Fraud Attempts on the Rise Since Pandemic’s Start

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As Covid-19 passes its one year anniversary in the United States, businesses are still adjusting to the pandemic’s impacts on their industry.

Banking is no exception. While banks have quickly adjusted to new initiatives like the Small Business Administration’s Paycheck Protection Program, the most notable impact to financial institutions has been the demand for online capabilities. Banks needed to adjust their offerings to ensure they didn’t lose their client base.

“ATM activity is up, drive-through banking is up 10% to 20% and deposits made through our mobile app are up 40%,” said Dale Oberkfell, president and CFO of Midwest Bank Centre last June.

The shift to digital account openings has been drastic. The chart below looks at the percent change in cumulative number of evaluations from 2019 to 2020 for a cohort of Alloy customers, limited to organizations that were clients for both years. Since the onset of the pandemic, digital account opening has increased year-over-year by at least 25%.

Although the shift to digital was necessary to meet consumer demands, online banking opens up the possibility of new types of fraud. To study the pandemic’s impact on fraudulent applications, we took a closer look at changes in consumer risk scores since the onset of the pandemic. Similar to credit scores, risk scores predict the likelihood of identity or synthetic fraud based on discrepancies in information provided, behavioral characteristics and consortium data about past fraud activity.

Comparing the pandemic months of March 2020 to December 2020 to the same period in 2019, Alloy clients saw a dramatic rise in high-risk applications. Total high-risk applications increased by 137%, driven both by overall growth in digital application volume and a comparatively riskier population of applicants.

There are several ways for you to protect your organization against this growing threat. One way is to use multiple data sources to create a more holistic understanding of your applicants and identify risky behaviors. It also ensures that you are not falling victim to compromised data from any one source. It’s a universal best practice; Alloy customers use, on average, at least 4 data sources.

Another way for you to protect your institution is by using an identity decisioning platform to understand and report on trends in your customer’s application data. Many data providers will return the values that triggered higher fraud scores, such as email and device type. An identity decisioning platform can store that data for future reference. So, even if a risky application is approved at onboarding, you can continue to monitor it throughout its lifetime with you.

Digital banking adoption and usage is expected to only increase in the future. Banks need to ensure that their processes for online capabilities are continuously improving. If your organization is spending too much time running manual reviews or using an in-house technology, it may be time for an upgrade. Click here to see how an identity decisioning platform can improve your process and help you on-board more legitimate customers.

Top Four Digital Trends for the Next Five Years

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The sheer amount of disruptions the banking industry endured in 2020 has cast a new light on banking industry trends. But will these disruptions translate into major shifts or further acceleration — especially with regard to digital growth — over the next five years?

Last year, banks saw an unprecedented influx of deposits — $2.4 trillion, according to the Federal Deposit Insurance Corp., with gains going primarily to the biggest banks. Looking ahead, we predict further ascendance of the moneycenter banks, but still see opportunities for smaller, nimbler banks to remain competitive when it comes to digital banking innovation. 

Disruptions and Opportunities
The Covid-19 pandemic demonstrated compelling reasons for community banks to step up their digital banking efforts. In-person interactions are limited, and even in places where banks are open, many customers may not feel safe. The preference for remote banking is likely to continue into the future: Qualtrics XM Institute found that 80% of people who start banking online are at least somewhat likely to continue.

But the coronavirus is just another tick in the column in favor of greater investments in digital banking. Many community banks have already rolled out online service options in the past few years. Their efforts and investments to make digital banking more user-friendly and efficient is paying dividends.

For instance, Cross River Bank, a community bank with $11.5 billion in assets in Fort Lee, New Jersey, emerged as one of the top Paycheck Protection Program lenders while simultaneously gathering $250 million in deposits in just 15 days. As innovative banking technology becomes more readily available, community banks will have convenient alternatives to legacy vendors that don’t require a massive budget.

What’s Next in Digital Banking?
Banking will continue to evolve rapidly over the next five years. In particular, community institutions should take heed of four trends.

1. Hyper-localized products will help community banks compete with larger institutions.
Community institutions should focus on overall product offerings, not just rates. Digital solutions can offer better tools to connect with the local community, as well as expand a bank’s customer base nationwide.

A major trend for banks to consider is verticalized banking. The big banks aren’t capable of delivering hyper-localized or targeted offerings to the same extent. While these services already exist for certain demographics, such as military personnel and students, we’re seeing this expand to female entrepreneurs, minority-owned businesses and tech developers.

2. Banks are leveraging technology to deepen community relationships.
Covid-19 relief efforts created an opening for tech-savvy community banks to win market share and goodwill among small businesses and communities at-large. These relief efforts will likely continue to be a major area for investment and innovation over the next few years.

A prime example of this is Quontic Bank’s #BetheDrawbridge campaign. The Astoria, New York-based bank’s Drawbridge Savings account matches a portion of interest paid to account holders into a fund providing financial relief to New York City families and businesses. Not only is the bank leveraging digital account opening to broaden its footprint, but also building goodwill within its home-base. 

3. Real-time transaction monitoring becomes table stakes to compete online.
While the U.S. has been slow to adopt real-time payments (RTP), the time is near. The Federal Reserve is working to release its RTP network, FedNow, by 2024; The Clearing House’s RTP Network is quickly expanding.

Community banks should prepare for real-time banking — not only through the implementation of real-time digital servicing, but also through real-time transaction monitoring. Money moves today; if banks don’t receive a report until the next morning, it’s too late. As real-time payments become more accessible, real-time transaction monitoring will be table stakes in order to prevent fraud, mitigate costs and stay competitive.

4. The business banking experience will see major growth and user-friendly improvements.
Commercial banking has so far lagged behind consumer services, remaining manual and paper-based. Fortunately, the innovations that have emerged in personal banking are migrating to the commercial space. This will likely become a major area of focus for technology firms and financial institutions alike.

Looking Ahead
In the next five years, smaller banks will need to double down on digital banking trends and investments, taking advantage of their nimble capabilities. The right tools can make all the difference — the best way for banks to fast-track digital offerings in the next stage of their evolution is to find the right partners and products for their needs.

Rethinking the Core with Nimble Digital Banking Technology

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When it comes to the core, banks spend years evaluating their systems and making sure they align with the current and future needs of customers.

From personal financial management tools to card controls, customers select banks that offer the highest tech and robust options. This can be a challenge for banks, especially on the smaller side or those with a limited budget. But when a bank’s core can no longer keep up with the demands of digital banking trends, the cost, expense and risk of a total core conversion is often too high for institutions to justify making a wholesale change.

Instead, banks are bolting on a variety of tools that attempt to provide the functionality they need to meet customer demands and run efficiently behind the scenes. This can be a challenge for many banks, especially those that are light on staff and are assigned to manage multiple vendors. Vendor management is can be a meticulous and time-consuming task, as there are many separate and segmented parts that need coordination in order to run smoothly with close monitoring. This may require additional staff or additional tasks for executives that already wear many hats.

The future in core banking
As they look ahead at the future of digital banking, bankers are seeking ways to work around the core and still have comprehensive banking capabilities. These systems must be robust and fully run through the cloud while maintaining security. This explains the rise of challenger and neo banks that focus more on technology and security, rather than the brick and mortar. What also sets these companies apart is the way they utilize their core — it goes beyond the legacy systems that require many additional outside services for simple banking needs.

The modern core needs to evolve into a hub that serves as the foundation for digital banking, embedded banking and other customer-focused capabilities, working seamlessly across channels while also giving consumers individualized services.

How customers prefer to utilize banking
Bank customers are continuing to seek options that are tailored to their needs. Hyper-personalized services have continued gaining momentum as customers seek services that match their differentiated and unique situations.

Different customer segments have different needs and requirements; a small business owner’s needs will look different compared to a college student. The small business owner may look for options that can better track purchases or need loans for his or her business. The college student may be looking at more options like P2P payments and card controls to monitor their financial behaviors. Hyper-personalization means cores need to be more flexible and adaptable, with streamlined processes that make updates to technology and features seamless.

The pandemic has challenged and complicated some customers’ ability to work with their banks, given that branches have undergone significant changes to operations to ensure the safety of staff and customers. In response, customers have had to rely more on customer service options in a digital environment — which can be a turn off for many. Many customers avoid using a chat function or calling a helpline at all costs, as they believe it will be a time suck or it will not resolve the issue. So in addition to building in hyper-personalized services, banks must also take these preferences into consideration as they assist customers by offering methods that best suit their preferences.

Nimble and robust from the bottom to the top
As banks continue working toward their goals for 2021, it is important they examine their current offerings against their roadmap for the future. By working with technology partners that create a one-stop shop for services, they can eliminate the need for multiple vendors and moving parts while tightening their security measures through nimble cloud-based solutions. Now is the time for banks to make the switch and evaluate how they can provide the highest level of banking for their customers.

Digital Transformation Defined

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Many banks know they need to undergo a digital transformation to set their institution up for future success. But what do most bankers mean when they talk about digital transformation?

“If you look at the technical definition of digital, it means using a computer. Congratulations, we can all go home because we all use computers to do everything in banking today,” jokes Nathan Snell, chief innovation officer at nCino during a presentation at Bank Director’s BankBEYOND 2020 experience.

Of course, a digital transformation requires technology, Snell says, but he argues that the integration or adoption of this technology should change how a bank operates and delivers value. Going beyond that, it should be accompanied by a cultural shift to continually challenge the status quo — otherwise this attempt at change may fall short of innovation and transformation.

You can access Snell’s complete presentation and all of the BankBEYOND 2020 sessions by registering here.

Developing a Digital-First Approach to Risk Management

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The world has leaned further and further into the digital realm, largely thanks to a younger, more tech-dependent generation.

The Covid-19 pandemic accelerated a years-long push toward online and mobile banking use. Does your institution have a true digital banking strategy to deliver simple and secure digital banking services to your customers? As the primary channel through which customers conduct nearly all their banking activities, digital is your bank now.

But as more consumers turn to digital channels, cybercriminals are following suit — as demonstrated by increasing incidents of fraud and unauthorized account access. To mitigate cybersecurity threats and protect your customers, your bank’s risk management strategy now requires a digital-first approach.

Risk Management in Digital Banking
Even though customers demand digital transformation, delivering frictionless experiences comes with certain inherent challenges and risks. Once you identify these hurdles, you can mitigate them so that your institution can move forward.

The most pressing digital banking risk management issues fall into two categories: overcoming organizational challenges and mitigating regulatory risks. Each of them has several considerations and variables your institution should consider.

Overcoming Organizational Challenges

Outdated corporate culture: Entrenched processes and perspectives can stall your digital transformation. Promoting a more forward-thinking culture must start at the top and flow down in order for the entire institution to embrace change. Confirm your bank’s risk management personnel are onboard, and involve them from the beginning to ensure a secure and safe transformation.

Refocusing of key positions: Some of your bank’s key positions may change in response to digital transformation. Digitization may shift the focus of some, but these positions are still critical to the institution’s success. For example, instead of manually performing tasks, employees working in an operations department may begin focusing on automating processes for the institution.

Resistance to change: Many institutions have executives that will champion progress, while others are resistant to the changes required to adopt a digital-first approach. Identify the champions at your institution and empower them to lead your digital transformation.

Lack of innovative thought leadership: It will take true out-of-the-box thinking to digitally compete with the big banks and emerging fintech companies. Encourage that kind of modern thinking within your institution.

Misguided beliefs: Quash any notions that a mobile banking app is the only component of a digital strategy, or that a digital-first approach means that personalization is no longer needed. Back-end operations and internal processes must fully support a digital environment that effectively identifies and fulfills individual customer needs based on their actions and behaviors — without adding friction to the customer experience.

Mitigating Regulatory Risks

Digital compliance and cybersecurity: Banks operating in a digital environment must still comply with all applicable laws and regulations. This includes paying attention to uniquely digital processes that are covered under specific rules, such as electronically signing documents per the E-Sign Act. To mitigate risk, institutions should invest in technology designed to ensure compliance and strengthen cybersecurity.

Third-party risk management: Many banks are outsourcing all or part of their digital strategy to fintechs and other third-party vendors out of necessity. But institutions are still ultimately responsible for all functions, whether they are performed internally or externally. A robust vendor management program is key to avoiding unqualified third-party providers. A provider must understand applicable regulatory requirements, be able to adhere to them and guarantee compliance.

Fraud and identity theft: The increase in banking without face-to-face interaction can increase the risk of synthetic identity fraud, traditional identity theft and account takeovers. Your bank should meet these challenges by reviewing and strengthening your Bank Secrecy Act/anti-money laundering (BSA/AML), know your customer (KYC), customer due diligence (CDD), cybersecurity and other relevant compliance programs. Digitizing internal processes will result in more available data as well as the ability to use AI to monitor customer behaviors and efficiently identify potential fraud.

While digitization can increase certain risks for banks that undertake such a transformation, enabling enhanced digital banking risk management to secure digital channels, mitigate risk and deliver a frictionless customer experience is worth the effort.

Three Reasons to Prioritize Digital Customer Service

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Consumers and businesses are increasingly choosing to complete financial tasks in digital channels, but banks have largely failed to evolve their customer service and support strategies.

Traditional phone service models that banks have relied on for decades are notoriously frustrating and inefficient not only for the consumer, but for the agent as well. Forcing customers to leave the digital channel to connect with a service agent via a time-consuming phone experience is detrimental to customer satisfaction and loyalty. Not to mention, this channel hop leads to higher costs and inefficiencies for the bank. It’s time for banks to take a digital-first approach to customer service.

Digital customer service has experienced significant acceleration in recent months. Banks that modernize their customer service strategies with digital-first communication and collaboration capabilities will be able to enhance the customers’ and employees’ experiences. There are three top reasons banks should adopt digital customer service: modernize communications, boost operational efficiencies and increase customer engagement.

Modernize Communications
The coronavirus pandemic has amplified the use of digital this year, more than anyone could have predicted. With fewer customers visiting branches, digital banking usage has skyrocketed. While this shift made banks realize that the digital experience should be their top priority, many are neglecting the glue that makes digital transformation work: digital customer service.

For many consumers, this is the first time they’re relying on digital for more-complex tasks like opening accounts and applying for loans. Customers must have the ability to be met with full support and guidance within digital channels by bankers that can see their issue in real time and help them find a resolution.

Boost Operational Efficiencies
Contact centers have traditionally fielded simple requests, such as determining account balances and transferring money between accounts, but now self-service and automation allows most customers to handle these more straightforward tasks themselves. As a result, bank agents are typically met with more complex requests and inquiries. This has created a need for contact centers to become more sophisticated, with more highly-trained and specialized employees.

Savvy banks are recruiting AI to help with this transition — not just for customer-facing inquiries but agent training as well. Bots can speed up customer service by surfacing relevant information during interactions, alleviating agents from manually retrieving data from back-end systems. They can also recommend the best next action and pre-approved verbiage for customer responses, reducing time and effort for agents and increasing compliance with bank policies. As agents accept or decline the suggestions, the bank’s system can capture more data to optimize and improve bot recommendations for more accurate, targeted assistance in the future.

Digitizing customer service and enlisting bots to assist agents gives banks a way to save time, increase operational efficiencies and boost staff morale and satisfaction. This is especially important now, as they navigate thin margins and the pressure to do more with less.

Increase Customer Engagement
Today’s phone-centric customer service models typically include long wait times and disjointed experiences. Once customers connect with an agent, they have to spend time reauthenticating and providing context around the issue at hand. Meeting customers where they are in the digital channel instead — whether that’s through chat, video or voice — ensures that the agent can see the issue in real time, eliminating any guesswork. Agents should never have to ask ‘How can I help you?’ again. This more-seamless option leads to a better customer experience and increased engagement and loyalty.

Customers expect their financial services providers to know and understand them, just as big tech companies and major retailers like Amazon.com and Netflix do. Through digital customer service, banks can better, more quickly access relevant customer information necessary to tailor responses and interactions, ultimately boosting customer loyalty. In fact, it’s common for banks that leverage digital customer service to experience 20% improvements in customer satisfaction, reflected in net promoter and customer satisfaction scores.

Banks are increasingly realize that a phone-first approach to customer service will no longer cut it, especially in the increasingly digital world.  In fact, the most-advanced institutions are removing phone numbers from their websites entirely, replacing them with flexible, digital-first communication options. Those that embrace digital customer service will be well positioned to keep and grow customer relationships, increase profit margins and secure a strong competitive position.

Why Nailing the Customer Experience Comes Down to Empathy

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While this pandemic has brought many challenges to the financial industry, it’s also brought the opportunity of accelerating customer adoption of your digital banking services.

But it’s also presented an opening for your bank to build genuine customer loyalty and turbocharge your net promoter score.

Difficult times bring out the best and the worst in both people and companies. It’s easy to offer amazing service when things are going well, but it’s how you treat your customers during tough times that builds, or breaks, loyalty. American poet and civil rights activist Maya Angelou said, “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

Right now is your opportunity to make your customer feel valued, supported and secure. To do that, you need to be empathetic to your customers and your staff.

Consider your customers. They’re stressed.

This is a stressful time for them. Many are financially strained and need advice on the new programs and policies put in place to help them. They’re socially isolated and trying to avoid public places in an effort to stay safe. So, naturally, they’re increasingly banking through your digital channels — but that’s stressful too. How do I use mobile banking? Is it secure? How do I make sure I don’t send money to the wrong person?

To navigate these tricky waters, your customers need access to knowledgeable people who can guide them through your technology, and help them understand how to use your products and services.

Your frontline is your bank. It’s through your frontline that your customers experience your bank. And these are difficult times for frontline staff, too. Many are working from home, and have had to switch roles to handle the increased volume of remote support requests.

At the same time, they don’t have the in-person support of their colleagues, and they don’t have the same toolsets at their disposal. And new programs and policies are being rolled out faster than ever. All this at a time when many of them are experiencing personal difficulties.

You need to provide them with the knowledge, skills, and tools to deliver an exceptional customer experience. For the knowledge and skills part, they need practical training, which has been made more difficult by the pandemic. Instructor-led trainings are off the table, your learning management system could be better. You need an engaging and effective way to train remote staff so they can offer the right solution at the right time for your customers.

One of the biggest holes you need to plug is the lack of employee knowledge and familiarity with your digital products — the very ones you customers need to rely on right now. Many of your staff don’t bank with you, so they’ve never experienced your digital tools. If they’re not familiar with your tech, how can they be expected to promote and support it? To empower them, you need to train them on your tech and give them tools to help customers navigate transactions.

It all works together. The goal during this pandemic is to deliver an exceptional customer experience, to make customers feel secure and valued during a difficult time. Banks that can pull this off will build coveted long lasting customer loyalty. My contention is that empathy is the key to success.

Your customer experience is curated by your frontline employees. If you can remove stress from their jobs with training and support tools, they’ll be in a better position to help your customers. Investing in your frontline and showing them that you care about them will make them feel valued and help you build staff loyalty.

A well-trained, supported and secure frontline will do a much better job of helping your customers get through these tough times. Armed with the knowledge, skills and tools they need, frontline staff will be able make prescient recommendations that promote your products while making the customer feel confident and secure with their banking situation.

In the long run your customers won’t remember the details of each transaction and how it was handled. They’ll remember whether their bank added to their stress, or gave them one less thing to worry about during a trying time.

A Costly Problem Facing Banks

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Bill pay is a central tool in digital banking suites — but most customers aren’t actively using it.

It’s counterintuitive: Banks play a central role in our financial lives, yet most consumers opt to pay billers directly, according to “How Americans Pay Their Bills: Sizing Bill Pay Channels and Methods,” a survey conducted by Aite Group. The online survey of more than 3,000 U.S. consumers was commissioned by the bill-pay platform BillGO.

Almost 60% of bills are paid online, according to the survey, which finds that the percentage of online bill payments paid directly via a biller’s website — already accounting for the vast majority — increased by 14 points since 2010. In that same time period, banks’ share declined by 16 points as third-party entrants entered the space.

The result is chaos for consumers seeking to pay their bills on time and a missed opportunity for their banks.

“[For] many financial institutions, bill pay has been a fairly strategic component of the consumer relationship,” says David Albertazzi, Aite’s research director in the retail banking and payments practice. Along with automated loan payments and direct deposits, bill pay is viewed as a core element of the primary financial relationship.

There’s also the real cost associated with this problem: One bank recently shared with Bank Director that it built a bot just to deregister inactive bill-pay users sitting on its core system.

Bank Director’s 2020 Technology Survey finds that improving the customer experience is a top technology objective. Albertazzi says that bill pay should be part of that strategic consideration — and the experience needs to improve. Dramatically.

“The actual model and the experience have not changed for many years,” he says. “Today, it’s pretty prone to friction.” Payees must be added manually by the customer, and there’s a risk of mis-keying that information. Customers can’t choose how to pay, beyond their primary checking account. They aren’t notified by the bank when the bill is due. The payments lack information and context, and they don’t occur in real time.

These barriers limit the experience, driving more than three-quarters of the Americans who pay bills online to just go directly to their biller’s website.

Financial institutions need to shift from a transactional to a customer-centric mindset, says Albertazzi. “Once financial institutions do that, then there’s a great opportunity to recapture market share,” he says.

Banks should also consider how they can change customer behavior. Just a third of bills are scheduled to be paid on a recurring basis, according to survey respondents, which points to another gap where banks lose a bill-pay user, according to Albertazzi. Encouraging customers to enroll in automatic payments means they’re more likely to keep using their bank’s bill-pay capabilities.

Most customers trust their bank, but poor experiences have driven consumers to a decentralized model that benefits no one. With the massive adoption of digital channels that accompanied Covid-19, banks have a chance to change consumer behaviors.

“Providing that convenience to the consumer, the transparency in the process and addressing efficiencies to the entire consumer bill-pay experience will help drive change in consumer bill payment behavior over time,” says Albertazzi.

What Banks Can Learn About Customers from 50,000 Chatbot Searches

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Covid-19 has increased usage of digital banking services and tools, including live chat, video chat and chatbots.

While live chat and video chat offer a one-to-one conversation directly with your customers, chatbots provide 24-hour service, instant answers and the ability to scale without the need for human intervention. Relatively new channel to the banking world, the promise of chatbots seems endless: answering every question and automating related tasks, quickly and efficiently. How can banks best leverage the promise of this opportunities to better and more efficiently serve customers?

To truly answer that question, we need to understand how customers interact with chatbots, how that varies from known digital behavior, like search and navigation, and how can those insights be turned into reality.

So we decided to analyze more than 50,000 banking chatbot interactions. What we uncovered revealed some very interesting insights about customer behavior and what it will take to make that promise a reality.

It turns out that customers interactions with chatbots are very similar to human interactions:

  • They typically typed 11.24 words, on average, compared to with 1.4 words typed into a banking website search bar. Chatbot interactions are conversational. Customers ask questions like “Can I Have My Stimulus Debit Card Balance Deposited to My Account” or making statements like “I need to change my address.”
  • Almost 94% of questions asked were completely unique. While customers may ask the same type of question — “What is my routing number?” versus “What is your routing number?” versus “What is the routing number” —how they phrase the question is almost always unique.
  • A fifth of all interactions started with “I need,” “I want” or “I am” — another indication of the conversational approach that bank customers take with chatbots. Unlike a search function, where typically they would use shorter phrases like “refinance” or “refinance car,” they make statements or ask questions: “I am looking to refinance my auto loan” or “I want to refinance my auto loan.”
  • Fifteen percent of interactions included the word “how.” This is another indication that customers ask chatbots questions or looking for help completing tasks like “How do you use Zelle?” or “How does a home equity loan work?”
  • Fourteen percent of all interactions began with “Hi,” “Hey” or “Hello.” And who said that bots don’t have feelings?

Chatbot adoption and usage will only continue to grow. Like all newer channels, it will require fine-tuning along the way, using insights and analysis to effectively interpret what customers are looking for, and deliver back relevant responses that point them in the right direction.

This starts with analytics and data. As data sets grow with more usage, they will reveal insights on how customers interact with chatbots, what they are looking to do and how that changes over time. This will feed the data set used to power the chatbot’s AI — both natural language processing (the ability to interpret what the customer is asking or looking for) as well as the sentiment analysis (whether the customer is happy or frustrated). Analysis will be required to learn and understand the nuances of what customers are asking when presented with phrases like this actual query from our dataset: “Hi. What is the safest way to prove documents of account balance when applying to living in an apartment complex?” Banks and/or the chatbot vendors will need to monitor the training the chatbot, including recognizing customer frustration and offering up logical next steps — like “It looks like you’re frustrated, can we transfer you to an agent?” as needed.

The analytics and data will also provide the map of the information that needs to be developed and updated to deliver answers that customers need. Given that 93.8% of questions that customers ask are unique, having the right knowledge will be critical. Sometimes this might be a simple answer (“What is my routing number?”) and sometimes it might require decision trees that offer options (understanding if an auto loan is for a new or used vehicle to get the customer one step closer to conversion).

Banks have a great opportunity to make chatbots the 24/7 tool that improves customer experience, reduces support costs and drives digital adoption. But it will take a commitment to the analysis and ongoing optimization of knowledge to truly become a reality. 

Next time you start you interact with a chatbot, start with hello — I’ve heard they appreciate it!

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.