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BirdsEye View

 The appetite for investment in technology appears insatiable these days.  Every division of the bank needs expensive technology investments to satisfy customer needs TODAY.  CEOs and CIOs are having a hard time prioritizing the constant, ever-growing stream of project requests and partnership integration challenges.

Consider the roadmap below to prioritize (and stick to) your commitments to digital transformation.

1. Eliminate friction points at the customer level

2. Work toward a new and modern core system

3. Perfect your client-facing apps and touch points

4. Accept that the cloud is where it’s at and move there fast

5. Defend against larger players who rely too much on brand and scale

6. You can be as customer-centric as Amazon without BEING Amazon

7. Think strategically about stickier product lines

8. Build brand awareness and identity in innovative ways

Technology is but a means to an end, not an end in itself.  The real goal for all of us SuperCommunity banks is to continue to offer superior experiences to our customers.  We might not provide the single most convenient experience, but we can excel in applying our human differentiators to an acceptable technology offering.

J.D. Power has been measuring Net Promoter Scores (NPS) for years.  Their analysis shows that, despite enormous investments in technology, the banks with the best NPS are NOT the largest banks but Brethren such as First Republic, Frost and Eastern Bank.  Overall satisfaction ratings have historically been superior at the midsize banks relative to the larger and mega-banks, but in 2021 the scores are converging.  This trend is concerning.

We can learn from the midsize banks who found ways to win in the digital age.

For example:  First Republic, a bank that grew organically incredibly successfully, uses data analytics to help their bankers be more efficient.  Customers can also connect with their banks by pressing a single click.  This is HUGE both in terms of customer convenience and emotional engagement.

Huntington Bank created a digital-only line of credit which allows customers enrolled in automatic payments to borrow up to $1000 without any interest charges and fees.  This is a true innovation that rewards a very sticky product, thereby increasing customer tenure and, with it, customer NPV to the bank.  This feature comes on top of a 24-hour grace period and a $50 leeway before a customer triggers an overdraft charge.

At Frost, overdraft fees are waived for customers who sign up for direct deposit (similar strategy to Huntington’s) up to $100, plus the direct deposit customers get access to their money two days before they get paid, yet another inducement to choose Frost as your primary bank.

PNC offers a technology tool that helps its retail customers avoid overdraft fees when they are in a “low cash mode”.

FNBO is working on helping customers predict their cash flows and use a cash flow control tool to optimize all aspects of cash flow for small and mid-sized businesses.

More examples are available.  The common denominator here is, each bank chose a target customer segment to attract and engage with in a retention-enhancing mode while improving the customer experience.  They set out to achieve a specific outcome and then develop a strategy and tactics to achieve that outcome through product innovation and out-of-the-box thinking, regardless to their size.  Any of you, my readers, can do that as well.

This leads us to the inevitable resource conversation.  Most of you simply do not have the wherewithal to execute on these enhancements and improve your customer experience.  Fortunately, FinTechs are abound, and generally they need you more than you need them.  

Are you looking for –

• Seamless account opening process and real time detection and ID verification?  There is MNTL

• Real time small business lending?  There is Numerated

• An automated savings tool for consumers?  There is Personetics

• Leverage RPA for small business loan applications? There is Bolstr

Etc.etc.etc.

FinTechs are not the answer to all, but they are typically excellent in delivering a quality digital experience to replace human interaction.  They can create value-add to your customers while freeing your bankers to occupy the coveted “trusted advisor” spot.

Examples:

• Recommend mutual funds to optimize a customer’s investment portfolio and regularly rebalance the portfolio based upon each customer’s stated goals

• Help customers think wholistically about the use of tax refunds

• Tell customers at the point of sale if an overdraft fee will be incurred as a result of the transaction 

• Dynamically utilize economic data to suggest to investors whether stocks are the right place to put their money in

• Remind customers to pay their bills before they’re overdue and help them optimize their bill payments’ timing strategy

FinTechs such as Mint provide customers with low balance warnings, bill reminders, over-budget notifications, unusual spending and suspicious account activity alerts and predict overdrafts before they occur.  Every one of these creates value for customers (but could cost banks fees).

The point: SuperCommunity banks lay claim to customer-centric branding and execution.  Partnering with FinTechs such as the ones mentioned above can bring credence to that claim through technology, to be reinforced by the inimitable human connection that only community banks can deliver.  This combination is powerful and can help you, the reader, win your digital war!