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Many community banks will soon have to replace outdated technology expenses that will hit them in an ongoing environment of compressed net interest margins, increasing compliance costs and higher capital requirements.
January 19 -
A call to improve customers' digital-banking experience was the top theme during SourceMedia's Digital Banking Summit. Banks should imitate the Apples and Googles of the world, not each other, experts said.
June 12 -
Banks that misinterpret regulatory guidance on vendor risk management can wind up shortchanging themselves and stifling industry innovation, according to consultant Paul Schaus.
August 28 -
Apple Pay, Samsung Pay and Google Wallet are among the mobile payment services vying for dominance. Here's what every banker needs to know to get a game plan in place.
March 26
Many community banks pride themselves on knowing their customers. In a traditional banking environment, that means bankers can recognize the customers entering the front door of a branch, offer a handshake, and greet them by their first name.
But what does it mean to know your customer as banking moves to the
Knowing your customers comes down to knowing what people need from their banks and how banks can fulfill those needs. Back when customers came into branches to do their banking, these questions could be answered via face-to-face conversations. Now banks often need to find this information through other means: customer surveys, customer experience mapping, ethnographic studies, and analyzing personal, transactional, and public data.
All of these tools should be used to understand what bank customers need, how they go about their banking, and how to make their regular banking activities more seamless and convenient.
That knowledge can help organizations solve their customers' real-world problems. Without it, new initiatives run the risk of wasting resources on innovation for innovation's sake, creating solutions that have no impact on customers' lives.
To start building that knowledge, a bank needs to start with this question: what is my bank's
Once the bank has zeroed in on the customer segments that it will serve, it needs to
- What are they trying to accomplish when they log in?
- How are their finances being impacted by trends in their environment?
- How do they perform their banking tasks?
- What obstacles do they face in accomplishing those tasks? What tools do they use to perform them?
- How do their other digital activities (like social media or online shopping) influence how they bank?
A bank that is targeting urban, upper middle-class professionals will have very different answers to these questions than one serving a small rural community where most residents make a living in agriculture. Both of these banks can thrive they're just going to do it by offering different things.
The first should build a mobile-first banking experience for its on-the-go urban professionals. The second bank might find that its customers aren't so enthusiastic about mobile, but tthat they need fast access to credit for their farms or businesses that support the local rural community. Therefore the latter bank would need to focus on streamlining and automating its credit approval and loan servicing processes, finding alternative ways to determine credit-worthiness to grow its customer base, and improving its management of customer relationships so that the bank is top-of-mind when a customer needs credit.
For either of these banks, the number-one objective should be to know their customers' financial needs and habits inside out. They should have a granular understanding of how the customers they serve go about their everyday lives, how they fit their banking activities into them, and what pain points they experience with those activities.
Starting an innovation project with that knowledge will give banks a competitive advantage. When a bank knows from the outset that its initiatives are fulfilling customers' needs, it will avoid building solutions that risk lukewarm adoption.
The first step in developing any new product or service is finding a problem to fix. Having those problems already mapped out will give banks a head start on inventions that have real-world applications, furthering a cohesive long-term strategy for innovation.