Connie Davis and her cofounder Kelli Bain created Kairos Digital Commerce Consulting because they believed that banks and credit unions were missing the forest for the trees. These institutions had compelling data on customers, but they often get stuck within their own datasets, missing the larger trends going on across the fintech and finance space.
As a consultant, Davis works to leverage third-party data to help bring these institutions into the new reality of post-Covid finance. “You almost have to have a pre-pandemic view of your customer and a post-pandemic view,” she told us when we spoke last week.
We called Davis to better understand how the Great Resignation and the rise of the investment app have changed the landscape for community banks and credit unions. We wanted to know what new opportunities are available to institutions willing to seize the moment.
I think it's going beyond investment apps. The pandemic has created new behavior and new expectations and perspectives around money management. Prior to the pandemic, consumers at large had established banking behaviors. When movement and access aren’t restricted, you kind of deal with friction points, and pain points take a lower priority. But in a situation where you're not able to move about anymore, it just exacerbates pain points. Lockdown opened many customers up to exploring different brands, different services where they experienced, in some cases, more friction, but in some cases, streamlined processes that then became the building blocks for new loyalty. As they had a lot of time on their hands, they started exploring.
So, look at this whole holistic view of what somebody is doing when they're locked in their home: exploring new brands, opening to new ideas, and trying to be resourceful. That started what I hope will not be an irreversible erosion of brand. But I'm super concerned about that.
I'm also very aware of behaviors that the pandemic exacerbated on the financial wellness side. We saw lots of people without the right types of banking products that were unable to get stimulus, didn't have access to branches or to financial services because of where they lived, and didn't have the right products to extend them credit through COVID because of their credit score. So, I think that the access or possibly exclusion to financial products and services could also deter them from the bank brands that they might have been looking at before the lockdowns happen.
And the final realm that led to a loss of capital is crypto. People had lots of time to explore and get educated. That likely spurred additional intellectual curiosity and new questions like: What else can I do to earn money online? What kind of services are out there to serve me? I'm trying to create other streams of income to secure my family — is my bank able to help me do that? So, it's a combination of all of those things that’s led to capital flight, to be perfectly honest.
Well, at Kairos, we focus a great deal on digital transformation and empowering that by getting beyond the walls of your own data. Banks and credit unions are swirling in their own customer data, in their own product and application data, and in their own staff view of the data and their processes and procedures. There's a lot of noise out there to just run your business, and a lot of times our heads down just doing that. But I think banks and credit unions have to look up. They have to get out and look at the world beyond the banking products and services that they offer. They have to try to get to a hyper-personalized level of understanding of their customer, so that they can not only help them with products and services that might have been exacerbated during that time of need in the pandemic, but also get to know them as they are now with the new behaviors. At Kairos, we talk about the innovative power of third-party data and what increased customer insight can do to help banks and credit unions get to know their customers better and bring them meaningful products and services at the right time, and through the channels that customers expect.
It's a question we ponder a lot of Kairos. Kelli and I have three main ecosystems that we’ve focused on — they’re where we believe the future of banking is going.
The first is crypto: do you know who your cryptocurrency-friendly customers are? Who's interested? Who's in the market looking at crypto, doing that research, and looking for those higher yield savings products?
The second area is: how to best serve customers who are passionate about certain political or social ideas, like climate and the planet. There are sustainable products out there that people are interested in like the minimalistic movement. There's the FIRE movement. For each of those movements, where are your banking products to serve that specific customer? Money is at the center of everything in someone’s life; it's an amplifier for whatever else I'm trying to do as a human being. To give one example: there are sustainable products where you're going to need higher-ticket lending but that are not quite a home loan — whether it's a battery system for your car or solar panels. Right now, there are no solar loans other than predatory ones where interest rates are high. So, we really are encouraging banks and credit unions to think about ways to help enable consumers with those types of sustainable products.
The third area where these institutions are missing the boat is serving customers with higher risk profiles. They're missing the boat on financial wellness, and the products and the types of loans that truly support people. There is absolute proof that there is a poverty premium and I think there's work and opportunity for banks and credit unions to do something different in that realm.
Entrepreneurs, small-business owners, side hustlers — those types of customers need special attention. I saw that firsthand as a business owner. The bank or credit union could be getting out in that community to see what kind of technology that the small business owners and gig workers are embracing. That's a place to embed finance. That's a place to embed lending ecosystems. Don't wait for them to come in with a business plan, and ask for a loan — meet them where they are when they're first starting out. Often teams attend fintech accelerators and extend an effort to embrace innovation labs and tech hubs to bring new products and services to the customer base. Why not go out and meet them in the community? Why not hold workshops and brainstorming sessions with your Business customers?
Those are things that might allow banks and credit unions to uncover patterns and trends. A lot of them still do community lending programs and alliances with car dealerships. Why not other types of businesses? So, that's where I would say some innovation could come from, on top of all the other themes that we are already mentioned.
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