Time for Mid-Sized Banks to Redefine the Customer Experience
Fast, efficient digital services enable mid-sized banks to offer customers a truly personalised experience and new ways to strengthen their ties with the local community
By Derek Corcoran, chief experience officer, Temenos
For banking customers, good service now means completing a quick and painless transaction online. The experience of the last year, with branches closed or offering reduced services due to COVID-19 restrictions, has brought this to the fore: a survey by Mastercard in 2020 showed 87 per cent of people who had never used a banking app before the pandemic would continue to use them in future.
Banks are intensely aware of this change, which was well under way even before the pandemic. Digital transformation was the number one priority for 75 per cent of banks in a recent study authored by Jim Marous, CEO of the Digital Banking Report. Within that, 87 per cent said customer engagement was the core reason for their transformation. But for mid-sized banks and regional credit unions, local market expertise and superior customer service via their branch network is the most important way they have of distinguishing themselves from multinational megabanks.
So, as Malcolm Gladwell asks in his book David and Goliath: Underdogs, Misfits and the Art of Battling Giants, how can smaller players turn their perceived disadvantage into an advantage? What is the mid-sized bank’s slingshot? In our work with clients, we have developed a new roadmap for success and reimagined the customer playbook to truly focus on the market of one, using technology to ensure banks can go beyond relying on lower prices and their branch network to succeed.
Purpose and edge
The first step is to define an outward-looking purpose that connects and builds trust with the community, and then find an edge: does your lack of size mean you can move faster, or focus on an important niche of the community that you can serve differently to anyone else?
A good example in my own home state of Colorado is Elevations Credit Union; the front page of its website is very different from a typical banking site. It sets out that Elevations provides financial products specifically for Coloradans, it offers free one-on-one consultations, and it donates two cents every time you use your credit card to support local scholarships and grants. This community-focused approach is very difficult for a national megabank to replicate.
The second step on the journey is precise and targeted marketing. For mid-sized banks, the branch used to serve this purpose, but as people visit their bank branch less often, or even not at all, local banks need to find another way to be where their customers are.
They certainly don’t need to spend money on expensive national TV ads. Instead, a mid-sized bank needs to go directly to where its customers are online. This means finding out which targeted Google Adwords will get them to the top of their searches, geotagging, placing ads in relevant community Facebook groups sharing the ways in which they are supporting that community, and even advertising at local sporting events, connecting community with experience.
Acquire customers – aka sales
Selling can be a dirty word in banking – no customer wants to be “sold” to – but what we’re talking about is making it easy for customers to access your products online. Making applications happen as fast as possible is the priority. Only 14 per cent of people who gave up on an online application then came into the branch to finish the process – the rest disappear, or worse, move on to another bank. Ensuring that the first three questions of an online application are name, email address and mobile phone number allows customer service teams to follow up with people who don’t complete the process. By doing this, a Temenos customer converted 40 per cent of abandoned loan applications into successful transactions.
There is a range of things banks can do: for example, using data about the applicant held by their mobile phone company to prefill parts of the application, speeding up the process and helping with identity verification. Also, offering predictive text on categories such as occupation makes those sections quicker to complete accurately. These sorts of simple changes could bring account opening down to 90 seconds, with no increased risk of fraud to the bank.
Retain and help
Every bank’s digital channels are an opportunity to reinforce their edge – such as the donations to local charities via credit card spending in the Elevations case above. You can display how those donations are being spent on the home page of your mobile banking app, for example. Banks can also use the data they have to personalize what each customer sees on that first screen, such as their progress towards savings goals.
Many mid-sized banks have moved quickly to ensure they are still providing a high level of personal service during the pandemic – in one example adding a secure one-to-one chat feature, similar to WhatsApp, in just three weeks. A large national bank would not be able to move so fast.
After this extraordinary year, the task for mid-sized banks globally is to keep learning lessons in how to meet their customers’ needs through digital channels, and to prioritise investments that bring them closer to their communities.
About the author Derek Corcoran is originally from Ireland but his career has allowed him to live in Europe, Australia, Singapore and he currently resides in Boulder, Colorado USA. In his role as chief experience officer for Temenos, Derek acts as an advocate for the bank’s customer – ensuring experiences from account opening to digital banking to business banking are designed with customer convenience in mind.
Derek is a regular presenter at Fintech conferences and has contributed content to The Fintech Book, The Financial Brand, American Banker, Breaking Banks and Forbes. He leans on his own background in software engineering and project delivery to help banks imagine the ‘art of the possible’ when designing Amazon-like experiences for customers.