Modern transactional accounts: where bank meets life


My previous blog traced the rise and fall of checking accounts. This blog examines how smart banks can reuse them for the modern age as transactional accounts. It requires more than a name change – it takes an investment in technology to elevate this account’s role as a crucial and integral customer touchpoint. Let’s see how technology can help position transactional accounts at the intersection of banking and life.

From banking products to customer experiences

As challengers often prove, harnessing the power of modern technology can make banking more exciting and customer-centric. Transactional accounts allow customers to optimize their use of cash. And, with open banking, customers are no longer tied to a single bank but can choose a portfolio of banks and accounts to meet their specific needs and aspirations. The key message is that in the banking world we have entered a new era of customer empowerment. Banks need to do more than offer an attractive interest rate or low or no fees to attract and retain customers. They must wake up to a new dawn where traditional banking products are supplanted by the customer experience.

New technology, new opportunities

In the digital age it is safe to say that One Size Fits None. Customers expect banks to compete on more than price. From a modern, digital perspective, transactional accounts are smart, customer-centric and useful. They use automation and artificial intelligence (AI) to provide clients with timely and useful advice, such as tricking users into transferring excess funds to a higher yielding savings account or offering automatic funding. convenient when customers start shopping. Such value-added functionality helps increase customer engagement and loyalty – and, with the right technology and the right strategy, banks can build much deeper and lasting customer relationships.

Cognitive technologies are becoming widespread in the banking sector. Most banks offer chatbots as their first line of customer support. Powered by AI, including machine learning and natural language processors, these virtual assistants often use speech and text recognition to answer routine questions. While useful in themselves, chatbots offer a simple glimpse into how technology can redefine and enrich the customer experience.

Forward-looking banks are harnessing data science and behavioral analytics to learn more about each customer’s spending and saving habits and to deliver tailored, real-time financial advice. Some banks go even further, for example by bundling accounts with personalized portfolios to create personalized wealth management capabilities for their clients.

Innovate, innovate, innovate!

As banks seize the opportunity to get closer to their customers, Big Techs and fintechs have an important role to play in modernizing and transforming the role of transactional accounts. Under this arrangement, these accounts are effectively “stored value” entities within the larger banking ecosystem. This is the essence of Google Plex, which a number of banks are exploring as a modernization option.

Innovation is essential and transformative. Recent innovations launched by various banks include:

  • Low-cost branchless bank accounts with no ATM fees, insufficient fund fees, free checkbooks and digital apps
  • Free chequing accounts designed for freelancers, gig workers and solo professionals with tools that simplify and automate tax savings; prepayment options for account holders with direct deposit; “emergency buckets” that allow savings transfers; real-time alerts; and categorization of expenses
  • Free business checking accounts for startups with free business banking services; no minimum or maximum deposit; and integrations with third-party applications
  • Checking out with cash back rewards for a plethora of lifestyle favorites
  • Accounts without minimum of any kind; reimbursements of all third-party payment charges (without exclusion); and reduced overdraft fees

The possibilities are truly endless. The bottom line is that with a modern technology stack and strategy, banks can design and launch distinctive accounts quickly and at the right price, creating profitable offers that will attract and retain satisfied customers (or even ” enchanted ”) for your brand.

Focus on technology

To fully participate in the financial ecosystem, banks must embrace modern technology – as well as a cultural mindset – that enables collaboration and integration. Successful open banking requires open, flexible and modular technology – application program interfaces (APIs) and event architecture help make these things possible. In addition, cutting-edge technology and APIs also enable a bank to become data-driven and deliver unique, real-time customer experiences. Banks don’t have to create all of these things from scratch, that’s the beauty of the best ecosystems.

Go forward

A wave of change is sweeping the global banking industry. Bankers can’t stop the tide, but they can learn to surf. Banking has become a tech company, but that’s probably not a core competency of most financial institutions, and it’s certainly a diversion from the core business of banking. Technology partners can fill this gap; finding the right partner can play a critical role in helping banks thrive in a growing financial ecosystem.

As I said before, the new era of competition is also one of collaboration. Together we can, and will, move forward.

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