional banks react to this environment by investing in digital products, they face an uphill battle against national and digital counterparts who possess inherent advantages like global scale or niche product strategies,” stated the R/GA report.
That being said, even the most digitalized of banks is yet to arrive at the right formula. Most leverage their digital tools for convenience, which is undoubtedly a necessity in today’s market, but fails to give any single bank the edge in the market. Experts have long suggested that the wide spread of digital tools has homogenized the banking system, cutting out unique value propositions. Even regional banks are at risk of losing their legacy in customer service at the behest of convenience.
What consumers want today is a digital offering that can also cater to highly personalized preferences and requirements. This is where regional banks have the opportunity to thrive, given that values of personalized customer care are deeply rooted in their legacy. In fact, many individuals who choose regional banks over national banks do so for their human connection.
Regional banks can use this legacy to gain the edge over their national or tech-based competitors. “In a saturated market where digital innovations are table stakes, regional banks have a unique strength: human connection. This is their opportunity to lead toward a more human future of banking,” explained Radia.
Financial Harmony lies at the center of this ambition. “Live in the present while preparing for the future,” is the foundational principle of Financial Harmony. From a practical perspective, this means facilities for easy transactions combined with advice to make smarter decisions. Digital tools will offer invaluable infrastructure in this scenario.
Instilled in these digital tools, however, are principles of convenience, trust, security, support, respect, and shared values. According to R/GA, consumers across the US believe that regional banks far outperform their competitors when it comes to each of these principles. Therein lies the competitive advantage.
Results are already showing. Financial Harmony principles not only constitute a major reason for switching to regional banks from other competitors, but consumers also report being more satisfied with their Financial Harmony after making the switch. To consolidate this position, regional banks need to further develop their help & support systems, pay more attention to consumer needs, and demonstrate transparency and honesty – all while developing the underlying infrastructure.
“This can be a new golden age for those willing to examine their purpose and create offerings that attract like-minded customers who may be outside the reach of their physical footprints,” concluded Philip Rackin, VP of innovation consulting at R/GA Business Transformation.