A quick guide to digital prioritization

Last summer, MANTL commissioned the 2021 Banking Impact Report to explore how industry trends are impacting community banks, credit unions, and the communities they serve. We spoke with banking executives, small-business owners, and consumers across every demographic to help us understand what’s at stake for community financial institutions (FIs), and how forward-thinking leaders can navigate what’s next.

In this deep-dive post (the fourth in a series), we’ll explore a key topic from our survey data: digital prioritization. Read on to learn what customers of community financial institutions really want when it comes to digital services so that you can define your strategy, invest your money wisely, and choose the right partners to help elevate your investments.

Every organization in every industry is talking about digital transformation these days. But if digital transformation is to be more than just a buzz phrase, you need a strategy based on a keen understanding of what your customers want as well as the trusted partners that can help you provide those services. 

This is especially true for community banks and credit unions. Most everyone knows that true digital transformation involves more than a single piece of technology or just one process that needs to be brought online. But few community FIs have deep enough pockets or the in-house technology expertise to attack every piece of the puzzle at once. 

Perhaps this is why digital transformation remains a somewhat mysterious process for many community banks and credit unions. While a recent survey of community FIs indicated that 48 percent of respondents felt that their organizations had “very clear objectives and a path forward to digital transformation,” this means that more than half of such institutions were far less certain about the road ahead. 

Digital transformation continues to be a murky concept that nonetheless is eroding the foundation of community banks. That murkiness is reflected in the disparate ways community banks define digital transformation.

—Wipfli, The State of Community Banking, 2022 Community Banking Research Report

Where to start

So where do you begin your digital journey? You begin by playing to your strengths. Relationships are at the core of community banking, and by listening to your customers and learning what they want, you can design your own roadmap to digital transformation—one that prioritizes the desires and needs of your consumer and small-business customers. 

You will of course need to talk to your own clients and look at the particular demographics of your area and customer base, but you can begin by learning about the insights we gleaned from our 2021 Banking Impact Report.

What consumers and small-business owners actually want

While consumers and small-business owners may differ in what they need and/or expect from their community FIs, they are in lockstep when it comes to their top three desires for digitization:

• Mobile transfers and check deposits. If community FIs are to match the convenience currently offered by large national banks, this is the place to start: A whopping 71 percent of small business owners and 61 percent of consumers list mobile transfers and check deposits as their top priority among digitized services.
• Alerts and notifications for fraud, bills due, and large purchases. Both consumers and small-business owners expect to be able to keep a close eye on their funds, with 65 percent of small-business owners and 57 percent of consumers citing online alerts and notifications as a top priority.
• Online account opening. The big banks are offering this service; you need to as well: 50 percent of small-business owners and 44 percent of consumers cite online account opening as high on their list of priorities.

While consumers and small-business owners begin to diverge a bit at this point in their top candidates for financial service digitization, both groups agree that they would like to see the following advanced features:

• Accounting and payment tools. 49 percent of small-business owners and 34 percent of consumers cited such tools as top priorities for digital transformation.
• Integration with payment apps. 47 percent of small-business owners and 35 percent of consumers would like their community FIs to offer seamless integration with apps like Venmo and Apple Pay.
• Cardless/mobile ATM access. 32 percent of small business owners and 28 percent of consumers want to be able to access ATMs via their mobile devices (i.e., without having to use an ATM card).
• AI-enabled customer support. 20 percent of small-business owners and consumers would like to see AI-enabled options like chat-bots added to community banks’ customer support offerings.
• Biometric or voice verification. 22 percent of small-business owners and 19 percent of consumers would like to see fingerprints, facial patterns, and/or voice recognition added to the list of community banks’ authentication tools.

And finally, 28 percent of small-business owners would like to see their community FIs offer integration with point-of-sale systems, and 25 percent of consumers are looking for support of peer-to-peer payment methods.

Research by the Digital Banking Report found that financial institutions ranked themselves lower in digital transformation maturity this year than they did in 2020, reflecting consumer expectations that are increasing at a pace faster than most institutions’ ability to deliver. The report also found that data/analytics maturity and innovation maturity in banking also fell in 2021 for the same reason.

—“6 Digital Banking Transformation Trends for 2022,” The Financial Brand

Don’t forget Millennials and Gen Z

Although the over-40 set make up the largest customer segment for most community banks and credit unions, such institutions would be foolish to overlook the desires of their younger (and future) customers. As time passes, Millennials and Gen Z will play an increasingly important role in steering the economy, and in all but the top two categories of advanced services (mobile banking, and alerts and notifications), this group of consumers and small business owners is even more emphatic in their demands and expectations for digital transformation. 

For example, even though online account opening was a strongly desired feature among all our survey respondents, 9 percent more Millennial consumers and 3 percent more Millennial small-business owners cited this as a top priority. 

Millennials and/or Gen Z respondents also surpassed our overall survey population in the importance they placed on the following advanced features:

• Integration with payment apps. This is a big one for both Millennial small-business owners and consumers, with 58 percent of the former and 42 percent of the latter citing it as a must-have feature.
• Cardless/mobile ATM access. This feature is of particular importance to Gen Z customers—especially those that are small-business owners, of whom 45 percent expressed a desire for the feature (as opposed to 32 percent of the overall small-business owner respondents).
• Biometric or voice verification. While customers of all stripes expressed an interest in these advanced authentication features, they are especially important to the under-40 group, who have become accustomed to using them in all aspects of their lives. This, no doubt, is why although only 22 percent of all small-business owners and 19 percent of all consumers cited this as a priority feature, 36 percent of Gen Z small-business owners and 28 percent of Millennial consumers reported a desire for this type of authentication. 

Millennial and Gen Z customers also expressed a stronger desire across the board for AI-enabled customer support (with approximately 5 percent more citing this as a top feature). And both Millennial consumers and small business owners exceed the general population in their desire for financial tools for payment, accounting, budgeting, spending tracking, and more.

Partnering for success

You’ve listened to your customers. You’ve prioritized your digital offerings. And you’ve created a roadmap for digital transformation. Now, you need a strong partner with a good product. By choosing vendors that will work with and support you as you explore the best path forward, you can ensure your digital success.