Five Considerations for Stronger Digital Communications Adoption

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Digital banking services and capabilities are increasingly one of the most important areas of investment for community banks.

Community bank customers appreciate the personal service they receive from their local bank but desire the technology capabilities offered at national banks. Community banks are challenged to deliver seamless, robust digital banking services in a cost-effective manner. These challenges create some compromised digital banking experiences, particularly around digital communications.

Community banks consistently have much lower adoption rates of digital statement compared to large national banks. Bank leaders often cite demographics as the leading factor in the lack of migration to digital communication, with many banks assuming that only younger, wealthier customers adopt digital banking solutions. In reality, adoption rates are fairly consistent across age, income and location. 

Instead, many regional and community bank customers do not adopt digital solutions because they do not trust their bank’s offerings. The network of third-party vendors a bank uses creates a patchwork of solutions that may not communicate effectively, resulting in a negative user experience. This friction results in abandonment, as customers decide to just continue accepting the traditional printed communications.

The good news is that this area can be fixed — but it requires community bankers to fully understand what is needed to create a well-designed digital communications experience.

Crafting A User Interface, Appearance
A customer’s experiences must be consistent across the bank. Banks thrive at managing a customer’s in-person interactions; its digital presence, online and mobile offerings should offer the same experience. When electronic statements on the digital platform look unsophisticated and lack consistency in design, it leaves a bad impression with the customer. The online site must be responsive and mobile-friendly, enabling the customer to bank on-the-go.

Fully Functional Entitlement Management
Passwords, authorizations and verifications can easily become one of the frustrating components of digital adoption for customers. Most often, customers are unaware that numerous third-party vendors are involved in making their digital experience a reality. When they change or update their settings, they expect these changes to occur across their account in real-time. Any delay or latency results in an inconsistent experience for the customer.

Centralizing Preferences, Settings
Bank customers encounter digital experiences that consist of digital banking preference settings in one place on the website or mobile app and settings for digital communications in another area. This can create confusion among customers. Since they may not be aware that the digital communications may be held by one vendor, and other account functions are held by others, it seems to make little sense why all settings are not centralized in one place. It is worth exploring the options to unite these components in one place, further eliminating potential friction.

Longer Retention Period
Communications archival is one of the most beneficial — yet overlooked advantages — for digital adoption. Customers may or may not refer to previous communications such as notices and statements regularly, but when they need them, they will appreciate the capability. Community banks do not often like to pay for the server space needed to store these past communications, but it is an area executive should consider when trying to increase digital adoption. Customers cite short retention periods as a reason for electing to continue to receive paper statements.

Innovative Notification Options
Most legacy digital communication integrations use email as the primary method of notifying customers. Today’s bank customer is inundated with emails from work, personal matters and retailers. They are also cautious about opening emails due to hackers often masking themselves as financial institutions in phishing and other fraud-related schemes. The best way to get around this is through real-time integrations between digital banking and digital communication systems, offering the use of SMS or push notifications when possible.

Achieving greater digital adoption is possible. The status quo not only leaves most banks spending more per customer to deliver documents than their large, national bank competitors, but it gives customers the impression that they cannot manage their digital experience effectively.

The good news for regional and community banks is that it is possible to improve on the efforts already in place to build a strong digital presence by choose vendors that are truly committed to the open banking concept. Once the ecosystem of vendors works together, community banks will be in a much better position to market and grow their digital adoption efforts.

Repatriating Office Employees While the Pandemic Continues

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It is the greatest human resources challenge of the modern corporate era.

In early March, U.S. companies — including most banks — sent their employees home to work as the Covid-19 pandemic gained strength and many states issued shelter-in-place requirements and business lockdowns. Most banks kept their branches open for limited customer access, and continued to staff their operations centers, but sent most of the remaining people home. Now, banks are starting to repatriate these employees as state restrictions are eased, and the economy begins to reopen.

There are a number of factors to consider as your bank prepares to repatriate its office staff, including how to keep them safe and changes that will have to be made to the workplace. Some employees may be leery of returning to their old offices since the Covid-19 infection rate is still rising in many states, even though the national rate is slowly declining. New precautions need to be put in place to protect your staff from infections, and these will need to be communicated clearly to them.

It seems highly likely that U.S. companies will have to learn how to live with the Covid-19 virus for the foreseeable future.

Darin Buelow, a principal with Deloitte Consulting LLP and leader of its global location strategy practice, says the only comparable experience in recent memory was the hectic week after the Sept. 11, 2001 terrorist attack on the World Trade Center towers in New York. Most of lower Manhattan was closed, and the big Wall Street banks had to make alternate plans so they could operate when the financial markets reopened on Sept. 17.

“The banks had to figure out how they were going to get ready for the market reopening, and to do so without trying to cram and jam all their employees back into lower Manhattan,” Buelow says. “This prompted them to [move to] their business continuity sites, if they had them, in the suburbs. And if they didn’t, very quickly look for those locations where they could try to get trading desks and phone banks and everything else they needed to occupy offices.”

Of course, this was in the days before widely available video conferencing services. Many households still had dial-up internet service, so relying on a distributed workforce wasn’t an option. “But it was short-lived, and Manhattan was deemed to be okay again,” Buelow says. “What we’re experiencing now is new for all of us.”

Buelow has five suggestions that bank management teams should consider as they prepare to bring their employees back into the office.

Prioritize Employee Health and Safety
To make employees feel safe while the pandemic continues, banks should provide them with personal protection equipment (PPE) while also conforming with new, Covid-19 hygiene standards that have started to emerge. Banks should be stockpiling PPE supplies now, even if they don’t anticipate bringing their people back until the fall or later. Banks that have kept their branches and operations centers open have already had to take these precautions, although they now be applied on a larger scale. “Demand is increasing because there are more companies that are planning on having those stockpiles ready to go for when reentry happens,” Buelow says. “But also, the supply curve has been increasing. We’ve got more companies engaged in producing those products now, and they’re really starting to ramp up.” Of course, this could change if a surge in infections occurs this fall as the economy reopens, leading again to scarcities.

There are various Covid-19 hygiene standards that companies can rely on as they prepare their workplaces for reentry. The Occupational Safety and Health Administration has released a set of recommendations — “Guidance on Preparing Workplaces for Covid-19” — as have the International Facility Management Association and the Building Owners and Managers Association International. And of course, banks should be checking state and local guidance and requirements as well.

Modify the Workplace
Most offices will have to be reconfigured to provide enough room to maintain social distancing precautions, and this could limit the available space for people to 25% of its normal capacity. “If they try to get up to 50% capacity, most layouts are going to be problematic, and it may be difficult to achieve six-foot distancing,” Buelow says.

Banks with employees in high-rise office towers will have to work closely with their landlords to address a number of issues. “Many [banks] are going to be in multi-tenant situations,” Buelow says. “Landlords have responsibility, oftentimes, for the lobby, for lobby security, maybe lobby temperature testing, maybe lobby hygiene, bathroom hygiene and ventilation. Increasing ventilation is something that’s being debated, the merits of that, the feasibility of that to remove airborne contaminants from offices. Not an easy thing to do, but the landlord has to be part of that conversation. Modifying the workplace is not just what to do in your own space and your cube farm, it’s also engaging with the landlord.”

Elevators in high-rise office towers pose another challenge because they will only be able to take a small number of people at a time to maintain some level of social distancing. “Imagine in a multi-tenant building that has an elevator design platform, which presumes that people are going to pack those elevators [from] 8:00 to 9:00 in the morning,” says Buelow. “Even if your company decides that it’s only going to bring back 10% or 15% [of its employees], if there are other companies that have a much higher number than you and you’re not the only one using those elevator banks, it’s going to slow it down for everyone.” Buelow says that some companies are already modeling how long it will take employees and customers to reach a desired floor using their building’s elevators. He knows of one major company that estimated it would take two hours in the morning and evening for people to enter and exit the building.

Prepare the Workforce
Communication is a critically important piece of the office worker repatriation process. Returning employees will need to be trained on any new Covid-19 safety procedures or mechanisms that have been put in place, as well as proper PPE use. Equally important, employees will need assurances that their health and safety are the bank’s top concern. “I think most companies are going to be very proactive, transparent and genuine in their communications to their employees,” Buelow says. “I think it’s important to communicate with employees that the company is going to place their health and safety above everything else. Be open about the timing of when you think you’re going to be looking at coming back. We’ve seen companies say things like, ‘We know it’s not going to be before Labor Day.’ Or, ‘We know it’s not going to be before 2021.’”

Buelow says some companies have assured employees who are afraid of returning to the office that there will be no repercussions if they continue working from home. “‘And when you feel comfortable coming back, we would love to have you, assuming the state and local regs allow it and we feel like we’ve been able to put in place the changes that we feel are necessary, in order to make it a safer workplace,’” he says. “I think it’s just all about communication and change management, and helping employees understand where the company’s priorities are.”

Develop Pandemic Management Protocols
These involve all the processes the bank will rely on to keep employees and customers safe. Some of these processes will be in response to federal, state and local mandates, while others will be developed by the bank itself.

“We’re already living in a country that has pandemic management protocols [PMPs] in place,” says Buelow. “You have to wear a face mask if you’re going to go to the grocery store. You might be gated on your way in, you might be subject to temperature testing. So those PMPs are a fact of life in many U.S. cities right now. And it could be that way for some protracted period of time. What we’re saying is that companies need to have new protocols and new procedures and new policies to deal with pandemic times.”

Buelow offers one example of a PMP that could become a common occurrence as employees start returning to the workplace. “What if you develop a fever while you’re at work, in the office on the 17th floor, at 3:00 in the afternoon?” he says. “Where do you go? What’s your routing? Who do you notify? What does day one look like on the first day of reentry? What can employees expect? What’s the protocol for testing and screening? What’s the work-at-home policy? I think there’s new policies that have to be written, new procedures and protocols that have to be developed and followed.” 

Use Technology to Enable New Ways of Working
It seems likely that companies will be forced to rotate their office staff until either an effective coronavirus vaccine has been widely distributed, or some level of herd immunity develops and naturally drives down infection rates. And there are a variety of technology tools that can help manage Covid-19 risk in the workplace.

If you’re going to do temperature screening, for example, you’ll need a way to track and manage that information while protecting the employee’s identity. “There are technologies out there to help with … contact tracing or contact awareness so that somebody who has a fever at 3:00 in the afternoon, who were they sitting near?” Buelow says. “Who did they brush up against? Who did they eat lunch with?”

Another technology, deployed either as a wearable or a mobile app, would enable employers to detect who an infected person came in contact with so it wouldn’t be necessary to quarantine an entire floor or department for two weeks out of an abundance of caution. “Deloitte has an application that just hit the street, called MyPath, which does a lot of these things,” Buelow says. “It’s a tool that companies can use for these kinds of self-certifications at home and contact awareness, and case management, and a number of other things to help clients and companies with all of the technological aspects of reentry.”

There is also a technology that monitors how rooms are being used and whether social distancing restrictions are being observed. “Are people congregating in rooms where they shouldn’t be having too many people in a particular room?” says Buelow. “Removing chairs or draping them so that people don’t use them doesn’t do any good. If a meeting is called in a conference room with 20 people and they just roll 20 chairs in there, they’re not socially distant anymore.”

The process of repatriating office workers includes a lot of unknowns. For example, how will they feel about working in a very different environment which may still pose an infection risk despite all the precautions? “We’re not really sure what reentry is going to look like,” Buelow says. “If the employer creates a space that is so antiseptic, and everyone’s wearing masks, and nobody’s in meetings with anyone else, and they’re behind barriers, it could actually discourage integration. If you had to wait in the lobby for an hour-and-a-half for an elevator, on top of all of that, would you really want to come back on Tuesday after your Monday experience? So, that remains to be seen, and it could further delay reopening.”

Crafting a Last-Minute Telecommuting Policy

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As the COVID-19 pandemic evolves, more banks are asking their employees to stay home and work.

Capital One Financial Corp. asked employees who could do so to begin working remotely effective March 12. JPMorgan Chase & Co. asked its managers around the world to allow employees to work from home, where possible, less than a week later.

“We understand that this may be a disruptive decision, but we believe that is in the best interests of our associates and our communities,” said Capital One Chairman and CEO Richard Fairbank in an internal memo. “And it will create more space and distance for those who still need to come into work.”

Some employees — those in customer-facing positions, for example — can’t work from home. But remote work can keep others safe and enable in-branch workers to better practice so-called social distancing, helping to prevent the spread of the novel coronavirus while still keeping the business running.

The pandemic promises to disrupt all workplaces, at least temporarily. Yet, few banks are prepared for this mode of work. Directors and executives responding to Bank Director’s 2018 Compensation Survey indicated less than one-third offered telecommuting options to at least some of their employees.

So, what do banks need to know about putting a remote-work plan in place? To find out, Bank Director reached out to a few banks to see how their telecommuting program has evolved.

Ensure a secure workplace
Memphis, Tennessee-based Triumph Bank limited telecommuting to its mortgage division before the pandemic hit, and it was a natural place to start when the $837 million bank began implementing social-distancing measures.

Triumph doesn’t have a set policy in place for remote work, but it has established guidelines — starting with ensuring that the employee’s workplace is safe from a data security perspective. The bank doesn’t want sensitive information easily accessed by an employee’s spouse, child, roommate or anyone visiting that person’s home.

With that in mind, the bank asked loan officers and some loan processors to work from home in response to the pandemic — a decision made, for the processors, based on each employee’s at-home environment. “You evaluate each situation: Does [the employee] have an area that they can work from at home that is a secure spot, where you don’t have to worry about customer information, [and] they won’t be distracted by young children or a spouse,” says Catherine Duncan, the bank’s vice president of human resources. Those factors are taken into consideration. “We were able to send those [employees] home, and we separated everybody else.”

Port Angeles, Washington-based First Northwest Bancorp is allowed to examine employees’ at-home workspaces to ensure data security, if needed. The $1.3 billion bank’s remote-work policy also outlines equipment usage, and what to do if something goes wrong — if the internet goes down, for example. “Whatever that is, expectations of you as an employee, what you’re expected to do at that moment,” says Chief Human Resources and Marketing Officer Derek Brown. 

Get the technology in order
TAB Bank Holdings was able to shift to remote work quickly — from about 10% of staff roughly three weeks ago to 96% as of March 18. The $827 million digital bank unit operates out of one location: its Ogden, Utah headquarters.

The fact that the bank has digital onboarding in place for loans and deposits, and moved from paper-based processes five years ago, enabled it to move rapidly.

“It was really just a matter of setting up VPNs and machines, because the workloads are the same no matter where you sit,” says President Curt Queyrouze. A VPN is a virtual private network, which allows the user to send and receive data as if their computer were operating on a private network.

Following the bank’s disaster recovery meeting about the pandemic almost a month ago, staff identified where they needed more VPN licenses, and which employees lacked a personal computer or access to the internet at their home. This gap wasn’t limited to older employees; younger workers tend to rely on smartphones when they’re not in the office.

In response, TAB Bank ordered $400 laptops to distribute to select employees and granted stipends so staff could access the internet at home. That early move was critical — Queyrouze says a later trip to purchase a few more laptops came up empty, as stores wrestled with demand.

Banks need to consider all the technology required by the employee. For example, Duncan says Triumph Bank updated its payroll system so employees can now clock in remotely. That’s necessary for those that are eligible for overtime pay.

Enable communication between employees and teams
Technology facilitates communication and collaboration. Both TAB Bank and First Northwest use Microsoft Teams, a communication and collaboration platform tied to Office 365.

“To the extent that [employees] have video capabilities on their laptop or desktop [computer], we’re really encouraging them to use those so that we can see each other and feel more connected,” says Queyrouze. “We’re finding that it actually makes a difference.” He regularly emails staff, and they’re clearly communicating tasks that need to be accomplished as the situation evolves. “We have some employees whose actual work activity is going down because of reduced activity in some of our areas; for instance, loan demand’s down,” he says. “We’re trying to be purposeful about getting them engaged in other projects.”

Enabling communication is particularly critical for employees at this uncertain time.

“It’s been so fast moving that I’ve been just working to create communications and a sense of security for our employees,” says Brown. The situation is evolving rapidly, as new guidance comes from government agencies, legislative and executive bodies pass new rules, and banks work to digest it all and react appropriately for their employees, customers and communities. “We’re meeting every day to assess the situation.”

Teresa Tschida, a senior practice expert at Gallup, recommends setting clear expectations for staff, communicating frequently and gaining feedback along the way. Great managers “help people know what’s expected,” she says. And in a period of intense uncertainty — as schools and businesses close, and people are asked to isolate themselves in their homes — the daily grind of work can be a source of comfort.

“If done right, management and the company itself can be a respite from some of the stuff that we’re facing in our inboxes, or with our families and whatnot,” she says. “At least with our companies, we feel well taken care of.”

The Proactive Approach to Managing Shareholder Relations

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shareholder-relations-7-13-16.png“You either die the hero or you live long enough to see yourself become the villain.” While it is safe to assume that filmmaker Christopher Nolan did not have a board of directors in mind when he wrote that line about Batman in The Dark Knight, the words are fitting nonetheless. In this day and age, if you sit on a board of directors of a bank long enough, you will eventually be confronted by a shareholder that no longer appreciates how the board is managing the bank. Knowing a confrontation with an activist shareholder will inevitably arise, a board of directors has two options: be proactive or reactive.

Being proactive means taking steps now to engage with all shareholders and prepare to address the concerns of a hard-charging shareholder. Being reactive means ignoring the inevitable in hopes that the board can react quickly under pressure about the board’s stewardship of the bank. Historically, the reactive approach was safe due to the infrequency of shareholder activism in banking. However, in today’s “what have you done for me lately” culture, people believe they are entitled to immediate recognition of their complaints, substantive responsiveness from the board and, ultimately, satisfaction of their demands.

Boards should consider implementing a number of actions to avoid being caught flat-footed. A board can adopt a shareholder engagement policy and/or create a shareholder relations committee. A good shareholder engagement policy will delineate the board’s process regarding shareholder communications and guidance on what is and is not permissible for directors to discuss with shareholders. A shareholder engagement policy typically includes:

  • the purpose of the policy;
  • the responsibilities of the board with regard to shareholder communications;
  • the procedures for interactions between the board and shareholders, including details about how and when such interactions should be conducted, documented and reported to the board;
  • acknowledge the legal and regulatory concerns inherent in engaging with shareholders; and
  • the general topics that are appropriate for the board to address, any limitations on those topics and any topics that the board and management are expressly prevented from discussing.

A detailed shareholder engagement policy also allows the board to set forth a clear shareholder communication strategy prior to confronting an activist shareholder.

A board can also implement a shareholder relations committee. The shareholder relations committee can:

  • review, update and implement a shareholder engagement policy or other procedures governing interactions with shareholders;
  • oversee and document all communications from the board to shareholders;
  • establish avenues or forums for shareholders to communicate with the board and vice versa;
  • appoint a specific individual to supervise and be responsible for speaking directly with shareholders;
  • communicate with management regarding investor relationships; and
  • set the procedures and oversee the purchase of stock by insiders.

The committee would oversee shareholder communications. During difficult stretches, a shareholder relations committee facilitates the board’s understanding of the issues concerning shareholders. This will simplify the process of conveying the bank’s strategy to shareholders. This is particularly important when the board feels it is necessary to calm any shareholder anxieties. During prosperous times, a board can ensure that shareholders fully understand the exemplary results the bank is producing and what it means for the shareholders’ investments.

Should the board have to deal with an activist shareholder, the foundation built and maintained by the committee can prove invaluable. Banking is about relationships. That is just as true for shareholders as it is for customers. If an activist shareholder arrives, the shareholder relations committee can utilize the goodwill generated with the majority of shareholders to gauge where the shareholder base stands on certain issues. Having relationships with all of the shareholders can help the board craft an appropriately measured response and ensure its message is disseminated properly to all shareholders.

A proactive board should not be viewed the same as a board taking defensive measures in the face of a proxy contest or hostile takeover. Some boards may be hesitant to take proactive actions for fear that the board will appear as though they are trying to entrench themselves. Communicating with shareholders is vastly different than implementing defensive measures that can (rightly or wrongly) be painted by activist shareholders as self-serving. By taking these actions the board shows shareholders that it cares about transparency and meaningful communication with the owners of the bank. The proactive approach conveys the message that the board welcomes and will be responsive to constructive interactions with shareholders.