Digital transformation, accelerated | ABA bank journal

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By Karen Epper Hoffman

Mmore than any other event in decades, the ubiquitous COVID-19 virus and its fallout this year has changed every element of people’s lives – from the way they work, where they eat and shop, how they spend their time. free time, whether or not they are traveling, whether they are even seeing friends or family. Likewise, these events also quickly changed the way they do business.

Perhaps the biggest and most obvious change is the surge in the use of banking services and digital payments by retail and business customers. Safe-in-place mandates and short-term shutdowns of any business that was not deemed “essential” essentially forced even those who were slow to embrace digital broadcasting channels to change their tone. “With the closure of most branch lobbies, banks are seeing an increase in online activity across the board,” said Chris Nichols, director of capital markets for CenterState Bank.

Real-world examples: Online account opening has more than doubled at most banks since last year, while online lending, website traffic, call center usage and services Online and mobile banking have grown significantly, adds Nichols of the Florida-based bank, which merged earlier this year. year with South State Bank and is in the process of taking that latest mark. “While some of this change is temporary due to branch office closures, most of the change is expected to be permanent as bank customers are building up habits,” he said, adding that more than a third of new account openings came from people over 60 years of age. .

“We’re seeing years of adoption within weeks,” adds Jamie Warder, executive vice president and head of digital banking for KeyBank. And yet, he believes that when branches and stores fully reopen and the situation stabilizes, “there will be a return to less digital use. When not asked, some customers will return. But for others, their behavior has definitely changed.

Indeed, this behavioral dichotomy is underlined by rrecent research from the consultancy firm Simon-Kucher and Partners. Forty-two percent of respondents to its survey said they would reduce their visits to bank branches even after the foreclosure orders were lifted. But more than half (54%) of bank customers surveyed said that despite their adoption of more digital services in recent months, they would only consider opening a bank account at a branch. Depending on the complexity and value of the account, clients may be even more geared towards opening an account in person: for example, 53% said they would visit a branch to open a business account, while 69% said they would. therefore get a mortgage.

And for branch-loving customers, the absence has made hearts sweeter in recent months, as survey respondents say once reopened they would travel even further to visit a branch: from 28 minutes to 37 minute walk to urban areas; and from 16 minutes by car to 27 minutes by car in suburban or rural settings, according to Simon-Kucher. This may be because about a little over a third of customers are “completely satisfied” with the digital services of their main financial institution: ranging from 33% of community bank customers to 35% of super-regional and 39% customers of the top four American banks.

As Joan McGowan, Global Banking Director for SAS, puts it, this recent “forced adoption of mobile banking has reshaped consumer behavior in a much more constrained timeframe than the industry could ever have imagined possible.” McGowan believes that the realization that it is much easier and more convenient to bank via a mobile device rather than going to a branch “will indeed continue to drive the adoption of digital banking services, in particular. in the field of contactless payments “.

However, in order to seize the opportunity, McGowan says banks need to analyze the data to “match the level of expectations and experience customers are getting used to in industries like retail,” she adds. . “Faced with the real competitive threat from fintechs and paytechs, there is great potential for banks to win big or lose big. “

Banking evolution, accelerated and transformed

Balancing the sharp and sudden surge in demand for digital banking and payments, along with a continuing desire (perhaps even a resurgence) in the need for human interaction, is unlikely to be an easy task. Ben Soccorsy, senior vice president and head of digital payments for Wells Fargo, says his bank is also seeing “tremendous activity compared to people adopting digital banking at a much faster pace. People cannot leave home or visit their local branch. It’s a journey we’ve been on for a long time, but we didn’t expect these changes to happen overnight. In the six weeks between mid-March and the end of April, Wells Fargo saw a 23% increase in the number of digital banking customers, with a 6% increase in mobile banking customers (at 25 million) and 4% (to 31 million) for online banking customers. This boom comes despite the fact that digital banking services were already heavily underwritten at big banks like San Francisco-based Wells Fargo, where they have been available for a dozen or more years.

In addition to online and mobile banking, Soccorsy says it has also seen a rapid increase in customer use of electronic payment options like Zelle, adoption of mobile wallets and greater use of free payment. contact by phone and card, which “meets the new needs of people. worries about touching things, ”given the spread of COVID-19, he adds. Hygiene concerns have brought to the fore research on the amount of bacteria carried on paper money and on point-of-sale terminals or kiosks, which in turn has led to the abrupt adoption of free payment. contact because consumers sense the potential risk of handling paper money.

Even digital banks have seen a bump from home-confined bank customers. Online-only Radius Bank, which had seen a 50% month-over-month increase in account openings, saw these rates double in consumer accounts and a fivefold increase in business accounts since the start of the COVID-19 crisis. , especially given the interest of companies in receiving government PPP support, says Mike Butler, CEO of Radius Bank. Additionally, Butler says the bank is seeing an increase in debit card spending and enrollments in its digital financial management tools. “We’re seeing more and more people using it as their primary account,” he adds.

Just as necessity is the mother of invention, so demand in times of crisis has been the mother of motivation, especially for banks. In light of a huge volume leap, Radius Bank is adding staff, strengthening marketing, and will redeploy an improved mobile and online platform for its SMB clients. Additionally, Butler adds that the bank has stepped up plans to add more personalization to its services, such as allowing more variance in mobile deposit limits (depending on the customer). (Earlier this year, Boston-based Radius Bank announced that it would be acquired by fintech giant Lending Club, in a deal that has drawn much attention to the power and potential of digital-only banking games.)

In addition to seeing a huge leap in online account opening and mobile depositing, KeyBank saw “a resurgence in the use of call center, video chat and chatbots,” according to Warder. Like other major banks, Key has been offering digital banking services for many years, but recent events have prompted the bank to put in place plans to offer more digital financial advisory, lending, and planning services. financial, he adds.

Meanwhile, CenterState is responding to the demand for more digital banking services by increasing the types of deposit accounts customers can open online to include multi-beneficiary accounts, health savings accounts, and targeting “hero accounts”. first responders, says Nichols. The bank has also started offering an online shopping cart where customers can place various financial products in their “shopping cart” (as they would on Amazon or another online shopping site) and checkout with it. a single consolidated application. Nichols says this option “will dramatically reduce customer time while saving costs for the bank.”

The Paycheck Protection Program also pushed banks to scale up operations to meet customer needs. “Many banks made more loans in six weeks [as a result of PPP]because it would normally take them a year to train, ”says Nichols. Therefore, banks like CenterState have boosted productivity by automating lending processes with robotic process automation and business process automation. In the case of CenterState, the bank was able to develop “a complete new loan program, new technology, new policy and new business process in less than three weeks. . . . This has never been done before in the banking industry and it was only through industry initiative and technology, where we were able to be successful, ”adds Nichols.

And yet, industry watchers are seeing that many banks still have a way to go in addressing the lingering challenges that COVID-19 and its subsequent financial and social effects will present. “Most banks have not made the rapid technology deployments necessary to meet new digital demand and are still scrambling to keep up with the digital implications of the pandemic, especially when it comes to lending,” McGowan said. The analyst believes that once these bankers can “catch their breath in the wake of COVID, management will reflect on and re-prioritize their data analysis programs to foster contextual understanding of their clients and clients in order to to keep the promise of excellence in the customer experience. The reality is that many banks still operate and manage their digital technology as a separate channel, so reaching this zenith will be a tall order. “

Karen Epper Hoffman is a frequent contributor on technology and security related topics to the ABA Banking Journal.

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