Banks' digital outreach efforts amid coronavirus crisis fall short

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As millions of Americans are being ordered to stay at home at least through April, the consequences could place strains on the financial services industry to the point of being unrecognizable in a year’s time.

Perhaps the industry was slowly getting there anyways, but very profound changes triggered by the coronavirus pandemic will befall faster than imagined.

Most of these changes are ones that could have been imagined before the epidemic, but will surely accelerate as a side effect of how this pandemic is impacting lives and behaviors.

These next few months will be a true test of everyone’s business continuity plans and the resilience of their teams. Ultimately, this is a test of the industry’s ability to look forward and adapt in a more permanent way for a very different future.

That being said, there are three key themes that come to mind:

The first is that “know your customer,” or KYC, procedures will need to be rewired and used as a competitive advantage. Up to this point, KYC falls into the compliance bucket.

But soon it should been seen as a positive differentiator because institutions won’t just have to know the customer, but truly understand them and therefore, be able to intuit their needs.

There is a seemingly limitless power of a very simple concept: customer centricity, which is the foundation upon which Amazon was created.

For example, I have accounts at more than a dozen financial institutions and while I’ve received a handful of emails about the health and safety precautions being taken at branches remaining open, I have yet to receive any communications focusing on providing assistance and advice on how I, or my business, might cope with the financial implications of the epidemic.

Banks have all the data they need to provide this critical information. They know where the money comes from, where it goes and when.

Institutions could create tremendous trust and loyalty if they focused their responses on helping address the financial anxiety and uncertainty by providing tailored education, advice, guidance and comfort. Beyond the generic customer communications, imagine using technology to predict and monitor the emerging customer needs, and being proactive in offering the right advice and support for that individual or business. Banks that aren’t doing this in the next year will be losing marketshare.

Secondly, digital customer interactions must take a deeper dive to make up for a tidal wave of branch closures.

For more than a decade, there has been a steady and unending march towards enabling customers to engage digitally. Up until now, most of those interactions have been transactional (account balance inquiries, money movement, remote deposit, etc.) which have been surprisingly impactful in reducing servicing costs.

But as branch visits went down, so did opportunities to engage customers in a richer, deeper interaction that might have built stronger relationships and uncovered additional needs.

JPMorgan Chase recently said it was closing 20% of its branches and undoubtedly more banks will follow. Banks are going to have to learn how to better understand their customers without physical proximity.

The industry has not really focused on finding a way to discover those needs in a digital environment, let alone engage in an advice and guidance dialogue.

Doing so will fill a growing gap in how customers are served. Unfortunately, the many banks that aren’t near the finish line on these projects will be building the airplane mid-flight.

A third key theme is the transition to telefinance. The obvious shift here will be a move to on-demand chat, voice and video-based services on top of the aforementioned enhanced digital self-services.

This hybrid of services will ultimately start replacing the branch-based service, often delivered via an inefficient and costly physical network. Instead of having universal bankers sitting idle in branches, imagine having many kinds of remote specialists able to advise more specific customers and needs, and using intelligent software to seamlessly connect the correct specialists matched to the customer need.

If an industry like the medical field, which requires specialized diagnostic and equipment, can effectively transition to telemedicine, how is the financial services industry not leaning into providing access to remote experts as well?

Done correctly, telefinance will also help reduce the burgeoning costs of expensive and expansive physical branch networks while also providing customers the convenience of engaging with a remote specialist at a time and place which most suits them.

For now, it is right to focus on keeping teams safe and healthy, and helping them cope with the sudden strangeness of their new socially distant lives. But industry leaders should take a moment to think about the more profound foreshadowing of the future that the coming days and weeks will begin to reveal.

If done well, it will create financially successful customers who will trust their financial provider like they do Amazon. Perhaps, even more so as institutions further enable a secure retirement, a home to protect families and an education to empower young Americans.

Surely, that is more powerful than a case of toilet paper arriving at your doorstep.

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Digital banking Customer-centricity Customer service Customer data KYC Coronavirus JPMorgan Chase Branch banking