Mobile banking applications, online banking, and digital onboarding have become very popular in the modern bank, and for good reason. Financial media has placed a huge emphasis on digital channels in the financial industry, warning the loss of relevancy for community financial institutions if they don’t get on board. While this may be true, it does not have to mean you should completely back off from your customers and let them ride the wave of digital alone.
Before we get into why you shouldn’t let your institution be totally swallowed up by digital, we want to remind you that digital channels are still so important to implement into your institution. If you haven’t made the transition to digital, now is your chance – the current financial industry requires it. Customers certainly do desire digital: nearly three-quarters of banking customers, for example, say they are willing to receive automated support regarding which type of bank account they should open (Accenture 2017). Yet, there is much more to digital than automating every process – and having a digital-friendly financial institution does not mean you should lose touch with your customers.
Avoid Age Segmentation
First things first: don’t assume all millennials want a 100% digital experience just because of frenzied media scares. Data shows that younger vs. older banking customers are more alike than you’d expect. Read how to avoid getting caught up in the millennial banking overhype here.
Our research shows that the annual income for individuals between 22 and 37 years of age can be anywhere from under $15,000 to over $125,000. Doesn’t that seem like an extremely wide generalization of an age group? The same goes for other generational groups (Baby Boomers, Gen Z, etc.), thus we cannot make a blanket assumption about the digital preferences of customers. What we can do is use the data we have to better deliver their wants and needs because we know what those needs are! Use this data to focus on life stages (not age) and the purchasing patterns they have exhibited.
People enjoy – and at this point, expect – a seamless banking experience, but they will continue to appreciate a real person’s guidance and presence.
Digital + Human
A truly successful and customer centric financial institution must utilize both digital and human channels. Digital is useful to streamline and make things easier, not isolate your institution from the customer. Find where to draw the line for your institution and walk it knowing that you can provide both. Don’t disrupt their journey by an ineffective human-only experience, or a completely isolated digital experience that will leave them with more questions than convenience. With data analytics you know how to give them what they want, solve their problems, and combining that with an easier experience makes all the difference.
Your personal help to a customer does not always mean a face-to-face interaction. Today’s customers also want to be able to solve a problem without getting in the car and driving to the branch. Helping them over the phone, email, or via online chat makes it that much more convenient for them, simplifying their experience and showing them their time is valuable. Does your website support frequently asked questions? How quickly does your institution reply to emails? Is there a simple and effective way a customer can reach you about a problem? According to a 2018 study by Capgemini, satisfaction is much higher among customers who had been offered personalized digital experiences proactively (49.1%) than those who had not (39.5%).
The Competitive Edge of a Community Financial Institution
We say this all the time, but it is so important: your size and position in a community is your best differentiator! If your institution becomes purely digital, what’s the difference between you and a big bank? Community banks and credit unions need to use their size and ability to be personal to their advantage. If they want a purely digital and remote experience, they can easily start an account at a Bank of America, but what you do to make the experience personal is what keeps them coming to you.
Personalization sounds easy, of course, until knowing a customer’s name doesn’t cut it anymore. Luckily, financial institutions are able to glean a lot more about a customer from their information thanks to vendors like us. Actually knowing your customers personally helps, but that isn’t always an option if they rarely visit a branch. See how FI Works can help you utilize customer data to give them exactly what they want.
Community financial institutions have the upper hand in other ways, too. Citi, Bank of America, and JPMorgan Chase may have huge marketing budgets, flashy mobile apps, and chatbots, but what they have less of is agility. Some of the greatest advantages of a community institution are the smaller teams, the smaller chain of command, and the way they can make decisions in real time. Yet, the ability to mobilize branch employees to make decisions and solve customer problems on the spot is a requirement. In creating a streamlined customer experience, the inability to help a customer solve a problem in one sweeping instance becomes a disrupted experience. A disrupted experience may lead to losing trust, losing a sale, or worst case – losing a frustrated customer. The efficiency of their interaction with you proves your value in the face of the big bank competition.
Personalization is still so important, and community banks are able to provide that in a way the big banks can’t. Still, a staggering 94% of banks fail to deliver on personalization (The Financial Brand). With the digital means available to financial institutions today (like a CRM!) knowing the customer is so much easier. With customer knowledge comes the exact kind of personal, helpful service they want that ultimately brings more business back to you. Is your institution prepared to be that kind of personal aide?
Set Your Institution Apart by Being Both Things the Customer Wants (and Needs)
At the end of the day, your task is to provide the customer with services that meet their needs and solve their problems. Before we let digital overwhelm and overcomplicate, remember that the point is to make things easier for the customer. Making things easier doesn’t mean backing off and letting technology execute every task, it means simply being able to solve their problem in the most efficient and personable way, in a way only a community financial institution can.
- Take advantage of your community position + size
- Avoid age segmentation – focus on life stage and purchasing pattern segmentation!
- Use a multichannel approach: Offer digital channels in addition to a personal touch