P2P payment apps, mobile deposit, digital account opening, APIs…
Since the advent of the ATM, it seems banks have been caught in a constant battle of technology one-upmanship, with community banks struggling to keep up with larger firms (and nonbanks like Amazon and Google) as they sprint ahead. For community banks, “winning” the tech battle requires building a vision of the future, not inventing something brand new.
“Community bankers hear ‘innovation’ and think they need to invent something completely new,” said Trent Fleming, principal of Trent Fleming Consulting. “But their core competency is not invention, it’s personalized service.” Truly knowing and understanding their customers and their communities is the foundation community banks have built on for nearly two centuries. With the pace of technological change increasing at an exponential rate, what knowing and understanding the customer looks like has changed as well. Fortunately, community banks don’t need to be on the bleeding edge in order to deliver quality customer service. “The tendency is to look for the next really cool product, but the next really cool product is better delivery of the customer’s financial information,” Fleming explained. “Focus on improving your customers’ access to their own information so their quality of life improves.”
To hear more from Fleming about creating a vision for your bank’s technology future, including the latest on emerging products and trends, attend the upcoming WBA Secur-I.T. Conference! Now fully virtual (it’s a tech conference, after all!), the conference will span two days and feature seven hours of presentations, networking opportunities, a vendor showroom, and more. Join your peers at the only Wisconsin technology event by and for bankers on Sept. 22-23! Visit www.wisbank.com/Secur-IT to learn more and register.
If they don't have one already, bank leadership should begin creating their vision today, but with the customer at the center. The best question to start with, according to Fleming, is Are we preparing for our next customer-base?
Bank leaders should closely examine demographic and commercial trends in their geographic footprint. In five years, what will the neighborhood around the branch look like? Will it still be retail and suburban, or will there be a shift to industrial? What’s happening with the population regarding age, race, and level of education? “It’s not just who your customers are, but what lines of business they’re in, the footprint, and what kinds of products and services they’ll need,” Fleming explained. “That helps you plan for what kind of institution you’ll be and how you’ll serve today’s and tomorrow’s customers.”
Tactics for Post-Pandemic Banking
With their strategic vision to guide them, bank leaders should build their bank’s future with the following best practices in mind:
1: Implement Fast
The biggest difference between banks with more than $15 billion in assets and those with less, according to Fleming, is the speed at which they can roll out new technology. Fortunately, community banks don’t need to develop and implement with lightning speed. “Most banks have access to what they need, they just haven’t implemented it,” said Fleming. By working with the third-party vendors they already have, many banks will find they can better leverage the tools they have available to them. “You need to aggressively embrace technology, because that’s what your customers are doing,” said Fleming.
2: Keep Momentum Going
The COVID-19 pandemic has caused massive disruption in nearly every area of life, but Fleming says the behavior changes it forced upon consumers should be encouraged if they are beneficial. “Going forward, banks should make sure they capture the value of changed customer behavior,” he said. “Slipping back into business-as-usual is the single biggest mistake banks could make.” One area ripe with opportunity for improving customer experience and bank efficiency is scheduling. “Smaller banks will innovate in offering appointment scheduling,” Fleming predicted. “Whether it’s online or in-person, scheduling driven by the customer is a huge opportunity.”
3: Fill in Gaps
In the pandemic’s wake, banks should reassess their branch strategy and where they have opportunities to meet new customer needs. “It’s important banks identify where they have gaps between what they offer and what customers want,” Fleming advised. Especially for the next generation of bank customers, face-to-face interaction isn’t the first choice. Fleming suggests cultivating more “invisible loyalty.” “A customer who only uses the bank’s remote channels can be as loyal and more profitable than a customer who you see all the time,” he explained. “The customer you see often isn’t taking advantage of your offerings.”
4: Prioritize CX
Banks should fiercely prioritize customer experience (CX). “The core of banking hasn’t changed,” Fleming said. “What will change is the quality of the delivery of information, giving customers what’s relevant for their current situation.” By knowing and delivering exactly what each customer is looking for, banks can grow satisfaction and loyalty. “The less time a customer spends successfully completing their banking business, the more satisfied and loyal they will be,” said Fleming. “Banks need to embrace and prepare for that concept.”
5: Engage Employees
To get ROI on investments in technology products, banks need to achieve high adoption and usage rates among customers. Fleming says knowledgeable, enthusiastic employees are the best way to achieve that. “Have employees use and adopt the new technology themselves, because that’s how they become knowledgeable about it,” he said. “It takes some training effort, but you’ll see customer adoption go up by a quarter to a third.” Another method is to empower an employee who shows great aptitude by naming him or her the Virtual Branch Manager—a position Fleming says shows current and potential customers that the bank isn’t looking at digital as an afterthought.
Seitz is WBA operations manager and senior writer.
By, Amber Seitz