Consumer Trends Changing Banking

Lauren was five months pregnant. For the past few months, she and her husband had been making plans to welcome their new child. As she drove her trusty 2016 Toyota Yaris to run errands, she began thinking about getting around with her child. She looked in the rear-view mirror at the back seat when she suddenly realized how cramped it would be with a car seat.

When she arrived at the store, Lauren texted her husband, Mark, I think we need to look into getting an SUV. Within seconds she received a response from Mark, I’m on it. Lauren smiled knowing that Mark loved to research big purchases like a car.

Mark googled “Best performing inexpensive SUVs 2022.” Under the sponsored results was a link for the 2022 Toyota RAV4. Mark clicked on the link. The doorbell rang. It was an Amazon order. As he walked back to his desk, he thought to himself, Why can’t buying a car be as easy as getting an Amazon order? Shortly after he sat back down, his phone pinged. Lauren sent a text that said, That was quick. You know I love my Toyota. Mark was confused. He was about to respond when he saw an email to him and Lauren with the subject “In the market for a 2022 Toyota RAV4?” from their local Toyota dealer.

The email talked about all the features of the RAV4. In addition, Toyota offered a pre-approved loan specific to him and Lauren at rates below market. A couple of days later, their new RAV4 was delivered to their home, having done all the ‘paperwork’ on their mobile phones directly with Toyota. Mark’s wish of getting a car as easy as ordering something from Amazon became a reality.

This story exemplifies three big consumer trends impacting financial services firms. The first one is personalization, providing the right offer to the right customer at the right time. It’s as if Lauren and Mark’s text conversation also included Toyota. The second trend is embedded finance. Whatever triggered the personalization was further enabled by Toyota’s capability to pre-approve and offer a loan, cutting out banks or credit unions before they even knew Mark and Lauren might be in the market for a loan provider. Finally, digital ubiquity facilitated the whole chain of events.

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