5 ways to boost your customer experience strategy

User-experience maestros like Amazon and Facebook may soon enter the retail banking space. Take a page from their collective playbook to keep your customers loyal for life.

By Chuck Green

Twenty percent of bank customers are “digital-only” users, preferring to prospect and purchase online, according to the Accenture Global Consumer Pulse Research study. Different consumers embrace digital technology in different ways, but the trend is clear: Across the board, digital is a force to be reckoned with. Even people who rely mainly on traditional channels will dip their toes in available digital channels from time to time.

The Accenture study noted that most banks will find it essential to adapt to customers’ new channel preferences. Consumers between 18 and 34—those who have grown up immersed in digital technologies—are two to three times more likely than consumers over 55 to want more digital interactions than companies currently support.

Tech heavyweight Amazon understands the value of meeting customer expectations. In a Bain & Company survey of more than 133,000 banking customers in 22 countries, consumers said they trust Amazon and PayPal with their money nearly as much as their banking provider.

Some 55 percent of U.S. consumers said they’re open to buying financial products from established tech firms, according to the survey. And 73 percent of millennials said they would be more excited about a new financial offering from the likes of Amazon, Google, PayPal or Square than from their bank.

The survey showed that if Amazon decided to move into banking, it would be buoyed by some major advantages over traditional banks and credit unions: better data, a superior customer experience (often referred to as CX), a digitally native platform and tremendous customer loyalty.

Certainly, all of these reasons are why almost half of banks and credit unions consider tech companies like Amazon, Google, Facebook and Apple to be a “significant threat,” according to a study by Infosys Finacle.

All things being equal, two out of three American adults—including 59 percent of current megabank customers—say they’d rather bank at a community bank or credit union than at a national bank, indicates The Financial Brand. But wanting to and actually doing so are two different things.

20% of bank customers are digital-only

An August 2017 report from the World Economic Forum concluded that major tech companies like Amazon pose a much bigger and realistic existential threat to traditional banking providers than fintech startups. Given that Amazon already provides payment services, credit cards and loans, Bain’s Gerard du Toit says it’s plausible Amazon could offer a bona fide suite of retail banking services in the very near future.

“It’s just a matter of time before big tech players enter retail banking in the U.S.,” du Toit told Bloomberg. “You’re going to see a Darwinian battle between banks and tech firms, and some surprising combinations on how they get to market.”

Amazon, for one, is working on a seamless transaction experience, explains Eric Cook, a digital strategist with WSI in Battle Creek, Mich. For example, Amazon’s new physical store lets customers walk in, pick up the items they want and walk out without paying for them in the traditional sense. Through a series of scanners and technology, your purchase is automatically paid for via an Amazon Prime account.

Similarly, when the Uber ride-sharing service was introduced, talk centered on the frictionless “Uber experience”: Consumers no longer had to think about payment. “You get out of the car and the transaction just happens,” says Cook.

Cook, who led the Community Banking and the Amazon Effect Learning Lab presentation at ICBA’s annual Community Banking LIVE in March, believes community bankers also have opportunities to discover where friction exists and lessen or eliminate it, whether it be in the loan approval process or when obtaining an extended line of credit.

Here are five ways community banks can improve their customer experience to gain and retain happy customers.

“We like one-stop shopping, where any employee in our thinking center can help a customer do things like open an account or make a deposit.”
—Cheryl Tanenbaum,
Intracoastal Bank

1. Make your switching process easier

Making it easy for busy customers to switch banks holds major appeal. Through a partnership with Bottomline Technologies, $351.8 million-asset Quontic Bank, based in Astoria, N.Y., will offer and authorize the creation of online checking and savings accounts for customers—even from home.

“We know most people work Monday through Friday, 8:30 a.m. to 5:30 p.m., which coincides with bankers’ hours,” says Drew Sandholm, marketing director. “It makes it difficult for them to open an account with us.”

Sandholm says the proliferation of surrounding banks spurred Quontic Bank to make the service available. “If you walk out the door and look to the right, there’s a bank. If you look just to the end of the block, there’s another bank. And if you go from one main thoroughfare, there are several banks. The layperson doesn’t know the difference between a community, regional or big, top 20 bank. We’re competing against all those banks for deposits, mortgages and other products or services.”

Customers at $315 million-asset Intracoastal Bank in Palm Coast, Fla., are also benefiting from an easy switchover program, says Cheryl Tanenbaum, senior vice president and chief financial officer. Intracoastal offers a personal and business package on its website. Customers complete paperwork, and the bank’s universal bankers use that information to carry out tasks like opening accounts and transferring direct deposits and auto debits. Consequently, customers no longer need to do the legwork to get information transferred, easing the way for them to switch to Intracoastal, explains Tanenbaum.

“We like one-stop shopping, where any employee in our thinking center can help a customer do things like open an account or make a deposit.”
—Cheryl Tanenbaum,
Intracoastal Bank

2. Introduce bank-based p2p payment options

Customers seek and expect instant gratification. New bank-based p2p payments options help community banks to provide it. Customers at Somerset Trust Company, a $1.2 billion-asset community bank based in Somerset, Pa., can quickly send and receive money via iPay Solutions, a Jack Henry & Associates, Inc. digital payments network. ExCheq, a p2p app from $500 million-asset North American Banking Company in Roseville, Minn., is a similar offering.

“I think we’re seeing a market for p2p tools,” explains John Gill, Somerset Trust Company’s senior vice president and risk officer. “To compete with p2p companies, the payments industry had to change by becoming more convenient and faster.” While he foresees p2p’s continued growth, it’s still a “very small piece of payments.”

Down the road, however, experts expect p2p payments volumes to skyrocket, thanks to its convenience and growing accessibility and capabilities. Forrester Research, a customer-based strategy expert, expects annual p2p payments volumes to hit $17 billion by 2019. (In 2014, the New York Times estimated p2p volume to be about $5.2 billion.) This growth also means p2p payments companies need to find ways to address the challenges of delivering top-notch customer support in this space, Telus International cautions.

Gill says he uses Square Cash, iPay and other p2p payments systems to transfer money to his children, and they repay him through the same channels: “It’s their view of writing me a check that they can just send.” He believes there will be greater usage of p2p payments systems. “It will be nice when payments can be done under one umbrella,” he says.

3. Embrace the universal banker model

When community banks equip every employee to respond to customers’ banking inquiries as soon as they enter the branch, it makes customers’ lives easier and builds trust and rapport.

This is also true for customers who communicate by phone. At Somerset Trust Company, all customer calls are answered by staff members in the bank’s call center who can address all questions, comments and concerns, notes Gill. In a sense, he believes, community bankers are private bankers. “I think all our lenders and branch staffers are private bankers for our customers and can accommodate the broad set of tasks that come in,” he says.

A universal banker’s tool of choice is the tablet. This one device brings together multiple pieces of information in one place, allowing the customer to interact with all of a bank’s products and services alongside a knowledgeable partner who can help guide them to the best solution. It changes the interaction from across a teller window to across a coffee table.

That personal attention can pay dividends. According to a 2013 Gallup U.S. Retail Banking Survey, 33 percent of new accounts were opened in branch by customers who were considering it but needed prompting, and 8 percent were opened by customers who hadn’t considered it at all.

An additional 13 percent had considered opening an account or buying a service but did not. These scenarios represent pivotal opportunities for universal bankers to give advice and relevant options that speak directly to that customer’s situation.

While the universal banker model won’t be right for every community bank branch, giving all frontline employees a grounding in the bank’s range of products and services will open doors to new business.

4. Build a “one-stop shop” feel

When community banks can smoothly address a wide range of financial needs, from equipment loans to mortgages to safety deposit boxes, it makes customers more likely to turn to them first. Intracoastal’s banking centers are inspired by the Apple store model, enabling customers to enter the bank’s “thinking center.”

“We like one-stop shopping, where any employee in our thinking center can help a customer do things like open an account or make a deposit,” Tanenbaum says. For example, an employee can help a customer access his or her online bank account using one of the bank’s iPads or Galaxy tablets at Intracoastal’s technology bar. “Customers can find how easy it is to carry out those tasks by being educated.”

Meanwhile, Quontic Bank puts a slightly different twist on the concept of one-stop shopping, offering products like postage stamps in its ATM. “One might think that’s unusual for a bank, but it adds a lot of convenience for people in Astoria,” notes Sandholm. “They don’t have to walk 10 blocks to the post office. I think it sets a tone for what to do for the community where it makes sense.”

5. Cultivate an “always-on” social media presence

Immediacy is everything in modern customer service. If a community bank has an active social media presence, customers can receive quick answers to their questions, lodge complaints or offer suggestions.

Intracoastal was well ahead of the curve in terms of establishing a social media presence, says Tanenbaum; the bank has been on Facebook since its opening in 2008 and is also on Twitter, LinkedIn, YouTube and Pinterest. “I feel if you’re not on social media, you’re behind the times,” she says. Intracoastal routinely monitors its social accounts, responding promptly to customer contacts. “We know we’re not perfect, and it’s good to have some negative feedback. Responding fast and professionally goes a long way.”

Kevin Tweddle, ICBA group executive vice president of innovation and financial technology, acknowledges that social can be “tricky.” He says some community banks eschew an “always-on” social presence, in part because of the potential sharing of negative feedback on a public platform.

Tweddle believes customers with negative feedback tend to chime in more than those with positive messages. “I don’t think [the concept] has been 100 percent embraced by a lot of banks,” he says.

For banks that do choose to use social media, the key is to remain interesting, human, relevant and responsive. Fifty-two percent of consumers believe that banks’ use of social media is ineffective, according to findings from a survey by Carlisle & Gallagher Consulting Group, as reported by several business publications.

“I think all our lenders and branch staffers are private bankers for our customers and can accommodate the broad set of tasks that come in.”
—John Gill,
Somerset Trust Company

With continued industry consolidation and the rise of digital banking technology, the real competition currently unfolding is not among community banks but between community banks and national brands, with digital engagement as the battlefront, says Eric Jones, senior vice president, product management, at Fiserv Bank Solutions.

Another warning shot: McKinsey & Company says that if big tech companies like Amazon get serious about banking, banks could see a loss of profits and customers. McKinsey’s worst-case scenario puts returns on par with what banks saw during the financial crisis of 2008.

The mantra in the midst of that battle? Think like Amazon in terms of convenience, says Sandholm: “I think every single company today can take a page out of their playbook in terms of how to treat customers: with respect, quick turnaround and everything that would embody five-star service.”

Need help being persuasive?
ICBA’s marketing toolkit now includes a “switch kit” with materials to help convince customers to switch to a community bank. Check it out at icba.org.

Chuck Green is a writer in Illinois.