Personalizing the banking experience through digital

Consumer emphasis on experiences and in-branch services underscores a growing need for the personal touch in a rapidly escalating digital environment. Let’s talk numbers. PwC’s Consumer Digital Banking Survey revealed a twenty-one percent increase in the number of consumers who base loyalty to their financial institution on experiential factors rather than rates.ⁱ   For sixty-one percent of the experience-driven individuals, access to a physical branch is essential to a positive experience, even as seventy-three percent of Americans are accessing bank accounts via online or mobile channels.ⁱⁱ

Financial institutions therefore need to simplify access to the information customers and members need, while also using those digital experiences as a starting point for deeper and more engaged interactions.

Social Media and the increase in use of data has highlighted changing consumer expectations. People think that they are special and unique. They want you to feel that way too.

Using Digital to Engage and Individualize the Customer Experience

When it comes to engaging with consumers, community banks and credit unions would be wise to respect the power of digital banking. Even as late as last year, the number of consumers who bank via laptop or PC channels grew significantly in 2019.ⁱⁱⁱ 

With such strong preferences for online banking, it is no surprise that an institution’s digital capabilities play a strong role in account holder acquisition and retention. According to a study released by Iselin, N.J.-based Provident Bank, eighty-two percent of consumers say they are less likely to switch financial institutions once they have become accustomed to their bank or credit union’s digital banking services.^iv  Digital banking is the proverbial “sticky” product that institutions are seeking.

Findings like these emphasize the importance of smooth and efficient online resources, covering an ever-increasing array of transactions. At the beginning, consumers were delighted with simple services, such as checking account balances. Then, they began to expect the more complex transactions, such as paying bills or applying for a loan. Now, consumers are demanding experiences from their banking applications. For example, the simple act of paying a bill morphed with the Instagram mentality to create PicturePay^®. Or, consider how a digital payment combined with social media can create a company, and a verb, like Venmo.

However, digital tools and online banking should be a starting point for community banks and credit unions to engage with account holders, rather than an end point, as consumers continue to crave a more personal touch. Focus groups conducted for a new Fed survey revealed that the loss of a physical branch in rural communities had a deleterious effect on residents. Account holders mourned intangibles of the personal touch, such as having a place to go for advice, personal relationships with bank representatives and the symbol of civic leadership the institution provided.^v

In today’s digital world, community banks and credit unions can still foster these connections by using digital as a gateway to deeper engagement.

For example, when it comes to seeking financial guidance, banks and credit unions remain a top three source of information for younger generations,^vi  but here is the catch. Millennials and Gen Z like to be prepared for the conversations they have about money, and often start research online.

Offering the personal touch for this generation begins through digital channels, by answering some of the basic questions younger individuals have. This can be as simple as creating content aligned to important topics, such as how to save for a car or  how to open a car loan. But, given the digital preferences of younger generations, calculators and simple online tools can elicit higher levels of engagement. A tool designed to personally determine how fast an individual’s savings account will grow, for the car, provides a starting point for building more personal relationships.

However, even older Americans still look to their financial institution for guidance. Half of Baby Boomers have over $100,000 in investable assets, and 1 in 5 report having more than half a million dollars ready to invest, according to a Gallup poll.^vii  Members of this age group continue to actively borrow, spend and invest, making them prime customers for community banks and credit unions.

Using the digital-first approach, community banks and credit unions can provide tools that help Boomers calculate retirement savings and how much they will need in order to live comfortably in their post-working years.

This is a reciprocal relationship. As account holders engage with online tools and services, banks and credit unions gain valuable data. Taking advantage of information gathered through digital transactions, banks and credit unions can personalize outreach and service offerings, deepening the customer and member connection.

Preparing for the Personal World of Open Banking

Beyond engagement, customers and members are anticipating a world where banks and credit unions personalize service at a deeper level. According to Accenture, 1 in 2 customers would like to receive personalized advice from their financial institution that is tied to their behavior or interests.^viii  Even more, they would like to see their bank offer more of the financial services they need, including tools for money management and person-to-person payment services, to name a few.

Let’s take the car example. Instead of showing an account holder how much they need to save for a car through a calculator tool, fintechs, like Monotto, can use AI and open APIs to automate the savings for the end user. This makes saving easier for and tailored to your consumers.

In the emerging world of Open Banking, this becomes a reality as banks and credit unions package third-party products with core banking services to meet consumer needs. Fintechs can provide niche services that would otherwise be difficult and costly for a community institution to deliver.

To compete in an Open Banking environment, community banks and credit unions need to learn how to use digital to initiate and grow personal connections. Using this approach, the loyal banking account holder of today could easily become a loyal user of multiple products in the future.

Personalization starts with access to data – a data ecosystem, actionable insights, and connected experiences. You have to make data work for you, whether you have internal resources or a partner like Finastra who can do the heavy lifting. In a data solution, you’ll want something that enables new data sources and collaboration to drive strategic planning and unlock efficiencies, and where insights enable you to offer the right solutions to customers and members at the right time.

ⁱ  “2019 Consumer Digital Banking Survey.” PwC. PwC Digital Consumer Research, Jun. 2019. Web.
ⁱⁱ  Ibid.
ⁱⁱⁱ  “ABA Survey: Customer Preference for Digital Banking Continues to Grow.” ABA Banking Journal, Nov. 5, 2019. Web.
^iv  “New Fed Survey Examines Effects of Branch Closures on Communities.” ABA Banking Journal, Nov. 5, 2019. Web.
^v  Ibid.
^vi  “ABA Data Bank: Banks Among Top Three as Source for Financial Information.” ABA Banking Journal, Sept. 20, 2019. Web.
^vii  Sean Williams. “For Banks, Baby Boomers Mean a Lucrative Business.” Gallup. Gallup Business Journal, Feb. 2, 2015. Web.
^viii  “2019 Accenture Global Financial Services Consumer Study: Discover the Patterns in Personality.” Accenture, 2019. Web.