How Banks Can Implement 3 Types of Automation Solutions

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Many banks struggle with digital transformation, often because they lack an effective strategy, clear governance over the transformation process or both.

Common and current inefficiencies include relying on manual reports created in spreadsheets across multiple systems, using email or word processing to capture and document approvals and serve as a system of record and inconsistent procedures across business functions.

A digital-first approach has increasingly become table stakes for financial institutions given consumer adoption. In 2021, 88% of U.S. consumers used a fintech, up from 58% in 2020, according to an annual report from Plaid. Customers expect a frictionless experience from their bank; traditional institutions need to have a plan in place to adapt accordingly.

Banks that don’t already have a digital transformation strategy need to establish one to anchor and govern their process for evaluating, prioritizing and executing digital transformation projects. One area for consideration on that digital journey should be automation, which can help organizations become more efficient and better mitigate a variety of risks. There are three intelligent automation solutions that can help banks reduce costs and improve productivity, among other benefits: robotic process automation, digital process automation and intelligent document processing.

  1. Robotic process automation: In general, RPA is task-based automation focused on accomplishing targeted components of business processes without the need for significant human intervention. RPA is capable of handling high volume, repetitive and manual tasks on behalf of human process owners, filling gaps where systems lack integration capabilities.
  2. Digital process automation: This type of automation focuses on optimizing workflows to orchestrate more collaborative work processes. DPA typically involves highly auditable data flows to improve regulatory compliance, and is scalable in a way that helps the organization adapt to evolving business needs.
  3. Intelligent document processing: IDP automation involves the extraction of semi-structured data from digital documents such as PDFs and image files. This transforms such documents into discrete data elements that can drive decision-making. IDP can enhance the scope of RPA and DPA solutions.

Questions to Ask
On a foundational level, banks need to have a clear, intentional link between technology spending and their overall business strategy if they want to succeed in their digital journey. Leadership teams need to understand issues with current processes to ascertain where streamlining those processes could offer the greatest return on investment. Here are some key questions to consider when evaluating process automation:

  • How does the automation solution reduce friction and improve the customer or user experience?
  • What is the associated market opportunity or efficiency gain enabled by the solution?
  • Is the institution potentially automating a bad process?
  • How does the solution align with what customers want?
  • How will the institution train its teams to ensure adoption?
  • How does the automation solution fit into the organization’s current processes, workflows and culture?
  • How will the bank manage the change and govern post-transformation?

Developing a Framework
Depending on where a bank is in its digital transformation journey, there are a variety of steps the organization will need to take to implement automation solutions. Those banks that are early in their journey can use the following steps to help:

  • Plan: Establish a framework for implementation, including objectives, teams, timelines and a project governance structure.
  • Assess: Understand the current state of functions across the business and identify process gaps where automation can help.
  • Design: Use best practices to establish a “fit for purpose” system design that meets business requirements and is scalable for future growth.
  • Execute: Configure the applications and integrations according to system design; validate, test and resolve any defects identified; migrate the approved configuration to the production environment.
  • Go live: Assess user readiness and deploy the solution.
  • Support: Execute an automation support strategy and establish an external support framework.
  • Monitoring: Establish and track key performance indicators to provide metrics for better visibility into the business.
  • Road map: Evaluate business unit usage and develop a plan for optimization and expansion to realize the company’s digital transformation vision and business goals.

Addressing each of these steps can help banking leadership teams develop a more thoughtful approach to automation solutions and improve their overall digital transformation strategy.

In an Uncertain Market, Count on Data

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Against a backdrop of challenging macroeconomic risks, including inflation, potential recession and high interest rates, banks are also dealing with volatility connected to the collapse of three regional banks. These are difficult times, especially for financial institutions.

At the same time, banks are struggling to achieve primacy: being the go-to for their customers’ financial needs amid the marketplace of more agile fintechs. To do this, banks need to make smart decisions, fast. This amalgamation of business-impacting factors might seem like an unsolvable puzzle. But in an uncertain market, banks can leverage data to cultivate engagement and drive primacy.

Banks can count on data, with some caveats. The data must be:

  • While there is a massive amount of data available, banks often lack a complete picture of the consumers they serve, particularly as digital banking has made it easier for consumers to initiate multiple financial relationships with different providers to get the best deals. It’s vital that banks get a holistic view of all aspects of a consumer’s financial life, including held away accounts, insurance and tax data.
  • Increased open banking functionality empowers consumers to take charge of their data and use it to be financially fit. Open banking serves that connectivity and makes it more reliable.
  • Banks are flooded with data, the torrent of which makes it difficult to extract value from that data. Up to 73% of data goes unused for analytics. But the right analytics allows banks to reduce the noise from data and glean the necessary insights to make decisions and attract and retain customers.
  • Most transaction data is ambiguous and difficult to identify. Banks need enriched data they can understand and use. Data enrichment leads to contextualized, categorized data that gives banks tangible insights to improve their customer’s journey and inform more meaningful interactions.

Data as a Differentiator
Once banks have high quality data, they can use it to differentiate themselves across three key areas:

1. Make smart, fast customer decisions.
Banks are expected to deliver relevant offers at the right time to customers before rapidly making critical risk decisions. The ability to do this hinges on having a holistic view into the totality of a customer’s bank accounts. Data science algorithms using artificial intelligence and machine learning can then surface insights from that data to engage, retain and cross-sell via personalized, proactive experiences. From there, banks can execute for growth with rapid integrations that help gain wallet share and productivity.

2. Promote financial wellness.
Banks are nothing without their customers. To win and keep customers, banks need to provide tools and products that can enable an intelligent financial life: helping consumers make better financial decisions to balance their financial needs today and building to meet their aspirations for tomorrow. One way to help them with this is to provide a holistic view of their finances with account aggregation and money management tools. According to a recent survey, 96% of consumers who used financial apps and tools powered by their aggregated data were more likely to stay with the financial institution providing these tools. These tools give banks a way to helping their customers and inspire loyalty.

3. Forecast and manage risk.
Uncertainty over recent events in the banking industry has made the need for immediate insights into net deposit flows an imperative. Banks can use aggregated data to identify, forecast and manage their risk exposure. Digital transformation, which has been all the rage for years now, can enable centralized holistic views of a bank’s entire portfolio. Dashboards and alerts make it more practical for bankers to identify risks in the bank as they develop. A platform approach is vital. Banks need an entire ecosystem of data, analytics and experiences to mobilize data-driven actions for engagement, retention, growth and ROI.

Now more than ever, banks rely on data to cultivate engagement and drive primacy. Starting with holistic, high-quality data and applying analytics to derive insights, banks can drive the personalized consumer experiences that are necessary to attract and retain customers. And they can use that same data to better forecast and manage risk within their portfolio.

Profits Over Growth

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The last few weeks have been a whirlwind for banking. As bank stock indices plummet and investors make bets about which bank will fail, I’m headed to one of Bank Director’s most important conferences. 

But the agenda isn’t packed with discussion about investor and depositor panic. Experience FinXTech on May 9-10 in Tampa, Florida, is for bankers and technology company leaders who want to make connections and learn from each other. Still, the news headlines will be on people’s minds. I’m thinking about how the new environment is going to impact banks and technology companies. Two years ago, a consultant to tech companies said to me, “The last five years have found that you don’t have to be profitable to be a company.” 

Tech founders focused on growth, not profitability; and once they had market share, they went public or sold to a bigger company, taking their billions in equity to retire at 30 on an island in the Caribbean.

The times are changing.

Some banks may pull back on planned tech implementations. I think some fintechs will be forced to sell.  Venture capital deals fell 60% in value in the fourth quarter of 2022 compared to a year prior, according to the news site PitchBook. Banks are choosing a vendor or partner while also considering the company’s financial stability. Banks don’t want their partners and vendors to disappear or be gobbled up by larger companies that disinvest in the platform.

But the current environment is not all bad for partnerships, either. In a contrast from two years ago, fintech founders tell me they’re concentrating on profitability these days and not just growth. The good news is that fintechs in general have gotten leaner, more focused and driven to create successful partnerships. 

Bankers still need to act like private detectives and investigate those fintechs. Bank Director Managing Editor Kiah Lau Haslett explores due diligence in Bank Director’s recently released FinXTech report, “Finding Fintechs.” But I’m convinced a group of fintechs focused on bank success — rather than growth for its own sake — can only be good for banks.

Insights Report: The Secret to Success in Banking as a Service

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Banking as a service can bring in more revenue, deposits and customers for community banks. But it can also increase compliance burdens and potential risk.

Banking as a service, or BaaS, is an indirect banking relationship where a financial institution provides the back-end servicing for a company that intermediates with retail customers. Today, most of these relationships occur online — the third party brings in customer deposits, payments transactions and loans in exchange for fees associated with the arrangement. In turn, the bank houses the relationship, facilitates the transactions, and takes the lead on compliance and oversight.

“Banks are outsourcing significant compliance duties to the third party, and they’re taking on risks that are new and different from their direct business because they are providing their banking services indirectly,” says James Stevens, a partner and co-leader of Troutman Pepper’s financial services industry group.

Banking as a service isn’t new, although technology has made it easier for institutions to build out this business line. Sioux Falls, South Dakota-based Pathward N.A., a subsidiary of $6.7 billion Pathward Financial, has been in this space for about two decades. The bank sees its legal and regulatory compliance management system as a “core strength” fueling its innovation with partners, says Lauren Brecht, senior vice president and managing counsel of credit and tax solutions at the bank.

That’s because institutions interested in offering a BaaS business line must walk a fine line of responsible innovation and robust third-party risk management. Executives should understand that they can’t outsource their oversight responsibilities. That’s why it’s so important that banks create robust, “top-down” third-party vendor risk management policies and procedures that specifically address BaaS concerns, Stevens says. He also recommends that banks invest in personnel and systems that can handle the oversight and compliance functions “way in advance” of any partnerships.

“Banks are always going to be the ones left holding the bag, from a regulatory and compliance standpoint,” Stevens says. “It’s incumbent upon them to not only do due diligence and establish a good contractual relationship with their partner, but to also have the capability to manage and oversee it over time to manage those risks.”

To download the report, sponsored by Troutman Pepper, click here.

The Banking as a Service Insights report was originally published in the second quarter 2023 issue of Bank Director magazine.

Regardless of a Recession, Banking Technology Makes Sense

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No bank wants to be Southwest Airlines Co.

Investing in technology with recession clouds brewing might seem counterintuitive. But as Southwest’s crisis over the 2022 winter holidays showed, technology shortcomings can incur enormous costs in the short-term and in the future.

The company has estimated that its scheduling system meltdown will cost it as much as $825 million. Customers disparaged the airline and executives received a pay cut. Southwest had been investing in customer-facing technology. But the back-end limitations of its operations technology hampered the company’s ability to handle the most basic customer service for airlines: safely getting customers where they needed to be in the wake of a winter storm.

Community banks face downside risks from inflation, rising interest rates and continued geopolitical uncertainty. As a result, bank executives may be inclined to delay or cut spending on technology that can help their institutions grow or be more efficient. Southwest’s experience shows that would be a mistake. According to Forrester data, firms pursuing technology-driven innovation grow three to four times faster than industry averages. Institutions that undertake multi-year efforts to make digital technology a priority recognize digital acceleration is a way to:

  • Permanently reduce the cost of doing business.
  • Improve customer and employee experience.
  • Outperform competitors ahead of a looming downturn.

Bank executives facing pressure to downshift their digital efforts in the name of cost reduction should remember the following lessons from Southwest’s experience:

  1. Back-office failures directly affect customer experiences. Southwest prioritized technology spending on customer experience gains over back-end improvements, such as a digital way for flight crews to report their locations and availability. As a result, crews spent time manually calling in to report their locations, rather than helping solve customers’ problems. Delays or cuts in spending on technology that would make bank lending more efficient, for example, could mean longer loan turnaround times for customers.
  2. Systems fail at the worst time. Systems usually buckle under stress, rather than when it’s convenient — whether the system is a complex staffing solution or basic spreadsheets tracking loans in the pipeline. On the other hand, the Paycheck Protection Program demonstrated how institutions that had invested in technology earlier could capitalize on that opportunity faster than those that did not. If the economy downshifts, banks may be too busy putting out figurative fires to assess vendors and initiate technology that would help them manage lending and credit at scale during and after any recession.
  3. Viewing technology as a near-term cost, instead of a long-running investment that drives growth, ultimately hurts the organization. Forrester notes that Southwest apparently “budgeted for technology on an ‘allocative efficiency’ basis, focusing on optimally allocating costs to meet current demand. In doing so, it appears to have largely neglected ‘productive efficiency,’ or focusing on maximizing future outcomes given current cost constraints.”

What to Do Instead of Cutting
As bank boards and leaders consider their technology budget and expenditures, remembering Southwest’s lessons can help guide their investments. They should narrow their focus to vendors set up to meet their needs and provide the appropriate return on investment. For example, a bank looking to purchase software to process and analyze loans may encounter systems designed for larger banks. In their evaluations of lending software, they should consider:

  1. How long will implementation take? Smaller financial institutions often have small staffs, so implementing new technology quickly is critical.
  2. Does the loan system foster cross-functionality to support staff with more generalized roles who wear multiple hats?
  3. Does the bank need to make adjustments to the technology before using it, or can it use “out-of-the-box” standard templates and reports to get them up and running?
  4. Is the technology capable of processing the various loan types offered by the community financial institution?
  5. Can the lender maintain control of the relationship throughout the process? For example, many community banks want the flexibility to either have a lender start a loan request in the branch, or let the customer enter key information and documentation at their convenience.
  6. Does the software provide straightforward summaries of individual deals and portfolio-wide summaries for greater collective visibility into the pipeline?
  7. Will the community financial institution have to switch vendors if it grows substantially, or can the software partner handle the transition?

Community financial institutions are vital to the communities they serve and need to be able to respond quickly to meet borrowing and other demands of their customers. Continuing or pursuing technology investments regardless of the economy will help the community and the bank thrive.

8 Questions to Ask Before Signing a Vendor Contract

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There’s no shortage of widgets, services and partners that your institution could use. But there isn’t a universal metric to decide which ones you should use.

The only way you’ll know is to evaluate, based on your institution’s goals, constraints and appetite for growth. In my career, I’ve worked alongside hundreds of financial institutions, listening deeply and learning how they evaluate vendors and tools. I’d like to share eight questions that can help your institution build the right kind of momentum and avoid distraction. I separate these questions between “tool questions” and “vendor questions” — two areas are closely linked but very distinct.

5 Questions to Find Out if a Tool Is Right for Your Institution

1. Does it raise or lower operational risk?
Becoming a successful banker demands a basic grasp of risk management. But too often, I’ve seen successful bankers underestimate the risk of keeping the status quo and overestimate the risk of doing something new. If your institution has a high chance of subsequent growth that outweighs marginal increases in risk, then you could still lower the bank’s overall risk while increasing revenue.

2. Can it increase efficiency for an existing process?
Despite the glorious speed of computers, most banks still have to use some combination of manual work paired with automation to accomplish certain tasks. Banks commonly maintain their escrow and subaccounts on spreadsheets; every month, one or more team members has to print statements and stuff envelopes. There is higher value work for your commercial bankers to focus on. Ask your staff to flag these types of manual processes and then look for tools to eliminate busywork or tedious compliance tasks.

3. Can it allow the team to develop clients in new industry verticals, or confidently approach existing clients to win more of their business?
Your bank can’t be everything to every client, but you can identify the services or product functions that appeal to high-value industries, such as property management, 1031 exchanges, municipalities and healthcare. Even if your institution has previously passed on certain types of clients, consider if the tool in question could reignite those opportunities.

4. What would it cost in time, effort and lost opportunity to develop a similar tool?
I’m a huge believer in banks pursuing in-house innovation. Your institution is much closer to the problem that needs solving than a tech company that helicopters in without any banking know-how. However, there’s no reason to reinvent the wheel. If an externally built tool solves the problem without disrupting your momentum, then your choice is much easier.

5. Will it build momentum towards a top objective in the next 1 to 5 years?
It’s hard to project what the market will look like in 5 years, but thinking 1 year at a time is a bit like steering your car by looking at the road immediately in front of you. One way to hedge against volatility is to look for ways to deepen existing relationships with your clients. By adding value and serving more of their needs, you will benefit from their deposits, loans and genuine trust over the short and long haul.

2 Questions to Learn if a Vendor Is Right for Your Institution

6. Is the company committed to solving unsexy, real-world problems, or are they just waving around software as a cure-all for your challenges?
The line dividing these two scenarios can be blurry. Financial technology is unlocking massive opportunities and changing the way banking is done. Your institution will want to determine if you’re considering a partner with a solution in search of a problem or a firm that has wrestled alligators and knows how to get in and out of the swamp safely.

7. Can you get a warm recommendation?
Ask your network for their thoughts. Check in with your favorite banking association. Make some phone calls and find out if a prospective partner’s existing clients are satisfied. You shouldn’t count on the reputation of current clients alone, but it’s an invaluable part of the due diligence process.

Strong banks are built through consistency, integrity and a willingness to adopt new strategies and tactics before it’s too late. My final question is one I think banks should ask before tackling any of the prior seven questions.

1 Question to Discover if Your Institution Is Ready for a New Solution

8. Is your institution cultivating excellence and a growth mindset within each team member?
The best tools, built by the best companies in the world, won’t compensate for sagging morale and persistent risk aversion among your employees. Encourage your team to look for new opportunities, both from a client perspective and from a vendor perspective. The most valuable commercial banking clients need flexibility and creative problem-solving from their banking partners. With the right tools and attitude, your team can build partnerships that outgrow your expectations.

Converging Traditional Phone and Digital Experiences for Customers

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Delivering a seamless customer experience has become increasingly important as banks seek more efficient ways to streamline service.

While nearly two-thirds of the U.S. population use digital banking services, many still reach for the phone when a complex issue arises. This challenges banks with how to manage this channel shift in a way that facilitates a smooth experience for customers. Exacerbating the issue is the ongoing expectation for banks to accomplish more with fewer resources; call centers continue to receive a surge in support calls while facing widespread staffing shortages. Banks may also expect to record increasingly thinner margins in the current economic climate.

So, how can banks ensure they are providing an effortless customer experience — on par with tech giants and major retailers — while increasing efficiencies? The answer can be found in uniting traditional phone service with digital engagements and strategically embracing conversational artificially intelligence, or AI.

Uniting Phone, Digital Engagements
Most institutions currently manage at least two disparate systems for customer service, which creates a notable disconnect between digital and phone interactions. This separation perpetuates inefficiencies and can create a fragmented customer experience. Customers expect every interaction with their bank to be personalized and seamless; it isn’t well received when they encounter the stark contrast between the bank’s phone and digital spheres.

To solve this pain point, banks can unite phone and digital engagements within a single customer engagement platform. Incorporating the traditional call center phone service into digital-first customer support can significantly decrease the complexity of managing various point solutions, while also reducing costs and staffing requirements. Plus, this type of consolidation can drives considerable efficiencies across routing, management and reporting for the bank.

Equally as important, this unification facilitates a more consistent, low-effort customer experience. After all, customers care about resolving their issue resolution, not what channel they’re using — they are simply seeking a favorable experience. This can also create a better employee experience: staff sees the same information no matter how a customer is engaging, enabling easier, more accurate personalization.

Incorporating Conversational AI
Incorporating automation into your bank’s customer service channels can increase efficiencies while improving the customer experience across both digital and phone communications. For example, companies and consumers continue to adopt conversational AI technology and virtual assistants that provide intelligent self-service options in both text and voice channels. These assistants offload work from contact center employees, so they can focus on solving more complex problems and participate in higher-value conversations. Virtual assistants can additionally shorten the resolution time for customers, simultaneously improving efficiency and customer satisfaction (CSAT) scores.

However, not all virtual assistants are created equal. Third-party tool kits and do-it-yourself solutions can deliver less-than-ideal results, which negates their value and even creates additional pain points in the customer experience. Compared to their more-generic counterparts, platforms that have been developed specifically for financial services can provide a quicker, more relevant way to deliver a convenient digital experience for customers across both virtual and human assistants.

Virtual assistants become especially beneficial when a bank uses them across a single customer engagement platform. Leveraging a combination of human and virtual assistants in one platform — including chatbots for digital engagements and intelligent virtual assistants optimized for phone and digital voice engagements — eliminates the need for banks to manage multiple solutions across different technologies.

While there tends to be an imagined dilemma between efficiencies and a better customer experience, banks can — and should — have both. Converging traditional phone support and digital interactions onto a single platform, while strategically incorporating conversational AI, allows banks to reduce costs and optimize resources while increasing consistency across customer interactions.

Time to Automate All Bank Processes

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The uncertain economic environment, with a recession likely on the horizon and inflation driving up costs, has given banks a unique opportunity: revisiting their existing compliance and operational systems, and exploring long-term, scalable solutions in response to looming and increasing regulatory pressure.

Leveraging machine learning and automation to power digital transformation can address the concerns that keep bank directors up at night — especially since financial institutions may be expected to begin providing more data over the coming months. This comes at a time when banks are dealing with a number of external challenges; however, bank directors know they cannot skimp on adherence to strict compliance requirements. Missing a revenue goal is unfortunate, but from what we’ve heard from our customers, missing a compliance requirement can be a devastating blow to the business.

Increasing Regulatory Risk
Banks and other lenders may encounter financial strain in adding more compliance staff to their teams to address new regulations. Among them, Section 1071 of the Dodd-Frank Act requires financial institutions to report demographic information on small business loans. Regulators are reworking the Community Reinvestment Act. In response, banks are considering how they can leverage automated compliance systems for fair lending, loan servicing and collections.

Bankers are quick to acknowledge that the manual processes involved in data verification should be eliminated if their institutions have any hope of staying ahead of the curve. Furthermore, labor shortages and increased competition for talent has increased costs associated with these tasks — yet their necessity is imperative, given regulatory scrutiny.

As loan originations decrease during an economic slowdown or recession, it may look like delinquency rates are increasing as the ratio of delinquent loans to originations increases — even with no notable changes in delinquency cases. The increasing ratio could trigger scrutiny from the regulators, such as the Consumer Financial Protection Bureau.

If that happens, regulators look into whether the borrower should have received the loan in the first place, along with any fair lending bias concerns, and whether the bank followed appropriate procedures. Regulators will scrutinize the bank’s loan servicing and collections compliance procedures. Given that traditional manual reviews can be more inconsistent and vulnerable to human error, this becomes an incredibly risky regulation environment, especially where data integrity is concerned.

To mitigate risk and increase operational efficiency, banks can use end-to-end document processors to collect, verify and report data in a way that adheres to existing and pending regulation. Implementing these processes can eliminate a large portion of time and labor costs, saving banks from needing to recruit and hire additional compliance professionals every time fair lending and servicing requirements become more demanding.

Automated Processing
Lenders like Oportun, a digital banking platform powered by artificial intelligence, have found that leveraging intelligent document processing has reduced the cost of handling physical documents and traditional mail by 80%, increased margins, lowered instances of human error and improved data integrity. Enhancing customer experiences and providing quality data are crucial for Oportun; this makes their operational goals more cost-effective and scalable, and increases the capacity for Oportun’s team.

“[Automation] has helped us establish some strong controls around processing mail and servicing our customers,” Veronica Semler, vice president of operations at Oportun, says. “It’s reduced the risk of mail getting lost … it has increased our efficiency and made things easier for our team members in our stores.”

Institutions that leverage automated systems and machine learning for compliance can reduce labor costs, provide customers with high quality, efficient service and deliver accurate data to regulators. This provides companies like Oportun, which was an early adopter of machine learning, with an advantage over competitors that use traditional manual review methods.

Implementing document automation into existing systems allows banks to address compliance concerns while laying the groundwork for growth. Automation systems provide the tools for banks to reduce friction in lending and operations, enhance their controls and reduce human error — giving boards confidence that the bank can provide accurate, quality data ahead of any new fair lending and servicing regulations. Now is the time for boards and executives to recession-proof their banks and facilitate long-term success by investing in automation for document processing.

Winning the Trust and Loyalty of Younger Generations

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Traditional banking is rapidly evolving; long gone are the days when community banks could impress potential customers simply with the number of brick and mortar locations they have or a wholesome in-person experience.

Members of millennials and Generation Z make up the largest population demographic in the United States. They have high expectations from the companies they do business with, including their financial institution. Unlike their parents and generations before them, customers of these younger generations value the digital experience that companies can provide, and often use that as the determining factor when choosing their primary bank.

Millennials and Gen Z customers are considered digital natives who have grown up surrounded by tech companies using electronic payments; they’re used to digital experiences that are instant and seamless, in every aspect of their lives. This creates an expectation that daily banking will be built around them and their needs — but unfortunately, community banks are having trouble keeping up. While these institutions are known for creating high-touch, personalized experiences for their customers in person, translating this capability to digital experiences isn’t always easy.

There are three things community banks can do to win the trust and loyalty of younger generations.

1. Create a Human, Digital Connection
Although a seamless digital experience may be the top priority for millennials and Gen Z, they still have a desire for a human connection for situations where they cannot find a solution or answer online. The key for banks is to find the balance in providing both — this requires understanding what younger generations want from a bank and putting that in the context of a digital experience. Banks must put forth effort in embedding digital banking with their face-to-face interactions.

2. Provide Tailored Experiences
Taking on a “people first” mindset is essential to thriving in the platform era. Potential customers enjoy very tailored experiences from companies like Apple and Uber Technologies; they carry those same expectations for their community financial institutions. Personal and tailored interactions that go beyond addressing customers by their first name can greatly improve long term loyalty and trust.

One competitive advantage community banks have over fintechs and neobanks is the large amount of data they can use to improve their cross-selling and upselling efforts.

3. Utilize an Engagement Banking Platform
To thrive in the platform era, community banks need to make a paradigm shift from vertical silos that can be hard to change — and even harder to stitch together — when attempting to meet the needs of customers. Instead, they must move to a single customer-centric platform, leaving fragmented journeys behind and leading into the new era of banking. An engagement banking platform can eliminate fragmented member experiences by plugging into your institution’s core banking systems, integrating with the latest fintechs and providing ready-to-go apps for the bank’s various business lines.

The platform era isn’t going anywhere; choosing to continue traditional banking practices isn’t an option for community banks that hope to thrive and become industry leaders. It’s time to embrace the disruption, rather than run from it, and prepare for digital transformations that will re-architect banking around customers.