How Banks Can Create Financially Savvy Communities

Money is a complicated subject for many Americans, and financial literacy is often a challenge.

Financial wellness is often a personal journey that lasts a lifetime — and is a place where banks and technology can really improve people’s lives. Everyone benefits when bank customers enjoy financial wellness. People in good financial health tend to enjoy better physical and mental health, contribute more to society and pay more in taxes. But from a bank perspective, financial wellness is both a challenge to be met and an opportunity to be seized. Now is the time for institutions to pick up the pace.

Although financial wellness can be hard to define, only 22% of respondents in a recent TIAA survey described their finances as “healthy.” This is a concern because of the negative compounding effects over the long term mean that multiple generations may struggle to get on top of their finances. How can the banking industry address this potential widening gap between the rich and poor?

Financial literacy is one starting point, but only 21 states require students complete a personal finance course to graduate from high school. This is a major shortcoming – personal finance is an essential life skill. There’s no substitute for starting early.

The Money Smart financial education program from the Federal Deposit Insurance Corp. helps people of all ages enhance their financial skills and create positive banking relationships. FIS actively supports this and is helping to move this program online and embed financial education within financial products and services. But there is more work to do.

Just like physical well-being, everyone has unique goals and measures of success of financial wellness. Banks that appropriately assist customers on their financial journeys can create deep loyalty and great customer satisfaction. Personalized tools are essential to help individuals align finances with life goals, such as going to college, getting married or having a family. But ultimately, financial wellness is about making small, everyday choices about budgeting, expenses and using credit wisely. While this is never easy, technology can help.

Put Data and Technology to Work
For many people, facing up to their financial position is daunting. Financial jargon can be confusing, and the majority of individuals cannot afford a financial adviser to help navigate the complexity of securities, mutual funds, 401(k)s and the like. But, with the right digital tools and banking support, most don’t need one.

Digital technology empowers people to better understand their financial transactions by harnessing the power of data. The right analysis makes it easy to determine patterns, whether decisions are wise and if they are aligned with savings and retirement goals. Sophisticated data tools can provide insights to financial wellness and take much of the hard work out of the analysis of where customers spend money, and where there are opportunities to save. Over time, people form new financial habits that encourage easier budgeting and regular saving.

The opportunity is there for banks to become proactive and help customers make better financial decisions. With a wealth of customer financial data, banks are uniquely positioned to offer customers a guided journey to good financial health; those that do will be rewarded with loyal customers.

Financial wellness is an opportunity for every bank. It requires bankers to think creatively and collaborate, likely working with fintechs and suppliers to offer financial management services that empower customers to better manage their money. Open banking makes this easier and more affordable, and the time is right to accelerate progress.

Financial wellness and financial inclusion go hand in hand. Financial wellness tools can educate and encourage unbanked and underbanked individuals to participate in the regulated bank space. But it takes perseverance and commitment from banks to progress and earn the trust of those unfamiliar with traditional banking. Banks committed to financial wellness and inclusion must think big and start small. But the crucial thing is to start.

3 Things Business Customers Want From Their Banks

Just like the best community bankers, we want to be the best for our customers: the community banks powering small businesses across the country. So reviews really matter.

Our most energizing reviews are the comments that community banks relay to us from their business customers, specifically regarding their business credit application experience. You are the best banker you can be when business customers are ecstatic about the end-to-end business credit application experience. What makes business customers go out of their way to tell a community banker how happy they are?

To answer that, let’s take a look at the reasons that really help a small business owner thrive. Take Rachel, a cafe owner looking to expand her operations. Here are three things that would make you a hero in her eyes:

1. Applying for Credit Feels as Easy as Ordering Takeout
Maybe it won’t be quite as easy as a takeout order, but the experience can have many things in common. Efforts to digitize the Paycheck Protection Program, along with the customer experience for a whole host of other industries, have permanently re-trained business customers to expect more. She can even sign up for a full-fledged marketing platform in mere minutes online. Business credit application that attempt to replicate something similar include:

  • A state-of-the-art application on the bank’s business product website.
  • The application for credit follows a logical, intuitive flow, with no questions that could stump the applicant or require unnecessary precision.
  • An easy way to checking the loan status. The platform offers a way to login to check the status, revise the application once it is submitted and add documents. Prospective borrowers know where their application stands every step along the way.

2. Quick Decisioning From the Bank
This does not mean that every applicant is ultimately approved. But a fantastic online digital experience helps applicants self-select away from what would never have a chance. Completed applications are thorough and include all the data and documentation necessary to tell the applicant where she stands in a day or two. Your bank may even be able to fund her that much more quickly, generating incredible satisfaction from business owners.

3. Closing is Electronic
Not unlike a mortgage, loan closing can be fully electronic — with a lot fewer forms. Customers, like Rachel, love that. The PPP closing was largely electronic for many business owners nationwide. Why should they ever go back?

Of course, these three things only happen when your bank’s underwriting team has everything they need at their fingertips: all documents and data in one place and a decisioning engine with a recommended offer while avoiding the “black box decisioning” from artificial intelligence. A robust analysis that leaves no detail to chance and recommends quality decisions can help your bank finalize decisions. You answer your business customer in mere days.

To do that, consider adding a nimble platform that is both quickly enabled and valued priced. Your bankers are the trusted advisor to your valued business customer; you can be the hero with your bank.

Key Considerations for Measuring Customer Loyalty

Retail banking has particularly been affected by the shift to the digital delivery of products and services, given its sheer magnitude and importance.

The global coronavirus pandemic significantly accelerated banks’ adoption of digital channels and led to critical behavioral changes for customers. Banks now need to determine which shifts are here to stay and which could revert, to some degree, to pre-pandemic levels.

Strategic Resource Management conducted a detailed survey in July 2021 that offers a snapshot of customer attitudes at a particularly interesting moment in time. Sixteen months of dealing with Covid-19’s realities had created a degree of equilibrium; thoughts of a return to “normal life” had begun to enter the conversation. This cross-section provides a view into the likely permanence of customer mindsets, helping financial institutions better understand customers’ perceptions of, and feelings toward, the institutions with which they bank.

Several noteworthy takeaways:

  • US financial institutions performed well in loyalty and engagement, though credit unions performed the best. Although the roughly 5,000 credit unions in the United States comprise a small number of overall banking assets (8% based on June 30, 2021, data from the credit union and banking regulators), its member ranks remain exceptionally loyal and engaged. While some community banks enjoyed similarly high ratings, other institutions should take note of credit unions’ success and consider following some of their tactics.
  • Charlotte, North Carolina-based Truist Financial Corp. ranked very high for customer perceptions of care, value for money and understanding customer needs. The product of a 2019 merger between BB&T Corp. and SunTrust Banks, the $541.2 billion bank embarked on a significant brand awareness campaign that emphasized financial wellness and a holistic level of care for the customer’s financial life. While the largest banks often excel in terms of resources and digital tools, they are frequently viewed as more transactional. Truist does not fit this stereotype – its customer ratings demonstrate that they place great importance on emotional connection, similar to credit unions and community banks.
  • Chime ranked poorly on engagement and loyalty. While other digital brands lagged in this area, Chime ranked at the bottom of both dimensions. It has done an excellent job of building market awareness and initial enrollments but has fallen short converting new customers into more meaningful relationships. The company faced backlash last summer following reports that it suddenly closed several customer accounts. Few respondents treat Chime as their primary transaction account; the absence of a branch network may be a contributing factor. But the company could still shift public perception. By teaming with a brick-and-mortar presence — mimicking PayPal Holding’s approach in partnering with Discover Financial Services to achieve point-of-sale ubiquity — Chime might overcome concerns about access. 
  • Great service remains the biggest factor behind customer loyalty. When asked for their top reason for choosing and staying with a given institution, great service led the pack. It outpolled product quality, ease of use and personal recommendations. Beyond that, subtle yet interesting differences emerged. Location, value for money and loyalty programs moved up the pecking order when customers decided to stay with a provider. The order of “reputation and trust” and “doing what they say” swapped positions — arguably because customers can now assess an institution’s behavior firsthand rather than relying on reputation. This may also explain why brand values gained prominence in the research.

Attracting and retaining customers is instrumental to a financial institution’s relevance. It’s what ultimately fuels its success. Banks must determine why customers partner with organizations, why they stay with them and why they leave. Taking this into consideration and keeping a close pulse on what behavioral changes are permanent will help financial institutions form stickier, longer-lasting customer relationships.

Defending Your Bank Against Cybercrime

Fraudsters always look for the path of least resistance.

Recently, the most vulnerable targets have been government funded pandemic relief programs. According to recent research from several academics, 15% of Paycheck Protection Program loans were fraudulent in the 18 months leading to August 2021, totaling $76 billion. And the U.S. Department of Labor reported $87 billion in unemployment benefit scams during that same period.

As Covid-19 relief programs wind down, fraudsters are redirecting their focus from government-backed programs to bank customers and employees. The latter half of 2021 saw an uptick in traditional types of cybercrime: identity fraud, ransomware, social engineering and money laundering. So, what can a bank do to keep itself safe?

Arm employees and customers with knowledge.
Share resources and stories to help employees and customers understand the risk of cybercrime, defend their devices and detect suspicious activity. Employees are the first line of defense; it only takes one breach to compromise an institution. Provide training programs to educate staff about the different types of financial crimes and detection mechanisms. In addition, take steps to heighten customers’ awareness of fraud trends through campaigns and educational programs. For example, it is important that employees and customers know how to verify host files and certificates, determine the difference between  valid and scam websites, store confidential information and private data on their devices and set-up their devices on different network servers to minimize damage in case of an attack.

Build financial crime programs.
Investing in fraud, anti-money laundering and cybersecurity tools without a long-term strategic plan is a futile and expensive proposition. It’s common for organizations to have strategic initiatives for digital delivery channels and customer experience, but lack a financial crimes strategy. Many financial institutions do not realize they need one until it is too late: they suffer a large loss that could have been prevented. Banks should first identify, evaluate and classify assets and risks and then build a program as part of the long-term business strategy rather than a disconnected component. This approach helps to recognize an institution’s vulnerabilities and launch the most effective defensive strategy.

Invest in modern defense technologies.
Encryptions, patching software, firewalls, multi-factor authentication and real-time monitoring systems are all part of the complex, multifaceted defense that mitigates the risk of an attack. There’s not a single solution that can do it all. For instance, early breach detection mechanisms act as a strong defense, sending alerts and implementing backup and recovery programs in the event of an attack. Artificial intelligence and machine learning technologies can go on the offense, analyzing customer behavior, tracking transactions and reporting on deviations from usual behavior in real-time. Adding workflows to automated alerts allows accountholders to be involved with challenging transactions, reducing the risk for errors down the line. The foundation of any security program is continuous monitoring and evaluation of vulnerabilities, defense technologies and risk plans.

Test your incident response plan.
It is vital to test the resiliency of plans with simulated fraud or cybersecurity attacks. Don’t underestimate the chaos that a breach will cause. Everyone at the bank, from directors and the C-suite to the branch managers, must understand and be comfortable with their role in mitigating loss.

Banks spend plenty of resources building sticky customer relationships, but fraud immediately breaks that bond. A research paper by Carnegie Mellon University found that 37% of customers leave their financial institution after experiencing fraud. When a customer account is compromised, the user needs to completely modify the information on that account, including direct deposits and utility payments. The lack of trust in their financial institution, coupled with the need to rebuild their account from scratch, pushes customers to shop for another institution.

As new technologies emerge and the financial services industry becomes increasingly digitalized, the risk of financial fraud also grows. Fraudsters are constantly evolving their strategies to take advantage of new vulnerabilities. To keep safe, banks need a top-down management approach that focuses on education, long-term defense programs, modern technologies and continuous testing. Customers expect a high level of security and fraud protection from their financial institution; if they don’t get it, they will look elsewhere. In order to grow and retain their customer base, banks need to have an upper hand in the war on bank fraud.

Bankers’ Perspectives: Better Banking for Small Businesses

Digital trends predating the Covid-19 pandemic vastly accelerated as a result of the crisis, with clients moving further away from in-person experiences. Small businesses increasingly expect more from their financial institution as fintech providers outside the traditional banking space chip away at market share. Bank leaders have to act quickly to provide better services, products and experiences. In this video, Bank Director Vice President of Research Emily McCormick interviews three bankers about how they’re approaching these circumstances: Shon Cass of $986 million Texas Security Bank, based in Dallas; Stacie Elghmey of $1.7 billion Hawthorn Bank in Jefferson City, Missouri; and Cindy Blackstone of Tyler, Texas-based Southside Bank, with $7.1 billion in assets.

Derik Sutton of Autobooks also provides his point of view, based on the technology company’s background in working with banks and small businesses across the U.S.

Investing in technology isn’t just dollars and cents, says Cass, and banks need to rethink return on investment in the digital age. “How does [technology] build a better bank for the future?”

Topics discussed include:

  • Meeting the Needs of Small Business Clients
  • The Changing Competitive Landscape
  • Working With Technology Vendors to Meet Strategic Goals
  • Looking Ahead to 2022

For more on serving small business customers today, access the Small Business Insights report developed by Bank Director and sponsored by Autobooks.

Three Ways to Lower Customer Effort and Increase Loyalty

I often talk to bank and credit union executives and the topic of increasing the loyalty of customers/members frequently comes up.

The typical reasoning is that increasing customer satisfaction by going above and beyond leads to increased loyalty. While it certainly makes sense, especially in a highly regulated vertical like financial services, it is not always the best area to focus on. Indeed, a different measure has been steadily gaining popularity and is often a better fit for banks: customer effort. If customers encounter difficultly in resolving their issue, they are much more likely to look for solutions from different institutions. On the other hand, if it’s easy to resolve their issue, they will appreciate the financial institution more. This, in turn, leads to increased wallet share and overall loyalty.

Customer effort, or CE, can be measured through survey results like customer satisfaction or net promoter score asking customers if they agree or disagree with the following statement: “[The institution] made it easy for me to handle my issue.” Customers score their effort on a range from 1 if they strongly disagree to 7 if they strongly agree. The individual scores are averaged to get the overall institution average; an average score of 4 or less is considered poor, and scores of 5 and higher are considered good. The advantage of CE score as compared to customer satisfaction and net promotor score is that it can be used to measure the experience as a whole, but can also focus on specific experiences: the usability of a specific page on the company website or interactive voice response that prompts customers to speak to an automated phone system.

The insights gleaned from deploying CE scoring can be quite interesting. For most customers, banking is a necessity and there are a plethora of institutions to choose from offering a similar range of products and services. This implies they choose who they bank with partially based on the perceived effort needed to use the services. Traditionally, this meant choosing the bank with conveniently located branches; increasingly, it means choosing institutions with robust online and self-service offering. The expectation is that banks should do simple things well and make things easy. When there is a problem, helping customers solve it quickly and easily is key.

Here are five insights from institutions employing CE scores:

  1. Customers dislike having to contact the bank multiple times and needing to answer repetitive questions multiple times. They also don’t like switching from one service channel to another to get their problem resolved.
  2. Majority of customers will start with lower effort channels — online and self-service — and only opt for phone service when needed. Calling is seen as a higher level effort.
  3. Customers are willing to put in more effort when there is a perception of increased value for the effort, like driving to a branch to discuss important life events. But as customer effort increases, so do their expectations.
  4. Experiencing complications in resolving their issues makes it hard for customers to believe they are getting value for their money. They will be more likely to consider products from other competitors.
  5. Negative outcomes of high-effort experiences significantly outweigh any benefits of easy or low-effort experiences. In other words, customers who perceive their bank is making things “difficult” are more likely to leave than customers who are “dissatisfied” according to an NPS or CSAT score.

Here are my top three suggestions for prioritizing changes that can reduce customer effort:

  1. Invest in self-service solutions. Analyze feedback on CE surveys to identify specific experiences on websites and apps that could be improved with self-service.
  2. Adopt an asynchronous service model. Asynchronous service solutions that do not require customers to actively wait or demand their full attention throughout the interaction, like messaging and call back functionally, can significantly reduce a customer’s perception of effort.
  3. Use video calls. Video calls can provide many benefits of in-branch visits but require less physical effort from customers, lowering expectations on the institution.

There is significant overlap in the above suggestions and suggestions on how banks can save customers time. That’s because an investment of time is just one dimension of a customer’s effort.

Measuring customer effort can provide actionable insights into specific process and service improvements and should be a part of any bank’s customer success story. Customer perception of a difficult interaction is a good predictor of customer churn; investing in more easy experiences can improve both share of wallet and long-term loyalty.

The Key to Upgrading Digital Experiences

The pandemic has accelerated a number of trends and digital roadmaps, momentum that continues today.

Microsoft Corp. Chairman and CEO Satya Nadella put it best when he said “We’ve seen two years’ worth of digital transformation in two months.” In banking, 59% of consumers said the pandemic increased their expectations of their financial institutions’ digital capabilities. How can banks respond?  

A Non-Negotiable Experience
As customers, haven’t we all had an experience that left us confused? Many times it’s something obvious, like a marketing email urging us to download an app that we’ve had downloaded for years and use weekly. Customers expect that when they share their data, they get a better experience. A recent survey of Generation Z consumers reported that nearly 40% give a business only one chance to provide a satisfactory digital experience before moving onto a competitor.

Customers also expect their bank to be a strategic partner in money management, offering relevant services based on the data they have. These experiences can build loyalty by making customers feel taken care of by their financial institutions.

Common Challenges
When it comes to managing and optimizing their customers’ digital experiences, we see banks dealing with a few major issues:

  • Difficulty effectively cross-selling between products.
  • Disparate services where data lives in disconnected silos.
  • The scale of data, often exceeding legacy capabilities.

These challenges, along with many others, stem from the fact that customer data often live in numerous different systems. When data is scattered and siloed, it’s impossible to tie it together to understand customers or create personalized digital experiences that engender loyalty. This is why many banks are turning to customer data platforms (CDP).

Upgrading the Digital Experience
CDPs are powering some of the most cutting edge, customer-centric digital programs across leading financial institutions. An enterprise CDP makes data accessible and useful by bringing disparate data sources together, cleansing the data, and creating a singular view of the customer that can be used across the entire organization. It can become a bank’s single source of truth on customers. Marketing can connect to customers with personalized offers, analytics can explore data to find trends and areas of opportunity, customer service can access relevant information to assist customers, and finance can forecast with customer key performance indicators.

Should you consider a CDP?
Here are a few questions executives should ask to determine if their bank’s current setup is working:

  • Are customer data points and interactions centralized in one location?
  • How much time are analysts spending gathering customer data for reporting?
  • Is marketing able to easily use the same customer data to drive personalization?
  • How confident are teams in the data?
  • Is it easy to bring in a new data source?

If there is hesitation around any of the answers, looking at CDP options could be a really smart idea.

Capabilities to Look for

There are many companies using CDP terminology to describe products that aren’t exactly that. Banks should focus on a few key features when evaluating a CDP.

Speed to value. How long does it take to pull data together for a customer 360 degree view? When will data be ready to serve customers and power initiatives across the organization? The best way to accelerate these timelines is with a CDP that uses artificial intelligence to unify and organize records, which is much faster and more stable than rules-based data unification systems.

Enterprise functionality. A CDP should serve as the single source of truth for the entire organization, with a suite of tools that can accommodate the needs of different teams. Multiple views means teams are only presented with the data they need, with the methods that they prefer: robust SQL query engine for analysts, point-and-click segmentation for less technical users and dashboards for executive visibility.

Flexibility and interoperability. A CDP should work with your bank’s current technology investments, connecting easily to any tools or systems you add in the future. One sign of this is a CDP having many partnerships and easy integrations that can quickly allow you to take action.

You need to trust that a CDP can scale to the enterprise and compliance demands of a bank, accommodating vast stores of data that will only continue to grow.

A critical opportunity
There is unprecedented demand from banking leaders to stand up a CDP as a critical business driver. And no wonder. With so many customers using digital channels and generating more data, banks need to double down on increasing the lifetime value of existing customers while finding ways to attract new customers.

What Banks Can Learn From Retailers to Grow Loans

If success leaves clues, retail has dropped plenty of golden nuggets to help the banking industry refine its credit application process and increase customer loyalty.

While banks have come a long way with online and mobile features, credit and loan application procedures are still stuck in the early 2000s. Often, the process is unnecessarily bogged down by false pre-approvals and lengthy forms; bank processes drive how customer obtain loans, instead of by their individual preferences.

Savvy lenders have already adopted alternatives that curate an express, white-glove approval process that incorporates customer loyalty. It’s more of a catalog of options available any time the consumer wants or needs something. Companies like Amazon.com and Delta Air Lines don’t work to predict consumer’s every desire; instead, they empower the customer to shop whenever and wherever, and proactively offer them options to pay or finance based on their data. Consumers join loyalty programs, earn points and build profiles with companies; they can then apply for credit online, over the phone, in store — wherever it makes the most sense for them. If they provide the correct information, they typically find out whether they are approved for credit in 60 seconds or less — usually no heavy paperwork to complete, just verbal confirmations and an e-signature. Retailers have given consumers a sense of ease and confidence that endears them to a brand and inspires loyalty.

Banks, on the other hand, seem convinced that customers are monolithic and must be instructed in how to shop for loans. But they have much more consumer data and more lending expertise than retailers; they could go even further than retailers when it comes to extending loan offers and services to customers in a variety of formats.

For instance, a bank should never have to deny a customer’s loan application. Instead, they should have enough data to empower the consumer with personalized access to loans across multiple product lines, which can go further than a pre-approved offer. These guaranteed offers can eliminate the application process and wait time. It gives the consumer insight into their personal buying power, and instant access to loans where and when they need them. The process doesn’t require a lengthy applications or branch visit, and removes the fear of rejection.

What Keeps Banks from Offering Customers a Faster Process?
It’s not a completely failed strategy that banks throw multiple offers at a consumer to see which one sticks. Some consumers will open the direct mail piece, complete the forms online and receive approval for the credit line or loan they have been offered. That’s considered a successful conversion.

Other consumers won’t be so lucky. The quickest way to upset a consumer who needs a line of credit or loan for personal reasons is to send them an offer that they were never qualified to receive. It’s cruel, unjust, wastes the consumer’s time and jeopardizes any loyalty the consumer has for your bank. Your bank already has readily available data to ensure that consumers receive qualified loans — there’s no reason to disappoint a customer or prospect.

Additionally, consumers increasingly reward personalization, and the sense that an institution understands them. A survey from Infogroup found that 44% of consumers are willing to switch to brands that better-personalize marketing communications. And a recent survey from NCR finds that 86% of people would prefer their bank have greater access to their personal data, compared to big tech companies like Amazon.com and Alphabet’s Google. This is up 8%, from 78%, in a similar study in 2018.

Personalizing messages and offers is something retail brands do well; consumers are open to and increasingly expect this from their banks. This is a bank’s best strategy to stay ahead of retailers’ loan products: showing customers how well you know them and deepening those relationships with fast, guaranteed offers.

The U.S. economy is expected to expand more rapidly later this year, through 2023, according to the Federal Reserve. This is a far cry from the doom and gloom projected late last year. Banks looking to capitalize on the growth will have to adopt a more on-demand strategy from their retail brethren. The loyalty from customers will be sweet.

How Digital Tools Can Create Consumer Confidence

The coronavirus’ challenges offer banks an opportunity to reassure shaken consumers and help them reestablish a sense of control.  

Consumers are concerned about protecting the health of themselves and their families and, increasingly, the impact Covid-19 could have on their financial well-being. Unemployment is at its highest level since the Great Depression; approximately 50 million U.S. workers have filed for unemployment since March. One survey found that 38% of individuals report checking their account balances more frequently than before the pandemic — a clear sign of anxiety around finances.

Banks are uniquely situated, as already-trusted partners, to provide the peace of mind and assurances that consumers desperately seek during these anxious times. Consumers will build loyalty toward those institutions that help them feel aware and in control of what’s happening with their money, even in virtual spaces.

A few ways that banks can increase confidence as consumers increasingly rely on digital payments include transaction alerts, increasing contactless payment limits and giving spending insights, including recurring transactions.

Alerts and insights help consumers feel more in control of their financial situation. Consumers have shifted their spend toward debit cards and checking accounts as they seek to limit accidental overspending and avoid debt. Monthly insights can give them a quick view of their spending by merchant type and location. Making it easy to see where card data is stored online, and with which merchants, allows consumer to review their recurring transactions and easily remove cards from accounts and merchants they are no longer using. 

Increased credit limits help consumers feel like they have more options for safe and contactless payments. With rising infections, lockdown and social distancing causing a drop-off in travel, social events and eating out, online commerce and contactless transactions are increasingly replacing cash transactions.

While Covid-19 accelerated the uptick in the use of these digital payment methods, many Americans may continue these new habits post-pandemic. As many consumers remain reticent to venturing out of their homes for errands, visits to branches for service requests have migrated to bank contact centers. To manage this increase in the number of requests to call centers, banks should encourage consumers to handle everyday requests themselves through online and mobile self-service tools. Doing so will allow phone support to prioritize in-depth items that require personal support.

For example, providing precise and detailed transaction information to consumers on their mobile apps will reduce the numbers of queries and false disputes raised with contact center staff through misunderstandings or confusing transaction details. Other digital capabilities that banks can offer range from simple card controls — like turning a card on and off, or resetting a PIN — to more advanced features, such as disputing a transaction or applying for a new account.

Consumers now tend to expect similar easy-to-use experiences across all of their apps. With tech companies like Amazon.com and Google setting the bar high, it is essential that financial institutions also offer robust features and intuitive design. The past six months have brought with them a dramatic acceleration in digital payments, and financial institutions should grasp the opportunities to continue to be the trusted and reliable pillar on which their account holders lean.

COVID-19: A Make-or-Break Moment for Customer Loyalty

It seems like the world is spinning faster these days. COVID-19 has caused dramatic shifts in the way people live their lives and manage their finances. Add record job loss to the mix, and you get a groundswell of people relying on their banks more than ever. It’s a make-or-break moment, as customers form new habits in response to their new reality.

Ryan Caldwell has a bird’s-eye view of how customers are relying on their financial institutions’ data and digital tools in this moment of crisis. As the CEO of MX, a Utah-based fintech, Caldwell helps financial institutions collect, analyze, present and act on data. Right now, the data is telling him this moment offers an opportunity for banks to cultivate loyalty. At the same time, it presents big risks for banks that don’t rise to the occasion.

In a recent interview, Caldwell told a story that serves as an interesting corollary for two approaches banks might take to navigate the crisis.

Driving down the streets of Lehi last week, Caldwell noticed construction in the parking lot of a Chick-fil-A. He was curious so, at the stoplight, he opened their app and placed an order. When he pulled up to the window, the Chick-fil-A manager confirmed his order and handed it over with sterile gloves. The receipt was in the app. It was an optimal, socially distanced experience.

Caldwell asked the manager about the construction. In a time when most restaurants are struggling to stay afloat, Chick-fil-A, Caldwell was told, is converting half its parking spots into mobile ordering stations. They’re experiencing exponential growth in mobile usage and, without customers spending 45 minutes in the store, they’re able to operate at redline capacity. They’re busier than ever.

Shortly after his Chick-fil-A experience, Caldwell had an experience that better aligns with refrains we’re hearing in the news about how restaurants are getting slaughtered without dine-in customers.

Caldwell’s family frequents a local pancake place, but the restaurant has no mobile app and a terrible website. Still, when your four-year old daughter has been cooped up in the house for weeks, you run out of options. So Caldwell placed a phone order and ventured out.

When he pulled up, the restaurant looked deserted. He parked and went inside to pay for the order — touching door handles and PIN pads along the way. The pancake place’s manager had a completely different problem from Chick-fil-A’s: without dine-in customers, they had virtually no business. Caldwell says everyone in town loves this place’s pancakes — a lot more than they like Chick-fil-A — but it didn’t matter how much people love it if they don’t have a safe, easy way to get to it.

The restaurant analogy easily applies to banks. The ones that provide a modern mobile experience are not only processing basic transactions for their clients, they’re using data to provide helpful insights and peace of mind in this crucial time. They’re able to increase engagement and help their customers figure out just how much is safe to spend on toilet paper stockpiles. They play a key role helping customers tackle daily struggles.

Banks that aren’t leaning into technology risk losing out on these opportunities. Worse, they may not see that loss until we’re on the other side of this crisis.

Banks without data aggregation have no way of knowing how their customers’ behavior is changing in response to this crisis. They can’t see it when social distancing and closed branches cause customers to download new apps, apply for a loan from a fintech or find a new way to move money.

“Banks are completely blind to changing consumer habits regarding digital banking if they don’t have aggregation,” Caldwell says. “So I think a lot of banks may think they’re going to come out of this at the end even stronger, but they are not realizing they’ve already lost a battle. It’s just a question of time before that lingering account dwindles down to the low balance, and then it either sits as a zombie account or it goes to zero.”

In times of rapid change, banks can’t afford to fly blind by using lagging indicators based on last month’s reports. Caldwell says leading indicators — the tiny tremors in behavioral changes that only artificial intelligence can detect — will be crucial in helping customers and de-risking the bank.

And banks need to get their data and digital experiences in place fast. The healthcare industry’s response to COVID isn’t to take 18 months building a new hospital from the ground up, Caldwell says. Healthcare administrators triage; they set up tents in parking lots and do whatever they have to do to provide help where it’s needed most.

It is possible for banks to play catch-up quickly. Fintechs have come out in droves to support banks with accelerated launches and discounted services. For MX’s part, they can set up a data-driven mobile app that sits alongside the bank’s existing app in a matter of weeks.

“You don’t have time to retrofit your ancient hospital,” Caldwell says. “If you want to take good care of your customers and not let them down, you need to launch something in the next few weeks. The world you live in right now is a world where that is not only possible, but it’s requisite.”