How banks can follow Amazon’s strategy of constant connection

Illustrations by Randall Nelson

Consumers expect the constant availability of services through their computers, mobile devices and smart home technology. So it makes sense that they’re now looking to their banks for a similar level of connectivity. What can community banks do to keep up?

By Karen Epper Hoffman

Nowadays, customers have all manner of information, products and services at the touch of their fingertips—or the sound of their voice—and all that access has raised their expectations when it comes to their bank.

While the term “customer experience” gets bandied a lot by banks, appeasing the demands of the hyper-connected, bank-anywhere-at-anytime consumer or small-business owner is increasingly challenging.

A Salesforce study released last year points to the difficulties in pleasing and meeting the expectations of consumers who are used to seamless online experiences from the likes of Amazon and Google. The study, dubbed State of the Connected Customer, found that more than three-quarters of the 6,700 consumer and business buyers surveyed say it’s easier than ever to take their business elsewhere, and they are more willing than ever to do so based on how quickly and effectively their providers meet their needs.

“As disruptive companies leverage breakthroughs in cloud, mobile, social and artificial intelligence technology to deliver personalized, valuable and immediate experiences, customers have more choices than ever,” Salesforce says in the report. “As a result, they grow to expect this superior experience from any business with which they engage.”

Chris Nichols, chief strategy officer for $16 billion-asset CenterState Bank (recently merged with National Commerce) headquartered in Winter Haven, Fla., agrees that companies like Amazon and online payments provider Venmo have raised customer expectations. “They expect their banks to have the same technology and the same level of experience. Alerts, instant confirmations and splashy graphics are now expected,” he says.

Nichols recently sat through a focus group to get feedback on a bank’s website and mobile applications. The comments “boring,” “hard to navigate” and “not enough information” came up more than half of the time. Small community banks are experiencing the same trend.

“The customer, whether business or consumer, does want the ‘always-on’ mentality via online- or mobile-based products and services,” says Brad M. Bolton, president, CEO and senior lender of $144 million-asset Community Spirit Bank in Red Bay, Ala. “Community banks must stay ahead of the technological curve by keeping their online services up to date and fresh.”

For his part, Bolton says Community Spirit Bank tries to support the always-on expectation through access to personal bankers, as well as encouraging lending and deposit staff to share cell phone numbers with their customers. “Customers expect instant access not only to their money but to their banker. If they have a question, they are now utilizing personal texts to their banker and they, like everyone else, watch the screen to see if they are getting an immediate response,” Bolton adds. “That is what our customers expect. I believe the bankers who provide these wow moments for their customers—even if it’s 9 p.m. on a Saturday night—will get some type of a response.”

John Gill, chief operating and risk officer for $1.2 billion-asset Somerset Trust Co. of Somerset, Pa., points out that while branches are still being used to open new accounts, resolve problems and receive financial advice, the bank’s digital channels are where its customers are completing more than 85 percent of transactions and 60 percent of deposits.

“We are also seeing more customers using social media or sending secured messages through mobile banking for questions or assistance,” he says. “With the new account-opening technology vastly improving, I believe that we will soon start noticing a much higher percentage of accounts being opened through the digital channel versus the branch.”

Larry Ponemon, founder of the Ponemon Institute in Traverse City, Mich., sees “huge implications” for the banks that seek to provide services and products to retail and business customers in the wake of digital transformation. “This concept of digital transformation has led customers to believe they are entitled to everything all the time,” he says. “This creates some big positives and some big negatives for banks … especially since there’s a huge difference between Citibank and the local community bank.”

While the common belief is that so-called digital natives—young people who have never known a time before internet access—will spurn the community bank or smaller financial institution for the promise of a more digital-friendly bank, Ponemon and others disagree. “Community banks still have that touch and feel,” he says.

Aiming for systemic change

Sam Kilmer, senior director for Cornerstone Advisors of Scottsdale, Ariz., points out that the systemic change to self-service is about more than just digital technology.

“Even before Amazon,” he says, “fuel purchases moved to self-service and the automobile purchase process for many moved to self-service with researching, learning, comparing and selecting the car features, getting a price quote and even the financing—all done remotely. [It’s the] same with investing and financial services. It’s more convenient and more on the customer’s terms.”

Laurel Road Bank in Darien, Conn., has built itself into a community bank that could appeal to both the digital banking masses and a specific clientele. Chief marketing officer and head of product experience Alyssa Schaefer says the $500 million-asset community bank has cultivated a business in student loan refinancing, as well as in taking deposits from customers nationwide.

To engage digital customers, Laurel Road Bank offers rates within two minutes and provides flexibility in loan account opening, Schaefer says. “With a lot of lenders, you can only do a portion of the [refinancing] online,” she adds. “With us, you don’t have to talk to anyone.”
Jaime Dominguez, director of product strategy for bank solutions for Fiserv, points out that for most people, “their last best experience becomes their latest expectation.”

For example, when doing his taxes using a software program, Dominguez says he needed help. He selected the “help” button, and a live person popped up to assist via video. “That set an expectation for me, and I started thinking, ‘Why can’t I speak with my banker on a Sunday afternoon while looking for a house to determine if I can afford it or to begin the process of purchasing it?” he says. “I realize that having a live person is not sustainable 24/7, but that’s what we as consumers expect. We want things to be catered to us and we want everything in real time.”

JP Morgan Chase & Co., Capital One and other big banks have done a good job quickly opening up an account online, says Nichols of CenterState Bank. “Traditionally, banks make their customers come into a branch to establish a relationship,” he says. “Now, the expectation is to not only be able to open an account via mobile, but to be able to do it in under 15 minutes, and preferably five minutes.”

Bolton says instant access is key. “This is in the form of personal relationships with bankers [and] continually improving mobile app functionality. For some customers, it’s as if internet banking has been replaced by the ability to log in to their app instead. We have to always be focused on removing the extra steps.”

Bolton sees community banks as having an opportunity to add tools that allow the customer to budget other accounts or credit cards they have with other institutions, giving them a larger financial picture at their fingertips. Banks could also provide options for fraud alerts, balance alerts or notifications letting customers know when a check clears, he adds.

“What has kept community banks as relevant players in the financial industry has always been the local, personal touch and willingness to work out the nitty-gritty details of complex customer needs at a personal level,” says Peter Cherpack, executive vice president for Ardmore Banking Advisors in Ardmore, Pa. “While the regional and larger players hold most of the cards, the community bank has always had the local handshake.”

Jeffrey C. Gerrish, chairman of the board of Gerrish Smith Tuck of Memphis, Tenn., points out that as customers become more accustomed to everyday banking offerings, the community banks that are often most successful will not only offer the typical deposit and loan products, but cultivate niche offerings based on their geography or customer base.

For example, Laurel Road Bank has developed a significant position in its competitive tri-state market by specializing in student loan refinancing, particularly for those in the medical industry. Other community banks might focus on agricultural lending or commercial real estate, Gerrish says. “A lot of community banks have become niche players,” he adds. “But, if they’re going to play in that niche, they really need to focus on what that particular niche needs.”

This strategy is in line with the increasing customization that today’s always-on customers have come to expect. “Since this is not a one-size-fits-all process,” Dominguez says, “each bank has to determine where they are in this journey and prioritize the key capabilities they want to focus on.”

In addition, community banks that want to better compete must modernize their processes by implementing smooth and easy online and mobile account-opening solutions “with steps like adding selfies to verify their identity,” Dominguez says.

The key to winning business

According to the Salesforce report, seven out of 10 customers say connected processes like seamless handoffs or “contextualized engagements” based on earlier interactions are critical to winning their business. The software company’s survey respondents also say that they are nearly four times more likely to see seamless transitions and handoffs between channels as important, not unimportant.

It’s important, Dominguez warns, not to overlook the role branches can play in appeasing and winning over these tech-savvy customers. Successful community banks have looked to speeding up processes and utilizing biometric technology to “create frictionless experiences at the branch to meet customer expectations of accessing their account information quickly, or truly digitizing a branch to serve a specific market segment,” he adds.

“The key is that financial institutions are aware of these shifts, and most are doing something to keep up with changing demands, to focus on a strategic customer journey and address all necessary touchpoints,” Dominguez says.

With this in mind, Nichols advises that community banks need to have a vision of how they want to position themselves with their customers. This means trying to figure out what the next 10 years hold for branches, checks, debt and credit cards, cash and the delivery of banking services, he says. “Banks then need to invest in their mobile, web, voice and wearable applications to the same level as their branches,” Nichols adds.

Bolton echoes this sentiment. “Customers expect to be able to handle everything at the touch of the smartphone screen. We must constantly be analyzing how the services we offer can be improved to provide that wow service [they’ve] come to expect from the Amazons and Zappos of the world.”

However, Bolton adds: “[It’s] not always easy and it can be a frustrating process when most of the technology surrounding our offerings is not designed solely for our institution, but is a vendor service. You are often at the mercy of that vendor for updates and improvements.”

He points out that it’s essential for community banks that depend on core banking and other financial technology vendors to clearly voice the expectations of their customers.

“Change may take a little longer, but requesting updates that make your customers’ user experience better is one way to provoke product improvement. Or be willing to change vendors when necessary to get the type of experience you want your customers to have,” Bolton says.

“This can be an arduous task no one wants to tackle, but it’s sometimes necessary. Weighing out the costs versus the needs of your customer and executing change when it’s right is key.”

6 tips for better customer connection

Sam Kilmer, senior director of Cornerstone Advisors, offers this advice to community bankers who want to better engage with their customers:

  1. Reorganize around the entire customer buying process by consolidating sales, marketing and service, instead of organizing by departments and product lines.
  2. Rework management accounting and resource allocations to reflect real production value instead of traditional profits and losses, which often treat marketing, contact centers and information technology as cost centers.
  3. Deploy strategic delivery plans—aligning with strategic or tech plans—that may start with a journey-mapping exercise. When done right, this can result in visual delivery roadmaps with milestones, and internal champions and working groups that bring needed attention to progress.
  4. Switch out sales pitch-oriented collateral with interactive and compelling information to drive self-buying. This could be in the form of in-depth staff training and certification, staffing smarter contact center representatives, smarter mobile apps and websites, financial education, webinars about cash management, videos or blogs.
  5. Focus on digital marketing and social media, supplemented with physical outreach to drive digital, such as enhanced contact centers, bank-at-work programs, trade shows, art exhibits and other outreach. According to Cornerstone Advisors research, digital account opening is the leading technology being replaced right now. About one-third of community banks are planning to add or replace this technology.
  6. Consider fintech partnerships that offer digital delivery. Smart banks are holding these new talents, tool vendors and fintechs accountable to specific revenue-driving projects instead of treating them as cost centers.

A day in the life of a bank customer:
past and present

It’s no secret that life has radically changed for the average consumer over the past 30 years, when the mobile devices, digital assistants and mainstream internet were not at the fingertips of even the most tech-savvy banking customer. Let’s compare the average day of a customer in 1989 versus 2019.

6:30 a.m.

1989: Your radio alarm clock buzzes and begins blaring Paula Abdul’s “Straight Up.”
2019: Your smart home device beeps, alerting you to wake up, before playing the algorithmically programmed station from your favorite music-streaming service.

7 a.m.

1989: You peruse the newspaper over eggs and bacon. You’re on the Atkins Diet.
2019: Over breakfast, you review the text messages, emails and social media posts that came in while you were sleeping. You check the balance on your banking and investment accounts via your community bank’s mobile application.

8 a.m.

1989: You sit down at your desk. You may have a computer; you may not. There is no password to log on.
2019: You sit down at your work computer and log in with two-factor authentication, which likely includes a PIN, password, email and/or fingerprint.

12 p.m.

1989: You eat lunch. You’re still on Atkins. You listen to music on your Sony Walkman. You just got the new Huey Lewis CD.
2019: While a ticker at the bottom of your computer screen alerts you to stock price and investment portfolio changes, you spend a few minutes during lunch reviewing your bank and investment accounts, confirming your automated payments have gone through, and shopping online.

5 p.m.

1989: You find a local happy hour by looking at signs near your office.
2019: You respond to the last of the work emails. You post to social media sites (“It’s 5 o’clock somewhere” selfie time). You check your smartwatch to see how many steps you have walked so far today, and make sure your necessary payments and deposits have posted.

7 p.m.

1989: You watch a primetime network show or, if you’re edgy, HBO or Showtime, on your television set.
2019: You stream virtually any movie or show that has ever been made from a long list of streaming services available on your smart TV.

Karen Epper Hoffman is a writer in Washington state.