Why a Multi-App Strategy Is Needed for a Multi-Generational Customer Base

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For most consumers, mobile has become the primary delivery channel for interacting with their financial institutions. As a result, community bankers devote a great deal of time and resources toward the development and delivery of their digital banking experience. While the intent is correct, the strategy is often flawed.

Many bankers now subscribe to the concept of the super app, or a single application that bundles all a bank’s services, along with those of its fintech partners, within a single mobile application. The perceived benefit is that if a bank’s customers can manage everything from basic transactions to wealth management and financial wellness, to consumer lending and even business banking, then it should be more convenient for both the customer and the institution.

The reality, however, is that a super app approach really only works if the bank is serving a very homogenized customer base (e.g., predominately retirees, or a certain profession, like farmers). In most cases, a community bank’s customer base is much more diverse, and therein lies the issue.

The super app mindset means that when any new services are successfully deployed, it bloats the application and ultimately dulls the customer experience, making it more difficult for users to find and use the service that the bank worked so hard to integrate.

Digital banks are frequently cited for their design and usability, and indeed, 47% of new checking accounts were opened through digital banks in the first half of 2023. But their elegance is not a matter of artistic design as much as it is about strategic deletion – in essence, having leaner, more focused digital applications catered to serve individual consumers rather than a cumbersome single app experience.

Elon Musk famously said, “Possibly the most common error of a smart engineer is to optimize a thing that should not exist.” Rather than designing focused mobile applications, many bankers continue to insist that the only option is to keep adding services or functions for all customers, regardless of their unique needs. Digital banks are attracting Millennials and Gen-Z customers and gaining ground on community banks through addition by subtraction, by providing limited and targeted functionality specific to their targeted demographic — not their grandparents.

Rather than try to boil the ocean within a super app environment, many bankers are realizing higher levels of customer engagement and better digital experiences for their customers through either a companion app or a multiple app strategy.

In distinguishing the two, a companion application is a secondary application that does not include traditional banking services, but rather, provides only supporting services such as debit/credit card controls, budgeting, p2p payments or financial education. In a multi-app strategy, each persona has an available application designed for them and each app includes the full suite of traditional banking services, such as account balances, transactions, transfers, remote deposit capture and bill pay, as well as specifically designated services for that persona.

For years, community bankers have used personas to design improved products and create a better understanding of the needs of their customers and target markets. Why would the use of those personas end at the digital channel? A multi-app approach enables banks to deploy mobile experiences specifically designed for the profile and needs of each customer banking with their institution. It can take generational preferences into account and still provide the customer with the ability to choose the application/configuration that is right for them. Invariably, when their needs change over time, they could then personalize those configurations by including additional services that further meet their needs and match their unique experience.

By focusing on the services that their customers are most likely to need, designs can become more streamlined, improving usage of digital services instead of the more costly human-powered, back-office service centers. This also provides the bank with a way to test new ideas within a targeted scale to see if its customers respond positively. If so, the bank can then focus on rolling out that new service or feature more broadly.

A multi-app and/or a companion app strategy acknowledges that different customers do in fact have different needs. By delivering solutions built around those needs, bankers can drive both customer engagement and claim a larger percentage of wallet share over time.

Using Your ‘Why’ to Navigate Change Successfully

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Investing in change is expensive. Besides the financial aspect, change can drain a financial institution’s resources and severely impact internal processes. The reality is that change is often necessary to continue providing the best experience for both customers and employees. Bankers must invest time, effort and money into selecting the technology partners that will solve a crucial pain point in their organization.

Step 1: Identify Your Common Force
There are four common forces that prompt a bank to invest in a new partner or technology. Depending on which force is driving the decision for change, executives need to prioritize different factors when evaluating potential vendors.

When systems change: When banks change one major technology — whether a core, payment vendor or online banking solution — it has a ripple effect across their other technologies, relationships and processes. Banks often use this opportunity to change or update their other technology partners to create a more cohesive end-user experience that integrates with the new system. They have to ensure that their vendors can handle that new system.

When there is an urgent need: Banks that have a vendor relationship that does not work well with their own internal workflow can be another force for change. This dysfunction can ultimately result in the bankers being forced to step in and help complete responsibilities because the vendor isn’t able to meet expectations. Instead of gaining resources and offering the best end-user experience, the bank focuses its time and effort on putting out fires.

When a solution is under review: New leaders or new managers can be an impetus for change, as they seek to understand their vendors better, evaluate their value and look for where they have efficiencies and where they do not. What benefits do different vendors bring the bank in simplifying and decreasing manual operations? Is this vendor improving efficiency so that end users have the desired experience? This force is more proactive and prompted by an evaluation where the opportunity for change is not a mandatory given. This review of vendors is important for financial institutions to do because it could uncover issues that have yet to reach a pain point level and can still be addressed.

When a vendor impacts the institution’s reputation: Occasionally, banks do not receive the high-quality experience they expect from their vendor and seek change to maintain their reputation. The end product does not feel competitive or has caused errors for its customers, which hurts brand perception and loyalty. Like the previous force, changing vendors before things escalate gives the bank much more power and flexibility to choose the best partner in a timeline that works for them.

Step 2: Ask the Right Questions
Bankers must evaluate their vendors based on their current common force. They must first identify why they need to change. What are they trying to solve? Then, they can leverage that pain point to develop questions for potential new partners based on the root issue impacting their situation.

Questions like, “How do you integrate with our vendors?” or “What does our daily engagement look like?” or “How do you guarantee your process?” can help executives evaluate vendors more efficiently.

Vendors want to avoid viewing themselves as replaceable. The truth is, there is a lot of competition out there, and not a lot of difference between solution offerings. Bankers need to know what to ask to get a solution that meets their needs and addresses their deeper concerns.

Peeling back the onion that is a bank’s current workflow might cause tears, but that is the only way executives can solve vendor issues that impact the institution’s transformation, improve the end-user experience and continue to stay competitive.

5 Key Areas Where Banks Can Implement Automation Solutions

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As automation has become more widely available to the financial services industry, banks need to take advantage of automated solutions to streamline manual systems and processes and maintain a competitive edge.

But they would be mistaken to seek out automation only for a solution to a specific problem; rather they should take a holistic approach to automation and craft a strategy that incorporates automation in a variety of ways that could potentially improve many functions of their business. While commercial, off-the-shelf software exists for specific automation use cases, banks need to understand how automation fits into their broader business strategy and how to weave it throughout the organization’s processes. This allows leadership teams to understand where a customized approach is necessary and where turnkey solutions may be suitable.

There are five specific areas that banks should assess for automation readiness and efficiency gains.

1. Customer experience. A frictionless customer experience is a standard expectation in many industries; banking is no exception. In the past, if a customer wanted to open a deposit account at a bank one month and take out a loan the following month, the bank might require two interactions with two different employees to gather data from that customer. But there are process enhancements that can automate and streamline these processes to remove the redundancy and enhance the customer experience.

Automation can streamline the intake and digital cataloging of customer information, pulling that data together into a single place and data set that employees from various functions of the bank can query and use. The consistency of information makes the experience more palatable for the customer, and more efficient for employees.

2. Credit approval and loan operations. A typical commercial loan application and approval process can require the loan applicant to submit a significant number of documentation items and pieces of information to the bank. Using an automated tool to gather, process and organize that information can significantly cut the cycle time for the loan application, approval and origination process. Additionally, an automated process on the front end enables the loan operations process on the back end of a transaction to be more efficient and seamless, as employees can access all of the electronically obtained information in an organized format.

Automated solutions for credit and loan operations — one example of which is highlighted in this case study — can result in better information for banks and quicker decisions for applicants. Banks can use automated solutions to integrate with credit bureaus or other data providers via application programming interface (API), and apply credit policies throughout underwriting.

3. Data management. Most banks have numerous data sets that can be queried separately but not all together. What this can mean from a lending perspective is that a bank may have a commercial loan system, a retail loan system and a credit card system; all of those systems could have different outputs, which could make it difficult to analyze data and have a holistic and meaningful view of the customer’s relationship, profitability and risk profile.

Organizations should explore how automation solutions may improve their existing infrastructure and make their data more relevant and useful by enabling real-time reporting to build a more complete profile of the customer.

4. Automation tools can vastly improve the intake and data maintenance process required to comply with Know Your Customer (KYC) regulations. Automation can replace manual process during customer onboarding and ongoing monitoring and verification efforts. Compliance automation creates a uniform process and data set that the bank can use throughout the customer lifecycle, rather than on an as-needed basis, when onboarding is completed or when monitoring items arise.

5. Streamlining the audit function. As we highlight in this case study, automation can help a bank’s internal audit department “spend less time gathering data and scoping audits and more time on fieldwork such as testing hypotheses, assessing risk management, and reaching conclusions using a datacentric approach.” In that specific case, a bank used an intelligent automation solution to identify gaps and pain points in how it quantified risk during the audit planning process, accelerated its planning process and incorporated various data sources, such as consumer complaints and regulatory standards, into the audit plan.

Automation can improve virtually any function of a bank’s business, but organizations may find it daunting to determine where or how to begin implementing such solutions. Discussing options with a third-party advisor can help bankers craft a valid and thorough automation strategy that incorporates all the advantages of automated capabilities that might be relevant and available. This strategic approach maximizes efficiencies for the bank, while providing a best-in-class customer experience.

How Banks Can Speed Up Month-End Close

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In accounting, time is of the essence.

Faster financial reporting means executives have more immediate insight into their business, allowing them to act quicker. Unfortunately for many businesses, an understaffed or overburdened back-office accounting team means the month-end close can drag on for days or weeks. Here are four effective strategies that help banks save time on month-end activities.

1. Staying Organized is the First Step to Making Sure Your Close Stays on Track
Think of your files as a library does. While you don’t necessarily need to have a Dewey Decimal System in place, try to keep some semblance of order. Group documentation and reconciliations in a way that makes sense for your team. It’s important every person who touches the close knows where to find any information they might need and puts it back in its place when they’re done.

Having a system of organization is also helpful for auditors. Digitizing your files can help enormously with staying organized: It’s much easier to search a cloud than physical documents, with the added benefit of needing less storage space.

2. Standardization is a Surefire Way to Close Faster
Some accounting teams don’t follow a close checklist every month; these situations make it more likely to accidentally miss a step. It’s much easier to finance and accounting teams to complete a close when they have a checklist with clearly defined steps, duties and the order in which they must be done.

Balance sheet reconciliations and any additional analysis also benefits from standardization. Allowing each member of the team to compile these files using their own specific processes can yield too much variety, leading to potential confusion down the line and the need to redo work. Implementing standard forms eliminates any guesswork in how your team should approach reconciliations and places accountability where it should be.

3. Keep Communication Clear and Timely
Timely and clear communication is essential when it comes to the smooth running of any process; the month-end close is no exception. With the back-and-forth nature between the reviewer and preparer, it’s paramount that teams can keep track of the status of each task. Notes can get lost if you’re still using binders and spreadsheets. Digitizing can alleviate some of this. It’s crucial that teams understand management’s expectations, and management needs to be aware of the team’s bandwidth. Open communication about any holdups allows the team to accomplish a more seamless month-end close.

4. Automate Areas That Can be Automated
The No. 1 way banks can save time during month-end by automating the areas that can be automated. Repetitive tasks should be done by a computer so high-value work, like analysis, can be done by employees. While the cost of such automation can be an initial barrier, research shows automation software pays for itself in a matter of months. Businesses that invest in technology to increase the efficiency of the month-end close create the conditions for a happier team that enjoys more challenging and fulfilling work.

Though month-end close with a lack of resources can be a daunting process, there are ways banks can to improve efficiency in the activities and keep everything on a shorter timeline. Think of this list of tips as a jumping off point for streamlining your institution’s close. Each business has unique needs; the best way to improve your close is by evaluating any weaknesses and creating a road map to fix them. Next time the close comes around, take note of any speed bumps. There are many different solutions out there: all it takes is a bit of research and a willingness to try something new.

Small Business Checking, Repositioned

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This is part two of a two-part post diving into the future of small business checking. Read part one, Small Business Checking, Reimagined.

Increasingly, small businesses see digital payment solutions as both a way to get paid faster and to satisfy customers who now prefer to pay that way. Indeed, this capability has become indispensable for most small businesses. And for banks, it is the key to capturing even more small and medium-sized business relationships moving forward.

However, there is one problem: Banks don’t offer a simple solution to help their small business customers meet this fundamental need. As a result, small business owners have had to resort to outside options (four of which we explored in part one). Over time, this reliance on fintech challengers can lead to disintermediation for the bank, as the non-banks begin to replace the financial institution with their own offerings.

At this point you may be wondering: Does my bank already offer this kind of solution, or something that’s similar enough? The answer, most likely, is no — or not yet.

The reality is that the ideal solution for a small business owner is a steep change from the small business accounts of today. Current accounts are built on transactional functionality. The many supporting, and sometimes dizzying, features that go along with it, such as transaction fees, minimum balances and item allowances, may be important to the bank, but miss the mark for a small business.

Simply put, small business owners need bank accounts designed for a very specific reason: to receive digital payments and easily track their critical cash flow in the process.

To be truly relevant, this reimagined small business checking account needs to include the following three crucial components:

  • Digital payment acceptance, including credit cards, and online invoicing, set up and ready for the small business owner to start getting paid faster into the very same account.
  • Manage and track customer payments, ranging from incoming, coming due, and past due, right inside the digital platform that’s comprises their checking account.
  • Expertise and high-touch support that a business owner can expect from a longstanding and trustworthy institution. This is an important differentiator, and one that fintech challengers can’t come close to matching.

This checking account product offers two significant benefits. For a small business owner, it represents exactly what they have been searching for: a complete small business solution that features receivables functionality, offered by the same trusted institution that they’ve come to rely on for so many other needs.

And for banks, this new account allows them to embrace a mindset focused on customer workflows and solving real-world challenges. It could even signal a way forward, and open the door to many more opportunities. Promoting such a markedly different product, however, would require some care. Unlike a typical account, with its mandatory list of bulleted features, a reimagined solution like this one requires positioning that highlights its problem-solving capabilities.

A generic framework for our hypothetical account, organized by customer need first and benefit(s) second, could go:

Get paid, the way they want to pay
Make it easy for paying customers. Accept online payments and credit cards, or send personalized digital invoices. Either way, get paid directly into your bank account for easy access to funds.

Better control of your cash flow
Track and manage it all automatically: incoming, coming due and past due customer payments. Know exactly who has paid and when, and get an up-to-date view of your cash flow.

Do it all, all in one place
More than a checking account. Everything you need for your small business is included with your account. And there’s no need to set up multiple accounts across multiple platforms — one easy enrollment is all you need.

You don’t have to go it alone
Because a great digital experience is only the beginning. Every successful business needs an accessible financial partner — your bank is available and ready to help.

Of course, a reimagined small business checking account needs to be designed and launched with supporting capabilities in mind. Look for partners that can help your institution go to market with a proven solution — inclusive of the product capabilities and go-to-market services — that enable small business owners to get paid, while staying ahead of the competition.

Learn more about Autobooks and download your free small business resources here.

The Three C’s of Compliance

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Compliance doesn’t have to be the department of ‘no:’ It can be a benefit, rather than a burden. Barbara Boccia of Wolters Kluwer explains the three C’s that drive a culture of compliance and describes how to integrate these factors within the organization.

  • Turning Compliance Into a Competitive Advantage
  • Key Factors That Drive Compliance Culture
  • Elevating Compliance as a Strategic Asset