How Smaller Banks Use Digital Channels to Stay Competitive

As people move away from physically walking into brick and mortar branches, the banking industry has planted (at least) one foot firmly in the “bank of the future.” This modern structure is built with technology and online platforms, erasing geographic boundaries and introducing new offerings to customer bases across the globe.

The reach of the bank and its commensurate customer growth is happening in tandem with a new kind of customer experience. With a click, people expect to be able to get to what they need and want. The demand hinges on how easy it is for them to spot and access personalized solutions, and the speed with which their needs are satisfied.

The “bank of the future” is accessible to banks of all sizes. In fact, many smaller banks are transitioning to a model that includes targeted enhanced customer experience and digital offerings. Here are some of the prevailing steps smaller banks are taking to improve their position in the online banking environment:

  1. Fund Investments in the Digital Space: In general, banks are investing massive resources to transform themselves into digital service providers. Already an issue of scale, it’s possible that smaller banks can maintain financial health in the near-term by sustaining their traditional structure, but looking even a couple years forward, we expect that digital competencies will be table stakes for competing.[1]
  1. Global Banking Growth: The changing geopolitical landscape has added complexity to international banking. Banks will need to cultivate deep, empirical knowledge to navigate varying government protocols. By becoming a digital resource and source of user-friendly global banking, banks can create value for customers seeking comfort and familiarity amid market uncertainty.
  1. Artificial Intelligence: With mobile banking and depositing becoming increasingly popular, customers are more accustomed to managing their financials without one-on-one customer service. Integrating Artificial Intelligence (AI) capabilities into the digital banking interface can give customers a personalized experience and allow the institution to allocate a slimmer workforce to higher-value clients.
  1. Build an online community: Offering an online experience that reflects the traditional branch feel can grow brand trust in an online community. For example, OneUnited customers were looking for in-person offerings online. The company moved their Second-Chance Checking System to their public website, helping customers alleviate debt in a simple, private, digital channel. By investing in the needs of their customers, OneUnited has achieved a strong online community and brand trust.[2]
  1. Invest in IT: In general, as technology applications and digital services grow, IT resources increase in importance. Everything from internal software to external offerings needs to run smoothly. Banks can ensure success by putting the right support team in place early.
  1. Security reigns supreme: As your portfolio of digital services grows so does the threat of security breaches that can hurt your customers and your brand. Digital upgrades should include special precautions to secure private information.
  1. Know your customers: Technology and digital services improve ease of use for customers and for banks. By integrating online systems (like SalesForce), banks can gain a clearer and more actionable understanding of their customers. This insight can shape strategies for what new digital services to offer, what applications are most necessary, and how to provide the most value for customers in the online channel.
  1. Banks as tech companies: Digital services have transformed bankers’ job descriptions. In fact, many banks are taking a new view of themselves as technology companies with an emphasis on banking—rather than as financial institutions powered by technology. Banks can either partner with a technology company or bring tech services in house.

The digital transformation is an important time of growth for banks. New technologies focus in on improving customer experience by getting customers what they need in a quick and simple process. It’s time to take advantage of the opportunities digital offers to prepare for the future of banking. The HORNE Banking team can support you through this process, helping you to spot opportunities, secure your institution, and remain ahead of related digital compliance issues.

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Topics: Digital Banking

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