Coronavirus Makes Community Count in Banking

In the face of an economic shutdown triggered by the coronavirus pandemic, small banks stepped up in a big way to ensure local businesses received government aid.

Over the past 50 years, the American community bank has become a threatened species. Yet these institutions rose to the occasion amid the coronavirus-induced economic shutdown. The Small Business Administration reported that 20% of loans made in the first round of the Paycheck Protection Program, were funded by banks with less than $1 billion in assets, and 60% were funded by banks with less than $10 billion in assets. In total, the first round of lending delivered $300 billion to 1.7 million businesses.

There were just 5,177 bank or savings institutions insured by the Federal Deposit Insurance Corp at the end of 2019 —a fraction of the 24,000 commercial banks in the U.S. in 1966. The majority of these institutions were local, community banks, some with only a single branch serving their market. But over the past 25 years, the banking industry has increasingly become the domain of large conglomerates that combine commercial banking, retail banking, investment banking, insurance, and securities trading under one roof.

Technology has accelerated this consolidation further as consumers select the institutions they can most easily access through their smartphone. Deposit market share tells this story most starkly: in 2019, over 40% of total assets were held by the four largest banks alone. From 2013 to 2017, total deposits at banks with assets of less than $1 billion fell by 7.5%.

Despite that erosion, small banks were willing and able to help hurting businesses. After the dust settled from the initial round of PPP loans, many of the nation’s largest banks faced lawsuits alleging they prioritized larger, more lucrative loans over those to small businesses with acute need.

Community banks filled in the gaps. USA Today reported that a food truck business with a long relationship with Wells Fargo & Co., but couldn’t get a banker on the phone during the second round of PPP. Instead, Bank of Colorado, a community bank in Fort Collins, Colorado, with about $5 billion in assets, funded their loan.

Another one of those banks, Evolve Bank & Trust, an institution with about $600 million in assets based in Memphis, Tennessee, answered the calls of customers and non-customers alike. Architecture firm Breland-Harper secured a loan through Evolve; firm principal Michael Breland the called the funds “crucial in meeting payroll.” Special education program The Center for Learning Unlimited was turned away at 15 banks for a PPP loan. Evolve funded their loan within days.

The coronavirus pandemic has proven two things for small financial institutions. First, community still counts — and it may expand beyond a bank’s local community. A bank’s willingness to work with small businesses and organizations proved to be the most important factor for many businesses seeking loans. Small banks were willing and able to serve these groups even as the nation’s biggest bank by assets, JPMorgan Chase & Co., reportedly advised many PPP loan applicants to look elsewhere at some points.

As big banks grow bigger, their interest in and ability to serve small businesses may fade further. The yoga studio, the restaurant and the small business accounting firm, may be best served by a community bank.

Second, community banks were empowered by technology. Technology is a lever with which big banks pried away small bank customers, but it was also crucial to small banks’ success amid the PPP program. Because of the pandemic many small banks accelerated innovation and digital solutions. During the crisis, Midwest BankCentre, a community bank in St. Louis with $2.3 billion in assets, fast-tracked the implementation of digital account openings for businesses, something they did not have in place previously.

By tapping tools created by fintech companies, small banks can use technology to support their efforts to assist the nation’s small businesses during and beyond these uncertain times.

Three Reasons to Take Banking to the Cloud

Bankers challenged by legacy technology can leverage a low-cost workaround as a way to keep up with the latest innovation.

Today’s marketplace is challenging bankers to keep pace with the rate of technology innovation and provide a level of functionality and service that meets — or hopefully, exceeds — their customers’ expectations. Many find, however, that they must first overcome the limitations of existing legacy technology in order to deliver the customer experience that will keep them competitive.

A revolution of sorts has been developing within the computing world: a shift to internet-based, cloud services has introduced a more cost-effective, scalable and reliable approach to computing. With essentially no or little cost to join and access to on-demand platforms and application programming interfaces (APIs), users are empowered to leverage virtually unlimited resources while paying on a metered basis. An additional benefit of the cloud is its ability to support transformation over time, providing options to configure services based on users’ specific needs as they evolve — which has a direct application for bankers.

Many banks have already learned that a move to the cloud not only helps them increase efficiencies and reduce operational costs, but can drive innovation where it matters most: the customer experience. The inherent advantages of the cloud are being applied within retail banking to provide a modern banking experience for customers through services that are offered in a scalable, “pay-as-you-go” format that grows and evolves over time.

Most importantly, the cloud helps bankers build off of their existing technology infrastructure to more easily create new services and experiences for their customers, particularly in three ways:

Faster innovation. The cloud breaks down the barriers to innovate across departments, eliminating a disintermediated, “spaghetti” architecture and allowing banks to go to market faster. Projects that may have taken months or years to implement before can now often be completed through a click and initiated within days. Much like an appstore, the cloud allows banks to subscribe, try and launch new products almost instantly, as well as delete applications that no longer serve their account holders.

More cost savings. Compared to the expense of enterprise and on-premises solutions, the cloud minimizes the need for costly investments, like physical infrastructure or storage and maintenance fees. Instead, banks pay only for the specific applications they use. Services that were once available only through binding, long-term contracts are now accessible entirely within the cloud on a metered basis, removing the significant upfront costs associated with legacy technology.

Improved flexibility. The number of resources and tools available within the cloud environment is growing daily, which drives growth in the developer community as a whole. This leads to more participants who are creating and contributing even better offerings. Banks benefit through the ability to implement new products or services quickly and easily in response to market demand or the specific banking needs of account holders. If the bank finds a certain application does not provide enough value, the cloud offers the flexibility to try other services until it identifies the product with the best fit for its unique situation.

For too long, too many banks have simply settled for “good enough” from an innovation perspective, hamstrung by their legacy technology’s complex infrastructure. In most cases, banks’ core technology investments have been sound ones — the technology is stable, secure and reliable and has a proven track record. But it can create limitations when it comes to flexibility, ease and speed to deploy new capabilities. With cloud computing, bankers can effectively extend the value of their core technology investments by leveraging all of the benefits that they provide, while cost-effectively supporting a more innovative approach to providing customers with a true, modern banking experience.

2020 Technology Survey Results: Accelerating the Drive to Digital

The Covid-19 pandemic has bankers reexamining the value of their branches.

While branch networks remain vital, their preeminence as a delivery channel has been diminished through the coronavirus crisis.

Bank Director’s 2020 Technology Survey, sponsored by CDW, finds that bank executives and directors indicating that the digital channel is most important to their bank’s growth (50%) outnumber those who place equal value on both the digital and branch channels (46%).

In last year’s survey, those numbers were essentially flipped, with 51% indicating that the two channels were equally important, and 38% prioritizing mobile and online channels.

This accelerates the evolution that the industry has undergone for years. Nearly all respondents — 97% — say their bank has seen increased adoption and use of digital channels due to Covid-19.

The survey was distributed in June and July, after a period of time when many banks upgraded their technology to better serve customers digitally, facilitate remote work by their employees and respond to the high demand for Paycheck Protection Program (PPP) loans. Sixty-five percent say their bank implemented or upgraded technology due to the coronavirus crisis. Of these respondents, 70% say their bank adopted technology to issue PPP loans.

These executives and directors also report installing or upgrading customer-facing virtual meeting technology and/or interactive teller machines (39%), or enabling customers to apply for loans (35%) and/or open deposit accounts digitally (32%).  

Yet, just 37% sought new technology providers as a result of the pandemic.

The survey also reveals that fewer banks rely on their core provider to drive their technology strategy forward. Forty-one percent indicate that their bank relies on its core to introduce innovative solutions, down from 60% in last year’s survey. Sixty percent look to non-core providers for new solutions.

Key Findings

Focus on Experience
Eighty-one percent of respondents say improving the customer experience drives their bank’s technology strategy; 79% seek efficiencies.

Driving the Strategy Forward
For 64% of respondents, modernizing digital applications represents an important piece of their bank’s overall technology strategy. While banks look to third-party providers for the solutions they need, they’re also participating in industry groups (37%), designating a high-level executive to focus on innovation (37%) and engaging directors through a board-level technology committee (35%). A few are taking internal innovation even further by hiring developers (12%) and/or data scientists (9%), or building an innovation lab or team (15%).

Room for Improvement
Just 13% of respondents say their small business lending process is fully digital, and 55% say commercial customers can’t apply for a loan digitally. Retail lending shows more progress; three-quarters say their process is at least partially digital.

Spending Continues to Rise
Banks budgeted a median of $900,000 for technology spending in fiscal year 2020, up from $750,000 last year. But financial institutions spent above and beyond that to respond to Covid-19, with 64% reporting increased spending due to the pandemic.

Impact on Technology Roadmaps
More than half say their bank adjusted its technology roadmap in response to the current crisis. Of these respondents, 74% want to enhance online and mobile banking capabilities. Two-thirds plan to upgrade — or have upgraded — existing technology, and 55% prioritize adding new digital lending capabilities.

Remote Work Permanent for Some
Forty-two percent say their institution plans to permanently shift more of its employees to remote work arrangements following the Covid-19 crisis; another 23% haven’t made a decision.

To view the full results of the survey, click here.

Eliminate Customer Friction to Unlock Your Bank’s Growth

Why don’t your target customers want to join your bank? Because they’re not impressed.

Banks often sabotage their own attempts at success through their siloed, disjointed, out-of-touch and unimpressive approaches to doing business that leave small-to-medium businesses, private wealth clients, upwardly mobile millennials and even commercial customers underwhelmed by their service delivery.

Eliminating customer friction must be your guiding policy
For 10 years, the rallying cry of the C-Suite has been “invest in technology to stay relevant.” The next 10 years must be defined by a singular, focused, and undeviating devotion to eliminating the friction of doing business with your institution.

Fixing customer friction will be challenging and expensive, but it will also offer the best return for your shareholders. Your bank must organize teams around this mission. Executives need to evaluate resource and budget requests against a simple criterion: How much friction will this reduce, compared to the cost of funding it? Every budget request should be accompanied by a detailed user story, a list of friction points, and a proposed solution that describes the customer experience. Every touchpoint is an opportunity to reinforce your brand as customer-friendly or customer-hostile. Your bank should move quickly through these three steps:

  1. Get aligned. Your bank needs support from your board, your C-suite and even your investors to pivot to this focus. Once you have the buy-in and mission statements crafted, it’s time to designate the priority projects.
  2. “Shovel-ready” projects come first. Rescore projects that were previously denied funding or resources because they were too difficult to execute or didn’t cross a financial hurdle on a simple 2×2 matrix that evaluates improvement in customer experience and reduced friction vs. cost and complexity to implement. The projects in the top-right corner should be your initial list of funded initiatives.
  3. Deliver quick wins and results that measurably drive customer engagement. This will define success for the next 10 years. Re-engineer how you extend customer offers and execute pricing for standard and relationship clients. Your investment in tech will pay off if you accelerate this function.

For a fast return on investment, examine how your bank prices on base versus relationship status and rewards customer behaviors. Segmenting customers into single-service households, small to medium-size businesses, commercial, or mass-market and tying rewards or pricing adjustments to their categories can mean the difference between retaining or losing target customers. One-size-fits-all pricing, or even pricing by geography, will leave customers feeling like they do today: you don’t understand them or price according to their life stage or needs.

Aim for high-frequency iterations so you can test and learn everything before you scale it. Imagine being able to execute 100 or more micro-campaigns and evergreen trigger-based offers annually, with multivariant testing. Drill down to specific customer personas, identify specific trigger events, and act on intelligence that demonstrates to your customers that your bank understands them.

Get in the habit of defining a user story, designing a process and executing an offer or pricing schema in a sprint. I was astounded how quickly banks moved on preparing their infrastructure to administer Paycheck Protection Program loans. Imagine being able to consistently move at that speed — without the associated late nights and headaches.

Lastly, installing an agile middleware layer will unshackle your bank from the months-long cycles required to code and test customer offers and fulfillment. High-speed, cloud-based offer management that crosses business lines and delivers omni-channel offer redemption will be a game changer for your institution.

Installing a high-speed offer and pricing engine may seem like science fiction for your bank, but it’s not. It will require investments of time and money, coordinated efforts and lots of caffeine. But the results will allow your financial institution to prove success, build a model and inspire your teams to get serious about bulldozing customer friction.

The financial rewards of executing better offers, engaging more customers and delivering relevant, optimized pricing will give your bank the financial resources to remain independent while your competitors shop for merger partners.

Five Questions to Ask When Weighing Banking Software

A contract for banking software should be the start of a working relationship.

When your bank purchases a new banking system, you should get more than a piece of software. From training to ongoing support, there’s a tremendous difference between a vendor who sells a system and a true partner who will work to enhance your banking operations.

But how do you know which is which? Here are some questions that could help you determine if a vendor is just a vendor — or if they could become a more-meaningful resource for your bank.

Do they have real banking expertise?
A software vendor that lacks real-world banking experience will never have the institutional knowledge necessary to serve as a true partner. The company may have been founded by a banker and their salespeople may have some cursory knowledge of how their solution works in a banking environment. However, that is not enough. You need a vendor that can offer expert insights based on experience. Ask salespeople or other contacts about their banking background and what they can do to help improve your bank.

Do they want to understand your issues?
A vendor won’t be able to help solve your problems if they aren’t interested in learning what they are. You should be able to get a sense of this early in the process, especially if you go through a software demonstration. Does the salesperson spend more time talking about features and system capabilities, or do they ask you about your needs first and foremost? A vendor looking to make a sale will focus on their program, while a true partner will take time to find out what your challenges are and what you really want to know. Look for a vendor who puts your needs above their own and you’ll likely find one who is truly invested in your success.

How quickly do they respond?
Vendors will show you how much they care by their turnaround speed when you have a question or need to troubleshoot a problem with your banking system. Any delay could prove costly, and a good partner acts on that immediate need and moves quickly because they care about your business. It can take some companies weeks to fully resolve customer issues, while others respond and actively work to solve the problem in only a few hours. Go with the software provider who is there for you when you need them most.

Do they go above and beyond?
Sometimes the only way to address an issue is to go beyond the immediate problem to the underlying causes. For example, you might think you have a process problem when onboarding treasury management customers, but it could actually be an issue that requires system automation to fully resolve.

A vendor that can identify those issues and give you insights on how to fix them, instead of bandaging the problem with a quick workaround, is one worth keeping around. This may mean your vendor proposes a solution that isn’t the easiest or the cheapest one, but this is a good thing. A vendor that is willing to tell you something you may not want to hear is one that truly wants what’s best for your organization.

Do they continue to be there for you?
Some software companies consider the engagement over once they’ve made the sale. Their helpline will be open if you have a problem, but your contact person there will have moved on to new targets as you struggle with implementation and the best way to utilize the software.

Find a vendor that plans to stick with your institution long after agreements have been signed. They should not only provide training to help facilitate a smooth transition to the new system, but they should remain accessible down the road. When a new software update becomes available or they release a new version of the system, they should proactively reach out and educate you on the new features — not try to sell you the latest development. Although you won’t know how those interactions will go until after you’ve made your purchase, it pays to evaluate the service you’re getting from your vendors at every stage of your engagement.

Finding a software vendor that you trust enough to consider a partner isn’t always easy. But by looking for some of the characteristics discussed above, you can identify the most trustworthy vendors. From there, you can start building a relationship that will pay dividends now and into the future.

Doing More In Branches With Less

Frugality breeds innovation, which means right now is a prime opportunity for change.

Budgets are tight and resources are stretched thin for banks. The good news is that they can do more with less by implementing a universal associate model with the right enabling technology. When executed optimally, this model can help reduce staffing costs, reduce technology costs, and increase advisory conversations at the same time. A win all around, especially in these times.

Many banks will say they already have this model in place, but we find that a true universal associate model is rare.

Leadership typically believes they already have deployed a universal banker model, but when we break it down for them and go through what each associate should be able to deliver at every touchpoint, it becomes clear that they are far from a universal banker,” says Krista Litvack, director of Professional Services, the training and banking consulting arm at DBSI.

Universal associates are cross-trained employees who can fulfill nearly every task and transaction type within the branch, including the workload of tellers and the majority of the platform staff responsibilities. This model can reduce teller costs and eliminate the need for specialized roles and customer hand-offs. At the same time, universal associates are often experts at transitioning high-cost, low-value transactions — like a check deposit or withdraw — to low-cost channels such as self-service or mobile.

Universal associates are a way for banks to turn every interaction into an advisory or sales conversation using their depth and breadth of product knowledge. For example, a universal associate might offer a college savings account to a customer with new or young children. These types of advisory conversations can improve the customer experience significantly. According to a J.D. Power consumer study, customer satisfaction doubled when they received higher-level interactions that led to either additional savings or improved financial journey products, such as retirement planning.​

Training is an important component, but the missing link to a true universal associate model is often technology. A universal banking model with the right technology and process in place can save up to $92,412 per branch, per year. That’s a massive cost reduction worth considering. There are three key areas banks should address to create a seamless integration of technology, people and process.

Cash Automation
Universal associates can’t operate efficiently without removing the largest distractions that a traditional teller has: balancing.​ Staying in balance, counting each individual transaction three times and the cumbersome end-of-night processes all distract from building relationships that secure long-term patronage. Teller cash recyclers are a step in the right direction and help shift the focus from balancing and counting cash to advising and helping the customer. When designed and located properly, these devices eliminate stress, allow for open branch design by increasing security and make overall cash management more effective.​

Technology Optimization
Cash recycler limitations keep many branches from achieving full automation because they limit access for two staff members at a time. This disrupts the customer experience and the workflow of the associates if a third associate needs to use the machine. Instead of investing in more machines, banks can use technology such as remote transaction assist. It helps optimize recylers by allowing cash transactions to be sent from any part of the branch to any recycler or dispenser, pulled down from a queuing system that uses a unique identification number once the associate is at the device.​ One recyclers can now easily be shared among multiple staff members, greatly reducing technology costs and creating more convenience.

Banks can optimize their cash recycler investments even further with kiosks to handle all types of transactions to more-efficient channels while tablet-equipped associates advise customers. This opens up recyclers for associate and customer use.

Tablet-Equipped Associates
The in-branch experience doesn’t have to be tied to a desk or an office: Imagine a universal associate who can help customers from anywhere in the branch to create a unique experience that maximizes branch square footage. Tablet-based teller applications that connect associates to cash automation machines or even self-service kiosks is the final piece in creating a frictionless customer experience and a true universal associate model.

Break down the teller line and remove the need for a hand-off entirely with a tablet that has teller transaction functionality and empower universal associates. Banks that want to implement a universal associate model will need the right design, technology, and process to make the shift. Now is the time to make those investments and position your bank for its post-pandemic future through lowered costs and better customer experiences.

A New Opportunity for Revenue and Efficiency

Intelligence-Report.pngIn 2017, Bank Director magazine featured a story titled “The API Effect.” The story explained how banks could earn revenue by using application programming interfaces, or APIs, and concluded with a prediction: APIs would be so prevalent in five years that banks who were not leveraging them would be similar to banks that didn’t offer a mobile banking application in 2017.

Today, the banking industry is on a fast track to proving that hypothesis.

Banks are hurtling into the digital revolution in response, in no small part, to the outbreak of Covid-19, a novel coronavirus that originated in China before spreading around the globe. The social distancing measures taken to contain the virus have forced banks to operate without the safety nets of branches, paper and physical proximity to customers. They’re feeling pressure to provide up-to-the-minute information, even as the world is changing by the hour. And they’re grappling with ideas about what it means to be a bank and how best to serve customers in these challenging times.

One way to do so is through APIs, passageways between software systems that facilitate the transfer of data.

APIs make it possible to open and fund new accounts instantly — a way to continue to bring in deposits when people can’t visit a branch. They pull data from call centers and chat conversations into systems that use it to send timely and topical messages to customers. And they enable capabilities like real-time BSA checks — an invaluable tool for banks struggling to process the onslaught of Paycheck Protection Program loans backed by the Small Business Administration.

All those capabilities will still be important once the crisis is over. But by then, thanks to the surge in API adoption, they’ll also be table stakes for banks that want to remain competitive.

In short, there’s never been a better time to explore what APIs can do for your bank, which is the purpose of this FinXTech Intelligence Report, APIs: New Opportunities for Revenue and Efficiency.

The report unpacks APIs — exploring their use cases in banking, and the forces driving adoption of the technology among financial institutions of all sizes. It includes:

  • Five market trends driving the adoption of APIs among banks
  • Actionable API use cases for growing revenue and creating efficiencies
  • A map of the API provider landscape, highlighting the leading companies enabling API transformation
  • An in-depth case study of TAB Bank, which reimagined its data infrastructure with APIs
  • Key considerations for banks developing an API strategy

To learn more, download our FinXTech Intelligence Report, APIs: New Opportunities for Revenue and Efficiency.

Fixing What’s Broken In Bank Product Pitches

There’s a better way to sell pens: Don’t start with the pen.

A classic teaching example for sales hands a shiny new pen to someone with the instruction, “Sell me this pen.” Typically, the student takes the pen and begins to describe it, attempting to use the looks and features of the pen to sell it. The would-be salesperson often struggles to “sell” the pen, because they fail to discover if the person needs a pen to begin with.

This is often how banks sell products and services to their customers. But the search for a solution to this sales dilemma has led to new and advanced ways to sell pens (and everything else) the wrong way.

A better way to sell the pen is to put it in your pocket and, instead, ask the customer questions. The goal is to discover the customer’s needs and help them realize that a pen — the one you happen to have in your pocket — is what will meet their needs.

Artificial intelligence companies and fintech platforms want banks to pay enormous sums of money to help identify products and services for customers. Having given away all manner of financial tools, products and advice, they’re now pursuing bank customers by offering demand and savings deposits, mortgages and loans. Some of the biggest names in technology are joining the fray as well: Facebook, Apple, Alphabet’s Google and Uber Technologies, among others.

Customers aren’t necessarily getting more savvy, but technology is.

A venture capital firm we work with that invests in fintechs was very clear that most online financial tools are merely marketing devices used to poach customers and grow assets. Often these tools expose a problem in a customer’s existing account and offer an immediate remedy if the customer transfers accounts to them. This isn’t necessarily good for the customer, but can be devasting to a bank.

Pushing product is difficult; providing solutions is far more rewarding — and efficient.

Recently, we met with a regional bank that has over 80 retail branches and offers wealth management as part of their service model. They have only 17 financial advisors to service customers in their home state. They confessed that of only 27% of their wealth management clients have a retirement account with the bank.

Only 27%. How is this possible? Is it because they don’t sell retirement accounts? Or is it because they don’t know their customers? After all, who doesn’t need a retirement account?

Another bank we work with wondered if they should start offering business credit cards. They didn’t understand their customers’ needs well enough to decide what products would address those needs or wants, so they opted to pitch a credit card offered by a vendor.

One of the industry’s largest digital banks confessed to us they are considering adding a human element to their arsenal, seeing a need for a digital/human hybrid approach. They’ve realized that society is moving to digital, but also recognize there is not enough value in digital alone.

The COVID-19 crisis will accelerate the shift to digital. If brick and mortar banks are going to survive, and even thrive, they need a digital component that complements their human element. Throwing money at new technology that pushes products that customers may or may not want or need will only lead to costly and disappointing results.

Banks need tools that develop and deepen customer relationships and make it possible to offer real solutions, as opposed to pushing products they hope will increase revenue.

Accenture recently released a study with five key findings about customer expectations. They are:

  1. They want integrated propositions addressing core needs.
  2. They want a personalized offering.
  3. They are willing to share data with providers in return for better advice and more attractive deals.
  4. They want better integration across physical and digital channels.
  5. Their trust in financial institutions is increasing.

Essentially, customers want personal offerings that serve their core needs and delivered in the medium they choose. Banks that want to grow revenue and increase retention shouldn’t continue to “push the pen.” They should find and offer digital/human hybrid models to help customers self-discover solutions.

Three Retail Strategies for the Post-Coronavirus Branch

Technology is key to providing a near touch-free experience in the branch and digitally, but many banks are not ready. Less than 50% of organizations believe they are prepared for competitive threats, customer expectations or technological advancements, according to the 2019 “State of Digital Banking Transformation” report.

It’s a daunting task to take on digital transformation. Financial institution didn’t need a crisis to learn that banking from anywhere is a priority for customers, but it has highlighted the slow rate of mobile adoption. Only 17% of financial institutions believe they have deployed digital transformation at scale, with larger organizations being the most advanced, according to the Digital Banking Report. Even after the coronavirus pandemic has settled down, consumers will value banks that make the investment to provide services digitally.

Onboard Customers to Digital Resources
Transacting from anywhere is important, but that’s not the entire branch experience — banks need to provide highly personal financial education and advisory services from anywhere. Focus marketing and communications on educating customers with resources like blogs, social media posts, financial healthcheck tools or webinars on relevant topics like financial planning in an emergency. Content explaining the details and next steps on payment deferrals, personal loans, and programs like the Paycheck Protection Program are especially helpful during this time. Ensure your compliance officer looks over everything before it’s posted.

Offering tools and resources now will position you as an advising partner rather than a product-focused institution. And video banking gives your customers more access to experts. These platforms put face-to-face interactions in the palm of your customers’ hands by allowing them to connect with a banker right from their phone, securely sign and share documents such as photo IDs, documents for new accounts, loans, and other urgent needs.

Give Customers Access to Experts
Banks also need to invest in technology that allows their experts to work from anywhere — including the corporate campus or headquarters too. These investments allow them to work from anywhere makes transitioning to remote easy; they can also improve productivity when they are in the office.

Adding flex spaces in your headquarters allows you to reduce the number of desks provided to full-time employees while improving productivity, the flex space allows your employees to have a space to focus when they need to, collaborate, and it can be used by others when that employee is remote or off-campus.

Your experts will need to have a well-thought-out space where they can perform their remote expert duties. A clean backdrop, technology, and quiet location are all necessary to make sure your experts can handle any question and transaction. However, the space doesn’t have to be expensive or elaborate. Take an Instagram-versus-reality approach to creating the perfect remote expert set-up. Meaning, focus design dollars on what is on camera instead of spending on the entire space. Offer your experts best practices for video conferencing so your exceptional customer service standards are not altered when your associates are working remotely.

Prepare Your Branch for the Post-Coronavirus Consumer
This is truly the time to prepare your branches for the future and provide an even-better experience than before. Consumers post-coronavirus will be more aware of being in confined spaces, such as private offices. A “service spot” offers a unique workspace for associates that is visibly less “confining” but still private, potentially increasing the appeal of getting advisory services in the branches. Ideally, the spots would be set at counter or bar height.

Teller towers are a retail-friendly twist on the old-school teller line. They remove queue lines and create more distance between customers, while providing a better interaction experience with staff.

Easy-to-clean surfaces for furniture, flooring and more will be the way of the future. Brian Silvester, Head of Design at DBSI, offers several examples of easy to clean and green finish options:

  • Stain-resistant surfaces and PFOA-free upholstery are easy to clean and reduce health concerns linked to PFOA.
  • Easy-to-clean laminate instead of wood veneer offers a realistic natural wood-look without having to worry about scratches and special cleaning procedures.
  • Groutless flooring like luxury vinyl tile reduces maintenance over time. There are even options that are carbon neutral.

The post-coronavirus consumer may be hyperaware of germs on everything they touch, and may not be interested in communal brochure racks to gather information. Digital and interactive signage with hand sanitizer nearby in an option that is easy to clean and update. Interactive digital signage allows customers to still obtain the information they want while collecting emails and data for customer insights. Touch-free screens are a great way to showcase your products and services with virtually no risk of community spread.

To create the perfectly prepared retail strategy that can attract and retain customers in any situation, banks need to fuse design, technology and process. Branch transformation, at any level, is both an art and a science.

Coronavirus Underlines Digital Transformation Urgency

The passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act means up to $350 billion in loans guaranteed by the Small Business Administration is set to flow to small businesses by the June 30 funding deadline.

Community and regional institutions are, of course, the logical partners for distribution of this capital. But a challenge remains: How will those financial institutions reach out to the market when their lobbies may not be open, and businesses may not be comfortable with face-to-face interactions?

Banks have done little to change the way they interact with their business customers in the digital age. In good times, this lack of transformation allowed large technology companies like Amazon.com, PayPal Holdings and Square to siphon customers away. The current environment complicates efforts for banks that have not already transformed to be responsive to their customers immediate needs.

Customers prioritized convenience — now banks will be forced to. Even prior to social distancing, consumers prioritized speed and convenience, whether it came to new technology or where they banked.

Winning at business banking was always going to require banks to offer business customers a frictionless experience. But the ability to operate business banking functions digitally has taken on new meaning — from defining quality service to becoming a necessity during a pandemic.

Three Critical Points of Friction in Business Banking
Now more than ever, it should be every institution’s goal to make working with businesses as easy as possible, especially when distribution of SBA dollars is at stake.

To meet this moment, banks need to remove three critical friction points from their business banking experience:

  • The Application: Paper applications are long and tedious, and the process is even more difficult for SBA 7(a) loans. To remove friction, institutions need to focus on data and access. They should use available data and technology to pre-fill applications as much as possible, and provide them digitally either for self-service or with banker assistance.
  • The Decisioning: Underwriting loans is a labor-intensive process that can delay decisions for weeks. An influx of Paycheck Protection Program loan applications will only compound the inefficiencies of the underwriting process. Banks need to automate as much of the underwriting and decisioning process as possible, while keeping their risk exposure in mind. It’s critical that banks select companies that allow them to use their own, unique credit policies.
  • The Account Opening: Banks also need to think about long-term relationships with the businesses they serve during this time. That means eliminating common obstacles associated with opening a business deposit account. For example: If a business has already completed a loan application, their bank should have all the information they need for a new account application and shouldn’t ask for it twice. They need to ensure businesses can complete as much of this process remotely as possible.

At Numerated, the sense of urgency we hear from bank leaders is palpable. Our team has been working overtime — remotely — to provide banks with a quick-to-implement CARES Act Lending Automation solution. Banks have been working just as fast to understand the current environment and build strategies that will help them meet their customers’ rapidly shifting needs.

In many ways, the COVID-19 pandemic has forced banks to consider digital transformation as a solution to this problem. Still, many firms have held off for any number of reasons. Institutions that have focused on digital transformation will be the most successful in improving the business banking customer experience and will lead the way during this pandemic as a result.

From Eastern Bank Corp. in Boston that used digital lending to become the No. 1 small to midsized business lender in their competitive market, to First Federal Lakewood, in Lakewood, Ohio, that is using digital experiences to retain and grow strategic relationships, institutions of all sizes have launched new digital capabilities, better positioning them to face what’s ahead.

As the nation’s businesses grapple with this new reality, these financial institutions are examples for others exploring how to serve business customers when they can’t see them face to face. Doing so will require a reimagining of the way we do business banking.