By Anthony Burnett
Community based financial institutions (FIs) are the heart and soul of America. These locally owned and operated institutions are woven into the fabric of the communities we live in, work in, raise our families and build our lives. That building involves our careers, our hobbies and our futures. That future in large depends on: money, investment and risk.
Most of us are not born with the equity we need to see our hopes and dreams come true. We need money to finance our education, our houses, cars and businesses. We need equipment, tools, facilities and employees to make our lives work. The local community bank steps in to make all of this possible. It is the reason they were created, and fuels the local economy and future.
In today’s changing consumer environment, where omnichannel delivery is the norm, community banks are also challenged with delivering services in a way that deepens their wallet share, household penetration and margins—so that they can continue to fuel the American spirit.
In years past, that service was almost universally delivered the same way. A customer interacted with a “banker” in a branch across three feet of mahogany. Most interactions were transactional in purpose: check cashing, payments and order filling. The world had fewer channels for consumers to access financial resources and the delivery model worked. No, it worked great!
However, today we have smart phones, the Internet, and global mobilization thanks to technology. Routine components of all things financial are now automated. Checking balances, moving money, making payments and even loan applications are handled via smart phones, tablets, laptops, drive-throughs, and ATMs. Therefore, the purpose of the physical channel, i.e., the branch, has changed and with it the identity of the banker.
A 2014 study by Ernst & Young sheds tremendous light on what is happening, and what FIs have done to adapt. The graph below shows consumer channel preference by banking task. The study found the more routine and automated the task, the more likely the consumer is to choose a “nonhuman” interfacing channel. However, the more complex the interaction, the more likely the consumer prefers a physical channel, especially when it comes to sales.
Over the last decade, FIs have been moving toward a different branch delivery model based on these preferences by consumers, so they can continue to deepen wallet share, reach more households, businesses and boost margins. What was born are Universal Bankers who do so much more than the routine—they now educate, advise and teach consumers as they discuss products, introduce experts and create deeper relationships with their customer in the process. In fact, NCR estimates Universal Bankers can handle up to 95 percent of customer requests; the remaining 5 percent are referred to subject-matter experts.
The deepening of relationships with the customer is the key. Consumers today are becoming so much better at research and analysis, but they need help making decisions and choosing a partner. So, they’ll ask a friend or a thought leader, and then go and meet the people others also trust.
FIs can strengthen these interactions and introductions by following these steps as they develop their own universal bankers:
- Hire people who like people and are engaging. Customer engagement is a culture shift that moves away from transactions and toward conversations.
- Train the banker to ask questions. Educate the consumer before offering solutions. The Banker’s job is to listen first, and then speak from his/her wealth of knowledge or bring in experts…when needed.
- Invest in tools that automate routine activities and create margin for the banker to invest time with their customers. Scheduling tools, staffing models, cash handling equipment, ATMs, and or Interactive Teller Machines (ITMs) are examples of such investments.
- Remove the barriers to the customer. Often this involves eliminating fixtures that separate the customer from the banker, but it doesn’t have to be radical. The key is the facilitation of the desired experience.
- Promote the bank’s brand in the physical environment. Stay away from artwork and use flat screens and marketing materials to communicate your unique brand message. Promote your value proposition so the community and customer know what you are about.
Banks that embrace this model often see dramatic results. According to FDIC reports, a community bank in the Southwest organically grew its assets from $1.0 billion to $3.5 billion in five years with this engagement model. Furthermore, loan and asset data prove a financial institution in Tennessee grew its loan portfolio by 50 percent in four years and another in the Carolinas grew its book of business by over $100 million in a similar period.
Investment in people and creating an environment that fosters engagement can change cultures. And, that culture is about building relationships—the heartbeat of the universal banker.