Digital banking is here to stay, but doing it properly requires the right practices and tools. Four experts at the Bank Customer Experience Summit, held in Chicago from Sept. 13 to 15 shared insights into how to succeed in various areas of digital banking.
Corey LeBlanc co-founder, COO/CTO, Locality Bank io, Tom Long, founding manager, The Long Group, Lamine Zarrad, SVP of product, ZenBusiness and Evan Siegel, VP of financial services and AI at eGain shared these insights during the panel BCX talks: Inspiration for banking executives
Long addressed the importance of data during his presentation by mentioning how FDIC chair Jelena McWilliams said that “data is the new capital.”
The lesson here is key: financial institutions that truly capitalize on data will succeed. Although banks have access to customer’s address and names, they often don’t know how to use that information successfully.
Long said banks need to take a “personalized view of market-financial journey, behavior, life stage, demographics and purchase intent” of the customer. With this data, you can break down customers into segments.
“Segments are both homogenous and different from all other segments,” Long said.
A example of this would be transactional versus relationship customer segments. Transactional customers don’t keep accounts for long and are only around for the transaction, whereas relational customers have a relationship with the bank and thus open more accounts and stick around for longer.
Long said banks can act on this data to upsell to these relational customers.
Next, LeBlanc addressed the importance of innovation by telling a story about Walt Disney. When Disney visited a carousel, he noticed the horse he was riding on wasn’t riding and that some of the paint was chipped. So Disney came up with a motto: “All horses jump, no chipped paint.” His parks follow this motto by making sure all rides work properly, and they all look good.
LeBlanc said banks need to follow this same motto with their services, especially due to changing customer expectations
“73% of customers that have an experience with one company changes expectations for all. 88% of customers — they expect companies to accelerate their digital initiatives. 68% say COVID-19 have elevated expectations of brand’s digital capabilities,” LeBlanc said.
In order to keep up with these expectations, banks need to take control of their digital roadmap and not be afraid of setbacks for innovations.
For example, when SpaceX’s rockets kept exploding, Elon Musk said this was to be expected. Innovation isn’t about getting it right the first time, it’s about learning and gradually improving.
In addition, LeBlanc also said that innovation doesn’t start with technology, it starts with getting leadership on board. By providing good leadership on innovation and putting in place the right infrastructure, your bank can begin innovating.
Zarrad spoke about the severe problem of the underserved population. In fact, 25% of people worldwide are unbanked and 75% are underserved.
There are two types of problems keeping people underbanked: structural and behavioral. On the structural side, many people simply don’t have a bank in the community. However, the behavioral side is also important. For example, some people may not enter a bank because the architecture is too overwhelming, they feel as if they aren’t welcome there.
Zarrad said the way to handle these problems is to use digital tools to deconstruct risk ecosystems to reach customers where they are: through their smartphones.
Since most of the world has access to smartphones, digital banking tools can reach them in ways traditional services cannot.
Zarrad said his company developed a tool called Gestalt which can break down customers based on many different risk factors and behavioral factors that keep them away from banks to reach them directly.
“We built Gestalt to look at hundreds of attributes and put them in different risk buckets and behavioral buckets,” Zarrad said.
By doing this, the machines sort the data and present it, and an analyst can in turn use that data to reach customers where they are.
Lastly, Siegel spoke about the importance of financial coaching and how digital tools can help with this issue.
On one level, customers in the Gen Z and millennial demographics do not come to branches. They define good service as good technology tools, not the friendly branch experience. On the other level, Americans are struggling financially and are often not willing to pursue financial coaching, which often happens at the branch level.
“67% of Americans are not financially healthy,” Siegel said.
Of those customers, many do want to reach out for financial coaching because they are embarrassed by their financial situation, the advice is too generic or boring, there is too much upselling or many other problems.
Siegel said eGain’s virtual coach helps solve these issues by giving advice that is personally tailed to the individual.
“It gives one to three action plans based on what you told the coach,” Siegel said. Due to its anonymous nature, there is no opportunity for user embarrassment.
This tool works primarily because the vast majority of clients, especially in the younger generations are willing to talk to a virtual coach.