What do community bank customers want? It’s simple. In addition to the close, personal connection that’s so uniquely characteristic of community banks, they want the same thing consumers who bank at large, national financial institutions want – the next big thing. Whether it’s online banking, mobile banking or emerging digital payments, consumers expect their bank to offer the latest and greatest capability. The good news for community banks is that they can now deliver those solutions. The outdated assumption that community bank customers must choose high-touch service over high-tech capabilities overlooks the tools and technology now available to every banker. It’s well established that community banks have strong relationships with their customers, and those bonds can be heightened with technology. In fact, banks of all sizes are now able to harness the power of predictive analytics to understand customers’ life cycles, looking for key moments to capture and retain the relationship. Through the use of this technology, community bankers not only know their customers better than ever, but more clearly understand what they want, and when. A full range of innovative solutions that provide “anytime, anywhere” banking is clearly what most customers are calling for, and what all community banks must be prepared to provide to compete with larger institutions. Retaining a banking relationship throughout a lifetime means offering next-generation products and services that transcend geography and never give a customer reason to look elsewhere. There are three principal ways that technology can help community banks not just keep pace with larger institutions, but also leverage the strength of existing personal relationships to win market share. Offering innovative online capabilities, mobile banking and emerging payments provides the best way for community banks to not only retain, but grow their customer base.
Online Banking Grows Up
Consumers are accustomed to exceptional online experiences at websites outside the financial industry, so they bring high expectations with them when they log in to do their banking. To be successful, a community bank’s online channel must be an extension of the experience found at the branch, offering the same branding, functionality and available services at any time of day or night. No longer content to simply check balances and transfer funds online, today’s consumers want to truly manage their funds – open an account, deposit a check, pay bills – as if they were sitting across from their banker. Increasingly, customers are also asking for online personal financial management (PFM) tools to track and analyze spending, and create budgets. Research conducted by Fiserv in 2010 indicates that for nearly 40 percent of consumers, PFM tools would be beneficial to managing their finances. More than two to one, the respondents indicated a preference for the use of PFM services at online banking sites over the top ranked third-party personal financial management website – another indication that consumers prefer and trust their own financial institution’s site over others.
Mobile Technology Drives Demand
The number of mobile banking households will grow to reach 35 million over the next two years, according to Fiserv research findings. Consumers increasingly say they want mobile banking applications that offer a simplified user experience that extends the functionality of online banking to enable quick and easy on-the-go account access and transactions. The increasing adoption rates demonstrate that consumers are embracing new mobile capabilities as quickly as they become available. About half of all Americans who are already mobile banking users – nearly 30 million consumers – want to use their smartphones to deposit checks, according to Javelin Strategy and Research. Even community banks that may have limited technology investment funds can partner with a technology provider to deliver the mobile applications commonly associated with larger banks, including downloadable apps that enable consumers to monitor and manage daily finances from their smartphones.
Navigating the New Payments Landscape
The industry continues to find new and innovative ways to help consumers and businesses make payments. Person-to-person payments are generating the biggest buzz in this space, and for good reason. Not only a significant driver of mobile demand among consumers and community banks, person-to-person payments help community banks target and retain younger customers and their parents.
Non-financial institution competitors outside the traditional banking and payments services industry are taking notice of the potential and clamoring to get in on the action. To keep those payments at home, successful community bankers know that it’s essential to offer a wide array of payment options, including payments through mobile and tablet banking, interbank transfers, person-to-person payments and prepaid card capabilities. Now more than ever, community banks have an opportunity to employ technology to build deeper relationships with their customers, and remain the place customers go to pay and get paid by anyone they know or owe.
An Advantage for Community Banks
As consumers continue to embrace technology that reduces the need for face-to-face contact with their banker, will the high level of customer service and personal interaction offered by community banks become obsolete? Absolutely not. Technology enables smaller community banks to keep pace with offerings from larger institutions, and by delivering both “the next big thing” and personalized service from a trusted local partner, smaller banks not only level the playing field with their much larger competitors, they gain a distinct advantage.
Tom Cypher is a division president of bank solutions at Fiserv.