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.

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Community Banks: Are Your Customers Cheating on You?

As a community bank, you might think your customer is loyal and devoted. Many of them are, but are you doing everything necessary to keep your current customer from “cheating” on you? There’s more going on behind your back than you might think: 11% of banked adults say they will change banks in the next 6 months. Community banks may find that previously loyal customers are cheating on them with competitors, and it’s not rates that lure them away.

What’s the primary reason your customers are cheating on you? It’s the runaround. Some community banks struggle to answer basic questions, and customers find that they are having to speak to multiple staff to get the answers they seek. For some banks, up to 45% of their customers report getting the runaround from their current bank.

How to Keep Your Customers from Cheating on You

Needless to say, a large percentage of customers are currently shopping for a new bank. For a few high-performing banks, less than 5% of their customers report having to ask multiple staff to get their questions answered.  High-performing banks have much higher loyalty levels, because customers are confident that they can easily access information.

Deliver on customer experience with no runaround.

To keep your community bank customers from slipping away, take the issue of runaround seriously. Make sure your staff is well-trained; increase the emphasis you place on customer service and customer experience. Large or small, a bank that treats its customers like more than numbers on a ledger increases loyalty.

Embrace the digital era.

Technology is essential banks must make available mobile apps and tools that provide ease of use for transactional needs but access to information as well. Delivery channels are expected to be easily accessible, whether the customer is using a computer, tablet, or mobile device. Make sure all the most important information is available to your customers online, through your banking app, and on your website.

Provide a personalized experience.

Although emerging generations may demand enhanced technological capabilities from their community banks, all generations demand a personalized experience. Not only do customers want banks to remember their individual preferences, but they are seeking wealth-building and money-saving tips from their local branches.

Understanding why your customers might be cheating on you is the first step in preventing it from becoming an issue. Build loyalty and strengthen your relationship with your customers by providing them access to well-trained, customer-focused staff; high-end technological solutions; and answers to the questions they ask – the first time.

If you want to know what percent of your customers are cheating on you, and what percentage are currently looking around, let us know and we can tell you.*

 

*Our customer experience benchmarks track the loyalty and vulnerability of every bank’s customers (including the percent that are currently shopping around). If you are a bank or credit union in the Northeast, we already conduct interviews with your customers.  If you would like to see your customer experience results please contact us.

Insights from our Recent Bank Benchmark Surveys

Customer Experience Solutions, LLC conducts a comprehensive scientific statewide survey of banking customers twice per year, in Spring and Fall. The Customer Benchmark focuses on how your customers rate your bank, and how those ratings compare to your competition. The Prospect Benchmark focuses on how your prospects (non-customers) view your bank and how you might gain their business. We gather millions of ratings from your customers and your competitors’ customers every year.

The 2018 results have just come out across the Northeast, and here are some of the latest findings:

  • Technology is becoming less and less of a differentiator. Over time, we have seen customers’ perceptions change as they relate to technology. Five or six years ago, customers assumed there was a big gap between big banks and small banks in terms of technology and the use of digital tools. While that still exists to some extent, that gap has closed significantly. As a matter of fact, in most local markets in the Northeast, there is at least one community bank that is rated higher than most national, super-regional, and regional banks in that market. Contact us and let us tell you if you are that bank.
  • Technology is more about convenience than saving money. While that might seem obvious, it is important to know that banked adults across the region are conducting more and more financial transactions electronically. That does not, however, diminish the importance they place on relationships with the bank. As a matter of fact, this trend toward electronic banking is benefiting a lot of community banks that see it as a way to eliminate the more trivial interactions, and to embrace the fact that the in-person interactions are now much more valuable because they are far more likely to be on a subject that is substantive and truly important to the customer. Whereas most community banker-customer interactions were transactional ten years ago, the majority of banker-customer interactions are now focused on solving problems, planning, or creating greater financial well-being.
  • The vast majority of customers do not want a 100% transactional relationship with their banks. They want proactivity instead. Proactivity is one of the key drivers of customer service in the eyes of customers. They increasingly want a bank that will suggest new ideas and products. And contrary to popular belief among community banks, customers are willing to tolerate a little bit of pushiness from time to time, if they sometimes see the positive outcomes . The key issue is about striking the right balance. For example, in the latest benchmarks for New York State, 9% of customers said their banks were too pushy, but 29% said their banks were not proactive enough. These numbers can vary from bank to bank, so it is important to know where you stand with your customers. But the lesson is clear: Erring on the side of passivity is not a good way to satisfy your customers or grow your market share.
  • Customers need to feel secure. Bank security is a big deal today, so your customers should always know that you are using cutting-edge security protocols to keep their information safe. But you should also make them feel secure in their decision to bank with you by being knowledgeable – not just about checking and savings accounts but about all of their financial needs, from investing to mortgages to annuities. This is very clear from the latest benchmark results in New Jersey. A full 7% of banked adults said that they did not feel their money was safe at their current primary bank. For the banks that ranked higher than this, fixing this perception is a matter of survival.

There is enormous opportunity for you 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.

How Is Banking Like Baseball?

And How Is Community Banking Like ‘Moneyball’?

The idea that you can create a template that will work forever doesn’t happen in any business. There are some really, really bright people in this business. You can’t do the same thing the same way and be successful for a long period of time.” But maybe you can be Billy Beane. Are you like Billy Beane, the general manager of the mid-market team the Oakland A’s? As the protagonist in the book and movie “Moneyball,” he is responsible for successfully competing with big-market, deep-pocket teams such as the New York Yankees and the Boston Red Sox. How did Billy (as played by Brad Pitt in the movie) do it?

“We can’t do the same things the Yankees do. Given the economics, we’ll lose. Smaller market teams, when you hit bottom, you hit with a thud,” Beane has said.

The game of baseball has changed. It’s a data-driven sport that allows managers to manage to different situations and strategies. What works for one team or one situation may not work for the other. The challenge is to figure out what data you need, how to gather that data, and how to use it to meet your goals.

Billy Beane’s genius was his decision to do more research on players and his openness in looking at the research data in different ways to achieve success, despite the A’s budget limitations.

For example, general managers need to put together a multi-talented team where one size does not fit all. Today, a team consists of core players, specialists and multi-position players. The key is having the type of talent that fits the playing conditions. In baseball those conditions include the league (American with designated hitters), the field (Yankee Stadium with its short right field, or Colorado with its thin air) and, of course, the salary cap. In community banking, those conditions are urban versus rural, customer demographics, competitor strengths and weaknesses, and budgets for marketing.

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