Digital Decisions


Develop a strategy for choosing your bank’s next electronic move

By Cheryl Winokur Munk

Many community banks could easily believe that having a mobile app makes them a formidable player in the digital arena. But to really make the most of digital channels—now and in the near future—banks need a more strategic approach, some technology experts say.

This means banks need a clear understanding of what they’re doing, why they’re doing it and who they hope to serve—whether for digital payments or any other technology-based service.

“It takes a lot of rethinking of how you do your business and what your traditional business is,” says Stephen Greer, an analyst with Celent, a financial technology research and consulting firm.

An effective digital strategy starts with a decision from the top about what digital means to the bank. To be thorough, bank managers should discuss digital payment options as well as online and mobile channels and how the bank is going to prioritize these services. Otherwise a constant battle for funding and resources could become a problem.

To be effective, that directive then has to involve people at all levels of the community bank, Greer says. “It’s easy to check a box and say we are digital because the bank has mobile capabilities, but it needs to be a complete cultural shift,” he adds.

Next, banks need to determine their broad vision for their digital channels and understand the practical steps required to achieve that vision, Greer continues. Banks should thoroughly assess what digital capabilities they have today, as well as the needs and desires of their customer base, and then determine where they want to be in the future. Then they have to develop a process for getting there, carefully considering their available resources and competing priorities.

“If you’re a community bank, being all things to all customers in all channels is expensive and likely not sustainable,” says Jim Burson, senior director of Cornerstone Advisors Inc., a consulting firm in Scottsdale, Ariz. “Capital is not unlimited, so a digital strategy has got to be about what are the choices you are going to make.”

Think across channels

When crafting a digital strategy, no decisions should be made in isolation; a bank has to consider the implications of decisions across all channels, Burson says. For instance, if your community bank decides to allow its customers to open accounts online or via mobile, it might need to establish a dedicated call center to answer questions in real time over various communication channels. It also should think about the impact its digital decision would have on branch traffic and staffing levels.

“There are a bunch of pieces to the puzzle,” Burson says.

The transformation to digital can be overwhelming, so after you’ve developed your initial vision, it is important to break the actual implementation into small, manageable pieces. This will allow you to get something functional to market, even if some kinks have to be worked out over time based on customer feedback.

“If you wait to build the big behemoth of a project that may take 12 to 18 months, it will be outdated already,” says Alyson Clarke, a principal analyst of eBusiness & Channel Strategy at Forrester Research in San Francisco.

Expand your horizons

Clarke also recommends that community banks use a variety of resources to innovate and think about future decisions, not just a small team of people from within the organization or from a third-party firm.

Everyone within the community bank should be tapped for ideas, Clarke adds. “Employees use digital in their daily lives, and they see the pain points for customers.”

A solid digital strategy should also make use of customer data for relationship-building purposes, says Cary Whaley, ICBA’s vice president of payments and technology policy. An app that has geolocation capability, for instance, when used appropriately, should collect relevant data about customer behavior in an unobtrusive way. This understanding allows banks to deepen relationships with their customers by basing their products and services on what their customers actually do, not what they say, which can be different, he says.

Importantly, community banks that truly want to transform themselves into digital organizations need to understand that customers are going to continue driving expectations and be prepared to respond quickly.

Cheryl Winokur Munk is a freelance financial writer in New Jersey.