Consumers’ banking behavior and expectations are changing–and financial institutions must evolve in order to remain relevant.

To help banks approach this critical transformation, Galileo Financial Technologies recently collaborated with Datos Insights on new consumer research to uncover the most crucial developments in consumers’ banking behaviors and expectations today, as well as those likely to occur in the very near future.

The research, which polled 2,500 consumers in the U.S., revealed several key insights into how FIs can maintain market share, defend against increasing competition from fintechs and other digital-first challengers and ensure their business doesn't get left behind as banking speeds into the future.

1. Banking is becoming fragmented

Banks traditionally have acted as one-stop shops, serving a wide range of their customers’ financial needs. But that model is changing, the survey revealed. As digitally-enabled providers present highly-relevant services at the customers’ point of need, it’s increasingly easy for customers to access purpose-specific offerings–essentially creating a bespoke suite of financial services, from deposits, to payments to budgeting and more.

This trend is particularly popular with Gen Z and younger millennials: On average, they use more than six financial tools or services. And they are using more than half of these tools outside of their primary FI. But there was also significant service fragmentation among older millennials and Gen X respondents, with 74 and 57 percent, respectively, reporting using four or more financial services. On average, Gen Z and Millennials use more than six financial tools or services. And they are using more than half of these tools outside of their primary FI.

Notably, convenience ranked highly as a driver of this fragmentation–indicating that banks that want to maintain a central role in customers’ financial lives must position their offerings at the point of need by presenting services in a highly contextual, relevant way, leveraging data to create such compelling offerings.

2. Data-driven personalization

To slow or stem the adoption of competitive products, banks must insert themselves into customers’ evolving needs, which requires a deep understanding of just what those needs are. The good news for banks is that they already have the data on hand that’s needed to derive these critical insights.

However, Galileo Consumer Banking Report by Datos Insights found that some banks are failing to capitalize on this advantage, with 37 percent of respondents saying they didn’t feel offers were tailored to their financial situation. This despite the fact that customers are willing to give more data for something in return; 83% of consumers are willing to share their data to create a more personalized experience, an Accenture study found.

For banks, the importance of data-driven personalization means it’s crucial to ensure data is accessible, and not siloed across many different systems. In turn, that requires modernizing core banking technology platforms to ensure services can be deployed across multiple channels flexibly and nimbly–creating compelling experiences that serve as a competitive differentiator and drive meaningful growth.

3. Intelligent automated experiences

The survey revealed that consumers expect to be able to interact with their bank quickly, seamlessly and in a way that’s personalized to their needs or issues. What consumers don’t want to do is spend time on the phone speaking with a live agent; 60 percent of respondents said they wanted to interact with their FI without human interaction. Further, 21 percent of consumers already have conducted a financial activity using a virtual assistant device, and 42 percent of younger millennials have done so.

Given this sentiment, banks must be able to provide intelligent digital interactions and customer experiences via mobile devices–and that means using automated virtual assistants. However, most banks are still using legacy chatbots that can’t anticipate or solve complex needs, hindering the user experience. FIs must improve automation by levaraging artificial intelligence to enable truly smart, automated virtual assistants that offer compelling experiences and deepen customer relationships.

Click here to access the study.

Contact us to learn how Galileo can help your FI prepare for banking’s evolution.