Community Renewal: Getting Closer to Your Customers
Published on August 2, 2017 | LinkedIn
Banks have been a necessary part of our lives. They have been the primary vehicle to deposit paychecks, pay bills, get credit or finance large purchases. While national banks in general are perceived to be toll collectors and losing their relevance, community banks have a unique opportunity to redefine the category.
Embedding with Customers
In this era of anti-establishment, local means something. From locally sourced foods by grocery stores and restaurants to local economic and infrastructure investments to businesses and brands vowing to create a positive impact on the communities they serve, local focus is here to stay.
Community and regional banks have a long history of being a part of the social fabric. They’re part of the local community and recognize that people and relationships are more than a banner or customer acquisition campaign. Their ultimate goal is to help communities stay vibrant and feel connected.
It’s not to say that national banks aren’t part of the community, but their priorities are vastly different. Their commitments heavily lean to shareholders, compliance and regulations, cross-selling and technology platforms, and the need to attract and retain employees. They’re built to sell and the customer is often the fourth or fifth priority regardless of the customer-centric promises they make. And if you’re a customer whose revenue potential falls short of the mass affluent or wealthier profile, the fees an everyday customer accumulates are living proof that the customer or community are not the primary priority.
Community banks can change the category but a business-as-usual mindset won’t cut it.
Injecting the Right Technology
Finch companies have been getting a lot of exposure for their distinct advantages and disruption potential. They approach solutions in a digitally-first manner and don’t have to worry about legacy platforms. While they have tremendous potential, they don’t necessarily have the relationships or recognition with new customers. Community banks can readily provide the access, credibility, and the human touch.
For community banks, technological investments are necessary to maintain parity with larger banks, but there is also a challenge in placing the right bets. ATMs with imaging capabilities helped Chase strengthen the brand's innovative chops, but the ability to cash a check on a mobile app suddenly made that feature obsolete. If you’re a much smaller bank, you can’t afford to make that kind of investment.
And the cashless society is much closer than people think: even traditional brands like Visa are aggressively focused on strengthening their dominance. Visa is piloting a program that offers small businesses up to $10,000 for new POS equipment so that they can accept contactless payments — but only if they agree to stop taking cash. If you’ve recently spent time in China, you quickly noticed the consumers that use cash because locals transact on mobile phone payment platforms such as Alipay or WeChat. In China, this move to a cashless society happened very quickly. And with biometrics eliminating the need to type in a PIN, our phones and wearables will play an even greater role in our lives.
So, the entire physical structure needs to be re-examined. With community banks holding relationships, Fintech companies bringing truly innovative solutions to market, and consumers shunning fee driven banks, community banks partnering with fintechs are a natural fit.
Lead, Don’t Follow
Banks such as TD, including the former Commerce Bank, changed the branch experience. For a while, they were effective disruptors with large, national banks. The goal was simple, pick a main street where three or four national banks exist and offer a friendlier “retail-experience.” But today its more about frictionless banking and how technology will drive a seamless, intuitive customer experience. This is the chance community banks have to go deeper with customers and fully embed into their lives.
The near future means we can go into a store, pick out a product, and walk out without having to line up for the cashier to check us out. You can apply for an Uber job and as part of the process open up a bank account and secure financing for your vehicle. Or for the new age entrepreneur, you can help setup a payment platform from home and build out your online, Peruvian sweater business. This is a unique point in time in which technology is so transformative, accessible and yet still in a nascent phase. Community and regional banks can close the competitive gap with their larger, more dominant competitors.
Go Beyond the Painpoints and Redefine the Experience
While the opportunity exists, banking has traditionally been a risk averse business. So the ability to transform for many of these institutions has to start from within the organization. For many consumers, including me, the thought of never having to go to a physical bank or ATM is a refreshing reality. Who would have thought that banking could be so exciting? A couple of things to keep in mind:
• Know your audiences. First and foremost, understand your audiences. Go beyond typical demographics or firmographics and focus on audience behaviors, needs and motivations. A strong audience segmentation and understanding of the addressable market is a requirement.
• Leverage your assets. Community banks have built relationships and credibility over a long period of time. People trust you — leverage that brand equity in a smart and impactful manner.
• Transform but stay relevant. Your promise and your word are still important but the old ways of doing business need to dramatically change. Remember what made you successful, stay true to your customers and change with conviction.
• Co-create and partner. Know your limitations and don’t try to do it all by yourself. Build a lot of partnerships that will deepen existing relationships and drive a future-focused experience that changes the way customers live and businesses grow.
• Engage with your customers. You’re running a business but you can’t be in a constant push and sell mode. Learn everything you can about your customers, guide them when appropriate, and figure out how to get embedded into their most important moments.
The old paradigms for staying relevant are gone. Is your strategy built for the future?