Digital Is The Branch But Many FIs Lack The Personal Touch

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No one disputes that branch traffic is down and digital use is up at financial institutions. However, there is much debate over the conclusion that such a trend means that branchless banking is just around the corner.  To some, the argument for keeping branches open seems to be backward facing, to a time long gone when most consumers had to make a personal visit to their financial institution to make deposits, open accounts and send money.  Why hang onto branches when all those services and more can be completed on digital devices? To others, the inability of banks and credit unions to personalize the end user’s digital experience makes them hesitant to close the branches where they still do the bulk of their selling.

When customers visit branches, their service is personalized – at minimum – by receiving help directly from other human beings.  Some banks and credit unions have used that human touch to deliver much more than the minimum.  Today, however, there are a significant number of consumers who have hardly ever darkened the door of a branch.  They are comparing the digital experience they have with their financial institutions not only with other banks and credit unions, but also with other organizations they encounter online, such as Amazon. To monetize the digital banking channels they deploy, financial institutions must find a way to personalize them in a fashion that approximates certain features of the branch experience.

The personalization required to deliver an Amazon-like banking experience that differentiates and monetizes a financial institutions digital experience requires data.  Unfortunately for many financial institutions, the best they can do is “customize” a digital users experience based on macro level demographic data.  The specific data they need to "personalize" the experience is typically either isolated in the disparate systems serving the various channels they deliver services through, or it is in the hands of the third parties they outsource certain customer facing services to.  Without easy access and the ability to analyze this data, creating an Amazon-like banking experience is extremely difficult to do. 

Without a consolidated, integrated view to the customer’s or member’s digital activities across all devices, institutions will likely run the risk of doing more harm than good by posting irrelevant offers that cause the consumer to question how well the bank or credit union knows its clients.  Some financial institutions have undertaken core conversions or installed new CRM systems to address this need for data, but neither of those alone will give them what they need to personalize and then monetize digital channels.  In addition, deciding to renew a core or upgrade a CRM system represent a strategy that underestimates how quickly the digital landscape is changing.  By the time the financial institutions involved in such projects finished them, the fight for the digital consumers’ loyalty would largely be over. 

The challenge of consolidating, optimizing and monetizing digital channels is increasing due to the growing number of devices.  To overcome this challenge, banks and credit unions must be willing to consider moving beyond business as usual to embrace scalable, reliable, and innovative options that they may not find in the offerings to the large established FinTech providers.  Financial institutions who want to start employing best practices around their use of customer data will find this report recently published by Javelin entitled "Transforming Data Into Dollars For Financial Instituitons" of interest.  It is not the whole story, but it is a start.

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