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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Can Community Banks Compete with Big Banks on Electronic Banking?

Electronic banking is a disruptor to banks in much the same way that Amazon was to brick-and-mortar book stores when it first launched its online retail business. As a business owner, you either find a way to meet the level of service and convenience being offered, or you simply lose a piece of the market. Yet when so much is uncertain, including future economic security, how do you justify investing in technology when you’ve based your whole business platform on providing a personal touch?

Banking and technology have always been great partners.

Technology has always made banking more efficient and more profitable, and today’s fintech revolution is one of the fastest growing industries – worth over $12 billion. From the introduction of ATMs to check clearing and credit monitoring, technology makes banking easier for banks as well as their customers.

Fintech is a natural fit for community banks willing to make the investment. Some community bankers and credit unions avoid digital upgrades because they see them as threats rather than improvements that can make them more competitive in the industry. But most of the digital innovations available – payment apps, mobile wallets, online money management tools, mortgage loan apps – are simply enhancements to existing services.

It starts by recognizing that consumers want both the technology and the human touch.

Community banks have the opportunity to bring to their customers the best of both worlds: the personal, in-the-community, fabric-of-society human touch and the state-of-the-art technical convenience fintech allows. From online banking to mobile check deposits to customized apps, new technologies do not have to be a threat. And most consumers want both. They want to be able to come into their local branches, sit down and talk with someone, and know that there are human beings keeping their money safe. They also want to be able to bank at midnight, move money from one account to another from their phones, and make investment decisions while sitting in their living rooms watching TV. Based on our surveys, most millennials want the human touch when it comes to banking.  And most baby boomers want the convenience of electronic banking.  Why not give them both?

Community banks know their customers and can expand the innovation in fintech.

This is not merely pie in the sky. It’s happening on the ground as this is written. Some banks are choosing to build the reality themselves. Eastern Bank in Boston created an online lending platform that makes loans of up to $100,000, with decisions in minutes. Like many other banks that have developed some internal digital expertise, they now provide the solution externally and license it to other banks. And there are still plenty of high-quality managed services available in the market from the likes of Fiserv, FIS, Jack Henry, COCC, et al.

Community banks can embrace fintech without sacrificing their personalized, customer-driven focus, and these banks can indeed survive and thrive. Credit unions and community banks simply cannot rely solely on personal service as the entire premise of their existence when consumers clearly want more. They want not just personal service but personalized technology as well. Fintech is a solution that will open doors for community banks, allowing them to peel away less-than-satisfied big-bank customers who are ready for a best-of-both-worlds solution.