Community banks are cornerstones of their local markets, and the 2018 trends in our benchmarks continue to reveal opportunities for success. Community banks must be ready to embrace changes, particularly in the realm of technology, to step up their competition with the big banks. Size is no excuse, with technology being readily available to banks of all sizes, and lack of training is not a good excuse either. No longer can smaller banks cede the higher ground to the larger banks.
In our latest Prospect Benchmark results, we have seen that the technology gap between big and small banks is narrowing. While this a result of what is happening inside the banks themselves, as the smaller banks continue to improve managed services, there is a tightening of the gap in a place at least as important: in the minds of consumers.
Below is a specific example of what I mean. In New London County, CT, retail customers were asked what they thought the technological capabilities were of all the banks they do not use. As you can see from the chart, they see very little differentiation between the big banks, the small banks, and even the credit unions. Consumers believe more and more that there is little or no difference in tech capabilities between institutions – and they are right.
Chatbots are the future of communication.
By 2020, it is expected that 85% of consumers’ interactions will occur via chatbots. As they can be accessed by any social channel, website, or app, chatbots are essential to communicating with both millennial consumers and the emerging Gen Z consumers. They can also be programmed to provide personalized answers and offer predictable information such as account balances, spending activities, and bill pay reports. Artificial intelligence is at the center of emerging trends for every industry, and banking is not excluded. Smaller banks need to stay on top of this trend to ensure that, in the eyes of potential customers, they are keeping up with the market.
Micro-moments will determine your reach.
With most consumers checking their phones regularly as it is, your bank should be available to take advantage of customer reach regardless of when your banking information is accessed. Many decisions are made impulsively, and it could be as simple as someone searching for banking opportunities in your area. Based on our most recent benchmark results, 47% of adults in the Northeast are currently looking for at least one new banking product. While this percentage varies (with some counties at almost 60%), that means there is a very large amount of potential market share in play right now. It will be up to you as a community bank to decide who will come up first in the search engine with the right answer: you or the big bank around the corner?
Cross-departmental integration is the key to success.
It’s no longer enough for community banks to rely on separate departments to reach overall business goals. To achieve success, collaboration between departments is an absolute must. With the customer experience, not necessarily the services provided, becoming the center of attention, everyone must work together to meet new expectations. This is particularly important for community banks that do not have the same upper management resources as big banks. Collaboration will be that which evens the playing field.
Over the past few years, we have seen that the quality of what I call “quarterbacking” is becoming ever more important, especially for commercial customers. A decade or two ago, commercial customers relied on their loan officers to be the font of all knowledge. And those loan officers very rarely introduced customers to their colleagues. However, starting with younger business professionals a few years ago, the value of the team started growing in importance. The commercial relationship managers who were able to display a broad team of experts – as opposed to functioning as one-stop shops themselves – started to become more successful. That is now the case, not just among younger customers, but baby boomers as well. They too see the value of a broad team, instead of a funnel leading to one person. Successful quarterbacking is now one of the major drivers of success for banks both big and small. As an added benefit, if a commercial customer sees value in the entire bank team, they are much less likely to leave if the regional manager moves on or retires.
Digital specialists are what’s missing from your team.
Digital marketing is at the forefront of 2018, and banks would be ill-advised to not invest in this industry. According to the latest benchmark results, when customers begin looking for new banking products, 55% say they start by searching on Google. This can lead them to you or to your competition.
It is the era of social media, and if your community bank is not present on social platforms and in other digital arenas, you will not show up in searches, and the big banks will drown out all attempts at engagement. Community banks are no longer able to rely on friendly contacts that occur in person, and most consider employing digital specialists that can heighten their online marketing strategies. A digital specialist can also assist in making sense of the data that is now required to fuel a marketing strategy to effectively reach your target audience. The most progressive banks have dedicated professionals focused on reacting to social media posts and questions, and monitoring what is happening among competitors’ customers.
The foundation is being laid for community banks to excel in 2018, but such achievement will not be realized without effort. Understanding the latest trends will be the first stepping stone towards your business growth and how you can leverage the resources available to you.
There is enormous opportunity to improve your ability 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.