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Bringing Call Centers into the Future

FIPCO partners with interface.ai

In this current world, customer connection comes at a premium. The pandemic changed many things and shifted customer behavior. Now customers who may have previously stopped by a branch to ask a question are seeking service through phone more and more. How can financial institutions manage the ever-increasing number of calls while still providing high-quality service?

FIPCO is proud to announce a new partnership with interface.ai. interface.ai’s artificial intelligence (AI)-Powered Phone Banking solves many of the problems faced by traditional call center, elevating the entire call center experience. The AI-Powered Phone Banking automates more than 60% of the financial institution’s call center calls using the industry’s first neural voice-powered AI assistant.

“We are thrilled to be able to partner with interface.ai to offer this world-class product to our customers,” said Pam Kelly, president of FIPCO. “We understand the need for effective service for everyone who calls an institution, while making sure call center staff are not overwhelmed and customers aren’t stuck waiting for help in a queue.”

The AI-Powered Phone Banking reduces call wait times, while increasing productivity and engagement. FIPCO and interface.ai will be hosting informational webinars on November 9 and 16 to demonstrate to capabilities of this solution.

To learn more about this solution and the upcoming demos, contact FIPCO Sales at fipcosales@fipco.com or 1-800-722-3498, option 5.

Upcoming Informational Webinars:

Date: November 9, 2021
Time: 12:30 PM – 1:30 PM CT

Date: November 16, 2021
Time: 11:30 AM – 12:30 PM CT

November 9, 2021/by Cassandra Krause
https://www.wisbank.com/wp-content/uploads/2021/09/Untitled-3_Blue.jpg 972 1920 Cassandra Krause https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Cassandra Krause2021-11-09 14:15:532021-11-09 14:39:53Bringing Call Centers into the Future
Happy young adults holding speech bubbles with social media icons
News

Bankers Working To Win Gen Z

By Paul Gores

Winning the next generation of customers is always a goal of banks, but attracting Generation Z — today’s 24 year olds and younger — needs a thoroughly modern and comprehensive approach, bankers and experts say.

Members of Gen Z have had a smartphone or computer at their fingertips since childhood. That has created familiarity with technology that some believe gives non-traditional financial providers like fintechs a leg up on meeting teens and young adults digitally and getting first crack at offering them services.

Gen Zers constantly are absorbing what they see and hear on digital platforms, using apps and reading online peer customer reviews and “influencer” endorsements to figure out which financial provider might be best for them, according to those familiar with the new generation’s traits.

“My college students do not have checkbooks,” said Christine Whelan, a consumer science professor in the School of Human Ecology at the University of Wisconsin-Madison. “We still use that quaint anachronism of ‘balancing your checkbook.’ They don’t even know where that phrase came from. This is the generation of Venmo, and PayPal, and Zelle, and all sorts of online banking transfers when it comes to keeping their money and keeping track of their money.”

Training and development specialist Jennifer Pieper, of JPieper Consulting in metro Milwaukee, said banks need to be where Gen Z lives — on social media.

“Banks cannot rely on the same old marketing strategies. They should engage their Gen Z clients in online focus groups and ask them directly where they are getting information as it relates to financial services,” Pieper said. “Once they have that data, leveraging that information quickly will be a key to success.”

A report by the online research firm Survey Monkey showed that while 57% of Gen Zers visit Facebook, the most popular social media platforms among the age group are YouTube, Instagram, Snapchat, and TikTok.

“Winning Gen Z as a client is one of the biggest challenges facing traditional banks today,” said Pieper, herself a former bank executive.

Bank consultant Preston Afrank, a Lincoln, Neb.-based vice president with the firm Haberfeld, said Gen Zers are more comfortable with technology than any previous generation, including millennials. But he thinks that as Gen Zers age, they will want more than fintech apps.

“As Gen Z matures, as they get out of their college years, start entering the workforce and their peak earning years and borrowing years, I think they are going to realize that their financial lives are much more complex than most of what the fintechs have to offer,” Afrank said.

But banks need to reach out to Gen Z now to set the stage for deeper banking relationships, and be ready to talk with them in terms they understand when they do come in, he said.

“The best way to reach them is through an omnichannel approach,” Afrank said.

While of course that includes social media efforts, one study showed that direct mail shouldn’t be overlooked because Gen Zers actually are inclined to read snail mail, he said.

Whatever type of outreach occurs, banks — especially community banks — need to stress their technology is as good as their competitors’, and that they have branches that are convenient to where they live and work.

“That’s how you’re going to go about capturing that younger generation,” Afrank said.

UW’s Whelan said she thinks banks in general have been doing a good job of adapting to the preferences of Gen Z.

“Banks were definitely onto this,” she said.

Among banks that have stressed targeting the next generation is Horicon Bank. Early this year, the bank announced it had acquired the fintech Monotto, bringing on not only its RoboSave technology — an automated savings tool that uses artificial intelligence to identify how much money customers can save daily and then moves that amount into a savings account every few days — but also Monotto’s founder, Christian Ruppe.

At 26 years old, Ruppe, who is a Horicon Bank vice president and digital banking officer, isn’t very far removed from Gen Z himself and is familiar with that age group’s needs and wishes.

He said fintechs have been able to reach Gen Z because they have technology that makes banking simple, but that’s not all.

“They also know how to target them directly,” Ruppe said

Banks need to find out — using search data, online community reviews and other tech sources — what Gen Z is looking for, and then “get in front of them to show them that’s what we have.”

While many Gen Zers get their information from TikTok, fintechs are better represented on that social media platform than banks, he said.

One thing banks should know about Gen Zers is that they want the ability to chat digitally with a banker on their website rather than having to make a phone call. And Gen Zers even would like the choice to begin a business loan application online rather than live.

Ruppe said, for example, if a 23 year old who is trying to start a business goes to a community bank’s website and it says he or she must contact a banker to start the process, that’s a turnoff.

“I want to have the opportunity to speak to someone, but I don’t want to have to speak with someone,” Ruppe explained.

Oconomowoc-based Bank Five Nine begins pursuing the next generation of customers early through its Good Savers program.

The program is designed for kids and early teen years, said Jeff McCarthy, vice president and marketing director. The bank rewards them for making deposits into a savings account.

“They make 20 deposits of $5 or more and they earn a $5 gift card. So, trying to reinforce with those younger customers good saving habits,” McCarthy said. “And then as they get a little older, we have a student checking program and we partnered with lots of the high schools on what we call our Mascot Banking program.”

In that program, participants receive a debit card with their high school’s logo on it. By meeting certain criteria, they receive $150 from the bank, and in addition, the bank donates $150 to the school’s booster club.

“That’s the way we’re reaching those Gen Zers while they’re in their high school years,” McCarthy said.

McCarthy said Bank Five Nine also has “a very robust social media program” to get its name and products in front of Gen Z.

“We really believe that is a great way to reach this segment. Because social media is where they are,” McCarthy said. “It’s the entertainment and the news they’re consuming, so we need to be where they are, communicating with them in a language they’re comfortable with.”

Pieper suggested banks use information on the habits and preferences of Gen Zers to partner with them in what they feel is important.

“Banks must think outside the box to earn Gen Z’s relationships.  They should develop checking accounts focused on issues that Gen Z identifies with, including social justice, equity, and the environment,” Pieper said.

For example, she said, Aspiration, a fintech founded in 2015, allows its nearly one million customers to calculate their carbon impact off their debit card gas purchases.

“A bank’s ability to profile clients is more important than ever, and they must invest in their employees to ensure they have the skills necessary to connect with this savvy generation,” Pieper said.

What are some other things about Gen Z that banks should know?

  • They pay attention to social media “influencers” and online reviews. Influencers are people on social media platforms like Instagram who typically have a large audience that values their opinions on products or services. Often they are celebrities. “If you can get someone like that to say that your product is good, amazingly enough, more people buy it,” Whelan said.
  • They have seen major worldwide economic trouble twice already in their short lives — the Great Recession and the COVID pandemic economic downturn. “They’ve had a pretty rough go of it in terms of the life events that have happened around us,” Whelan said, adding that it might make them more wary of debt.
  • Branches are unfamiliar territory for them. “Gen Z has never had to walk into a branch to do their banking,” said Pieper. “Banks’ mobile banking platform should be competitive and user friendly.  To do this, continued pressure must be applied on core providers, FIS, Fiserv, etc., to ensure they keep pace with the rapidly evolving fintechs.”  When Gen Z does come to the bank, she said, they should feel like the bank is ready and able to assist them with their needs, even when they’re not quite sure what to ask.  “Bankers that are trained to empathize and then educate will be the winners in an ever-evolving landscape,” Pieper said.

Given the affinity of Gen Z and millennials for financial technology, the outlook for physical bank branches could seem bleak. But bankers and experts don’t see it that way, as long as banks adjust with the times.

“Gen Z is not going to be visiting branches to deposit a check or make a transfer. They will use an app,” Afrank said. “But when they do have an issue and come through your front doors, you’ve got to be prepared to service them. They are coming because they need some expert advice. Bankers need to be able to solve customers’ problems.”

McCarthy doesn’t see branches going away anytime soon. That’s because when things are too complex to be handled via an app or website, customers want a place to go get help and answers.

“Maybe that will change down the road, depending on what technology does,” he said. “But for now that brick-and-mortar location is still really, really important as people try to navigate complicated financial issues.”

Besides, he said, from a marketing perspective, branches are great tools.

“It reminds people that you’re there,” McCarthy said. “It gives people a sense of security that, OK, that’s where your money is. They like to be able to see it. It’s not out in the ether.”

Said Ruppe: “I don’t think that they’re doomed at all. Granted, I do think we’re not going to do as much in branches, obviously. We can do so much more online. I know that our branches at Horicon Bank, we constantly have customers. And sure, right now, it kind of skews older. But the second I need a check or something, I’m going in.”

Pieper said brick-and-mortar branches will adapt. They will be smaller, have more technology and be staffed by bankers who will be able to answer a variety of questions, ranging from how to reset a password to how to apply for a mortgage, she said.

“Branches will turn into answer centers that allow clients to either start a loan application, open an account, or solve a problem,” Pieper said.  “Additionally, they will be places where bank clients can get advice and counsel on how to improve their financial situation.”

September 7, 2021/by Cassandra Krause
https://www.wisbank.com/wp-content/uploads/2021/09/bigstock-Happy-young-adults-holding-tho-239043130-scaled.jpg 1719 2560 Cassandra Krause https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Cassandra Krause2021-09-07 17:42:312021-10-12 17:45:59Bankers Working To Win Gen Z
News

Net Interest Margin Challenges and Solutions

Faced with low interest rates, an abundance of deposits, and a pandemic-induced slowdown in business lending, many Wisconsin banks are wrestling with net interest margin (NIM) compression.

While NIM compression is a long-term trend in banking, the effect of the still-spreading novel coronavirus on the economy has heightened concern over net interest margin, which essentially is the difference between what banks pay for deposits and earn on loans and investments.

At a time when many banks have plenty of money to lend, the appetite for borrowing by good businesses is diminished and there’s not a lot of room for banks to further trim how much they pay depositors.

“Suddenly you’ve got less loan demand,” said Jim Reber, president and chief executive of ICBA Securities. “You’ve got less that you can charge on your loans. The investments that banks own have gone down in yield as well because the Fed has purchased somewhere around $3 trillion worth of investments in 2020. And then, finally, banks have just been flooded with liquidity.”

While the cost of funds is down, yields on assets have retreated faster than on deposits, he said.

“That’s just mashed all the room for any net interest margin,” Reber said.

Marc Gall, vice president and asset/liability strategist at BOK Financial, put it this way: “The downward push is really just that we’re in a very low rate environment where everything is getting compressed.”

Data from the Federal Deposit Insurance Corp. shows how NIM has narrowed for Wisconsin banks.

In the first half of 2018, the net interest margin average at Wisconsin-based banks was 3.51%. In the first half of 2019 it was 3.49%, and fell to 3.31% in the first six months of this year. Nationally, in those same periods, the NIMs for banks were 3.36%, 3.40%, and 2.97%, respectively.

With no end to the low rate environment on the horizon, bank consultants expect the net interest margin squeeze to persist.

In fact, said Ryan Hayhurst, managing director of The Baker Group, data for this year’s third quarter shows it’s getting worse.

“The third-quarter margin compression was significantly more than the first and second quarter, and it’s probably going to continue because now you don’t have the benefit of the PPP (Payroll Protection Program) fees coming in anymore,” Hayhurst said.

Looking at banks with assets of less than $10 billion nationally, NIM went from 3.68% in first quarter this year to 3.60% in the second quarter, and then lost another 20 basis points in the third quarter, Hayhurst said.

The net interest margin compression is worse for community banks that do little or no mortgage lending. Mortgage lending and refinancing have been bright spots in banking.

“If you’ve got an active mortgage department, an active mortgage presence, you’ve been able to refinance a whole lot of loans this year,” Reber said.

Hayhurst said NIM compression can be tougher on community banks than on larger institutions.

“The community banks receive approximately 80% of their income from margin sources,” Hayhurst said. “And bigger banks, it’s closer to 60%. So the larger institutions get a lot more of their revenue from non-margin sources like fee income, trust department, insurance activity, brokerages, investment banking – those kinds of things. The bigger banks also have lower overhead expenses because of economies of scale.”

As nice as it was to derive fee income from PPP loans when the economy drastically slowed at the start of the pandemic, the loans could contribute to some NIM compression as they are forgiven.

A decent amount of PPP is still sitting in banks, and once it’s forgiven, the return on it goes from 1% as a loan to only 5 to 10 basis points as cash.

PPP loans might also be used by a borrower to pay down other loans on the books that have higher interest rates, said Kent A. Musbach, senior vice president for the BOK Financial Institutions Group.

“So that’s a bit of margin headwind, if you will,” Musbach said.

What can banks do to minimize NIM compression?

One thing is to closely look at rates being paid for deposits like CDs, and cut them further.

According to Reber, at this point, depositors aren’t expecting their money will earn very much anyway.

Reber said banks have learned “they can be pretty aggressive on cutting their deposit costs because the depositors have very low expectations for any return.”

“A lot of individuals, a lot of small business, have been able to refinance debt. They know they’re paying less on whatever they’ve borrowed from their bank, and they therefore reason, ‘Well, the bank is going to have to pay me less,’” Reber said.

Gall said although cutting rates won’t have much of an impact over the last couple months of this year, it sets the stage for 2021.

“It’s really going to have a whole impact when you have 12 months of that lower cost,” Gall said. “It’s really trying to get yourself at a good starting point for the next year. And that’s why banks have to really take a hard look at every account.”

Said Hayhurst: “Because deposits have surged, I don’t believe most community banks are going to lose deposit relationships by cutting their deposit costs. Banks only have so many levers they can pull to fight margin compression.”

In addition to reducing deposit expense, banks must make sure they deploy their assets as effectively as possible to combat NIM compression, consultants said.

“Action step No. 1 is do something with the cash other than just have it sit at 10 basis points,” said Gall.

Right now, many banks are sitting on a lot of cash.

“Banks are holding that cash for a couple of reasons,” Hayhurst said. “One is the uncertainty – they saw a surge of deposits this year – and some of them are uncertain about if those deposits are going to surge back out. I don’t believe that they are. But there is a level of uncertainty there, so they’re holding cash for that reason.”

Hayhurst continued: “Two, they don’t like the yields they can get in say, the bond market. So they are holding that cash earning 10 basis points because they don’t like that they can only buy a bond at 1% and they remember when they could buy a bond at 2% or 2.5%”

“But 8% of your assets earning just 10 basis points is destroying margin. So first and foremost they need to deploy those assets,” Hayhurst said.

Reber said some banks are selectively investing longer term than they normally would.

“That 12-year bond that yields 2% is a better than a 5-year bond that yields 75 basis points,” Reber said.

Gall said, depending on its position, each bank may have a little different approach.

“The easy answer is the investment portfolio,” Gall said.

In addition, he said, banks that are doing mortgage originations may choose to hold some mortgages. A bank might also opt to become more aggressive in lending.

“The problem with that is in an uncertain economy you don’t really want to be leaning into potentially bad credits at lower rates,” Gall said. “You kind of pick your spot. But if you’re saying, ‘I’m going to earn 10 basis points for what the Fed has indicated is going to be three years if not longer, that’s going to be a huge hindrance on margin if you don’t do something with it.”

Gall said some banks have the philosophy that they always need to price at the low end in their market or they’ll lose the deal.

“Try to get a little bit more out of those loans, whether it’s 5 basis points or 10 basis points or 3 or 7,” Gall said. “Again, every additional couple of basis points you can get is probably what’s going to help banks succeed for the long run. Even though it doesn’t seem like a lot, when you start aggregating $250 million of assets and you start squeezing out 5 extra basis points, it becomes real dollars.”

Musbach and Gall said bankers could be better off to not focus so much on NIM.

“Is it the margin percentage that’s important, or is it the absolute net income interest number?” Musbach said.

Consultants said banks also must keep becoming more efficient.

It appears low rates are going to linger, and margins will remain under pressure, they said.

“The Fed’s own projections show that rates aren’t going to be moving until 2023,” said Reber. “Now, they can change their mind, but the last time they put the numbers on a piece of paper, it said 2023.”

The situation shouldn’t be anywhere near as bad as during the Great Recession, however.

“You’re not going to have these bank failures in the numbers we did back then,” Reber said. “It’s going to be an environment where banks are just going to have to muddle along with very modest earnings but pretty secure, pretty safe balance sheets until whatever normal is returns.”

Paul Gores is a journalist who covered business news for the Milwaukee Journal Sentinel for 20 years.

Interested in this topic? Check out WBA’s Margin Management Workshop recording! Seven hours of content, on-demand. Learn more by clicking here.

November 10, 2020/by Jose De La Rosa
https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg 0 0 Jose De La Rosa https://www.wisbank.com/wp-content/uploads/2021/09/Wisconsin-Bankers-Association-logo.svg Jose De La Rosa2020-11-10 14:32:292024-03-14 16:05:27Net Interest Margin Challenges and Solutions
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