How TCF Financial Reinvented the Customer Experience


deposit-6-15-18.pngIn the spring of 2015, new leadership took over TCF Financial Corp., based in Minneapolis, and set about a course that would reshape the bank from the inside out.

At that time, the bank was in the midst of rebranding itself when Craig Dahl took over as CEO, and hired Tom Butterfield as chief information officer to usher in a new era of online banking that would keep the $23 billion asset bank on a level playing field with much larger competitors.

“We were not there. We had identified some pretty significant gaps in our market to our competitors,” Butterfield says. “Not the least of which was mobile remote deposit capture.”

That specific capability is coveted by both bankers and customers, who favor on-the-go functionality while banks enjoy the ability to increase their core deposits at a time when the competition for customer loyalty and their funds has increased sharply.

The bank went to market with a very specific request for information, or RFI, that solicited a very specific technological architecture that would remake its online user experience to be seamless between devices, but also adapt to its highly customized core technology and allow the opportunity for scale. While this limited the number of firms capable of handling the project, it also allowed the bank to customize its own technology. D3 Banking Technologies, based in Omaha, Nebraska, was one of the few who could handle the specific and unique request.

In the end, the D3 built an all-new online banking experience for TCF, which migrated 1.2 million accounts to the new platform over 15 months, from the time the board approved the funding for the project to complete migration, which they completed last fall.

D3, like other fintech partnerships, reinvented the TCF customer experience using application programming interfaces, or APIs, that function similar to a server at a restaurant. In TCF’s case, there are two layers of APIs that were necessary to adapt what Butterfield describes as a “highly customized” legacy core system that differs from typical core systems like those offered by Jack Henry, FIS or Fiserv. Butterfield described TCF’s core as “many many years old that doesn’t lend itself to interacting well with these modern technical platforms.”

The top layer is what D3 built and actually makes the experience, but there is a middle layer of APIs the bank built that connects the core, and also enables the bank to be able to customize and scale into other technologies, like voice commands (think Amazon Alexa or Google Home), and others.

The real-world implication of this new technology became clear when Apple rolled out its iOS 10, which swapped fingerprint recognition for facial recognition security. Mobile apps for megabanks like Bank of America were live with the new tech almost instantly. So was TCF.

“We feel like we can compete with the best banks in the country and the best platforms in the country,” Butterfield says.

Customers who had been migrated to the new system also had questions, Butterfield says. In anticipation of that transition, TCF put “digital ambassadors” into branches that offered customers—some of whom physically carried their laptops into the branch to get help—training on the new system, a scenario that represents the transformation that TCF put in place.

“The fact that our branches were a part of this story and part of this journey is a key piece of its success,” Butterfield says

Beyond the tech itself, Butterfield says the move to emphasizing technology inspired wholesale changes within the bank’s own culture. TCF literally tore down cubicle walls and put its IT and business staffs at the same table—often referred to as bench seating—reducing the barriers between the two wings of the bank that typically operate independently.

The integration fundamentally changed the way the bank works, making it unique compared to other banks who still hold true to traditional structures.

“That breaking down of silos is really key of how we got this done in 15 months,” Butterfield says.

Since the completed rollout in the fall of 2017, the bank has reduced payment processing costs by $1.3 million in the first year alone, and Butterfield said there has been a 400 percent increase in adoption rate, and a 250 percent increase in accounts opened by existing customers through the platform, and a reduction of 2.6 percent in checking account attrition, all signs the bank sees the tech has increased loyalty and potential for deposit growth, even as the largest banks grow their deposits over community and regional competitors.

“We’re definitely in the ball game,” he says.

Community Banks Released From ADA Liability


community-bank-12-29-17.pngMany community banks received threatening letters from the advocacy group Access Now alleging that the banks’ websites violated the Americans with Disabilities Act (ADA) for the visually impaired in provision of electronic information technology, including the banks’ websites, online banking, mobile banking and apps, ATM services, and telephone banking (known collectively as electronic banking services). These letters started arriving at banks in late 2016 and generally offered to resolve alleged claims by working with Access Now’s attorneys—Pittsburgh, Pennsylvania-based Carlson Lynch Sweet Kipela and New York-based KamberLaw LLC—to bring the banks’ websites into compliance with the ADA. The banks that chose not to work with Access Now were threatened with potential lawsuits.

On November 20, 2017, the Independent Community Bankers of America (ICBA) announced it had reached an agreement with Access Now to stop the mass distribution of letters to community banks threatening to bring actions against these banks for alleged violations of ADA. The industry trade group reached a mutually agreeable settlement with Access Now, in which the ICBA will adopt and distribute to its current members a restatement of voluntary access principles that are acceptable to Access Now, as a reaffirmation of the banking industry’s ongoing commitment to encourage accessibility for visually impaired persons. Access Now will release ICBA member banks and all U.S. banks with less than $50 billion in assets from all claims related to the provision of electronic banking services and the ADA.

It is unclear if the release requires all ICBA banks and non-member banks with assets of less than $50 billion to adopt the Access Now principles. In addition, it is unclear if adopting and following the Access Now principles by community banks will protect them from threatened litigation by organizations similar to Access Now. However, it is advisable to adopt and follow the principles for protection against claims.

The principles adopted by the ICBA are as follows:

  1. Ensure accessibility. The ICBA will encourage its members to make reasonable efforts to ensure that digital platforms and services are accessible to visually impaired and low vision customers, as well as potential customers and companions to such customers or potential customers.
  2. Train bank employees. The ICBA will encourage its members to conduct periodic training for bank employees responsible for electronic banking service accessibility to promote greater accessibility.
  3. Develop electronic banking service accessibility guidelines. The ICBA will encourage its members to develop electronic banking service accessibility guidelines that are designed to promote increased independent use of the member’s electronic banking services by customers and potential customers with disabilities, as well as their companions. The details of the accessibility policies adopted, if any, will be at the sole discretion of each member bank.
  4. Implement the principles within the next three years. In the event that formal guidelines are not issued by the U.S. Department of Justice in 2018, the ICBA encourages its members to implement its principles on or before December 31, 2020.
  5. Incorporate access information into existing customer service. The ICBA encourages its members to publicly post notification and contact information in connection with their provision of electronic banking services for customers and potential customers who claim to encounter access barriers. Members are encouraged to respond to inquiries or complaints related to any alleged access barriers in a reasonably prompt manner.
  6. Communicate with third-party vendors. The ICBA encourages its members to utilize their existing vendor management due diligence process and communicate to the vendor that consumer-facing digital content provided by that vendor should conform to the ICBA’s principles.

While the DOJ has not adopted a website accessibility standard, one acceptable set of voluntary principles for accessibility is the World Wide Web Consortium’s Version 2.0 of its Web Accessibility Guidelines. Nothing within the ICBA’s principles intends to suggest that members should adopt an accessibility standard greater than that which may ultimately be adopted by the DOJ, or that equal access may not lawfully be provided in an alternative fashion. All community banks should endeavor to adhere to the principles set out above and watch for the release of website accessibility standards by the Justice Department.

Pursuing the Pole Position in Digital Banking


digital-banking-11-3-17.pngBanks with unique strategies tend to perform well in the marketplace, and a $1.2 billion asset bank in Wausau, Wisconsin, is proving that formula through a digital platform and a strategy focused on lending to a niche community.

IncredibleBank serves customers nationwide as the digital division of River Valley Bank, a 15-branch community bank serving Wisconsin and the Upper Peninsula of Michigan. The division was established in 2009, when the bank was seeking to grow deposits and looked at the new online banks in the marketplace at the time, such as ING Direct (now Capital One 360). Then, the bank relied more on wholesale funding to fuel loan growth, but growing core deposits was a challenge, says Todd Nagel, River Valley Bank’s chief executive officer. “We started the online bank to create larger distribution in our regional footprint for deposits, and it was a way to replace our wholesale funding. We never dreamed that it would take off the way it did.

River Valley Bank’s net interest margin, at 4.13 percent per the Federal Deposit Insurance Corp., performs better than its peers, according to BankRegData. So does the bank’s return on assets (1.43 percent) and return on equity (15 percent).

These days, an online banking division focused on deposit gathering isn’t necessarily innovative. The management team has since expanded IncredibleBank’s focus to address the bank’s concentration in commercial real estate loans through a unique niche: motor coach loans. Motor coaches are one of Nagel’s passions, and he has one of his own, says Kathy Strasser, the bank’s chief operating officer. These vehicles aren’t the stereotypical cramped family RV, and the cost of these luxury homes on wheels range from $100,000 to $2 million or more. High-end motor homes are unique, with custom features that make it difficult to pinpoint their value. “That’s the hard part about financing them,” says Nagel. Two loan officers are dedicated entirely to this specialty niche, and these lenders visit motor coach manufacturers regularly to build their expertise in the area. Motor coach financing accounts for roughly 10 percent of River Valley’s overall business, according to Nagel.

In looking for a unique way to market IncredibleBank, Nagel and his team turned to another one of his passions: NASCAR. “There’s 150, 200 motor homes that go to every race, all over the country,” says Nagel. The bank sponsors NASCAR drivers Kyle Busch and Matt DiBenedetto, and brings the bank’s own motor home to entertain customers during meet-and-greets with the drivers at NASCAR races. A promotion around account openings offered a chance for customers to win a VIP pass at Watkins Glen International, a racetrack in Watkins Glen, New York, that hosts NASCAR events.

IncredibleBank accounts for 10 to 15 percent of the bank’s deposits, according to Nagel, and that, along with the division’s digital-only footprint, gives management some leeway to use it as something of an incubator for new technology. Nagel says the management team is working to examine every product offered by the overall organization—including all the necessary documentation—to explore whether it can be offered digitally. If that’s not possible, then “we may not offer it in the future,” he says. “We believe that everyone’s looking for an Amazon-like experience. I don’t want to be like Amazon, but I’d like to replicate the experience with banking.”

Seeing a future where Amazon is beating traditional retailers, Strasser says that River Valley Bank will continue as a traditional community bank in its markets, but won’t grow beyond a 15-branch footprint. The bank has been adding talent without traditional backgrounds—Strasser herself was an executive vice president at a company that is now a subsidiary of Deluxe Corp., which serves the financial industry with website design, customized checks and email marketing, among others. And good relationships with vendors are integral to innovation. The bank has worked closely with its core provider Jack Henry & Associates’ mobile division, Banno, which built IncredibleBank’s mobile banking app.

Still, the industry and its vendors aren’t moving fast enough for Nagel. He has high expectations for digital delivery. “Our greatest challenge is getting our partners in the industry to think like we’re thinking,” says Nagel. “You should be able to open a $1,000 checking account in two minutes. That’s my expectation.”

Innovation Spotlight: First Internet Bank


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David Becker, President and CEO

Before he understood banking, David Becker understood technology and its ability to shape the customer experience. Highly attuned to how people would want to bank in the future, Becker started First Internet Bank in 1999, now a $2.4 billion asset institution in Fishers, Indiana. In his 35 years working in financial services technology, Becker has created five companies listed in Inc. magazine’s 500 fast growing companies and continues to engage in philanthropic initiatives to support the economic growth of central Indiana.

When you first told people you were starting a branchless bank, what reaction did you receive?
Nearly 20 years ago, I had an idea to create a bank that lived entirely online. At the time, I had three financial services software companies. Today, we would call them fintechs. My experience as a service provider to the financial services industry, and my years as a consumer and business bank client, gave me deep insight into how banks worked, and, candidly, how they could improve.

How did bankers react? I initially presented my concept to a traditional bank, explaining how a bank could build a nationwide business with an all-online presence. After the presentation, though, the bank’s CEO rejected our concept. He claimed computers weren’t fast enough and the alleged consumer wouldn’t buy in. Essentially, he said it couldn’t be done.

Fortunately, consumers did not share the same skepticism. What’s unique about our story is that this online banking model was born following a focus group with my friends and neighbors. I asked them about how they’d prefer to bank. The ideas flowed. Eighteen years and $2 billion in assets later, we have demonstrated the success that can follow when you remain focused on the customer.

What lessons did you learn working in the technology sector that later helped you as you were growing First Internet Bank?
Before launching First Internet Bank, I worked in and around financial services for years. I saw an opportunity to improve upon the industry’s shortcomings—primarily improving efficiency and the customer experience, both of which rely heavily on technology paired with a human touch.

What’s helped us grow so quickly is that we’ve recognized that we need talented people who can handle anything that comes in the door. Because we have no tellers, per se, everyone who works on our retail banking team, for example, needs to be trained across multiple technologies to handle multiple functions, from complex IRA transactions to mobile functionality to starting new deposit accounts.

And because we’re using technology like mobile banking and biometrics, to revolutionize the banking process, there really isn’t any limit to our potential growth.

How can bank boards start to adapt an entrepreneurial mindset that allows for innovation?
Because we were a pioneer of the branchless model, we’ve learned to use technology to help us adapt to challenges and reinvent ourselves. Technology enables us to expand our business, enter new verticals to diversify our revenue streams, and serve customers across the country—without a costly branch network.

Technology is an increasingly important part of our business, and there is much to be said about the ways fintech is changing the landscape of our industry. However, I would caution boards against looking to a fintech solution as a quick fix to bring innovation to your organization. If you truly want to foster a culture of innovation, look to your existing team.

Today, our hire is the “dissatisfied banker.” We look for the banker who says, “What if we did this instead?” We want the people who challenge the status quo and offer solutions to help us make it better. At First Internet Bank, we call this our “entrepreneurial spirit,” and it permeates the organization.

Our people are the key to our success. Some are bankers that have finally been empowered to do what they’ve always wanted to do. Others are industry outsiders that we’ve hired to bring new solutions to old problems.

Are You Digitally Native or Just Digitally Naive?


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Your bank’s survival could hinge on how you answer this question.

In recent years, we’ve seen a tremendous increase in use of technology. According to a range of surveys, at least one in every three people in developed markets now carries a smartphone. And in the United States alone, smartphones account for more than half of all mobile subscriptions, meaning that at least a third of all consumers potentially will use their phones to make payments and purchases.

The digital era is here to stay and adopting a digital-first mindset is no longer a matter of preference but rather, a question of necessity. Traditional banks need to recognize the need to expand their own digital services and capabilities, and many have started innovating and investing heavily to do so.

If you’re ready to become a part of the digital revolution, that means your core banking platform needs to be up to the task of helping you establish a strong digital presence. Evolving into a more fully digital organization with the right core in place can help financial institutions deliver quicker and more reliable services, strengthen the relationship with current clients while helping to acquire new ones—all the while delivering a unique, personalized customer experience to all of their customers.

Looking into the future, a 2014 McKinsey & Co. research predicted that within a few years over two-thirds of all banking users will be fully adapted to the online world. However, a 2016 Bain & Co. study also indicates that adding channels to a customer’s experience can increase confusion and frustration. In other words, there are still some bumps in the road to a purely digital experience.

With the increasing adoption of digital channels, despite some snags, it’s easy to see an emerging trend: to succeed, financial institutions must adopt a digital-first view of how to do business (PDF).

The average customer will interact at least twice a day with their bank, checking on payments and balances, paying bills or making purchases. Because of this heightened activity, an increasing number of financial institutions are beginning to grasp the importance of the digital-first view of banking. North American banks have begun to invest heavily in apps that, when working in concert with existing core technologies, will improve the customer experience and cultivate stronger and longer-lasting relationships with their clients. These new apps allow banking clients to perform a range of financial activities while on the go, offering services more sophisticated than mere paperless customer experiences, which have been around for nearly a decade.

There is no doubt that the world is already experiencing a digital transformation. But can the inevitable change be advantageous? It can, if you’re ready with solid core technologies already in place. By some estimates, adopting digital technology could allow banks to decrease their physical footprint by 30 percent, resulting in a significant reduction in costs and corresponding improvement in profitability. Brian Moynihan, CEO of Bank of America Corp., cites the rise of digital usage among his customers as a prime driver behind significant workforce reductions in recent years.

Figures from the last few years demonstrate the success of digital banking. Online-only banks, for instance, saw more than a 30 percent rise in deposits between 2010 and 2013. Mobile banking will grow to more than 2 billion users worldwide by 2020. And according to a recent Accenture study, 20 percent of all bank customers are entirely digital users, meaning that if a bank wants to increase its customer base, catering to the needs of these new tech-savvy clients is a must.

The ability to deliver services the way customers want, including through digital channels, while not neglecting the core services that all clients demand, is increasingly crucial to establishing and maintaining long-term banking relationships. Digital change demands that financial institutions digitize their processes and drastically reset how banking staff reacts to customer needs. The adaptation of lean core banking IT systems and investment in new digital products and services that enhance and personalize customer experience will be key factors going forward.

In short, digital banking can realize astonishing improvements in earnings before interest, taxes, amortization and depreciation, while also enabling you to reach a wider set of customers through an expanded range of services. Experts estimate that a digital transformation of the financial sector and banking institutions can ensure secure transactions and minimize risks, reduce costs, ensure seamless integration with back office applications—and last but not least, streamline the customer experience.

David Mitchell is the president of Nymbus.

Shaking Up Traditional Banking


banking-strategy-2-10-17.pngUnlike some executives, David Becker likes to be told what he’s doing wrong. The chairman and chief executive officer of First Internet Bank in Fishers, Indiana, says bank interns speak to the senior leadership team at the end of their internships to discuss ways the bank could improve. He expects the same of staff throughout the organization.

“[Our hire] is the dissatisfied banker,’’ he says. “They were in an organization that had a boatload of rules and policies. We take the banker who says, ‘What if we did this?’ We want the person who questions the day-to-day operations.”

Running the bank in such a way has paid off.

The bank’s holding company, $1.8 billion asset First Internet Bancorp, grew loans 31 percent last year from the year before, to $1.3 billion. Net income grew to $12.1 million from $8.9 million in 2015. The bank’s return on average assets was 0.81 percent in the fourth quarter of 2016, and its return on average equity was 11.24 percent. First Internet has its headquarters in Fishers, a suburb of Indianapolis, and a loan production office in Tempe, Arizona, and that’s it. With a focus on digital banking, First Internet can grow its loan book nationally while keeping expenses low. One of its niches is digitally savvy investors who own properties or businesses in multiple states because the bank can accommodate lending that may take place in different parts of the country.

Investment bank Keefe, Bruyette & Woods has an outperform rating on the stock, in part based on its cheapness relative to the bank’s performance. The bank will have to continue to grow to achieve efficiencies, because internet banks have to pay slightly more for deposits than other banks do, says Michael Perito, a KBW analyst who follows the stock.

Becker feels as if the big banks are getting consumers more accustomed to digital banking, and therefore, more likely to leave for digital-only banks. When he first started the internet bank in 1999, customers had to deposit checks by sending them in the mail to the bank. Now, they can just remotely deposit them through the bank’s mobile banking app. If customers use another bank’s ATM, First Internet reimburses them for up to $10 per month in surcharges—making up for the bank’s lack of a branch network.

The bank has been growing lately in part because it is hiring seasoned bankers to tend to its loan book of mortgages, commercial real estate and consumer loans. Becker says the bank has managed to survive by building slowly and carefully in its early years, so as not to overstep its infrastructure. “The team we have on board are all folks at the senior level that worked at multistate, large, regional banks and have the expertise and the ability to help us grow to that multi-billion-dollar position,’’ Becker says. “It is all about the people. We can create computer tools and algorithms, but at the end of the day, somebody has to talk to you if there is a problem and know how to underwrite a loan.”

The bank is acutely focused on customer service, and in its early days, it didn’t hire anyone right out of high school or in their first job. “We needed talented people who could handle anything that came in the door,’’ Becker says. There are no tellers per se, and everyone who works in customer service needs to handle multiple functions, from wire transfers to starting a new deposit account. Staffers can communicate with their customers on the phone, in online chat rooms or via email. They keep track of customer reviews on sites such as Yelp, because bad reviews can damage the company’s reputation. Software vendors are held to account, and the bank doesn’t sign any long-term contracts with vendors, Becker says.

Although the bank relies on vendors rather than developing its own software, it follows the workplace ethic of a tech company: a 24-hour gym is available, and people can show up in jeans to work every day. “We use technology to revolutionize the banking process,’’ Becker says. “There really isn’t any limit to our potential growth. Are we a drop in the bucket in the whole community of financial services? Yes. But the consumer is coming our way. We are getting better at it and we are bigger day by day.”

Disability Claims Against Bank Websites: Is Your Bank Prepared?


disability-12-19-16.pngMany will recall painful lessons learned in the wake of the 1990 passage of the Americans with Disabilities Act (ADA) as numerous claims arose alleging that bank ATMs were not accessible to the disabled. Banks were required to retrofit facilities and equipment to meet the standards adopted in 1991 by the U.S. Department of Justice requiring ATMs to be accessible. Again in 2010, the Justice Department supplemented the general accessibility rules with standards setting out extensive technical specifications for ATMs, including speech output, privacy and Braille instructions, leading to another round of claims, lawsuits and retrofits of equipment.

Today, a new target for ADA claims has surfaced: online and mobile banking. Claims brought under Title III of the ADA are growing in number, targeting financial institutions for failing to make their websites and mobile applications accessible to individuals with disabilities.

Title III of the ADA covers public accommodations and commercial facilities and provides, in pertinent part: “[n]o individual shall be discriminated against on the basis of a disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation by any person who owns, leases (or leases to), or operates a place of public accommodation.” Banks fall squarely within the category of “service establishments” that qualify as public accommodations. Thus, Title III’s accommodation requirements apply to at least the physical location of a bank.

At issue in the recent influx of claims is the extent to which a bank’s website must accommodate disabled patrons. Federal courts are split on whether websites for private businesses actually constitute a public accommodation under the ADA. Federal courts generally have taken one of three approaches regarding the applicability of ADA accessibility requirements to websites: the internet is not a place of public accommodation; the internet is a place of public accommodation; or the internet is a place of public accommodation to the extent a website serves as a gateway to the full and equal enjoyment of goods and services offered in a business’s physical locations.

The Justice Department, which also enforces the ADA, has not yet issued regulations, accessibility requirements or guidance relating to whether and how commercial websites are to comply with Title III. Originally, the Department planned to issue regulations implementing Title III in the spring of 2016; however, it changed course in late 2015, announcing that the regulations would not be finalized until 2018 at the earliest, stating that it wanted to concentrate first on similar regulations for government entities and federal contractors covered by Title II.

In the meantime, the Justice Department has taken the position, at least as far as state and local governments are concerned, that Title II obligates those entities to make their websites accessible to consumers with disabilities. The Justice Department is on record asserting that “[t]he internet plays a critical role in the daily personal, professional, civic, and business life of Americans. The ADA’s expansive nondiscrimination mandate reaches goods and services provided by public accommodations and public entities using internet websites.”

As to private business, the Justice Department has entered into several consent orders under Title III in which the businesses have agreed to bring their websites and mobile applications into compliance with the Web Content Accessibility Guidelines 2.0 AA, published by the Web Accessibility Initiative of the World Wide Web Consortium.

With alleged violations of ADA Title III finding their way into claims, lawsuits and Justice Department actions, it is important for board members to be alert to emerging website and mobile application accessibility issues, to be prepared to assess their institution’s exposure and to make sure their institutions address any unmet requirements. With a new administration arriving in Washington D.C., it is important to monitor its perspective on this topic. Expert consultants and legal counsel can provide valuable guidance in structuring the assessment process as well as any needed remediation. The process should include a review of the institution’s web and mobile platforms, a review of the institution’s technical capabilities, as well as applicable vendor agreements to ensure that gaps are addressed so that the bank meets ADA requirements.

Rebuilding Trust Through Technology


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After many years in banking, we have heard every kind of criticism leveled at banks by angry consumers and politically inspired public servants. Most recently, Wells Fargo & Co.’s cross-sell scandal threw another log on the fire of contempt that many consumers have for banks. Despite a few very bad ethical lapses, it is always shocking how many banks get painted as bad actors when consumers and communities benefit directly from their business models. This benefit is not limited to the beloved stories of the community bank setting up a scholarship fund or a day of caring painting crew, or even the billions of dollars committed to Community Reinvestment Act activities by the industry. As noble as those efforts are, they pale in comparison to what banks really do.

Millions of consumers use the banking payments rails for free. Keeping a very small amount of money in a checking account can allow a consumer to reap the benefits of direct payroll deposit, free bill pay, free remote deposit capture and free ATM access in their bank’s network. Amazingly, should the consumer face a loss of funds due to hacking, the bank (which is not being paid for this service) often makes the consumer whole. The day-to-day systems that most consumers use are remarkably affordable.

Still most Americans do not trust banks. The most frequent complaints tend to fall in one of three areas: a lack of transparency; slow and difficult user experiences; and the promotion of products that do not fit the need of that particular individual. There are ways technology can combat these common complaints and even help ameliorate the ethical lapses that have tarnished banking.

Paperless application and smart data technology can make the application easier and more convenient for consumers and businesses alike. They can also speed up the time that is required for approval. It is often the credit activities that get banks tarred and feathered. It is understood that consumers and businesses turned down for requested credit will feel the sting of that rejection—particularly when the banks takes an inordinate amount of time to deliver its decision. More prompt decision making is helpful for all consumers.

Sophisticated data and AI systems could be built into the technology that would guide bankers to a right-sized product offering in real time. They can even enable online comparisons of products that gives the consumer a better idea of the available options and how well they fit with the consumers’ long-term goals. A few rogue bank models worked better for the bank if the customer failed than if they succeeded have given consumers the right to question if the advice that is offered by their bank is in their best interest. Recently a bank CEO, off the record, compared that experience of some bank customers to his experience buying a cellular data plan for his family. “I kept on wondering it the plan [the salesman] was touting was the best for the phone company or for his commission or actually for me. Banking can’t be like that; we have to make this better.” Fortunately, there is technology that is already making it easier for banks to understand what their customers need and to serve that need more transparently.

Transparency is going to be key. Having a customer click the “I have read this box” will not work in the long term. Online tools including the use of video, chatbots and embedded quizzes can make disclosure easier for consumers.

Regulatory technology is just developing, but there is the possibility that regtech will lower compliance costs and streamline disclosure. Some of the new technologies will provide internal bumpers that can help prevent rogue behavior from an employee. What a bank has for its regulators it will also have for its internal risk management team. Detecting ethical breaches before they become systematic or catastrophic will be more possible.

Several banks are going a step further towards building consumer trust. They are using their online platforms to support their customers financial health. Bank of America Corp. just rolled out a spending aggregation tool that allows consumers to see where their money goes and budget for the future. It even allows consumers to add data from non-Bank of America accounts. It is a smart way for Bank of America to get a better understanding of their customers while providing a useful tool that requires no effort to use.

It is easy to see fintech providers as competitors. Looking at online lenders and digital investing platforms as the enemy because they compete directly with banks is a common perspective. It is also possible to think of these companies as innovators that will help us rethink how to make our customers trust us again. Many of these fintech innovators are eager to work with banks that want to provide better banking experiences. These innovations may be the way banks return to delighting their customers and building loyalty.

Somerset Trust Co. Becomes a Leader in Mobile


mobile-11-4-16.pngAfter sweeping the sidewalk, the first job G. Henry Cook had more than four decades ago at his family-owned Somerset Trust Co. in Somerset, Pennsylvania, was putting checks in alphabetical order. This was the “most mindless, frustrating and stupid job I have ever done in my life,’’ he says. “That week was when I developed a commitment to figure out how technology can make banks smarter, so we can free up our people to really take care of customers.”

Today, Cook is president, chairman and CEO of Somerset Trust Co., which is on the leading edge of community banks in terms of mobile technology. At roughly $1 billion in assets, the bank has a mobile app that allows customers to log in with a fingerprint instead of a password, turn on and off their debit cards using the app and pay their bills with their smartphone camera. Soon, the bank will make it possible for new customers to open an account using the mobile app, instead of signing up through online banking or walking into a branch. The first step is to roll out the mobile platform inside a couple of branches, so bank staff can quickly enroll new customers using an iPad. In the first quarter, the bank hopes to make mobile account opening available to customers using their own devices anywhere, says Chief Operating Officer John Gill.

Mobile account opening is so new, it’s hard to find statistics on it. Almost all the banks that allow it are larger than $50 billion in assets. But it’s increasingly talked about as an avenue to generate new customers and accounts in an age when consumers increasingly rely on their smartphones for everything.

“Most community institutions do not really have a good strategy for account opening on the phone,’’ says Jim Burson, senior director at Cornerstone Advisors, a consulting firm in Scottsdale, Arizona. “Most people have the basic functional [items such as], ‘I can make a payment, I can check my account balance.’ But the big gap that needs to be closed is the account origination and loan origination piece of mobile.”

Gill says the bank simplified a lot of its own front-end and back-end processes to make it happen, so the app, for example, will scan identification such as a driver’s license, process the identification verification and order debit cards automatically. The bank also sends disclosures electronically. The same account opening system will work online as on the mobile app. “We’re trying to make this device independent,’’ he says. “Our branches say it is so time consuming to open an account. It really makes the customer experience better.”

Somerset is using Bolts Technologies to launch the new account opening platform. It already uses Malauzai Software for its mobile platform and Fiserv as its core processor. Gill and Cook declined to provide estimates of the costs and savings associated with mobile account opening. But being a privately owned bank certainly helped justify the investment, Cook says. “An awful lot of traditional businesses [are] very afraid of taking the incremental risk because some Wall Street types are going to be on their backs: ‘What about this quarter?’ The job of the CEO is to maximize shareholder wealth over time, and somehow that has been lost.”

Only about 10.6 percent of all the banks and credit unions in the country had fingerprint authentication as of March, 2016, according to an estimate in Mobile Banking Quantified, a report by research firm Celent and FI Navigator. Fewer than 1 percent had photo bill pay and 4.1 percent had debit card on/off switches in the app.

Why does Somerset, a community bank, want to be in the league of only a few banks offering such services? In the late 90s, the bank was struggling to grow and had only about $200 million in assets. It surveyed about 10,000 people, who said they wanted to do business with a community bank, but perceived that community banks just can’t “keep up.” Cook decided that the bank, in fact, would need to keep up. “Why do people not deal with local banks? They don’t think they’re experts. What does an expert mean in this day and age? We think technology is part of that answer.”