An ABA Research Study
ABA’s Community Bankers Council recently conducted a survey to better understand the community banking landscape. We asked top officers of community banks—board chairs, chief executive officers, and presidents—to share their plans and priorities for the year ahead. The goal was to find out:
- What technology will community banks implement to streamline operations or create a richer and more frictionless customer experience?
- Will they be adding new products, banking locations, channels, or business partnerships?
- Are there plans for growth within or outside the present footprint?
- What are banks doing to attract customers and deliver the best experience?
- What actions will they take to recruit and develop a skilled workforce?
Survey responses came from 440 community banks from across the United States. Participants were ABA member banks with less than $3 billion in assets—45 percent were under $250 million—representing every region of the U.S.
The resulting report, Community Bank CEO Priorities for 2018, incorporates the survey findings with insight and best practices from other community banks.
Compare your bank’s priorities and actions with your peers.
During 2018, community banks will continue to improve on offering personalized service through judicious use of technology, including extended bank hours with virtual tellers, more convenient loan processing through digital lending channels, access to trained tellers through video drive-through technology, and newly trained universal bankers equipped to meet a broad range of customer needs.
In short, the landscape for community banking will continue to grow and evolve in the year ahead, with customers’ needs continuing to remain front and center.
Here are the top 10 community bank priorities identified in the report:
1. Drive growth and profitability.
Many banks plan to expand organically in current markets (71 percent) or new markets (38 percent), implement new technologies to reduce operating costs (60 percent) and launch new products or services for customers and commercial clients (55 percent).
2. Add products and channels.
Most banks (69 percent) plan to increase the number of products and services offered over existing digital channels. On the lending side, 71 percent plan to offer digital processes for small business lending and 57 percent for consumer lending.
Slightly more than half of community banks (52 percent) plan to add new digital channels. Some 64 percent plan to offer online account opening across all digital channels, and 35 percent will offer mobile wallet.
3. Consider synergistic fintech partnerships.
Banks don’t necessarily have to compete with fintechs. They can partner with them instead. With little upfront investment, banks can:
- Hold loans for fintech lending portals that are run and branded by the fintech.
- Take advantage of a fintech’s software to offer their own branded online lending.
- Make inbound or outbound referrals with digital lending partners.
In a 2017 ABA survey on digital lending, 71 percent of respondents said their banks were interested in using a third-party digital platform for consumer loan origination, while 31 percent of banks would be willing to partner with a fintech company for servicing consumer loans, and 80 percent for small business loans.
4. Capitalize on technology and automation.
When considering technology as a competitive advantage, 77 percent believe lending will benefit the most from automation, followed by IT (72 percent) and customer service (62 percent).
5. Integrate customer information.
The success of omnichannel banking will depend on the bank’s ability to synchronize the experience across channels and devices—while managing the customer relationship in its entirety.
Right now, only 17 percent of respondents describe their banks as “very effective” or “somewhat effective” in integrating data from across the business to provide a seamless customer experience.
6. Fortify cybersecurity and fraud protections.
Fraud concerns are also taking center stage for bankers.
Community banks are currently fighting fraud by training staff (95 percent), upgrading network security systems (91 percent), educating customers (84 percent), using anti-malware/anti-virus software (81 percent), offering identity theft protection (73 percent), or adding it in 2018 (28 percent).
So far, just 7 percent have joined Sheltered Harbor—and industry-led initiative designed to add an additional layer of protection to banks’ business continuity and disaster-recovery efforts.
7. Market the bank.
Attracting, retaining, and growing customer relationships are perennial goals for any bank. But in the year ahead, there will be subtle shifts in how institutions go about it. They will keep faith in marketing, but adjust their channels.
In 2018, 59 percent of community banks will use radio advertising, compared to only 27 percent that plan to use television advertising.
Most banks will use email (68 percent), direct mail (61 percent), social media (77 percent), print display ads (80 percent) and local, in-person events (80 percent).
Half of respondents (51 percent) plan to keep marketing budgets the same in 2018, while 46 percent plan to increase their budgets in 2018.
8. Grow social media.
Having seen success with little investment, 52 percent of respondents plan to increase or significantly increase spending on social media, while 43 percent plan to sustain their current levels in 2018.
9. Recruit in difficult labor markets.
Across the board, banks cited recruiting and retaining talent as a top concern, especially for employees with specialized skills.
More than half of respondents (58 percent) find it difficult or very difficult to recruit people with the skills needed to keep the bank competitive. Skill sets most lacking were leadership skills (59 percent), innovation and outside-the-box thinking (41 percent), and customer services (40 percent).
10. Develop staff.
To develop talent within their banks, CEOs are investing heavily.
Respondents say their banks will be sending employees to job-related conferences and seminars (88 percent) and providing online training (85 percent), incidental or on-the-job training (80 percent), classroom training (69 percent) and career mentoring and coaching (58 percent) to their staff in 2018.
To learn more about the latest in community bank priorities, download the full report.