News and Articles
April 30, 2022
There are new challenges in the banking industry that emerge every year. Changes in the economy, new customer needs, and evolving regulations are just a few of the factors that often impact financial institutions’ operations. Still, banks are a necessity, and they must cultivate the resiliency needed to continue meeting customers’ needs. The right strategies can help financial institutions maintain profits even in the face of obstacles. Read on if you’re wondering how to move past challenges in the banking industry and provide your clients with the right financial institutions insurance products.
More Competition on the Market
One of the biggest challenges facing banks is a recent flood of competition into the market. Much of this competition has come from FinTech companies — a portmanteau of “financial” and “technology.” Many consumers have been lured by promises of fee-free overdraft, impressive tech features, and accessible mobile applications. Still, crises like the Chime outage of 2019 prove that FinTech competitors often can’t offer the level of reliability that a traditional bank can. Rather than cave to the competition, banks should emphasize their longstanding history in the financial market and remind customers of the protections that a standard bank account provides.
Major Shifts in the Culture
The emergence of FinTech competitors isn’t the only change facing financial institutions. Many banks are also contending with the major cultural shift that’s unfolding in real-time. This shift has placed a premium on new technologies such as banking that’s powered by artificial intelligence (AI). Many consumers are also invested in the emergence of wearable tech that links to their bank accounts. These innovations may appear to be a threat to established banks, but on the contrary, they offer an opportunity to invest in innovation. Banks can offer the best of both worlds by meeting new customer needs and offering reliable service.
More Regulatory Compliance Laws
One of the biggest issues facing banks — and affecting financial institutions’ insurance rates — is the increase in regulatory compliance laws. This legislation is a necessary response to many unethical practices maintained by banks that have been revealed in recent years. For financial institutions that maintain compliant and ethical standards, though, these laws are simply more red tape to deal with daily. Banks should keep a compliance expert on staff to ensure all practices are legally sound.
Higher Expectations from Customers
Of all the challenges currently facing banks, higher consumer expectations is one of the most stressful. It’s difficult to predict exactly what customers want or how trends will shift in coming years. Despite this uncertainty, though, financial institutions can stay ahead of the curve by simply listening to their customers, actively soliciting their feedback, and implementing it mindfully. ◼
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