How FIs Can Take the Speedboat or Extensibility Approach to Digital, Accelerated Financial Services

In a post-pandemic world, legacy financial institution must accelerate their digital processes quickly, or risk ceasing to be relevant.

With financial technology companies like Chime, Varo Money, Social Finance (or SoFi) and Current on the rise, change is inevitable. Alongside the nimble fintech competition, banks face pressure to rapidly deliver new products, as was the case with the Small Business Administration’s Paycheck Protection Program loans. While most legacy institutions try to respond to these business opportunities with manual processes, companies like Lendio and Customers Bank can simply automate much of the application process over digital channels.

Legacy institutions lack the access to the latest technology that digital challengers and fintechs enjoy due to technology ecosystem constraints. And without the same competitive edge, they are seeing declining profit margins. According to Gartner, 80% of legacy financial services firms that fail to adapt and digitize their systems will become irrelevant, and will either go out of business or be forced to sell by 2030. The question isn’t if financial institutions should evolve — it’s how.

To fuel long-term growth, traditional banks should focus on increasing their geographic footprint by removing friction and automating the customer’s digital experience to meet their needs. Millions of Generation Z adults are entering the workforce. This generation is 100% digitally native, born into a world of vast and innovative technology, and has never known life without Facebook, Snapchat, TikTok or Robinhood. In a couple of years, most consumers will prefer minimal human interaction, and expect fast and frictionless user experience in managing their money, all from their smartphone.

Some solutions that traditional banks s have undertaken to enhance their digital experience include:

  • Extending on top of their existing tech stack. In this scenario, financial institutions acquire digital/fintech startups to jump-start a move into digital banking. However, there are far fewer options to buy than there are banks, and few of the best fintechs are for sale.
  • Totally transforming to modern technology. This option replaces the legacy system with new digital platforms. It can come with significant risks and costs, but also help accelerate new product launches for banks that are willing to pay a higher initial investment. Transformations can last years, and often disrupt the operations of the current business.
  • Using the extensibility approach. Another way forward is to use the extensibility approach as a sub-ledger, extending the legacy system to go to market quickly. This approach is a progressive way to deliver fit-for-purpose business capabilities by leveraging, accelerating and extending your current ecosystem.

Institutions that want to enter a market quickly can also opt for the speedboat approach. This includes developing a separate digital bank that operates independently from the parent organization. Speedboats are fintechs with their own identity, use the latest technology and provide a personalized customer experience. They can be quickly launched and move into new markets and unrestricted geography effortlessly. For example, the Dutch banking giant ABN AMRO wanted to create a  fully digital lending platform for small to medium enterprises; in four months, the bank launched New10, a digital lending spinoff.

A speedboat is an investment in innovation — meant to be unimpeded by traditional organizational processes to address a specific need. Since there is a lot of extensibility, the technology can be any area the bank wants to prioritize: APIs, automation, cloud and mobile-first thinking. Banks can generate value by leveraging new technology to streamline operations, automate processes and reduce costs using this approach.

Benefits include:

  • Being unencumbered by legacy processes because the new bank is cloud native.
  • The ability to design the ideal bank through partners it selects, without vendor lock-in.
  • Easier adaption to market and consumer changes through the bank’s nimble and agile infrastructure.
  • Lower costs through automation, artificial intelligence and big data.
  • Leveraging a plug-and-play, API-first open banking approach to deliver business goals.

By launching their own spin-off, legacy banks can go to market and develop a competitive edge at the same speed as fintechs. Modern cloud technology allows banks to deliver innovative customer experiences and products while devoting fewer resources to system maintenance and operational inefficiencies.

If a financial institution cannot make the leap to replace the core through a lengthy transformational journey and wants to reach new clients and markets with next-generation technology, launching a speedboat born in the cloud or opting for the extensibility approach opens up numerous opportunities.

How an Online-Only Bank Powers Its Platform

If Radius Bank was going to succeed as a digital-only bank, it needed to offer customers an incredible digital experience.

By 2016, the Boston-based bank had closed most of its branches to focus solely on digital channels — a strategy that hinged on offering consumers and small business customers a superior experience without needing physical locations to resolve problems or open new accounts. Part of a suite of financial technology partners that powered this strategy was Narmi, a digital banking platform provider. Radius found success with its strategy, so much so that it became a natural acquisition for another online lender: In February 2021, LendingClub Corp., a San Francisco-based marketplace lender, closed its acquisition of Radius Bank and renamed the company LendingClub Bank.

Radius has been a long-time adopter of Narmi’s platform, and success stories like theirs helped Narmi secure the top spot in both the customer experience category and as the “Best of Connect” — the best overall among the category winners — in Bank Director’s 2021 Best of FinXTech Awards. Finalists included NCR’s open-technology-based Digital Banking Platform and Velocity Solutions’ Account Revenue Solution, which offers customers rewards to increase engagement. You can read more about Bank Director’s award methodology and judging panel here.

Radius partnered with Narmi about three years ago to refresh its online and mobile platforms, says Mike Butler, the former CEO of Radius Bancorp. Narmi offered “a drastic change” in the look, feel and functionality of the consumer banking platform. The platform also helps banks reduce both fraudulent account openings and account opening abandonment.

“Three years ago, if you visited the site, you’d see a traditional bank. Today, you’d see a more user-friendly experience,” he says. “[Narmi is] more than just technology people who say, ‘Tell me what you want and I’ll do it.’ From a fintech perspective, they give us their views of how they think the customer experience should operate. It’s like an added management team to us.”

Change can be jarring to customers used to the previous layout of a site. Butler acknowledges some initial dips in the bank’s net promoter score, which it uses to measure the platform’s success via the willingness of a customer to recommend the product. But Radius Bank’s score rebounded to above 50 within three months — a level that is considered to be “very good” for a bank, he says.

The platform features a “marketplace” where Radius introduces clients and customers to other products and services outside of banking that can improve their financial health. The implementation went so well, and subsequent customer reaction was so positive, that Radius decided to use Narmi again to launch a small business digital banking platform in 2020 — a product launch that helped the bank address a segment under intense pressure because of the coronavirus pandemic, and whose needs are often left out of bank offerings. Butler says Narmi was able to meet the bank’s implementation deadlines, clearly communicating the work required to make adjustments, and laying out options and alternatives in cases where the bank risked missing its timeline.

“Having our small business launch in 2020 in the middle of the pandemic was a big boost to our small business clients,” Butler says. “We’ve had a huge uptick in our acquisitions of small business clients — you have to throw Narmi into the mix of reasons why.”

Five Blind Spots to Avoid When Implementing Digital Technology

Digital tech implementations have moving parts that require up-front focus and planning to avoid costly fixes and delays.

Implementations can be thrown off track by blind spots that add costs and time, and result in a lack of confidence in the overall solution. At Bridgeforce, we routinely help clients identify blind spots and take steps to ensure a smooth implementation. Here is our list of the top five of 10 critical blind spots to watch for — all of which can be managed and avoided if you take action early.

Top Five Blind Spots to Watch for When Implementing Digital Technology

1. “Out of the Box” Descriptions

The vendor’s generic screen text and customer journeys are written for all clients. You’ll need to customize it for your organization with unique messaging and copy, customer journey flows, branding and opt-in/opt-out experiences. The blind spot risk is that customization and development adds to your timeline and costs.

Steps to take:
Secure Involvement: Engage compliance, customer experience and marketing teams when vendors are providing demos so each group can ask the appropriate questions to ensure that they get what they need from this solution.

Identify SME Assessment: Before vendor selection is complete, require that each business partner assess the work effort and resource needs to make required changes. Then you can determine the impact on the project timeline and budget. This sets expectations and informs effort and subsequent timelines.

2. Not Using Vendor’s Service Providers

Think twice before taking a pass on your vendor’s selected providers. There are four major integrations that must be considered: payments, SMS, emails and letters. Generally, using the vendor’s partners will be an easier onboarding experience with less required customization. The blind spot risk is that difficulty with onboarding and customization adds to your timeline and costs.

Steps to take:
Interrogate During Vendor Demos: Discuss available integrations during vendor demos so that you can make an informed assessment. This way, you can weigh trade-offs of using vendor partners against internal or enterprise solutions. The output of this key decision has a direct impact on your timeline and budget.

3. Lack of Source System Knowledge

You’ll need small and medium enterprises that have in-depth knowledge of all the affected source systems to properly map data for placement files and return files. The blind spot risk is that not having the source system familiarity could add weeks and months to the deployment timeline, depending on how many systems your bank uses.

Steps to take:
Plan Ahead: Determine early in the process what data will be passed to the vendor in the daily placement file. Ensure that you know how the data that is returned to the source systems will be mapped. Then, begin sourcing those items.

4. Counting on the Vendor for Operationalization

Operationalizing the digital solution falls entirely within your bank, because a software company defines a completed installation only as “deployment of the software.” Vendors aren’t focused on your operations — but you should be. The blind spot risk is you slow progress if you’re slow to recognize the need to operationalize, which can extend your timeframe and add costs if the vendor has to pause activity.

Steps to take:
Build Operationalization into Your Timeline: Ensure that your implementation plan considers time for strategy design and coding, messaging content creation and deployment, reporting design, procedure updates, integration with control self-assessments and analytics. Vendors may provide some light support in configuring the application parameters, but anything else beyond that is not their core business model.

Create Workflow in Advance: Predetermine your processes and workflows. For example, is the goal of digital collections to drive more self-service, or to improve interaction that ultimately connects to an agent? The end-to-end internal operational experience and external customer experience is unique to each organization—yours is no exception.

5. Timeline Based on Vendor’s Standard Deployment

The vendor will assume that several key dependencies have been finalized by your organization, such as strategy design. This can create unrealistic, often ambitious timelines. The blind spot risk is the danger of setting false expectations across the organization. The necessary adjustments that you’ll need to make to an unrealistic timeline will lengthen the completion time and could negatively influence staff perceptions.

Steps to take:
Determine Current State Readiness: Standard deployment schedules are achievable if your organization is ready. To ensure readiness, complete an initial working session and assessment.

Tackle these and five more blind spots head on before they negatively impact your implementation. Click here to see the all 10 blind spots and their fixes.

Digital Transformation From a Branch Perspective

If you ask five bankers to define what constitutes a successful digital transformation, you will receive five different answers. However, organizations can employ a few measures to help them succeed, including establishing priorities, assessing capabilities and creating a digital road map.

Meeting current challenges
Many financial institutions were in no rush to transform prior to March 2020. However, the Covid-19 pandemic accelerated the implementation of digital-first models. It also put pressure on organizations to battle-test alternative business models supporting remote operations and service delivery. Most notably, banks had to activate remote working models while simultaneously figuring out how to service and support face-to-face customers.

Now in 2021, the initial challenges posed by the pandemic have mostly been addressed. At the same time, bankers acknowledge that branch traffic levels might never recover to pre-pandemic levels.

Establishing priorities
First, organizations should establish priorities. The average mid-size, full-service retail office has annual operating expenses exceeding $350,000 a year — real money that could be repurposed to build a competitive digital service. Unleashing this capital and using it more effectively is key to initiating an effective digital transformation.

One initial objective should be to rank branch locations in terms of profitability and other performance metrics to identify the bottom 20%. In most cases, that percentage represents the locations that have been habitual low performers, or that might be in declining markets or suboptimal locations. It’s important to determine if these locations are leased, and if so, if there is a clear path to exit the lease. These details affect the timeline required to exit and any write-offs or write-downs related to each location.

Digital channels do not work in a vacuum. Experience tells us that community bankers do not like to lay off staff who live and work in these markets, and organizations should consider redeployment of these employees. Reassigned branch personnel can support new customers and existing users as they navigate organization websites and online product applications.

Once organizations understand the exit strategy and cost impact for low-performing locations, they can create plans that outline the timing and potential resources that could be freed up from physical branches and funneled into the digital channel.

Assessing capabilities
After determining the digital transformation budget, organizations should make an honest assessment of their existing capabilities and identify gaps or weaknesses. One goal should be to fix what is broken or not optimal, then prioritize the spend and deployment timeline for true enhancements.

Selecting digital enhancements involves many options, dependencies and complexities, which can slow down decision-making about digital transformation initiatives. Fixing obvious problems first and then investigating enhancements will take time, so organizations don’t need to close low-performing branches immediately.

Executives need to fully understand the features of potential enhancements, what is lacking from current capabilities, what is additive to current capabilities, enhancement release timelines and costs associated with each improvement. They also should consider the roll-out of these features and the impact on existing and future customers.

Creating a digital road map
Creating a digital road map can enable banks to set expectations about when changes to digital services will occur. Doing so requires honest introspection about where the organization is positioned on the digital transformation continuum.

For example, banks might think they have effective online account opening processes, but they should ask: Is it truly an automated, end-to-end process that works at all times under all conditions? Or do deposit operations personnel need to manually move data or paper along to make sure accounts can get set up? Organizations should fully understand where and how their existing customers might be affected, and where and how new customers will be serviced as they open accounts online.

While creating their digital road maps, banks also should take a look at the digital features they’ve already deployed. Are they useful and easy to adopt? Do they drive the user toward desired actions? Do the customers really use the available digital features? Are there benefits to users? If the answers to any of these questions is “no,” organizations should consider removing problematic features or improving processes.

Teeing up for success
Keeping tabs on customer usage trends and optimizing the customer experience should be top priorities in a digital transformation. Banks that make necessary changes can help improve the entire digital experience. To learn more about digital transformation from a branch perspective, view this video.

 

How Banks Kept Customers During the Pandemic, Even Commercial Ones

Digital transformation and strategy are examined as part of Bank Director’s Inspired By Acquire or Be Acquired. Click here to access the content on BankDirector.com.

Despite closed branches and masked interactions, the coronavirus pandemic may have actually improved customers’ relationships with their banks. They have digital channels to thank.

That’s a shift from the mentality pervading the industry before the pandemic. Business lines like commercial lending seemed firmly set in the physical world: a relationship-driven process with high-touch customer service. The Paycheck Protection Program from the U.S. Small Business Administration completely uprooted that approach. Banks needed to deliver loans “as fast as possible” to their small commercial customers, says Dan O’Malley, CEO of data and loan origination platform Numerated during Bank Director’s Inspired By Acquire or Be Acquired. More than 100 banks are currently using the platform either for PPP applications or forgiveness.

The need for rapid adoption forced a number of community banks to aggressively dedicate enough resources to stand up online commercial loan applications. Sixty-five percent of respondents to Bank Director’s 2020 Technology Survey said their bank implemented or upgraded technology due to the coronavirus. Of those, 70% say their bank adopted technology to issue PPP loans. This experiment produced an important result: Business customers were all too happy to self-service their loan applications online, especially if it came from their bank of choice.

“Self-service changes in business banking will be driven by customer demand and efficiency,” O’Malley says, later adding: “Customers are willing to do the work themselves if banks provide them the tools.”

Digital capabilities like self-service platforms are one way for banks to meaningfully deepen existing relationships with commercial borrowers. Numerated found that borrowers, rather than bankers, completed 84% of PPP loan applications that were done using the company’s platform, and 94% of forgiveness applications. That is no small feat, given the complexity of the application and required calculations.

Those capabilities can carve out efficiencies by saving on data entry and input, requesting and receiving documentation, the occasional phone call and the elimination of other time-consuming processes. One regional bank that is “well known for being very relationship driven” was able to process 3,000 “self-service” PPP loan applications in a morning, O’Malley says. Standing up these systems helped community banks avoid customer attrition, or better yet, attract new customers, a topic that Bank Director magazine explored last year. Already, banks like St. Louis-based Midwest BankCentre are reaping the gains from digital investments. The $2.3 billion bank launched Rising Bank, an online-only bank, in February 2019, using fintech MANTL to open accounts online.

The impetus and inception for the online brand dates back more than three years, says President and CFO Dale Oberkfell during an Inspired By session. Midwest didn’t have a way to open accounts online, and it wanted to expand its customer base and grow deposits. It also didn’t want to replicate the branch experience of opening an account — Midwest wanted to compress the total time to three minutes or less, he says.

Creating the brand was quite an investment and undertaking. Still, Rising Bank has raised $160 million in deposits — as many deposits as 10 branches could — with only two additional employees.

“We didn’t spend the dollars we anticipated spending because of that efficiency,” Oberkfell says.

Midwest BankCentre is exploring other fintech partnerships to build out Rising Bank’s functionality and product lines. The bank is slated to add online loan portals for mortgages and home equity lines of credit — creating the potential for further growth and efficiencies while strengthening customer relationships. He adds that the bank is looking to improve efficiencies and add more tools and functionality for both customers and employees. And how are they going to fund all those technology investments?

Why, with the fees generated from PPP loans.

Why Banks Should Scrap Their Digital Strategy

The last thing banks need when they pursue a digital transformation is a digital strategy.

Not too many banks get this right. Rather than create a digital strategy, companies instead need one cohesive enterprise strategy for how to be the best in serving their clients’ needs.

Setting up distinct channel strategies, or a digital strategy that runs outside of your bank strategy, only generates a bunch of disparate go-to-market ideas. That siloed approach puts your bank on a road to failure by generating and instigating conflicts, as teams vie for differentiated levels of support and resources to strengthen now-competing channels.

Instead of standing on its own, digital should shape and drive your single banking strategy. You are striving for integrated omnichannel delivery, which will translate into the best experience no matter how customers engage with you. Even if you want customers to handle the overwhelming percentage of their banking online, many will continue to walk into branches, particularly for complex transactions like mortgage applications, and call you with questions.

Granted, safer-at-home guidance in response to the coronavirus pushed digital adoption forward, more by necessity than desire. In July, nearly five months after the pandemic started, 91% of consumers conducted banking online, mostly to deposit checks or review account balances. Even more striking: 40% of consumers reported using their bank’s mobile app more often. But bankers shouldn’t take these adjustments for granted or consider them permanent.

Customers don’t care that different teams manage your digital, branch and telephone channels. They want to trust you to meet them wherever they are, and not have to explain who they are and what they want every time they interact with your bank. Digital allows you to walk that fine line with insights to follow their electronic footprints to specific products that match their financial needs.

Digital Is a Tool, Not a Product
This is so important that I need to repeat it: Digital is a tool, not a product.

I already know some folks are saying, “But, yes, it is. We produced a mobile app.” That’s not the same. You created that app for its own purpose. It also needs to be connected to something else — your banking systems — and deliver a real solution.

Granted, your bank needs digital visionaries who can envision powerful, engaging capabilities and stay ahead of customers. But these leaders must start with your banking strategy and weave their innovative ideas into that bedrock. Your team should be constantly stepping up its capabilities and services, and positioning them in a near-linear fashion alongside the customer journey so that customers can get what they want, when they need it.

And while you should never have a distinct digital strategy, you do need a dedicated team to monitor and track performance in this channel and identify new customer needs and opportunities. This is the essence of digital transformation, as you continue iterating your offerings and migrating more customers and transactions into your digital channel.

Changing the Internal Mindset
Digital transformation is about changing who you are as a bank and bringing that to your customers. The starting point is always your enterprise strategy, which anchors your value propositions on how you serve customers and your role in the community.

Every bank associate will have a role in achieving the future vision defined in that strategy. Be clear on how digital connects to your bank strategy and communicate expectations so that everyone from the call center team to the C-suite understands where they fit in. Even as your bank inches forward, it remains on a treadmill: continuing to advance to stronger performance that outpaces the competition but never crossing the finish line.

As you develop your bank’s enterprise strategy, establish and monitor metrics upfront to gauge success and maturity, including in the digital channel. Some metrics to consider include improved efficiency, the amount of customers adopting digital behaviors and successfully escalating the right transactions in your digital channel.

Be sure to measure progress in three dimensions: Are you getting more efficient as customers migrate to higher digital usage? Are you freeing up funds to invest in other initiatives? And are you maintaining the customer experience that defines your bank?

Because if you lose that in the long run, you’re going to lose your customers.

Inspired by The Joshua Tree

Thirty-four years ago, an Irish band came up with an album that sounded revolutionary for its time. U2’s “The Joshua Tree” went on to sell more than 25 million copies, firmly positioning it as one of the world’s best-selling albums. Hits like “I Still Haven’t Found What I’m Looking For” remain in heavy rotation on the radio, television and movies.

Talk about staying relevant. As it turns out, U2 has some wisdom for us all.

Relevance is one of those concepts that drives so many business decisions. For Bank Director, the term carries special importance, as we postpone our annual Acquire or Be Acquired Conference to January 30 through Feb. 1, 2022. In past years, this special event drew more than 1,300 bankers, bank directors and advisors to discuss concepts of relevance and competition in Phoenix.

While we wait for our return to the Arizona desert, we got to work on a new digital offering to fill the sizable peer-insight chasm that now exists.

The result: Inspired By Acquire or Be Acquired.

This new, on-demand offering goes live on February 4. Available exclusively on BankDirector.com, it consists of timely short-form videos, CEO interviews, live “ask me anything”-type sessions and proprietary research. Topics range from raising capital to deal-making, pricing to culture and yes, technology’s continued impact on our industry.

Everything within this board-level intelligence package provides insight from exceptionally experienced investment bankers, attorneys, consultants, accountants, fintech executives and bank CEOs. So, with a nod towards Paul David Hewson (aka Bono) and his bandmates in U2, here’s a loose interpretation of how three of their songs from “The Joshua Tree” are relevant to bank leadership teams, together with our Spotify #AOBA21 playlist for your enjoyment.

With or Without You

(The question all dealmakers ask themselves.) 

Many aspects of an M&A deal are quantifiable: think dilution, valuation and cost savings. But perhaps the most important aspect — whether the deal ultimately makes strategic sense — is not. As regional banks continue to pair off with their peers, I talked with a successful dealmaker, D. Bryan Jordan, the CEO of First Horizon National Corp., about mergers of equals.

 

Where the Streets Have No Name

(Banks can help clients when they need it most.)

A flood of new small businesses emerged in 2020. In the third quarter 2020 alone, more than 1.5 million new business applications were filed in the United States, according to the U.S. Census Bureau, nearly double the figure for the same period the year before. Small businesses need help from banks as they wander the streets of their new ventures. So, I asked Dorothy Savarese, the Chair and CEO of Cape Cod 5, how her community bank positions itself to help these new business customers. One part of her answer really resonated with me, as you’ll see in this short video clip.

 

Running to Stand Still

(Slow to embrace new opportunities? Don’t let this become your song.)

With the rising demand for more compelling delivery solutions, banks continue to find themselves in competition with technology companies. Here, open banking provides real opportunities for incumbents to partner with newer players. Ideally, such relationships provide customers greater ownership over their financial information, a point reinforced by Michael Coghlan, the CEO of BrightFi.

These short videos provide a snapshot of the conversations and presentations that will be available February 4. To find out more about Inspired By Acquire or Be Acquired, I invite you to take a longer look at what’s on our two-week playlist.

Increasing Customer Engagement to Exceed Expectations

The new normal produced by the pandemic has underpinned the need for change and connection.

One impacted area are the adjustments organizations are making as they rediscover the benefits of connecting with consumers, rather than simply selling them a product. These businesses are on the right track, as one thing is becoming abundantly clear in the wake of Covid-19: This is not the time to solely sell and advertise.

While advertising and selling inevitably play a big role in business operations, companies are often too focused on these two aspects and it doesn’t always pay off. Now is the time to connect, reach and engage with consumers on a deeper level. The coronavirus pandemic and economic fallout has impacted nearly all areas of consumers’ lives, and their interactions and needs from their banks and financial institutions need to change as a result.

Focusing on advertising and selling may work for some organizations, but with growing consumer expectations, this just won’t do for banks. Customers choose banks partially because of their emphasis on customer service and will be annoyed if the institution tries to advertise or sell them a product that doesn’t match their financial needs.

Connection goes beyond having the best catchphrase or the sunniest stock photo. True engagement is driven by identifying customer needs and communicating relevant solutions, peaking their interest and building connections that will last.

Right now, traditional, product-focused promotional efforts and marketing don’t work because people’s daily lives have drastically changed. Their financial situations may have been altered. A more personal approach develops connections and loyalty that will last for years.

It is more important than ever that banks use customer and business intelligence effectively to promote relevant products and services. Some institutions may need to return to their roots and their initial goal: to serve their communities and the people that live in them. This approach may sound simplistic, but it can prove challenging to achieve.

And banks, like their customers, don’t want to merely survive this health crisis, they want to thrive in these unprecedented times. It takes a shift in strategy to do so. “In a matter of weeks, digital and mobile banking technologies went from being a ‘nice to have’ to a ‘must have.’” The pandemic was even the catalyst for tech adoption at some financial institutions. With the help of data-driven communication systems, one-on-one communication is both realistic and accessible. The massive drive for digital solutions allows banks to reassess digital access to products and services. This immediate boost in digital engagement offers a huge opportunity for institutions that are implementing digital marketing plans, perhaps for the first time.

Practically applied, banks need to turn to smart technology to create a clear path to build better customer relationships and return to the longstanding values of one-on-one communication. While this may seem straightforward, using forward-thinking, innovative technology as the way to “get back to their roots” is an approach not previously imagined by many bank executives.

Utilizing a data-driven digital infrastructure allows banks to reach customers personally, uniquely and instantly. Banks need to embrace comprehensive digital outreach to touch people where they are with the services they need most. Customers still need access to financial services, even if they are avoiding branch locations and ATM lines. The solution is simple: Be the bank that communicates what options are easily accessible and available to them. Be the branch that shows that they care. With the help of an intelligent digital experience platform and the right technology, banks can automate the relevant communications, so the right messages reach the right person at the right financial time for them.

The pandemic sparked a much-needed shift: from being overly focused on advertising, selling and pushing products and services to establishing and building better customer relationships, increasing customer engagement as well as gaining consumers’ trust and loyalty for years to come. Returning to your bank’s original mission of serving the community will give you the ability to target consumers at the exact right time in their financial journey – reaching each customer’s specific needs and allowing banks to engage with their customers.

Exploring Banking’s What Ifs

What if the ball didn’t sneak through Bill Buckner’s legs in 1986?

What if you answered the call to deliver two pizzas for 10,000 bitcoins in 2010?

What if Hillary Clinton lost the popular vote but won the electoral college in 2016?

Thought exercises like these can take you down the rabbit holes that many opt to avoid. But how about asking “what if” type questions as a way to embrace change or welcome a challenge?

Mentally strong leaders do this every day.

In past years, such forward-facing deliberations took place throughout Bank Director’s annual Acquire or Be Acquired conference. This year, hosting an incredibly influential audience in Phoenix simply wasn’t in the cards.

So, we posed our own “what ifs” in order to keep sharing timely and relevant ideas.

To start, we acknowledged our collective virtual conference fatigue. We debated how to communicate key concepts, to key decision makers, at a key moment in time. Ultimately, we borrowed from the best, following Steve Jobs’ design principle by working backward from our user’s experience.

This mindset resulted in the development of a new BankDirector.com platform, which we designed to best respect our community’s time and interests.

Now, as we prepare to roll out this novel, board-level business intelligence package called Inspired By Acquire or Be Acquired, here’s an early look at what to expect.

This new offering consists of short-form videos, original content and peer-inspired research — all to provide insight from exceptionally experienced investment bankers, attorneys, consultants, accountants, fintech executives and bank CEOs. Within this new intelligence package, we spotlight leadership issues that are strategic in nature, involve real risk and bring a potential expense that attracts the board’s attention. For instance, we asked:

WHAT IF… WE MODERNIZE OUR ENTERPRISE

The largest U.S. banks continue to pour billions of dollars into technology. In addition, newer, digital-only banks boast low fees, sleek and easy-to-use digital interfaces and attractive loan and deposit rates. So I talked with Greg Carmichael, the chairman and CEO of Cincinnati-based Fifth Third Bancorp, about staying relevant and competitive in a rapidly evolving business environment. With our industry undergoing significant technological transformation, I found his views on legacy system modernization particularly compelling.

 

WHAT IF… WE TRANSFORM OUR DELIVERY EXPECTATIONS

Bank M&A was understandably slow in 2020. Many, however, anticipate merger activity to return in a meaningful way this year. For those considering acquisitions to advance their digital strategies, listen to Rodger Levenson, the chairman and CEO of Wilmington, Delaware-based WSFS Financial Corp. We talked about prioritizing digital and technology investments, the role of fintech partnerships and how branches buoy their delivery strategy. What WSFS does is in the name of delivering products and services to customers in creative ways.

 

WHAT IF… WE DELIGHT IN OTHER’S SUCCESSES

The former chairman and CEO of U.S. Bancorp now leads the Make-A-Wish Foundation of America. From our home offices, I spent time with Richard Davis to explore leading with purpose. As we talked about culture and values, Richard provided valuable insight into sharing your intelligence to build others up. He also explained how to position your successor for immediate and sustained success.

These are just three examples — and digital excerpts — from a number of the conversations filmed over the past few weeks. The full length, fifteen to twenty minute, video conversations anchor the Inspired By Acquire or Be Acquired.

Starting February 4, insight like this lives exclusively on BankDirector.com through February 19.  Accordingly, I invite you to learn more about Inspired By Acquire or Be Acquired by clicking here or downloading the online content package.

Three Reasons to Prioritize Digital Customer Service

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.