Smaller banks and credit unions can bring unique value to the mobile ‘arms race.’
Over the last two years, the largest financial institutions in the U.S. marketplace have made significant investments in their mobile applications centered around improving the client experience. Mobile app store ratings have gone from an average of 4.2 to 4.8, with increased functionality, improved experience and ease of use. This fast pace has banks and credit unions contemplating how they can compete in this mobile “arms race” and what unique value smaller institutions can bring to the table.
With megabanks spending billions on digital investments each year, regional and community bank executives understand they cannot compete on resources. Instead, these players are focusing on specific niches, brand strategies and community connections to differentiate themselves. For these institutions, digital strategy should be focused on a disciplined allocation of resources and a management team obsessed with understanding performance, competition and the voice of the digital customer.
During the past six months of the pandemic, the need for a disciplined voice of the customer process has become even more pronounced. Customers are communicating their frustration with experiences that are not ready for prime time in the digital world. Key frustrations revealed include:
Service requests that cannot be processed in real time
A lack of recurring digital status reporting on customer requests
Functionality that is available through online banking but not in the mobile app
An inability to quickly connect with a service representative when challenged with a digital session, either through chat or an immediate call from the bank
Best practice institutions are not managing the digital shift in a reactive fashion. Instead, they are building a disciplined voice of the digital customer process focused on six key areas.
1. Make Digital Benchmarks and KPIs Visible
Creating a recurring “digital snapshot” allows executive management to track key performance indicators in each stage of a customer’s digital experience with the bank. Cornerstone’s Growth Engine Framework illustrated below summarizes common measurements used to monitor the digital customer through the capture, acquire and nurture stages of relationship development. These metrics monitor activity across a bank’s website; marketing automation, digital account and loan origination platforms; and digital banking platforms. Executives should ensure dashboards with these types of measures and benchmarks are bubbling up to the C-suites each month to provide effective oversight.
2. Monitor Competition and Vendor Functionality
Bank executives often hear their front-line lament, “Our digital app is so behind others,” yet they have no formal competitive intelligence monitoring to validate this perception.
Digital strategy requires frequent monitoring of the local competition as well as national and best practice institutions that a bank’s customers can easily access. A key element of Cornerstone’s digital strategy work is an evaluation of a bank’s competitive capabilities along key criteria such as:
Authentication and registration (fingerprint, facial recognition, PIN, etc.)
Money movement (P2P, external transfers, bill payment, ACH)
Communication and feedback
Statements and reporting
Banks should also review how well their digital platform capabilities compare to others in the market such as NCR, Q2, Alkami, Fiserv, FIS, Jack Henry and Temenos. The bank should monitor app store ratings versus the competition, looking at the median on both Apple and Android devices. This competitive information should be actively shared with senior leaders, board members and frontline staff. The branch and contact center are getting the tough questions from customers, and sharing this information may make them more confident in serving customers.
3. Engage Net Promoter and Client Feedback Channels
Evolving a bank’s digital strategy requires digging into the details of customer loyalty and feedback. Typically, some of the lowest Net Promoter scores (NPS) in banking come from frustrated digital banking and payments users. To ensure an effective digital customer feedback process, banks should:
Utilize a surveying system that can easily be linked from a mobile app, online, and on your website. Keep it simple with the number and phrasing of questions.
Integrate feedback with app stores reviews. Digital banking vendors, such as Alkami, NCR and Q2, are working to provide sentiment applications, where mobile banking app user feedback is leveraged to create an app store rating. Third-party vendors such as Airship or OneSignal can also provide these capabilities.
Track the NPS of active customers whose primary channel usage is digital separately from customers who primarily use the branch so management can focus on accelerated improvements to this score.
Pay special attention to detractor comments and quickly convert commonly mentioned items into experience improvement sprints.
4. Address Inactive User Engagement
A deliberate approach to addressing inactive digital users should include the following:
A campaign targeting inactive users every 90, 120, 270 and 360 days will allow the bank to engage with them. Cornerstone’s experience shows that 20%-25% of clients will reengage after 90 days of inactivity with these efforts. Even 12% of those who have been inactive 270 days or more can be transformed into active digital users.
After a full year of inactivity, customers most likely will not re-engage, and banks should give customers an early warning regarding deactivation and any paper statement fees that may be triggered.
In order to support the bank’s brand, it is important to stress the fraud/risk perspective of shutting down access if the customer will use the channel.
5. Appoint Digital Ambassadors
An effective digital strategy requires strong engagement with branch and contact center staff. These team members are the linchpin in promoting, educating and communicating the features and benefits of the bank’s digital banking offerings. A formal program focused on frontline outreach provides a huge opportunity to set the bank apart. Executives should consider appointing a digital ambassador in each branch and in the contact center. These team members can participate in a specialized training program with monthly meetings centered around digital banking product knowledge, new releases and new features. These ambassadors become the voice of the digital channel in their department and act as “go-tos” for more complex customer questions.
6. Promote Your Success
A digital strategy requires proactively promoting the bank’s successes. Every time a new app or features is rolled out, the bank should make a splash. Every time a customer provides positive commentary, it warrants a testimonial. Customers trust their peers more than any other source, so these reviews matter in building the bank’s brand. Banks need to embrace the buzz that accompanies the release strategies of players like Apple and Samsung and share via customer communications and social media cool new things the organization is getting out the door.
Bank executives have woken up to the urgency of executing on a digital strategy to compete with larger players, yet the gritty discipline to manage this strategy from the C-suites has been lacking. By integrating performance and competitive customer data at the top of the house, leaders can truly drive and influence better outcomes from the digital channel.