2022 Financial Institution Trends: ‘Unbundled Banking’ Will Stick Around

In the past, customers turned solely to their bank or credit union for all financial services.

However, many individuals and small businesses are now turning to fintech payment providers, and “unbundled banking” is for services their banks don’t provide.

All kinds of consumers can now choose from a myriad of companies to serve their expansive financial needs.

One of the top financial institution trends moving forward is the move toward unbundled banking.

Let’s dive into what this means and what to expect.

What is Unbundled Banking?

In the past, banks essentially tried to offer a bundle of services. Most consumers turned to one financial institution for all their financial needs. If that institution could not meet their financial needs, they would look for an institution with a bundle to address their needs.

Unbundled banking is the notion of turning to different financial companies for different needs. This approach allows people to get specialized services that their primary bank does not offer or is limited in.

One of the biggest motivations for turning to unbundled services is mobile banking. Consumers now expect mobile banking services and digital banking. This turn toward technology is a significant reason why fintechs and other nontraditional financial service providers are competing with traditional banks.

Mobile Banking

Finance apps are on the rise. In 2019, 61 percent of banking transactions took place via mobile phones. This is a drastic increase from 52 percent in 2018, and we’re witnessing an upward trend.

Younger consumers expect convenient, comprehensive digital experiences, even when it comes to banking. Providing a digital experience is crucial for traditional banks, but mobile-first financial institutions provide an alternative for unbundled banking.

Some of the top features customers now look for include:

• The ability to transfer funds between accounts
• Paying bills
• Viewing balance information
• Depositing checks via mobile phone
• Branch and ATM locators
• Fraud notifications

Access to Investing

Another primary motivation for seeking unbundled services is investing. Even those with low- to moderate-income are more concerned about investing. In the past, investing was not as accessible to many average consumers.

For this reason, many people are now turning to online solutions. One study found that 52 percent of U.S. participants use an online investment platform. Fidelity and Robinhood are two of the most commonly used investing platforms.

Ultimately, these new digital platforms make investing in stocks and bonds more accessible to average consumers. This is a common “unbundled” service that consumers are turning to.

Slow to Switch Banking Providers

Even though consumers are looking for unbundled, alternative services, they are still unlikely to switch their banking providers. In the last decade, only half of U.S. banking consumers changed banks.

The future of banking is less of a one-bank environment and more of a conglomeration of services. Consumers are leveraging services from several financial companies while maintaining their primary bank account. In fact, 36 percent of respondents reported that they would prefer to use different companies for different financial needs.

While this is overall good news for banks, innovation is still essential. Traditional financial institutions must still focus on excellent digital services. Creating excellent mobile apps should be a primary concern for traditional banks and credit unions.

Your Digital Banking Solution

Unbundled banking is a rising trend in the financial industry, and it’s here to stay. Overall, consumers are looking for different financial providers to suit their various financial needs.

One of the most common examples is investing platforms to provide consumers of all income levels access to investing in stocks and bonds. However, mobile banking is another key component in unbranded banking and how consumers use it.

The good news is that very few consumers are switching away from their primary banking provider. Yet, this does not mean traditional financial institutions should be stagnant. On the contrary, innovation is more important than ever.

Teksetra is your digital banking solution. Our team of technology experts is here to support the technology needs of your financial institution. With over 40 years of financial technology experience, we can help your bank adjust to the key financial trends. We offer comprehensive tech solutions for financial institutions, including:

• Audiovisual and digital signage
• Project services
• Equipment leasing
• Sound masking
• IT Support
• Device maintenance and repair
• Third-party logistics and fulfillment
• And more

Learn more about Teksetra’s financial technology solutions today. Contact our team of experts today!