The DIY banking services customers expect

Illustrations by Shinsuke Kubo / iStock

Prompted by the pandemic, DIY banking services have grown at an increasingly quick rate. And as consumers—especially Gen Z and millennials—continue calling for more mobile options, community banks are stepping forward with new innovations and new tech partnerships.

By Elizabeth Judd


This summer, IncredibleBank customers may find themselves driving up to an ITM and speaking live with a bank employee via video long after all branches have closed.

Having broadened its digital offerings during the pandemic, IncredibleBank will use ITMs, or interactive teller machines, as part of its expansion model, where brick-and-mortar branches will serve as hubs, and self-service options like ITMs will act as the metaphorical spokes.

Quick Stat

45%

of consumers increased their use of digital channels in the earliest days of COVID-19

Source: Capgemini Research Institute

The $1.7 billion-asset community bank in Wausau, Wis., is experimenting with new self-service capabilities not out of pandemic fears but because self-service enhances and improves the customer experience.

“We want to give our customers better hours of service,” says Kathy Strasser, IncredibleBank’s chief operation/information officer. “If we have drive-thru ITM capabilities until 11 o’clock at night, we don’t have to have as many people sitting in a bank branch. We can have employees working remotely, servicing customers who want to handle [their banking] at night, if they so desire.”

IncredibleBank found itself in the enviable position of having ventured deep into self-service long before anyone had heard of COVID-19. For many community banks, though, “the pandemic shined a spotlight on digital channels,” says Mark Schwanhausser, director of digital banking at Javelin Strategy & Research.

“The pandemic,” he says, “was a sort of stress test that highlighted digital weaknesses” and prompted community banks to offer self-service options as quickly as possible.

Wins in self-service

Quick Stat

80%

of applicants who successfully established checking accounts touched online or mobile banking at least once in 2021—up markedly from levels five years earlier.

Source: Javelin Strategy & Research

The pandemic brought with it swift changes in customer behavior. For instance, an April 2020 Capgemini Research Institute survey found that 45% of consumers had increased their use of digital channels in the earliest days of COVID-19.

Asked which self-service product proved most indispensable during the pandemic, many community bankers would likely cite mobile check deposits. While banks were already offering mobile deposit capabilities well before 2020, the pandemic spurred new customers to use these capabilities, often for the first time.

“We saw an increase in mobile banking deposits that has continued to trend up,” says Greg Sullins, executive vice president of strategy, quality and productivity for $4.1 billion-asset Wilson Bank & Trust in Lebanon, Tenn.

In contrast, a self-service product that some community banks fully deployed only after the pandemic is online account opening. Without this, banks that had shuttered their branches—essentially, all banks in the spring of 2020—would have found themselves missing out on new opportunities to sign up customers.

“The biggest self-service area in my eyes was digital onboarding, whether it was on the loan or the deposit side,” says Kevin Tweddle, senior executive vice president of community bank solutions for ICBA. “From a digital perspective, that’s where I think community banks moved the needle the most.”

Numbers support Tweddle’s assertion. In a March 25 study by Javelin, 80% of applicants who successfully established checking accounts had touched online or mobile banking at least once in 2021—up markedly from levels five years earlier.

Using an online, self-service model to open accounts is an activity that apparently cuts across traditional demographic divides. “We had 90-year-olds to 16-year-olds opening new accounts this way,” says Sullins, noting that his bank opens 2,000 new accounts a month. What’s more, he observes that by leveraging digital capabilities, employees focus more on the customer experience than on handling recurring tasks. He estimates that there has been a 300% productivity improvement for staff supporting online channels.

Digital onboarding arguably had the greatest impact on commercial lending at Wilson Bank & Trust. Before the pandemic, the community bank offered a handful of self-service checking and savings products for consumers, but it did not offer a single fully self-service product for its business customers. Thanks to a partnership with Newgen Software, says Sullins, both business and consumer customers can now go online to open checking and savings accounts, as well as HSAs and CDs.

The PPP catalyst

Experts agree that an important catalyst for change was the Paycheck Protection Program, or PPP. Strasser says IncredibleBank began to provide more self-service options for commercial customers after businesses began applying for PPP loans.

“The CARES Act and PPP were rocket fuel to the mission of getting loans in the hands of businesses that needed it,” says Charles Potts, executive vice president and chief innovation officer for ICBA. “There’s no doubt that the pandemic accelerated the digital plans for many bankers in a very good way.”

Another necessary ingredient in the rise of community banking self‑service was the wealth of potential fintech partnerships.

At $2 billion-asset Encore Bank, for instance, a partnership with MANTL, which builds digital tools such as an omnichannel account opening platform, made an enormous difference, according to Erin Simpson, EVP and chief operations officer for the Little Rock, Ark.-based community bank.

“We use MANTL to allow our consumer customers to open and fund deposit accounts and order debit cards and checks online,” she says.

Encore Bank also began providing QR codes to make digital banking processes easier and faster. By scanning a QR code, a customer can open an account, order checks and debit cards, receive disclosures and electronically sign up for new products.

Efficiency benefits all

The efficiencies of digital processes can be tremendous. Simpson notes that the average time to open an account is now seven to eight minutes, while some new accounts have been opened in as little as three minutes. “With the old method of opening accounts,” says Simpson, “someone sits across the desk from you, inputs the data into a system, generates paper disclosures to review, and the whole process typically takes 30 to 35 minutes.”

“We’re blending self-service solutions with our branch network, and that’s kind of our secret sauce. … We believe those are the differentiators that allow us to compete head to head with the digital-only solutions, as well as the larger institutions.”
—Greg Sullins, Wilson Bank & Trust

What’s more, improved video technology is making self-service less cold and impersonal. Sullins notes that customers appreciate performing banking tasks “from the convenience of their homes,” while still having ample opportunity to ask questions and be assisted by a trained banker over video chat.

Video is also making self-service a reality for processes that once seemed impossible to perform other than face to face. Sullins says that his community bank may soon introduce a digital notary product in which documents would be signed as the notary and customer interact over video screens

With so many promising new self-service options popping up, community bankers find themselves wrestling with a few existential questions.

The pandemic underscored that “consumers want it all” when it comes to customer-service options, emphasizes Javelin’s Schwanhausser. That said, offering an array of channels has its drawbacks, especially given that checking accounts have the best odds of success when they are completed within a single channel. In 2016, says Schwanhausser, 65% of successful checking account applicants using bank branches could open an account in a single channel, but by 2021, that number had declined to 49%.

Potts points out that the term “self-service” is often used loosely, given that a few bank transactions, such as types of commercial lending, still require human intervention. The lure of what he calls “Amazonification”—or the idea that every process can be completed remotely and in nanoseconds—can prove problematic.

“We’re going to continue to bring forward self-service options, but we’re never going to force our customers into a channel just for the benefit of the bank.”
—Kathy Strasser, IncredibleBank

One idea is for bankers to stop attempting to digitize all transactions and perform them at lightning speed, devoting themselves instead to perfecting the self-service processes that hold the greatest promise. Potts notes that “abandonment of transactions is a real problem” whenever customers put aside what they’re doing to change devices or phone a customer-service rep, because a percentage will never return. Arguably, he says, “seamless” and “frictionless” should be the watchwords of the day.

Simpson agrees. She says that “the goal for us is to eliminate any unnecessary keystrokes or calls for our customers.” She continues: “We want customers to get their accounts opened and any services they need without having to reenter data or sign any forms they don’t need to.”

Maintaining humanity

Many community banks also want to ensure that self-service does not impinge on customers who prize personal interactions and enjoy visiting a branch.

At Wilson Bank & Trust, says Sullins, “we’re blending self-service solutions with our branch network, and that’s kind of our secret sauce. … We believe those are the differentiators that allow us to compete head to head with the digital-only solutions, as well as the larger institutions.”

Providing omnichannel solutions is central to IncredibleBank, as well. “We want to allow customers to bank with us the way they want to bank with us,” says Strasser. “We’re going to continue to bring forward self-service options, but we’re never going to force our customers into a channel just for the benefit of the bank.”

Interestingly, one of the oldest and most revered self-service banking channels—the ATM—saw a decline in usage during the pandemic. When Americans found themselves staying home during lockdowns, their need for cash plummeted.

Even now, as stay-at-home orders have been rescinded, the use of ATMs has not necessarily rebounded. In early April 2020, 24% of users reported visiting ATMs with high frequency, down from 34% who expressed the same prior to COVID, according to the Capgemini study.

“Our ATM usage continues to go down,” says Sullins. He explains that cash is less important as debit cards and mobile payment products like Venmo and Zelle take its place.

Looking to the future

The shift to self-service is placing new demands on community bankers. The good news, according to Tweddle, is that they are ready to meet this challenge.

“The beauty of community banks is that they’re nimble,” he says. “They can partner with a fintech and bring a digital onboarding solution live in a short period of time. So, while once they might have been behind, during the pandemic they’ve caught up quickly and are even accelerating their digital transformations.”

Podcast: How people power innovation

ICBA’s Communities of Innovation podcast recently featured Kathy Strasser of IncredibleBank, who talked about the important role people play in technological innovation.

Listen to the podcast »

That nimbleness is evident at IncredibleBank. Strasser is currently exploring how the popularity of a creative retail strategy like curbside pick-up could be tailored to signing financial paperwork or moving coins and cash. She is convinced that customers who prefer not to park and walk into a branch might specify an arrival time within a mobile app; using Bluetooth, a banker would know when the customer has pulled up and would proceed to the curb to complete a handoff.

Taking this one step further, Strasser is contemplating how Uber drivers might be harnessed to facilitate banking transactions outside the branch. While the regulatory fine points still need to be ironed out, she emphasizes that exercises in radical rethinking are important.

“In banking, we limit ourselves too much,” Strasser says. “Obviously, we have to meet regulatory requirements, and we will—but we’re thinking differently, because our customers expect us to think differently. We have to try to knock down the walls.”


Self-service and the branch: What lies ahead

Experts debate whether bank branches will become extinct once self-service alternatives proliferate. Although all the evidence is not yet in, it seems branches are likely to evolve to play a different but vital role.

At Encore Bank in Little Rock, Ark., for instance, staff regularly use mobile technologies to help branch customers. Executive vice president Erin Simpson points out that bank employees might hand a customer an iPad rather than a stack of papers to fill out. In other instances, they might send a link to be opened on a customer’s mobile phone because a particular process can be completed more easily or efficiently that way.

Kathy Strasser, chief operating officer of IncredibleBank in Wausau, Wis., notes that because of the community bank’s self-service options through digital channels, customers may only need to visit a branch if they help with something. She anticipates that as customers grow comfortable performing routine transactions electronically, they may visit branches less often. When they do visit, however, they will expect higher levels of knowledge and advice from the employees they interact with there.


Digital adoption is blind to demographics

When it came to embracing self-service options during the pandemic, no single age group or segment of society led the charge. The move to self-service “crossed all demographics,” observes Kathy Strasser, chief operating officer of IncredibleBank in Wausau, Wis., noting that customers of all ages and backgrounds began using online and mobile banking options at much higher rates.

Arguably, the most profound behavioral changes occurred within the senior set. According to an April 2021 Capgemini survey, older age groups showed a strong increase in the adoption of digital payments in the pandemic. In the months immediately after COVID-19 struck, 45% of 46–55-year-olds and 43% of 56–60-year-olds reported that they were using digital payment channels more than they had previously.

Greg Sullins, executive vice president at Wilson Bank & Trust in Lebanon, Tenn., points out that customers exhibit preferences that don’t always conform to predictable patterns. In the first quarter of 2022, for instance, Sullins found that almost 50% of new accounts opened in his bank’s branches belonged to Gen Z and millennial customers.


Elizabeth Judd is a writer in Maryland.