Bold Moves in Banking Technology
Feb 16, 2012
An Interview with Plante Moran Security Assurance Team Members, Raj Patel and Joe Oleksak
Like most businesses, banks sell a product: money. Granted, it’s money in the form of products, such as loans and CDs, but it’s money nonetheless. While customers can learn about these products through a bank’s website, they have to go to a brick and mortar branch to actually buy these products.
Such is the current state of technology and banking. But as Bob Dylan once said, “times they are a-changin’.” According to the Council of Financial Competition, U.S. customers will make 1 billion fewer branch transactions in 2012 than they did in 2010. Plante Moran Security Assurance team members Raj Patel and Joe Oleksak recently sat down with Michigan Banker to discuss why banks need to be bold and give their customers what they want: more online services and functionality.
MB: “We need to bring customers back to our branches.” I’m sure, like me, you hear that from banks all the time.
Raj: All the time. And we always have the same reply: not only are customer visits to branches declining rapidly, but customers who visit branches cost more than customers that use ATM, Internet, and mobile technologies. This mindset is actually a lose-lose for the bank and the customer.
Joe: A better goal to strive for is to bring the branch back to the customer through the technologies customers are clamoring to use anyway.
Raj: Right. The bold move is to recognize mobile banking as a fully functional branch of the bank—essentially an electronic personal banker for customers.
MB: According to the most recent ICBA Community Bank Survey, the adoption for mobile banking is low, with only 15 percent of banks offering mobile banking apps.
Joe: And current mobile apps provide mostly maintenance type services, like account balance and transfers, check image views, ATM/branch locators, with only limited transactional services such as check deposits.
MB: How would you like to see the environment change?
Raj: I’d like to see banks provide loan and CD products on their mobile apps. Currently, banks communicate CD rates/programs on their websites, branches, and in bank statements. Imagine a tab in the mobile banking app that provides the same information, the customer’s CD portfolio (including maturity dates), and an option to buy/sell CDs. It would be revolutionary, and the customers would love it.
MB: To be fair, there are significant barriers to adopting that kind of functionality.
Joe: Yes, there are. There aren’t a lot of precedents set about how to offer these services via mobile apps and still be in compliance with the different regulations. In addition, the mobile app solutions available to banks tend to be cookie cutter. They don’t inherently have the technical ability to have a more dynamic interface with a mobile banking platform. But there are companies out there that will help build customized solutions. It comes down to this: do you want to go with a run-of-the-mill solution that does just enough, or do you want to be cutting edge and develop a custom mobile banking app that’s flexible enough to meet your customers’ needs?
MB: Can you give a few examples of this kind of customization in action?
Raj: Sure. Imagine an existing bank customer using the loan calculator on a mobile app to calculate car loan payments while shopping for a car at the dealer.
The approval from the bank is communicated back to the mobile app, and the dealer uses the bar code approval from the customer’s mobile phone to upload the loan approval and details to the dealer systems. This all has the potential to occur in about 15 minutes. Now the bank has a chance to sell its product when, in the past, the customer may have gone with the loan provided by the car dealer.
Joe: In another example, let’s say that instead of paying a friend with a check, a bank customer selects the account on the mobile app to pay out of, and the mobile app provides a bar code with the amount, bank routing number, etc. which the friend scans with his phone to accept the payment. Location-based marketing is another area that banking will likely be exploring in the next 24 months. Using the GPS tracking device on the customer’s mobile device, the bank’s mobile app is able to notify the customer of related services or products—say, for example, that the nearest ATM machine is only 500 yards from where the customer is shopping at the mall.
Raj: As Joe said earlier, it’s a matter of changing one’s mindset from bringing customers back to the branch to bringing the branch back to the customer. Why wouldn’t banks want to capitalize on these kinds of profit centers and more easily and conveniently fulfill their customers’ needs?
MB: When you talk about bringing the branch back to the customer, it seems like what banks are doing with social media tools would qualify.
Raj: Banks are doing a wonderful job of using social media tools, including Facebook, LinkedIn, Twitter, and blogs. However, banks aren’t using these tools to sell products.
MB: Is that because of data privacy and compliance with current regulations?
Raj: Right. But banks could look at these tools with a different lens. For example, the current LinkedIn profiles of most bank managers and loan officers appear like resumes; they don’t tell the story of what they do for their customers. A potential customer will often Google the individual who recently came to her business to introduce the bank’s services. Since LinkedIn profiles of managers will appear on the first page of a Google search, a poor profile could negatively influence a potential customer.
MB: What are some best practices for LinkedIn profiles?
Joe: First, they should be consistent across bank employees. For example, in the second field below the name, all employees should use the bank’s tag line instead of their position at the bank. Second, all employees should publish their branch address and either their direct phone number or the branch’s general contact number. Too many banks neglect to publish this information. Third, bank managers and loan officers should join local business LinkedIn groups like chambers of commerce to network and turn cold leads into warm leads. They should also frequently share financial literacy resources on their LinkedIn profiles.
Raj: LinkedIn can also be used to do research on business and consumer customers. For example, a simple search of “restaurant owner” and your ZIP code can provide a bank manager with a list of local restaurant owners. It will also provide a history of their business and professional journey, possibly connecting to a bank’s existing customers or client asking for the referral to the restaurant owner who the builder is connected to. All this information is at our fingertips (or should I say, connected to our fingertips).
MB: What about Facebook? Are there any specific strategies banks should consider?
Joe: The “What can we post on Facebook?” strategy should be changed to the “What can we read on Facebook” strategy. Just by reading posts, bankers can learn a lot about what’s happening in their in the customers’ lives that could relate to a product or service offered by the bank. For example, “looking at new homes” can be connected to offering a new home loan. This would also apply to referral sources, as many real estate agents post their listings on Facebook which, if in your area, could mean a potential new mortgage loan.
MB: Any other social media considerations?
Joe: Just one. Tools such as Deluxe’s Social Media Listening Dashboard can helps banks monitor what’s being said about them. Moreover, banks can expand the “key words” being monitored to include specific and general bank products, potentially resulting in new customers or new services.
MB: That about does it for us. Is there anything you’d like to leave us with?
Raj: Virgil once wrote that fortune favors the bold. While brick and mortar branches will survive for a long time and are key to the operations of any bank, electronic branches via mobile technologies and the vast reach of social media sites can provide banks with a competitive edge…that is, if they make the bold moves necessary to stretch the use of current technology and the imagination of future innovation.