How Technology Blends Banking’s Future

After rapidly adjusting operations at the start of the pandemic and accelerating their digital transformation roadmaps, banks are left wondering: What happens next? And what did the acceleration mean for banks’ digital strategy?

Banks need to shift their mindsets from emergency response toward using digital technologies to boost their relevance to their customer’s lives. Blended banking will become the norm. Although Covid-19 will be with us for the foreseeable future, people have returned to shops, restaurants and theatres. Similarly, customers are returning to bank branches, but in lower volumes and for different reasons. The proliferation of digital banking means customers no longer need to visit a branch for a transaction. But many retail and business customers will still visit a branch to receive advice or to buy a financial product. And although most banking journeys start online, many are still completed in branch.

Banks must recognize this and provide a consistent customer experience across channels, with human support for digital interaction and digital tools that augment human interaction. In practice, this means empowering customers with an engaging digital experience that can continue in branch. Many banks already acknowledge this evolution: They are repurposing branches as advice centers, with less emphasis on over-the-counter transactions. In addition, banks can harness modern tech devices, like tablets, to support the in-person experience. But to truly elevate the customer experience and increase engagement, banks must also harness the power of data.

Advanced Analytics
For many banks, data and analytics have great untapped potential to drive the next wave of innovation to increase customer engagement. With a wealth of customer data at their disposal, banks can gain a deep understanding of customers behavior, goals and financial aspirations, and deliver personalized experiences in a way that was never before possible.

In practice, big life events have financial consequences — buying a car, getting married or having children — but the reality is that small transactions and spending habits can also provide valuable clues to a customer’s behavior. Careful use of data and analytics allows banks to help customers align their financial services closely with real-life events. They can also use data to help their customers gain a deeper understanding of their own financial standing, providing recommendations to optimize the use of cash. For example, a customer with surplus funds may be advised to pay down a mortgage or increase pension contributions rather the leave money on deposit.

Banks can also do more for commercial customers to evolve beyond transactional banking to helping them run their business more effectively. Once again, data and integration are key. Providing commercial customers with up-to-the-minute aggregated cash positions and forecasts gives them a deeper understanding of their cash use, liabilities and commitments. As banking becomes more open and connected, commercial banks can become the heart of an ecosystem with many participants. Banks must embrace modern technologies, boost automation and integration and ultimately adopt a fintech approach to finance.

A Fintech-First Approach to Finance
The pandemic has accelerated banking’s shift to a technology business. Banks that ignore this will be left behind. To attract and retain consumers and business customers, banks need to eliminate guesswork by harnessing technology and data and offering customers what they want, when they need it.

Banks have much to learn from big technology: Amazon.com generates around 35% of sales from recommendations, while 75% of what’s streamed on Netflix is because of its suggestion algorithm. In the digital age, consumers welcome recommendations, nudges and insights — and are usually happy for trusted suppliers to use their data to personalize their digital experience. Banks must adopt a more entrepreneurial approach to customer engagement.

Retail banking: For a long time, bankers have designed banking experiences based on customer journeys. Now is the time to support customer life journeys by proactively supporting customers throughout their entire lifecycle — from large, life-changing decisions as well as everyday spending and budgeting.

Commercial banking: Banks must acknowledge that millennials are more digital savvy and entrepreneurial than any previous generation. Many current retail customers will start businesses and become the commercial customers of tomorrow. Many will need financial advice, and all will need banking.

With fintechs and challenger banks growing in scope and number, now is the time for incumbent banks to act. The digital age is here to stay.

Preventing the 3 ROI Killers in Digital Transformation From the Start

Digital transformation at community banks is often a complicated, time-consuming and costly process.

With the right approach, however, community banks can increase the value and return on investment of their digital transformation initiatives. The key to maximizing ROI is to take a systematic approach and avoid common pitfalls that could become barriers to success.

Any technology investment that a bank makes needs to meet — rather than hinder — its business goals. Adopting a customer-centric point of view and proceeding incrementally are essential to ensure a successful outcome. Digital transformation is ultimately about future-proofing the business, so it’s critical to choose technologies that can grow, scale and evolve.

The three most common ROI killers in digital transformation are:

  • Doing too much, too quickly.
  • Failing to connect with the customer.
  • Not selecting a connected and experienced partner.

Doing Too Much Too Quickly
The number and variety of technology solutions for the banking industry to choose from is nothing short of mind-boggling. But successful digital transformation doesn’t happen overnight. Not all features are suitable for every bank’s needs or budget — or their customers.

Resist becoming blinded by the shiny objects some vendors will flash. Buying into all the bells and whistles isn’t always necessary at the outset of a transformation initiative. If the implementation fails, it will kill any ROI and team morale, and risks overloading staff and systems with immature solutions before the bank has confirmed they work.

A better strategy is implementing features and solutions incrementally using process improvement and customer satisfaction to quantify value. Taking smaller steps improves stakeholder buy-in and allows a bank to test-drive new initiatives with customers. Taking smaller steps towards digital transformation: implementing sidecar offerings and managed services instead of ripping out and replacing cores or launching products that the bank can’t fully support. New offerings must enable value without losing quality, security or customer satisfaction. Bank executives should establish clear and measurable key performance indicators to track progress, and only move on to the next step when the first is satisfied. There are few things worse than investing in technology that is too difficult to use or doesn’t achieve promised results.

Failing to Connect with the Customer
Misaligning technology choices with customer preference and digital banking needs sets up almost any initiative for failure before it’s out of the starting gate.

Banks typically cater to a broad demographic, making research and strategic planning critical at the procurement stage. Focusing implementations on tools favored by one specific group but not by others limits an organization’s capabilities and alienating others in the process. Customers groups have their own particular concerns and preferences, and it can be challenging to apply a single strategy that pleases everyone.

To avoid this pitfall, executives need to research, strategize, plan and focus to launch products that their customers truly want and need. Open dialogue with customers is the key to success, as priorities will differ vastly  in every community. It’s not enough to emulate competitors, although that is a helpful benchmark. Ideally, banks should seek customer feedback through surveys, direct market research and speaking with them when they interact with the branch or brand to understand their priorities.

Not Selecting a Connected and Experienced Partner
Finding technology companies to support digital transformation isn’t difficult. It’s estimated that companies in the United States waste up to 40% of their technology spend on poorly-made decisions, like investing in technology based on a pitch from a sales professional that does not understand or have expertise in the institution’s particular needs.

Community banks have unique needs, concerns and customers, and should seek technology providers that speak their language, with solutions and insights to advance their goals. Select providers with experience in your niche — one that understands the particular challenges of community banking in the post-pandemic world. They should be experts that are well-versed in the banking industry, provide all technical documentation, satisfy regulatory and compliance need, and offer technology solutions that create excellent user experiences while being flexible, scalable and within budget.

Creating a Better Business Banking Experience

Banks should be positioning themselves to be trusted partners for entrepreneurs, helping their businesses run smoothy, from account onboarding and beyond.

Too often however, what many business owners experience are complex, inefficient processes that require a litany of repetitive details and data points that can take days — or even weeks — to complete. In many cases, small and medium business owners have been forced to look to other institutions as a result of slow, manual process at their existing bank. The industry has seen how those institutions that invested in automation and better business banking experiences actually grew in terms of customers during the pandemic. But the growing number of banks that recognize the need to offer better experiences through enhanced user interfaces and automation must overcome the main hurdle of how best to implement it.

Today’s business owners expect the same quick and simple banking experiences they receive from their personal accounts from their business accounts. Banks that recognize this need often still fail to close the gaps. A major issue is that most of the process is still driven by paper forms. By automating some of these more manual and tedious steps, banks can speed up and streamline the process. Allowing the customer to directly fill out the necessary information online, all at once, rather than have them complete PDFs that need to be rekeyed by a bank employee later can save vast amounts of time.

Even once the account is live, business banking can still often be a clunky and complicated experience, especially on the back-end where each function lives on a different platform or service hosted by different vendors. Electing these options may take the user out of the bank’s system, with an environment that may look and function very differently than the initial account interface. Banks want systems that are attractive, transparent and user-friendly on the front-end, but still have all the functionality and capabilities users need.

The truth is that there is no single platform currently available that can check every box and solve every issue. However, banks should focus on the full end-to-end experience and look for solutions that can support their most current, important needs and offer the flexibility to adapt as the bank grows. Banks need to build architecture that reflects a more modern, app store that keeps the user in its cultivated experience without an obvious and often jarring transition between functions or screens, creating an overall better experience for the business banking user. Solutions and platforms that are flexible and scalable mean that banks can adjust these looks and functions as both the technologies and user needs shift, changing and controlling the experience to match it.

While some banks would prefer to develop their solutions in house, they may lack the dedicated talent and resources to do so, but “off-the-shelf” solutions may not have the necessary flexibility and scalability. For many community banks, this has increased interested in partnering with fintechs. Banks considering this option must ensure the fintech can meet all their functionality needs, as well as their risk and regulatory requirements — no small feat. A good place to start is by evaluating how a fintech’s level of compatibility with the bank’s existing core system.

Fortunately, there are a growing number of “core agnostic” fintechs that can work effectively with a variety of technology platforms and organizations, offering malleable products that can match the individual rules and procedures of each bank. Banks can then control the user experience and tailor it to their specific client demographic. From a cost-effectiveness standpoint, recent “low-code” or “no-code” solutions from an innovative fintechs give banks the ability to handle these changes in-house, without an extensive IT team. These solutions can bring greater efficiencies for banks that are now able to manage and shape their technology systems to solve complications that once required advanced technology experts.

Building and strengthening the relationships with business account holders is becoming a bigger priority for all banks. Banks that prioritize their needs and expectations by focusing on the end-to-end user experience and offering their business customers a better, faster and seamless experience will be positioned to meet their demands, possibly changing the road map of its technology future.

Building Relationships in the Digital Era


Customer expectations have evolved dramatically over the past decade, and they seek much more from their financial institution, including advice. Unfortunately, banks often aren’t meeting these needs in the digital space. Soren Bested of Agent IQ explains how banks can return to one of their core functions — dispensing financial guidance to their customers.

  • What Consumers Expect
  • Alleviating Customer Pain Points
  • Personalizing the Experience

Three Ways to Break the Mold of Digital Banking


digital-9-9-19.pngCommunity banks should look for ways to make their digital banking experience stand out for consumers in the face of increasingly commoditized offerings.

Most community banks in the United States are focusing on enhancing the digital experience for their customers, making sure they offer most, if not all, of the features that the top five banks offer. However, most community banks are doing the exact same thing, creating digital banking experiences that look and feel eerily similar.

These banks are using the same technology, the same channels and the same process workflows. Outside of the bank’s branding, it can be difficult to tell what differentiates one digital bank from another.

While these similarities help ensure that customers don’t switch banks for one down the street, it’s not preparing institutions to hold their own against new competitors. Challenger banks like N26 and Chime are creating a new, different experience for users — and quickly taking over the market.

Creating a differentiated experience for users takes more than new features or an updated interface. It comes down to banks being able to build for the future with a platform that can be scaled and easily integrated — a platform built on APIs.

APIs, or application programming interfaces, provide the flexibility and customization that is often lacking in banking. APIs allow banks to work with a wider pool of partners to build a more-personalized experience at a fraction of the development cost. APIs have enabled three trends and transformations that allow for differentiated community banking: real-time payments, true any-channel offerings and personalized user experiences.

Real time transactions
JPMorgan Chase & Co. recently launched real-time payments, which allows customers to instantly execute provider payments. This move creates urgency for other large institutions to implement similar offerings. But delivering this real time experience could require some midsize banks to undergo a complete digital transformation and create a technical infrastructure that can support real-time interactions: one built with an API-first architecture.

Any-channel
Any-channel, or omni-channel, means delivering the same services across multiple channels. But true, any-channel technology should focus on a platform that allows institutions to adopt any-channel — regardless of what that looks like in the future — while maintaining a single experience.

With an API-first architecture, multiple channels don’t translate to redundant development work. Instead, banks can focus on iterating on the overarching experience and translating that to each separate channel. Any-channel becomes less of a never-ending goal and more of a strategic vision.

The Ideal User Experience
Consumers not only want the same experience across channels — they want a seamless experience. Banks using an API approach can build workflows and processes that update automatically, so that users who start an application online can finish that process in the branch, on their mobile app or over the phone. APIs allow banks to build an experience around the user, not the channel.

When banks focus on the user experience instead of the channel or feature, the options are endless. Any number of micro-services can be integrated into a custom experience that is specific to the bank’s audience.

Just Holding On, or Thriving?
Most banks do a great job at maintaining their online experiences in their current states: their clients won’t leave because their competitors offer the same digital experience. But when it comes to acquiring new customers, it’s a different story.

New, digital-only banks are quickly taking wallet-share from consumers with sleek and personalized user experiences. Only those banks using APIs will have the ability and agility to keep up with the competition.

Five Insights into the Top 25 Bank Search Terms


customer-6-20-19.pngBanks can use customers’ search queries to create a more efficient, optimized user experience.

Most marketers rely on search engine optimization to drive traffic to their website, missing a crucial opportunity to optimize searching on the site itself. But on-site search optimization is a critical component of search and self-service for customers, and is a way that banks can create a better experience for users.

Search engine optimization, or SEO, focuses on attracting new visitors to a website. On-site search optimization addresses the existing and returning traffic base—a bank’s current customers and prospects. This approach helps them find helpful and relevant content once they are on the site, which is as important as getting them to the website or mobile application in the first place.

A growing percentage of customers use digital channels to interact with banks and require intuitive search and easy-to-find support information. Banks will benefit from delivering superior on-site search functionality with actionable support answers on their websites and mobile apps.

Transforming a bank’s website, mobile or online banking applications into a true digital support center involves more than a simple search bar. Search terms and activity can be used to inform the support content strategy, while monitoring customers search queries ensures a bank is providing the most sought-after answers across its digital and mobile channels. This continuous process directly impacts an institution’s customer experience, service levels and operational efficiency.

The top 25 search terms across banking websites in 2019 included:

1. Routing Number 10. Direct Deposit 19. Mobile Deposit
2. Overdraft Protection 11. Rates 20. Login
3. Order Checks 12. Address Change 21. ACH
4. Skip Payment 13. Loan Rates 22. Stop Payment
5. Online Banking 14. Debit Card 23. ATM
6. Wire Transfers 15. Check Card 24. Mortgage
7. Credit Card 16. IRA 25. Bill Pay
8. Open Account 17. CD Rates  
9. Account Number 18. Hours  

Customers’ search patterns in a bank’s digital and mobile channels differ the terms used in a search engine platform such as Google or Bing, according to data from SilverCloud. Searches on banking websites and apps average 1.4 words per search, compared to four on search engine platforms. On Google, people search for “the best checking account for me;” on a banking website, they use broader terms like “online banking.”

Two factors drive this search behavior. First, banking consumers are already on the desired site, so they use more narrow search terms. Second, financial terminology can be confusing and unfamiliar. As a result, customers who lack knowledge of specific banking terms tend to use broader search terms to home in on exactly what they need.

There are five takeaways for banks that are interested in how top search terms can help them grow more efficiently:

Banks need to deliver a better customer experience. Having a strong on-site search engine allows customers to service themselves in a way that is easy, fast and efficient.

Strong search could reduce call center volume. Having robust content, frequently asked questions and support answers allows customers to get answers without needing to contact call center agents.

Provide support as mobile adoption increases. Customers will have more questions as banks introduce more self-service options, like online account opening, mobile deposit and online bill pay. Banks should anticipate this and have support answers in place to facilitate faster adoption.

Create opportunity and invite action through search. Banks can drive deeper customer engagement into various product offerings by writing actionable support answers. For example, the answer for a search query for “routing number” could include information about what customers can do with a routing number, like set up direct deposit or bill pay. This approach can increase the likelihood they take such actions.

Banks can do more with less. The more that customers use self-service digital and mobile channels and find information that addresses their queries, the fewer employees a bank needs to staff customer service centers. Institutions may find they can grow without adding a commensurate number of employees.

Banks should review their digital channels to ensure they are providing support content that addresses the ways customers seek information. Content around general search terms needs to be robust. Executives will need to keep in mind that most search terms require 10 or more custom answers to address the transactional, informational and navigational forms of customer intent.

Small Business Lending: A Case for Digital Improvement


lending-1-3-18.pngIn a world where we can summon a car to pick us up in five minutes, and pizzas are delivered by drones, banks are being challenged by small business owners to create a secure digital environment to meet all of their customers’ banking needs—including applying for a loan—at their convenience.

Banks today have a great opportunity for digital improvement in the area of lending. For example, in traditional small business lending, the administrative and overhead costs to underwrite a $50,000 loan and a $1 million loan are essentially the same. With the aid of technology, underwriting costs are greatly reduced through a more efficient process.

In addition to reducing the cost to generate a loan, another direct benefit is the reduction in time for both the borrower and bank staff. Banks that implement technology that allows new and existing customers to apply for a small business loan online can reduce end-to-end time for both the borrower and the lender. The borrower can apply for the loan, upload documents and receive all closing documents digitally. If the online borrower has questions, the customer is assigned to a lender who can provide help through the process via phone, email or even in person, if needed. As an added benefit, the banker can focus on the customer in front of him and can start an application in the branch for the borrower, who then can finish the application in their home or office.

We now live in an era where user experience is at the front and center of everything a company does, and a painful process or poor user experience means that a prospective borrower may go elsewhere to apply for a loan. Banks that embrace digital lending technology today can differentiate themselves by delivering exceptional customer service. In addition to reducing costs and streamlining the process, lenders and borrowers can see several additional advantages to a digital experience.

Borrowers complete the application in less time.
Technology is transforming the way banks can accept applications, and can provide borrowers with a secure application that can be completed anywhere on any device, including with their banker in a branch or online.

Documents are managed securely.
Digital lending technology is advantageous because it also enables the borrower to deliver important documents to the lender quickly and securely. Instead of the lender waiting for physical copies, borrowers can upload documents to a secure portal, helping to shorten the process.

A more efficient process increases customer satisfaction.
Paper-based applications take a lot of time to fill out, and can create frustration for the borrower and the lender if a section is missed. The more efficient the lending process is, the greater the borrower satisfaction rate will be—allowing your team to build better and larger relationships.

From slim interest rate margins to competitive alternative lenders, many financial institutions are facing pressure to find a way to make lending profitable again. Leveraging technology to streamline the loan process and improve the borrower experience will lead to increased profitability for financial institutions, which is possible today with the help of technology.

Defining, Adopting and Executing on Fintech


fintech-9-5-17.pngFintech has become a convenient (and amorphous) term applied to virtually any technology or technology-enabled process that is, or might be, applied within financial services. While the technologies are complex, the vast array of the current wave of fintech boils down to three simple dynamics: (1) leveraging technology to measure or predict customer need or behavior; (2) meeting customer need through the best customer experience possible; and (3) the ability to execute more nimbly to evolve products and services and how they are delivered.

Every reasonably well-versed person in fintech knows that the ability to predict customer need or behavior is achieved through a strong data infrastructure combined with a high-quality analytics function. But what defines the quality of the customer experience? At Fundation, we believe the quality of the customer experience within financial services is determined by the convenience, simplicity, transparency, intuitiveness and security of the process by which a product or service is delivered. The challenge for many financial services companies in developing the optimal customer experience lies in the rigidity of their legacy systems. They lack the flexibility to continually innovate products and services and how they are delivered.

The distinct advantage that fintech firms like Fundation have over traditional financial services companies is the flexibility gained from building their technology infrastructures from scratch on modern technology. With in-house application development and data operations capabilities, fintechs can rapidly engineer and, more importantly, reengineer the customer experience and their business processes. The capacity to reengineer user interface (UI), user experience (UX) and back-end processes is a major factor in the ability of financial services companies to maintain a competitive edge in the digital era where customers are accustomed to engaging with the likes of Google, Amazon, Facebook and Apple in their digital lives.

Banks Remain Well Positioned to Win With Fintech
Armed with these capabilities, we, like so many fintechs, could be thumping our chests about how we are going to transform banking. But at Fundation, we see the future differently. We believe that the biggest disruption to banking is not going to come from outside of the banking industry—it’s going to come from the inside. A handful of banks (and maybe more) will reengineer their technology and data infrastructure using modern systems and processes, developed internally and augmented through highly integrated partnerships with fintechs. As a result, these banks will generate superior financial returns and take market share as customers migrate to firms that provide the experiences they expect.

In addition to enjoying a lower cost of capital advantage versus fintechs, we believe banks are well positioned for three other reasons. First, banks will remain the dominant choice of customers for financial products given their brand strength and existing market share. Second, banks have far more data than the average fintech that can be used to develop predictive analytics to determine customer need or behavior. Third, and perhaps most important, banks have what we at Fundation call the “trust asset:” their customers trust that they will protect their information and privacy and that they will recommend products best suited to their needs.

Be the Manufacturer or the General Contractor
Banks are in a strong position to win the fintech revolution but what remains are the complexities of how to execute. There are a few basic strategies:

  1. Do nothing
  2. Manufacture your own capabilities
  3. Operate as the general contractor, aligning your institution with third parties that can do the manufacturing
  4. Some combination of manufacturing and general contracting

For banks that are predominantly in relationship-driven lines of business rather than transactional lines of business, doing nothing is viable for now. The pressures on your business are not as severe, and a wait-and-see approach may enable you to make more informed decisions when the time is right.

For others, doing nothing is fraught with peril. Assuming that you choose one of the remaining three options, the implementation process will be hard, but what may be even harder is the change in organizational psychology necessary to execute on your decision. Resistance to change is natural.

That is why fintech initiatives should be driven top-down. Executive leadership should command these initiatives and set the vision. More important, executive leaders should explain why the institution is pursuing a fintech initiative and why it has decided to build, partner or outsource. Explaining why can reduce the natural resistance to, and fear of, change.

Manufacturing your own capabilities is hard work but has advantages. It provides maximum control over the project and limits your vendor management risk. The downside is that the skill sets required to execute are wide-ranging. That said, building in-house doesn’t mean that everything needs to be proprietary technology. Most fintech platforms are a combination of proprietary technology along with third-party customized components. Should you elect to build off of third-party software, you must ensure that the platform is highly configurable and customizable. If you don’t have significant influence over customization, you will lose the opportunity to reengineer the processes necessary to rapidly innovate and evolve.

Being the general contractor isn’t easy, either, but banks are very adept at it. You could make the argument that most banks are just an amalgamation of business lines, each of which employs a different system (mostly third-party) and are already operating as general contractors. The business line leaders we have come to know have significant experience managing critical third-party vendors and therefore have the skill set and knowledge to manage even the most innovative financial technology partners. What’s more, they often know what they would want their operating platforms to do, as opposed to what they are built to do today.

Should your institution decide to outsource services to a fintech firm, it is paramount to align interests. Banks should embrace their fintech counterparty as a partner, not simply a vendor. Welcome the flexibility that they offer, and allow them to empower your institution to innovate and evolve.

Don’t Squander the “Trust Asset”
In a world where Amazon, Google, Facebook and Apple dominate the digital landscape, deliver ideal customer experiences, and may possess a “trust asset” of their own, the status quo is not an option, no matter how painful change can be. If your financial institution intends to compete over the long term, executing on a fintech road map is vital, moving towards infrastructures with a foundation of flexibility. Over the next decade, flexibility will allow financial services companies to compete more effectively by delivering the products, services and experiences that customers will demand. Flexibility is what will allow your institution to maintain its competitive position over the long term.

Mobile Deposit Penetration Key Indicator of Readiness for Digital Transformation


mobile.png

Banking is being dramatically transformed by digital and mobile technologies. The widespread proliferation of smartphones, with their sophisticated cameras and mobile capture capabilities, creates a valuable opportunity for banks to shift both their retail and commercial customers from the physical banking habits of the past to new, digital channels—which can increase customer loyalty and save banks billions of dollars in operating costs. According to research by Bain & Company, branch visits are expensive for the bank, at an average cost of $4 to complete the same transaction that would cost about 40 cents if done through a mobile channel, and the branch traffic that persists today is dominated by routine transactions that could easily be transitioned to digital. As much as 8 percent of branch visits are simply to check an account balance, and a whopping 31 percent are to deposit checks.

Clearly, U.S. banks have a tremendous opportunity ahead of them if they can migrate more of their consumer and commercial customers from high-cost branches to self-service mobile channels for routine transactions. Mobile deposit technology can provide a strategic advantage by helping banks accelerate this migration. It has long been understood that mobile deposit is one of the most powerful options available to financial institutions for driving increased adoption of all mobile banking services.

Forward-thinking banks, analysts and investors are all recognizing the role that mobile deposit plays as a key indicator of a bank’s readiness for the digital future. That’s why banks like Bank of America Corp. are now reporting their mobile deposit growth rates in their quarterly earnings reports. They understand that demonstrating growing mobile deposit penetration indicates to investors that they are not only on the path to digital transformation, but that they also have the type of mobile-first customer base that every bank wants.

It’s not just consumer banking that can benefit from shifting transactions towards mobile. The commercial side of the business has a major opportunity to increase mobile banking services with mobile deposit as well. Paper checks remain the dominant form of payment for many businesses. A full 97 percent of small businesses still rely on paper checks to make and receive B2B payments, and according to the Federal Reserve, more than 17 billion checks were circulated in 2015. Yet, too many banks continue to rely on outdated practices, providing proprietary hardware to their commercial clients for scanning checks or simply expecting businesses to visit a branch or ATM to make their deposits. By leveraging commercial mobile deposit technology, businesses can batch deposit multiple checks using a mobile device faster than they can via a typical single-feed scanner. As the research firm Celent puts it, “mobile is the new scanner.” Celent also states that banks have an opportunity for 10 percent annual revenue growth over the short term by transitioning more of their commercial customers to mobile deposit.

To help transition both consumer and commercial customers from the physical banking habits of the past to the more mobile, self-service model of the future, banks must provide a superior mobile user experience. The research firm Futurion Digital conducted a thorough analysis of the mobile deposit user experience at 15 of the top U.S. banks and discovered a direct correlation between the quality of the user experience and adoption rates for mobile banking services. Banks that want to increase customer usage of their mobile banking applications would be wise to review the best practices and recommendations identified in the report in order to better position themselves against their peers.

In short, as physical branches become less important to a bank’s consumer or business banking strategy, transitioning customers to digital channels will be critically important to ensure they still have access to the services they need. Doing so can actually help banks increase customer loyalty and save billions of dollars by moving routine transactions to lower-cost, self-service channels. As one of the most popular features among mobile banking services, mobile deposit plays a strategic role in enticing customers to adopt all mobile banking services, and a bank’s mobile deposit penetration rates serve as a key indicator of its readiness for digital transformation. By focusing on delivering a superior mobile user experience and actively engaging with customers to help them make the transition to mobile, banks will be well-positioned for the future.