Digital tools offer community banks and credit unions an opportunity to improve in-person customer experience.
With the rise of digital services and changing customer habits during the COVID-19 era, the future of brick-and-mortar banking may seem in doubt. Looking ahead to the next five to ten years, physical bank branches will remain crucial for any comprehensive community banking strategy, but their use and purpose will continue to evolve.
For community banks and credit unions, this year’s digital acceleration is actually an opportunity to reshape the in-person banking environment and make it more meaningful. Newly adopted digital channels can complement brick-and-mortar branches, allowing banks to offer more comprehensive, customer-focused experiences.
It’s undeniable that digital banking is a critical way forward for today’s banks. In fact, many community banks and credit unions have realized that by integrating best-in-class online services from digital partners, they can compete against bigger banking institutions that may be slower to innovate. The benefits of digital branch tools are well-cataloged, and include greater accessibility and convenience for customers, a larger customer base, and enhanced automation.
But at the same time, physical bank branches are part of what puts the “community” in “community bank.” Although many customers are excited by digital tools, not every demographic will get on board right away. Older customers may have ingrained habits, while customers at any age may lack confidence in their own financial abilities and prefer to talk to someone in person. These visits can actually be a prime opportunity for staff to educate customers in how to engage with their digital platforms.
In addition, in-person banking is an opportunity for banks to offer above-and-beyond customer service, especially for more complex services that are difficult to replicate digitally. An in-person conversation can make all the difference when it comes to major financial decisions, like taking out a mortgage. Customers may very well start out with remote tools, then choose to visit a branch for more in-depth planning.
Flushing Bank, a New York-based community bank, provides an example of a bank that is quickly evolving its strategy to accelerate growth. Flushing Bank’s mobile and online banking capabilities, including digital account opening through MANTL, went live in March 2020. This timing allowed the bank to more easily serve customers remotely, and from April to June digital deposit account openings comprised 19 percent of Flushing’s customer growth, with further growth expected over time.
Another effect of implementing digital account opening is the expansion of Flushing Bank’s geographic footprint. The bank has 20 branches in the New York metropolitan area and ordinarily it would have planned to add more. But with digital tools like MANTL, its existing branches are more efficient and have a wider reach within the surrounding community, allowing the bank to service more customers without building new branches.
At the same time, in-person branches and staff remain irreplaceable for Flushing Bank. For instance, John R. Buran, President, CEO & Director, explains that Flushing Bank maintains a “multilingual branch staff to serve our diverse New York City customers,” which is a key differentiator in the market.
With this in mind, Flushing Bank is leveraging digital tools as more than just an online solution. New technology has allowed the bank to implement appointment booking, improve phone services, and enhance ATM video capabilities, allowing for a digital “face-to-face” experience that is safe and convenient. Post-COVID, these innovations are likely to continue to play a role in how the bank ensures excellent customer service, given that they now have a customer base increasingly attuned to Flushing’s online and mobile banking capabilities.
Flushing Bank has evolved its branch strategies in coordination with its digital capabilities — and it’s time for other community banks to do the same. Digital tools allow more transactions to occur remotely, which may lessen in-person branch traffic while offering banks a greater geographic reach. The next step is to refocus on the transactions that do occur in person, and ensure that digital tools are used to enable better customer service in branches.
To this end, many community banks will likely need to invest more, and invest in the right way. A report from Celent and Reflexis surveyed banks on their current strategies, noting how more banks could be using digital tools for maximum effect. For instance, banks can use tools to better understand their customers and access untapped opportunities for efficiency. Just as digital channels offer step-by-step data analysis capabilities, banks can do more to track each customer’s in-person journey as well. A simple starting point is to find out why customers actually visit physical locations — in one case, a bank realized that many customers come in looking for a notary and will quickly leave if one is not available.
Banks can leverage both staff-focused and customer-facing digital platforms in branches. The Celent and Reflexis report suggests that digital tools can help staff manage and automate their workflow and ultimately offer an improved customer experience. For instance, digital appointment booking, currently only used by about a third of surveyed banks, can offer a more time-efficient experience for both customers and staff.
There are several opportunities for innovation in this area. Quontic Bank, another community bank in New York, decided to use MANTL’s account opening software on tablets at their physical branch. These tablets tended to be faster and easier for customers, lowered the burden on staff, and helped prevent fraud with more thorough identity validation than the bank’s previous in-branch process.
The death of physical banking has been greatly exaggerated. During this transitional time, community banks and credit unions have an opportunity to find a complementary strategy for their physical and digital branches. A comprehensive plan will include best-in-class digital tools for remote transactions, but will also bring new digital capabilities to brick-and-mortar locations to ensure staff can provide high-quality and efficient customer service.