By Tina Giorgio
Last month Google unveiled its new Google Pay app—complete with a DDA-like account attached. Heralded as a “smart bank account” in a mobile-first environment, this new feature, called Plex, stems from the tech giant’s partnership with 11 financial institutions nationwide.
This latest effort by Google is part of a trend of non-bank tech companies wading into payments territory. (see sidebar)
But, in most cases, these players aren’t interested in payments from a financial services business standpoint. It’s all about the data. Experts valued the global big data technology market at $41.33 billion in 2019, with nearly 45 percent of that market stemming from North American activity. Projections take the market to $116.07 billion by 2027, fueled in large part by the growing use of artificial intelligence, machine learning, and data analytics.
As the fight for data dominance with big tech wages on, bank accounts and payments are unfortunately being eyed as a cave of riches, becoming a prime target for anyone seeking more insights into consumer and business behaviors.
The Community Bank Play
While some see data as the treasure trove, community banks will continue to have a strategic advantage in the marketplace. It all comes down to having the high-tech, high touch services that consumers demand. Because they are America’s most trusted lenders and have a longstanding reputation as stewards of their customers’ financial data, community banks will need to leverage that position and to strengthen their customer relationships. Specifically, community banks should:
- Have a firm payments strategy in place. The best defense is a good offense. Addressing the competitive environment head-on puts your community bank in a strategic position to advance. ICBA Bancard’s Digital Payments Strategy Tools can support you in firming up your plans.
- Look for trusted partners to up your payments game. BigTech draws in businesses and consumers through its simplicity and ease of use. Community banks can partner with fintechs to create that same seamless customer experience. Consider some of the companies launching from ICBA’s ThinkTECH Accelerator and what they can offer for your business.
- Focus on the safety and security of bank payments. When it comes to their data, consumers trust banks above all others. Continue to emphasize your safety and security protocols and showcase your team’s expertise in finance matters as a point of distinction.
- Emphasize your community impact. The pandemic has brought communities together and galvanized “buy local” movements nationwide. In fact, 80 percent of consumers feel more connected to their communities, and another 88 percent expect these connections to stay intact long after the virus is contained. Your community bank’s actions with PPP loans put you in an excellent position to demonstrate your commitment to your communities; continue to leverage your community-centric mission in your outreach.
While community banks still have a leg up on the competition, the window of opportunity is becoming smaller due to increased competition. This BigTech trend will advance and accelerate, so community banks need to factor it into their near-term plans or risk being disintermediated in the long-term. The BigTech threat is real, but community banks are in the power play position; to remain at the forefront of their customer’s financial lives, community banks must continue to leverage that position of strength.
Tina Giorgio is ICBA Bancard president and CEO.