Community Bank Challenges: Is Technology Your Achilles’ Heel?

Community banks and credit unions often believe their strengths lie anywhere but with technology. Given the variety of personal interactions in demand by customers, it may seem unlikely that technology shortcomings would be harmful. Unfortunately, even the best customer service cannot make up for a lack of the tech-based services that customers expect in their desire to make transactional banking easier and faster. Yet, most community banks and credit unions do have the technology they need to compete. So where is the issue?

Technology is rarely the problem.

Technology is rarely the problem, but how it is implemented and presented to customers certainly can be. A community bank may think that a basic technology package is all they need, but you can’t just introduce technology and walk away. While offering online banking services and mobile banking services is important, your customers must know how to use the technology, or it can become a source of frustration, causing some customers to defect.

Many community banks assume that if they shell out for an expensive new managed service in support of online or mobile services, then the problem is solved.  After all, isn’t technology supposed to be intuitive and easy to navigate?  That is what core processors will tell you.  But they would be wrong. In our interviews with millions of consumers and businesses, we know that almost half say they need some help from the bank to make use of the technology. Once they learn how to use online and mobile banking services, the vast majority of customers are happy with any banking technology, but the key is getting your customers to that point.

When we go through in-depth interviews with consumers and businesses about their banking technology, it becomes clear that being trained to make the most of technology is every bit as important as the technology itself.  What this means for community banks that are underperforming in terms of technology is that usually the problem is not the tools, it is the people behind those tools: your staff.

Improving the community bank customer experience begins and ends with your staff.

The challenge with technology often stems from a lack of staff knowledge. If a staff member isn’t a confident user of the banking tools your branch offers, they won’t be able to educate customers and provide the excellent customer service required to keep your customers happy. Customers often think, if the people at my bank don’t know how to use the tools, how can I be expected to?  Best-case scenario: Bank customers think the tools themselves must be too complicated and difficult; worst-case scenario: They think the community bank staff is incompetent. Based on our surveys, customers believe the latter to be true over 25% of the time. Either way, expensive online and mobile tools can be a waste of both time and money without proper education to accompany them.

Change your training, not the tools.

There are many companies that will insist you should replace your current tools so that your customers can make better use of technology. They will tell you how much money you will save in cost to serve. They will tell you that getting the “right” banking technology is the most important thing you can do. We have proof that this is not the case.

We regularly interview customers and members across 1,453 banks and credit unions. We know what they think of the technology at their community banks or credit unions. We know which tools each institution uses. Can you guess which institutions score the best? None of them. There is no consistent pattern. Two banks using the exact same tools can achieve very different ratings from their customers. Two credit unions with different tools might achieve the exact same ratings despite differences. The clear differentiator is not the technology; it is the support and training associated with the technology.

An understanding of the technology your branch uses should be a requirement for every bank employee. Once every staff member can navigate the utilized technology, incentive plans can be rolled out to your customer base. Staff will be ready to field any questions and promote the use of technology with confidence. If staff are resistant to adopting new technology, offer incentives to them as well. The most effective incentives that I have seen are at banks that pay all bonuses through peer-to-peer apps, such as Zelle®. Using this technology, each staff member can go online, open a bank account at the bank where they work (crazy that they haven’t already, right?), sign up for peer-to-peer services, and receive the money.  In short time, you will have 100% of your staff knowing how to open accounts online and how to use peer-to-peer banking.  Customers will see the difference in the confidence of the staff. Regardless of how you train your staff to use the tools you spent so much money on, it’s guaranteed to be cheaper than changing the technology you use.

Technology is necessary to attract and keep your banking customers, but technology must be properly implemented as well. Providing amazing community bank customer service means the community bank is everywhere customer needs are, from the local branch to the mobile app. Your customers will be able to tell you if your technology is truly lacking. However, you must first attempt to determine what works and what doesn’t, and this starts with your staff.

There is enormous opportunity for you to grow your community bank or credit union, but it starts with knowing what existing customers and prospects think of you compared to your competitors. Take action now and request our benchmark study for your region.

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