Five Ways to Challenge Digital Banks

Over the past several years, financial institutions have experimented with and implemented new technologies to improve efficiency, security and customer experience. Although online banking is currently challenging traditional banking practices in several aspects, there are ways that traditional banks can fight back. Here are a few key offerings of digital banking, along with ways traditional banks can beat them at their own game.

1. Improved service
Digital banks offer customers 24-hour service and the ability to conduct a variety of transactions in their own time. AI-powered chatbots allows customers to ask questions, perform transactions and create accounts through one platform, at any time. This on-demand service appeals to customers as saving time and effort in their banking experience.

However, one of the key missing components of an online banking platform is human interaction, which can be easier and more rewarding than filling out a checklist on a website. Customers can easily convey any special requests or needs. By providing excellent customer service with genuine and knowledgeable human interaction, traditional banks can offer a more complete service than online banks.

2. Heightened security
To keep up with innovative offerings like video chat and digital account operations, online banks can utilize SD-WAN solutions to maintain reliable connectivity and efficiency for their security needs. Solutions such as antivirus and anti-malware programming, firewalls and biometric and/or facial recognition technology provide additional levels of security to protect customer information.

Traditional banks may less susceptible to cybersecurity threats. Despite online banks’ level of security, their fully-digital presence makes them more vulnerable to cyberattacks compared to traditional banks. It may also be much more difficult to regain what has been lost in the event of a data breach, due to the ways cybercriminals can hide.

3. Streamlined services
Digital transformation is all about streamlining and improving operations; the concept of a digital banking solution is no different. Digital bank users can achieve their banking needs through a single platform. In one “visit,” customers can view their balance and recent transactions, transfer money between accounts and pay bills. Some digital banks also have the option to sync accounts with budgeting apps to further manage budgets and spending.

This streamlining allows digital banks to significantly reduce the number of different products and services they offer. By comparison, traditional banks can provide many more services and options to better fit the individual needs of their customers, and make sure they feel important and well looked after.

Moreover, traditional banks should not feel the need to provide all these services in-house. There are plenty of fintech partners they can lean on, with very specialized capabilities in these services, to help diversify their products and services.

4. Cost-effectiveness
There are often various costs associated with banking, both for the institution and the customer. The low overhead of digital banking allows for a significant reduction in cost and fees and may offer lower-cost options for individuals interested in opening multiple accounts.

Reducing costs may also mean reducing services and, at times, customer experiences. There’s no such thing as a free lunch; the less a customer pays, the less they may get. Many community banks offer more products and services, as well as helpful staff and peace of mind for small financial cost.

5. Environmental consciousness
Working to become more environmentally friendly is becoming an important step for all institutions. Digital banks are succeeding in reducing their carbon footprint and overall waste.

Many traditional banks are making great headway in becoming more environmentally friendly, and have the added benefit of making these changes optional. Many of the customer-facing changes can be approved or rejected by the customer, such as electing paperless statements, giving them more control over their banking experience. Digital banks are challenging traditional community banks in many ways. But community banks can leverage the substantial competitive advantages they already possess to continue providing a greater and more comprehensive experience than digital banks.

Scaling Customer Acquisition Through Digital Account Openings

A strong digital account opening strategy, when done correctly, can generate returns on investment that are both obvious and large.

Critical to this strategy, however, is to have a granular and holistic understanding of customer acquisition cost, or CAC. Customer acquisition cost is a broad topic and is usually composed of multiple channels. Digital account opening is a tool used to acquire customers, and therefore should be included in your financial institution’s CAC. ‍It may even be able to reduce your current CAC.

Financial institutions define CAC differently, and there is no limit to its granularity. We advise financial institutions to separate user acquisition cost into two buckets: digital CAC and physical CAC. This piece will focus on digital CAC.

With respect to digital CAC, there are a number of inputs that can include:

  • The digital account opening platform;
  • social media advertising spend;
  • print ad spend (mailers, billboards);
  • general ad spend (commercials, radio);
  • retargeting ad spend (i.e. Adroll); and
  • creative costs.

Optionally, a financial institution can also include the salaries and bonuses of employees directly responsible for growth, any overhead related to employees directly responsible for growth and even physical CAC, if this is less than 20% of overall CAC spend.

How Does Digital Account Opening Reduce CAC?
Digital account opening platforms are actually intended to lower your customer acquisition costs. Initially, this might sound counterintuitive: how would installing a digital account platform, which is an additional cost, reduce CAC over the long run?

The answer is scale.

For example, let’s say your financial institution spends $1 million on marketing and gains 10,000 new customers. This results in a CAC of $100 per customer. Compare that to spending $1.2 million on marketing that includes digital account opening. Providing the ability for customers to easily open accounts through online, mobile and tablet channels results in 15,000 customers, dropping your CAC to $80. In this example, implementing a fast and easy way for customers to open accounts reduced CAC by 20% and increased the return on existing marketing spend.‍

Once you have a successful marketing machine that includes strong digital account opening, you will want to scale quickly. Marketing spend decisions should be driven by quantitative metrics. You should be able to confidently expect that if it increases marketing spend by $X, you will see a Y increase in new accounts and a Z increase in new deposits.

The only additional costs your financial institution incurs for account opening are per application costs — which tend to be nominal inputs to the overall CAC calculation. ‍

What is a Good CAC for a Financial Institution?‍
CAC has so many variables and broad-definitions that it is nearly impossible to tell financial institutions what is “good” and what is “bad.” Across CAC industry benchmarks, financial services has one of the highest costs to acquire new customers:

Technology (Software): $395

Telecom: $315‍

Banking/Insurance: $303

‍Real Estate: $213

Technology (Hardware): $182

Financial: $175

Marketing Agency: $141

Transportation: $98

Manufacturing: $83

Consumer Goods: $22

Retail: $10

Travel: $7‍ ‍‍

Customer acquisition cost and digital account opening go hand-in-hand. Financial institutions should focus on the output of any marketing spend, as opposed to the input cost. Different marketing strategies will have varied levels of scalability. It’s important to invest in strategies that can scale exponentially and cost-effectively. By focusing on these principles, your financial institution will quickly realize a path towards industry-leading growth and profit metrics, putting your financial institution ahead of the competition.

Three Steps to Mastering Digital Connection

Before the coronavirus crisis, I heard bank leaders talk about “becoming digital,” but less than 15% considered themselves digital transformation leaders.

The pandemic has pushed banks to close the digital experience gap. Executives must take a hard look at what their customers expect and what digital tools (and products) they need to weather this crisis.

Digital transformation can’t happen without mastering the art of digital connection, which requires both technology and authentic human connection. To do this, banks must harness the power of data, technology, and their people to create customers for life. Here are three steps to help your bank master the art of digital connection.

Maximize Customers Data to Transform the Experience
If a customer walked into a branch for a typical transaction, the teller would have immediate visibility into their entire relationship and recent interactions — and would be empowered to recommend additional, relevant bank products or services. They would feel known and well-served by your teller.

Your digital infrastructure should provide the same humanized experience through email, customer service and other interactions with your bank. But unorganized, siloed data causes problems and impedes creating this experience. To maximize your customers’ data, you’ll need to:

  • Consolidate your view of each customer.
  • Ensure that teams have access to a high-level view of customer data and activity, from marketing to customer service.
  • Group them by segments in order to deliver relevant information about products and services. This step requires a solid understanding of your customer, their financial needs and their goals.

Invest in Technology That Reaches Customers Today
To inform, educate and engage your customers during this time of transition, you need sophisticated, best-in-class banking technology. Many banks have already come to this conclusion and are looking for help modernizing their banking experience.

A key component in meeting your customers where they are is quite literal. While some of your customers are well-versed in online banking, others have exclusively used their branch for their financial needs. The information these two audiences will need during this transition will look different, based on their previous interactions. Compared to customers who are already familiar with digital banking, those who have never done it before will need more specific, useful instructions to help them navigate their financial options and a clear pathway to 1-on-1 assistance. This kind of segmentation requires modern marketing technology that works in tandem with banking and lending tools.

Amplify Human Connections to Build Trust
Many banks have trouble letting go of the branch experience; customers have had the same reservations. In an Accenture survey of financial services, 59% of customers said it was important to have a real person available to give in-person advice about more complex products.

Now that going into a branch is not an option, your bank must find a way to use technology to amplify the human connections between your customers and staff. Especially now, sending meaningful, humanized communications will position your bank as a trusted financial partner. To transform your digital experience, and keep people at the center of every interaction, you must:

  • Personalize your messages — beyond just putting a customer’s name in the salutation. Data allows emails to be very specific to segments or even individuals. Don’t send out generic emails that contain irrelevant product offers.
  • Humanize your customer experience. Communicate that you know who you’re talking to each time a customer picks up the phone or contacts your help line.
  • Support a seamless omnichannel experience. Provide customers with clear avenues to get advice from your staff, whether that’s by email, phone or text.

Investment in innovation comes from the top down. Your bank must buy into this opportunity to transform your customer experience from leadership to all lines of your business. The opportunity is here now; this shift toward digital interactions is here to stay.

There’s no longer a question of whether a fully digital banking experience is necessary. Banks must leverage modern technology and the human connections their customers know them for to improve their overall customer experience. Excellent customer experience comes from delivering value at every touchpoint. This is the new bar all banks must meet.

Loan Growth: Curation, Credit Monitoring

SavvyMoney.pngOne community bank is using a fintech to deepen lending relationships with customers and help them monitor and improve their credit score.

Watford City, North Dakota-based First International Bank and Trust wanted to offer customers a way to proactively monitor their credit and receive monthly or incident-related alerts about any changes — without needing to use external vendors, granting external access to accounts or even paying for it. It chose to partner with SavvyMoney, which provides customers with their credit scores and reports alongside pre-qualified loan offers from within the bank’s online and mobile apps.

The fruits of the relationship were one reason the fintech was awarded the Best Solution for Loan Growth at Bank Director’s 2020 Best of FinXTech Award in May. CommonBond, a student loan refinancer, and Blend, which offers banks an online, white-label mortgage processing solution, were also finalists in the category.

In exploring how it could help customers improve their credit score and manage their finances, First International knew some customers were already using similar services through external websites. But the $3.6 billion bank wanted to convey that it had invested time and IT resources to ensure SavvyMoney’s validity, accuracy and status as a trusted partner, says Melissa Frohlich, digital banking manager. The SavvyMoney feature takes about 45 seconds to activate once a customer is logged in, and the customer experience is the same in the mobile app or website.

“From the fraud standpoint, we definitely recommend to our customers that … they use SavvyMoney because it’s free to them,” Frohlich says. “Especially with all the breaches that happen, it’s a good way for them to self-monitor their credit.”

The bank also uses the platform to share specialized credit offers along with a customers’ loan information and credit score, which it crafts using public records and extends based on internal criteria. It has launched two credit card balance transfer offers since rolling out the product two years ago. The fintech offers First International a way to “slice and dice” data to truly target customers with customized offers, as opposed to “throwing out a fishing line and hoping someone bites,” she says.

Launching the offers takes “very little” time to implement and consists of updating a term sheet, whipping up bank graphics and sending out a simple email blast. The first offer netted more than $190,000 in balance transfers — all from one email campaign.

“It was just very, very little work for us with pretty significant impact, without a ton of manpower or money that we had to put into it,” Frohlich says.

The balance transfer offer included messaging about how much customers would save with the new interest rate. If First International wanted to offer auto loan refinancing, it could input different rates based on the year of the vehicle and loan term.

First International was drawn to SavvyMoney in part because it had an existing relationship with a variety of core providers. That’s key, given that SavvyMoney connects to a bank’s core to pull in personal customer information from online and mobile banking sources. And because it would be sharing customer data, First International spent several months conducting due diligence, combing through SavvyMoney’s system and organization controlsreports and speaking with both its core and the fintech.

Frohlich says the actual implementation took about a month and was as straightforward as flipping a switch to activate the capability in customer accounts. She continues to work with her representative at SavvyMoney to add or change loan offers.

“They have probably the best integration that I’ve seen with Fiserv from a third party or a fintech, out of any other product that Fiserv doesn’t own,” she says. “The actual implementation was the best that I’ve ever taken part in.”

SavvyMoney can also integrate with the bank’s new loan platform that was slated for a March launch, a fact that Frohlich didn’t know when the bank selected either. Loan applications submitted through SavvyMoney will feed into the software’ auto decision-making.

“That will be a game changer for us, then we will heavily start doing more promotions,” she says.

Even after the bank switched cores, it has been able to keep SavvyMoney given its vendor relationships with other cores. “There have been other solutions, that now that we’re moving to a different platform, that I could consider,” Frohlich says. “But to be honest, our experience has been so great with SavvyMoney that I have no reason to look elsewhere.”

Viewing the COVID-19 Crisis From a New Vantage Point

Fintech companies have a unique vantage point from which to view the COVID-19 crisis.

Technology leaders are working long hours to help banks go remote, fill in customer service gaps and meet unprecedented loan demand. They’re providing millions of dollars in free services, and rapidly releasing new products. They’re talking to bankers all day, every day, and many of them are former bankers themselves.

Bank Director crowdsourced insights about banks’ pandemic-fueled tech initiatives from 30 fintech companies and distilled their viewpoints into five observations that can help banks sort through the digital demands they face today.

“Nice to Have” Technology Is Now “Must Have”
Online account opening, digital banking, financial wellness and customer service are garnering fresh attention as a result of the COVID-19 crisis.

Before the pandemic, these areas were thought of as “nice to have,” but they weren’t at the top of any bank’s tech expenditure list. COVID changed that.

Account opening and digital banking are essential when branch lobbies are closed, and customers are looking to their banks for advice in ways they never have before in times of widespread uncertainty.

These new demands have created a unique opportunity to push technology initiatives forward. Ben Morales, who had a 24-year tenure in banking before founding personal loan fintech QCash, observed that bank leaders shouldn’t “waste an emergency. Now is the time to push bank boards to invest.”

Bank boards are already talking about COVID as a potential inflection point for tech adoption, says Jon Rigsby, a former banker who co-founded and now is the CEO of Hawthorn River Lending. He notes that this moment is different from past crises. “In my 27-year banking career, I’ve never seen bankers change so fast. It was quite phenomenal.”

Customer Service, Financial Wellness Are Taking Center Stage
Consumers are increasingly seeking guidance from their banks, inundating call centers. As a result, communication and financial wellness tools are getting their moment in the sun.

Boston-based fintech Micronotes has witnessed exponential growth in demand for their product that helps banks initiate conversations with their customers digitally. Micronotes introduced a new program that’s purpose built for pandemic in mid-March. The Goodwill Program helps banks proactively communicate with their customers around issues like relief assistance and the Small Business Administration’s Paycheck Protection Program (PPP). Inbound interest in the firm from banks was nearly eight-times higher two weeks after the program launched, compared to the two weeks prior to launch, Micronotes reports.

Banks already equipped with digital communication tools are seeing an uptick in usage. Kasisto, a New York-based fintech, reported that several clients have seen a 20% to 30% increase in the use of KAI, a virtual assistant that can converse with customers and lessen the burden on call centers.

Financial wellness initiatives are also seeing liftoff. Happy Money, a personal loan fintech that uses financial and psychometric data to predict a borrower’s willingness to repay a loan, launched a free financial stress relief product for its bank partners’ customers. And SavvyMoney, a fintech that provides credit information to borrowers alongside pre-qualified loan offers, is seeing an influx of inquiries from banks that “understand the need to provide their customers with tools so they can better manage their money during uncertain financial times,” says CEO JB Orecchia.

Due Diligence Can Move Faster, When It Has To
Several fintechs have noted that banks are speeding up their vendor due diligence processes immensely — but not by relaxing standards.

Vendor onboarding programs can sometimes stretch to fill an entire year, according to Rishi Khosla, CEO of London-based digital bank OakNorth, but they don’t have to. OakNorth developed its own credit underwriting and monitoring solution, and recently spun out a technology company by the same name to provide the tools to banks outside of the U.K.

Khosla has a unique perspective given his dual roles as both a banker and technologist. He says some banks have created “unbelievable processes” that, when cut down, actually only amount to 10 to 20 hours of work. In this environment, he says, a commercial bank partner can get 20 hours of work done within days. They’re in “war mode,” so they can take a dramatically different approach, but with no less rigor.

“It’s not like they’re taking shortcuts. They’re going through all the right processes,” he says. “It’s just they’re doing it in a very efficient, streamlined manner without the bureaucracy.”

Approach Existing Partners First
Banks now wanting to adopt new technology may find themselves at the end of a long waitlist as fintechs are inundated with new demand. Fintech providers are prioritizing implementations for existing customers first — just as most banks prioritize existing borrowers for PPP loans.

To get the technology they need fast, some banks are getting creative in rejiggering the tech they do have to meet immediate needs.

Matt Johnner, a bank board member and the president of construction lending fintech BankLabs, got a call from a bank client a few days after the rollout of PPP loans. The bank wanted to customize the BankLabs construction loan automation tool to process PPP loans. Johnner says the bank “called because they know our software is customizable … and that we go live in 1 hour.”

Because of the exponential rise in digital demand, a bank’s success with technology during the pandemic has been based largely on what they had in place before the outbreak, according to many fintechs.

“Some banks are innovating through this and are thinking near and long term, especially those that have made good investments in digital banking and have a solid foundation to build out from,” explains Derik Sutton, VP of product and experience for small business solution Autobooks. “The most common response we get [from banks] is ‘We wish we had done this sooner.’”

Resist the Urge to Slash-and-Burn
There are typically three ways that banks respond in crisis, according to Joe Zeibert, who started his banking career as an intern at Bank of America Corp. in summer 2008. He recently joined pricing and analytics platform Nomis as managing director of global lending solutions after an 11-year career in banking, and believes history can be a useful indicator here.

Similar to the financial crisis, we see some banks rushing to innovate who will be ahead of the curve when they get out of the downturn. Others are playing wait and see, and then others are slashing tech and innovation budgets to cut costs wherever they can,” says Zeibert. According to him, the more innovative banks came out of the last crisis better off than their peers that cut tech spending. “They came out of the downturn with a 5-year innovation lead over their competitors — a gap that is almost impossible to close,” he says. Banks now should resist the urge to slash and burn and, instead, focus on investing in technology that will help them emerge from the crisis stronger.

Most technology companies are reporting an influx of inbound interest from banks, and strong momentum on current projects. Fintechs appear to be rising to the occasion, and one sentiment they all seem to share is that it’s their time to give back; to help banks and, as a result, the nation, weather this crisis together.

*All of the companies mentioned in this article are offering new products, expedited implementations or free services to banks during COVID-19. To learn more about them, you can access their profiles in Bank Director’s FinXTech Connect platform.

Three Retail Strategies for the Post-Coronavirus Branch

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

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

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

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

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

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

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

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

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

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

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

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

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

Banking on the Fly at Atlantic Union

When the rapidly spreading COVID-19 virus forced CEO John Asbury to send most of Atlantic Union Bankshare Corp.’s 2,000 employees to work from home, it gave him the chills.

After all, the Richmond, Virginia-based bank is hardly a digital-only enterprise. It has a branch-centric strategy that emphasizes face-to-face customer service. And like most traditional companies, it has lots of people working in big offices.

To Asbury’s immense relief, everyone has quickly adapted to the demands of running a $17.6 billion institution with a distributed workforce. “A month ago, it was quite candidly terrifying, the notion of moving the company to a virtual status,” he says. “But I have to tell you, at this point we’re actually pretty comfortable with it.”

Ninety percent of Atlantic Union’s employees are now working from home, including Asbury and the bank’s senior management team.

As it turned out, working remotely was not the only challenge that Asbury and the bank’s employees would find themselves facing in the early days of the pandemic. Soon thereafter, a second challenge came in the form of an opportunity that hardly anyone was ready for — not just at Atlantic Union but throughout the banking industry.

The Small Business Administration’s Payroll Protection Program, included in a $2.2 trillion stimulus bill passed in late March, was designed to funnel $349 billion in loans to hard hit small businesses that have been forced to close as part of a broad nationwide lockdown intended to curb the virus’ spread. But almost no one was prepared to take loan applications on the program’s April 3 start date, least of all the SBA.

Many banks, including some of the country’s largest, were slow to engage because of their uncertainty about various details in the hastily rolled out program. Asbury, however, decided that Atlantic Union owed it to its small business customers in Virginia, North Carolina and Maryland to quickly embrace the program and help them get funded.

“I think we all feel the weight of our responsibility,” Asbury says. “I never thought we would be an economic first responder. I never thought we would be at the scene of the crash, and here we are. You cannot say to your customers, ‘Sorry, it’s just too much work,’ or ‘Sorry, we just can’t go fast enough,’ or say, ‘Well, we’re going to do this for a privileged few, because the others aren’t worth it.’”

And yet for all of Asbury’s determination to respond quickly, there were many problems that had to be solved along the way. For starters, the bank did not have the right technology to handle the large volume of loan applications that it expected to receive. It had recently licensed an automated workflow solution to build an online account opening system, but the bank’s new head of digital technology concluded that it wasn’t the right solution for account opening. Asbury says she quickly negotiated a credit with the vendor and chose a different technology instead.

“The team literally, in a matter of days, was able to repurpose the solution and stand up an online application web portal and an automated workflow system, which is essentially a virtual assembly line,” Asbury says. Many of the bank’s employees worked 12 hour days and weekends to have the system up and running by April 3. “To be able to build this automated assembly line … recognizing that everyone working on it is sitting in their homes, is unbelievable,” he adds.

Another challenge was the SBA’s failure to provide lenders with a standard note agreement, one reason why some large banks were slow to engage in program. If a bank doesn’t use the SBA’s standard agreement, the agency won’t guarantee the loans. Asbury decided the bank couldn’t afford to wait for the SBA to resolve that issue, so he took a risk. “We used our best educated guess to create our own note, in the spirit of the agreement, and we began to fund,” he says. The agency later said it was okay for banks to use their own note agreements.

Once Atlantic Union began submitting loan applications, the SBA’s “E-Tran” electronic loan processing system kept crashing under the torrent of submissions it was receiving from lenders throughout the industry. The bank had 30 people who manually keyed in data, and is implementing automated technology to import the application data and upload it into the E-Tran system, which will greatly shorten the application process. “We think we can get the cycle time down to one minute for one loan, and that’s really important,” Asbury says.

The bank had 400 employees working full time on the program, including Asbury’s own administrative assistant who was approving loans. Through April 15, 5,717 Atlantic Union customers had been approved for loans totaling $1.42 billion. The program is now out of funds, although the bank has decided to continue accepting application in the hope that Congress will provide additional funding.

The pandemic proved to Atlantic Union that it is both resilient and innovative, traits that will benefit it long after the COVID-19 crisis has passed. “It’s going to cause us to be more courageous,” Asbury says. “I don’t mean we’re going to be hasty [or] impulsive, but I think that we’re going to be able to make big decisions more confidently, and frankly quicker as we’ve proven we can do it.”

Winners Announced for the 2019 Best of FinXTech Awards


Awards-9-10-19.pngBanks face a fundamental paradox: They need to adopt increasingly sophisticated technology to stay competitive, but most have neither the budget nor the risk appetite to develop the technology themselves.

To help banks address this challenge, a legion of fintech companies have sprung up in the past decade. The best of these are solving common problems faced by financial institutions today, from improving the customer experience, growing loans, serving small business customers and protecting against cybersecurity threats.

To this end, we at Bank Director and FinXTech have spent the past few months analyzing the most innovative solutions deployed by banks today. We evaluated the performance results and feedback from banks about their work with fintech companies, as well as the opinions of a panel of industry experts. These fintechs had already been vetted further for inclusion in our FinXTech Connect platform. We sought to identify technology companies that are tried and true — those that have successfully cultivated relationships with banks and delivered value to their clients.

Then, we highlighted those companies at this year’s Experience FinXTech event, co-hosted by Bank Director and FinXTech this week at the JW Marriott in Chicago.

At our awards luncheon on Tuesday, we announced the winning technology solutions in six categories that cover a spectrum of important challenges faced by banks today: customer experience, revenue growth, loan growth, operations, small business solutions and security.

We also announced the Best of FinXTech Connect award, a technology-agnostic category that recognizes technology firms that work closely with bank clients to co-create or customize a solution, or demonstrated consistent collaboration with financial institutions.

The winners in each category are below:

Best Solution for Customer Experience: Apiture

Apiture uses application programming interfaces (APIs) to upgrade a bank’s digital banking experience. Its platform includes digital account opening, personal financial management, cash flow management for businesses and payments services. Each feature can be unbundled from the platform.

Best Solution for Revenue Growth: Mantl

MANTL developed an account-opening tool that works with a bank’s existing core infrastructure. Its Core Wrapper API reads and writes directly to the core, allowing banks to set up, configure and maintain the account-opening product

Best Solution for Loan Growth: ProPair

ProPair helps banks pair the right loan officer with the right lead. It integrates with a bank’s systems to analyze the bank’s data for insights into behaviors, patterns and lender performance to predict which officer should be connected with a particular client.

Best Small Business Solution: P2BInvestor

P2Binvestor provides an asset-based lending solution for banks that helps them monitor risk, track collateral and administer loans. It partners with banks to give them a pipeline of qualified borrowers.

Best Solution for Improving Operations: Sandbox Banking

Sandbox Banking builds custom APIs that communicate between a bank’s legacy core systems like core processors, loan origination, customer relationship management software and data warehouses. It also builds APIs that integrate new products and automate data flow.

Best Solution for Protecting the Bank: Illusive Networks

Illusive Networks uses an approach called “endpoint-focused deception” to detect breaches into a bank’s IT system. It plants false information across a bank’s network endpoints, detects when an attacker acts on the information and captures forensics from the compromised machine. It also detects unnecessary files that could serve as tools for hackers.

Best of FinXTech Connect: Sandbox Banking

The middleware platform, which also won the “Best Solution for Improving Operations” category, was also noted for working hand-in-hand with bank staff to create custom API connections to solve specific bank issues. In addition, banks can access three-hour blocks of developer time each month to work on special projects outside of regular technical support.

How to Deliver a Full Customer Experience Over Mobile Banking


mobile-8-21-19.pngWith most banking activity taking place on mobile, banks must innovate in order to deliver the full customer experience straight to customers’ fingertips.

With more people using their phones to access banking services, banks cannot afford to miss out on the massive opportunity to go beyond transactions and offer the sales and service customers seek. A Citigroup study found that mobile banking is among the top three most-used applications on a consumers’ phone, increasing 50% from 2017 to 2018.

Many banks still have a siloed mindset, considering in-branch, mobile and online experiences as separate and distinct entities. But their customers don’t differentiate between channels; they view banking as an omni-channel experience.

Their expectations are the same, whether they go to a branch, visit their bank’s webpage at home or open an app on their phone. If they have questions, they expect the ability to ask their bank within the mobile app just as easily as they would in branch. And if they are interested in learning about savings accounts or loan rates, they expect to easily find that information within the mobile banking space.

Banks have long thrived by delivering seamless transactions, competitive and unique products and outstanding service. They have responded to the growing popularity of mobile banking by investing in technology to build out robust transactional experiences for their customers. From mobile deposit to transferring funds to bill pay, the ability to conduct fundamental banking transactions is available to and frequently used by customers.

Where bank mobile apps are lacking, however, is in providing the sales and service that they excel at delivering in their branches to the mobile devices of their customers. This is a huge opportunity many banks are missing. Based on our data, there are about 2,000 opportunities per every 25,000 accounts where a customer expresses an intent to inquire about how to do something or how to adopt a new product that is entirely uncaptured in mobile banking.

With the advent of digital transformation and more activity moving to mobile channels, the sales and service aspects of banking have gradually become more diluted. Banking has become less sales and service oriented and increasingly more transactional.

There is only one direction for banks to go: give consumers what they want and demand. Banks need to offer customers the ability to connect with them on their phone anytime, anywhere, and to receive the same level of sales and service they do at a branch. Mobile banking provides a plethora of opportunities to do just that.

Banks need to do more to provide the same support and service in their mobile channels as they do within their branches. There are three easy ways they can begin to leverage mobile banking to go beyond transactions to deliver sales and service to their customers.

1. Embed a robust help center within mobile banking.
Make finding and accessing digital support a breeze. Embed support content from your website within your mobile banking application to allow customers easy access to help content like resetting passwords and fund transfers. Make sure the most frequently asked questions are answered in a manner that answers the questions, provides additional information and creates a call to action.

2. Utilize chatbot to further engage customers.
Add live chat or an automated chatbot for an additional avenue to engage with your mobile customers. Banks can use chat to suggest relevant content or products and services, help point customers in the right direction and to learn more about their financial goals and needs.

It’s not uncommon for chat usage to double once it is added to mobile banking, which can put a sizeable strain on contact centers. Use support content in the form of a chatbot to allow customers the ability to self-answer common support questions, and offer live chat for more complex questions and issues.

3. Provide clear, concise product information.
Customers no longer consider mobile banking to be purely transactional. They think of it as an extension of a branch, where they’ve come to expect support and sales information. Providing links to your key products within mobile banking can encourage customers to explore your offerings.

When banks fail to go beyond transactions in mobile banking, they miss out on a vast opportunity to provide sales and service through the channel customers are the most present. The consequences of not doing so can result in greater contact center volume, and missed opportunities to increase wallet share.

Three Ways Directors Can Solve the 3,000-Year-Old Credit Problem


credit-7-9-19.pngHistory has shown that knowledge is power. One place that could use the benefit of that knowledge is commercial credit.

Banks have been lending to businesses for 3,000 years and has yet to figure out the commercial credit process. But executives and directors have an opportunity to fix this problem using data and digital capabilities to make the process more efficient and faster, and become the lending legends of their institutions.

In 1300 B.C. Egypt, the credit process looked something like this: A seafaring trader would trade bronze bowls with a local bronze merchant for cloth and garments. But to make this transaction, the bronze merchant would need to borrow from multiple merchant lenders. This process required lenders to understand the business plans of the borrower, go “door to door,” have community knowledge and know the value of all those goods. There were a lot of moving pieces—and a great deal of time—involved for that one transaction.

Fast-forward to today. A lot has changed in 3,000 years, but the commercial credit process has actually gone backwards. It can take a lender 60 to 90 days and more than $10,000 per lead to identify potential leads—and that’s before they review the application. After a borrower applies, the lender must look up credit reports, collect and spread financial statements and decide on the terms and conditions. Finally, the application goes through the credit department, which can take another 30 to 45 days and cost $5,000 per application.

Lenders will have spent all that time and effort to process the loan—but may not end up with a new customer to show for it. Meanwhile, borrowers will have spent time and effort to apply and wait—and may not have a loan to show for it.

While this problem has persisted for 3,000 years, the good news is that executives and directors have an opportunity to fix the problem by turning their manual-lending process into a digital-lending one. This evolution entails three steps that transform the current process from weeks of work into days.

First, a bank would use a digital-lending portal to gather applicable demographics to identify prospective borrowers. In researching prospects, they see critical borrower information such as name, address, years in business, legal structure, taxpayer identification number, history, business description and management team. Rather than having to wait until later in the process to uncover this critical information, they can immediately identify whether to pursue this lead and quickly move on.

Second, a bank uses a credit-decision engine to gather and analyze the applicable borrower data. Not only can the engine pull in consumer and credit bureau information, but it can also include automated financial collection, credit score and industry data for comparison. The bank can use data from this tool to determine terms and conditions, credit structure, purpose of credit facility, pricing, relationship models and cross-sell strategies.

Third and finally, the bank’s credit policy and process integrate with its credit-decision engine to enable an automated review of a loan application. This would include compliance checks, terms and conditions and credit structure. Since the data gathering and analysis has already taken place and automatically factored into the decision, there is no need to review all those pieces, as would be required with a manual process.

These three steps of this digital lending process have distilled a weeks-long process into about five days. Executives and directors can not only grow their institution in a shortened time period; they can do so without adding any risk. A bank I worked with that had $250 million in assets was able to add $20 million in loan volume without taking on any additional risk.

By using knowledge to their advantage and implementing a digital lending solution, bankers can save not just time and costs, but their institutions as well as their communities. They can now spend their limited time and resources where they matter most: growing relationships along with their banks. Having fixed the 3,000-year-old credit problem, they can place those challenges firmly in the past and focus on their future.