Reflecting on 2020’s myriad changes in the retail and branch banking spaces, CEO Mike Sha spoke on the virtual stage at Future Branches Virtual Summit on December 11th, giving a talk titled, “Why 2020’s Disruptive Detour is an Exciting New Road for Retail Banking.” With the new year in full swing, it is urgent for banks and credit unions to begin (if they haven’t already) to treat the digital detours of the past year as enduring opportunities for transformation and take specific actions to meet the moment.
Over the course of the session, we explored answers to the question, “how can banks and credit unions meet their consumers’ needs at scale when interactions have moved online?” One sales and service leader described Mike’s message as “music to [his] ears,” and we are pretty confident he didn’t mean it was a lullaby. So, here are the 5 top takeaways (you’ll have to imagine a pleasing melody as you read, though).
- Changing Consumer Preferences around Digital, Virtual and Video
Across many industries, consumers have grown more comfortable with using digital, virtual, and video platforms to meet their wants and needs. Of course, we know from first-hand experience that digital exhaustion (looking at you, ‘Zoom Fatigue’), is real and that many in-person experiences are sorely missed. But there are countless examples of how digital, virtual and video have fundamentally changed consumer experience: online grocery shopping and delivery; the rise of virtual classrooms and educational experiences; live-streamed events enabled by video platforms, and so on.
In banking, specifically, consumers have realized that there are many activities that are simply done more easily and efficiently on a mobile phone sitting on the couch; and banks have noticed the same. It’s harder than ever to imagine, for example, meeting face-to-face to fill out paperwork or coming all the way into a branch to ask a simple question or resolve a basic problem that could readily be addressed via live-chat or video conferencing. We think that these changes, or ‘digital detours,’ offer immense opportunities. This gives banks the most compelling reason yet to improve the digital consumer experience matching the standard set by Amazon, Instacart, and others; but also to find efficiencies at scale in workflows and processes. The more consumers use digital to handle simple minutiae, the more time bankers have to engage in rich conversations.
- The Movement of Advice from Wealth to Retail
Bank and credit union leaders said over and over again at Future Branches that they’ve seen a tremendous volume of consumers calling in for advice and assistance. Small business owners navigating the Paycheck Protection Program (PPP), individuals dealing with job losses and job changes, first-time home buyers capitalizing on rock-bottom interest rates, and so many other groups of people in various financial situations have sought financial advice.
But advice has long lived in the wealth management and financial management space, and the idea of advice-driven banking has long been associated with high net worth clients who receive a highly personalized, white-glove treatment. We think that banks and credit unions have an excellent opportunity to bring advice into the retail banking space (Deloitte agrees!), to serve consumers of all wealth segments and life stages in a more holistic and needs-driven way. The pandemic highlighted the need for advice in striking relief, but the fact is that tens of millions of consumers have long needed better financial advice and guidance no matter the macroeconomic conditions.
- Turning Digital Channels into Revenue and Growth Drivers
As branch-based conversations, the lifeblood of referrals and expansion opportunities, dwindled with lockdowns and closures, many banking leaders realized they needed to find ways to turn their digital channels into growth drivers. Historically, digital channels have been mostly transactional – fill out a form here, move money there, and so on. But the digital detour precipitated by the pandemic made it imperative to take things like financial advice and guidance to a more interactive, one-to-one service and make them digital.
We often hear that most financial products are sold, not bought. Certainly, consumers will raise their hands when they clearly realize they need a specific product, but more often than not, folks need encouragement and assistance to take out a loan, start a wealth management plan, or start saving diligently for their kids’ college education. It’s not as simple as just clicking a buy button. As a consequence, shifting to digital account opening and self-fulfillment has been a useful, yet insufficient strategy for many banks and credit unions. We think that consumer preferences to bank digitally will only grow and accelerate, so it is incumbent on financial institutions to adapt their most lucrative, human-centric activities (like branch-based conversations) into digital channels.
- Going Outbound and Proactive with Calling Customers
The pre-2020 paradigm for sales and service across financial institutions, in regards to engaging consumers, was to wait for them to come into branches or reach out with a question or need. Marketers, of course, would engage consumers using a variety of messaging channels and calls to action, but the only true 1:1 outbound activity for most institutions was making cold calls. As 2020 plunged many consumers into states of financial stress, institutions started to see value in reaching out proactively to check in on individuals’ financial well-being and current priorities.
This shift underscores the importance of sales, service, and contact center teams having accurate and current insight into the states of mind of their consumers. Moreover, proactive sales and service cultures present an opportunity to upskill bankers and specialists into advice-givers and financial guides, as opposed to order-takers and product transaction executors. We think the importance of this is sweeping, in that it presents the possibility of a paradigm shift in how consumers perceive and interact with their financial institutions.
- Discovering Needs Digitally to Enable Advice
Piecing together the latter four trends points to a clear imperative: discovering and understanding consumer needs, at scale, and across lines of business and demographic segments. Propensity models and aggregate data offer some actionable value, but lack the precision and personalization utility of intent-level data. Branch-based conversations, the bread and butter of traditional needs discovery, continue to decline. Moreover, consumers are becoming increasingly reluctant to disclose financial information to other people, a taboo that proves perennially stubborn to sales and service leaders.
Digital technology can enable great financial advice. We have heard across the industry that individuals are more forthcoming and responsive about their financial priorities and needs when answering questions in an interactive, digital experience from the comfort and privacy of the home. The outcome of better needs discovery is, quite simply, a greater capacity to provide relevant (as perceived by the consumer) advice and needs-driven sales and service. As financial institutions continue to scramble to differentiate themselves, we think that providing high-quality advice through delightful digital experiences will rank among the most important factors in determining who adroitly navigates the digital detour and who ends up stuck in the ditch.