Building relationships rooted in customer needs

At a time when people have had it drummed into them to keep their distance, it’s difficult to build strong relationships.

Before COVID-19, banks were working hard to forge tighter bonds with new and existing customers, but the negative effects of the pandemic – shutdown of in-person services, economic recession and millions of lost jobs in a matter of months – have stymied efforts to sign up new accountholders and showcase their value for customers.

At KeyBank, roughly nine out of 10 new accounts were sold through the branch channel before COVID-19, according to Kevin Sloan, who leads the retail branch network for the Cleveland-based super-regional. He says the pandemic has accelerated customer acquisition via other channels, primarily online or mobile. Consulting with advisors is also shifting to digital.

“With (the Paycheck Protection Program) and people being laid off, now more than ever people want access to financial advice,” he says. And employees who banked at their offices through the [email protected] program have also embraced digital channels, since so many are now working from home.

Banking transactions were already trending from in-person to online, says Dan Michaeli, CEO of Glia, which works with financial institutions on digital customer service. “However, new account opening and loan origination have been some of the last processes to make the shift,” he says. “The pandemic has demonstrated the necessity for banks to digitize these areas, including the need to incorporate digitally optimized self-service into the processes.”

Tiffani Montez, senior analyst with Aite Group, agrees the pandemic dramatically hastened the trend toward customers becoming “digital-first,” even when it comes to opening accounts, receiving financial advice and dealing with more complex products, such as seeking mortgages.

“This has all shifted the sales conversations and moved people who would have applied in the branch. It’s made it more acceptable and necessary to do that online,” she says. In addition, it’s driven many banks to quickly move toward “supplementing their digital channels with the human experience” by adding videoconferencing features or the ability for bankers to “co-browse” account documents online.

‘Like an earthquake’

Concurrent with the recent pandemic are very low interest rates, which means that many bankers are handling a flood of mortgages and refinancings completely online. Montez says relationship bankers, many working remotely, are looking at how they share and review documents when walking paper files over to a colleague’s desk is not an option. “This is an opportunity to digitize and automate various processes,” she says.

Relationship bankers who are waiting for operations to go back to the old ways may have a long – if not infinite – wait on their hands.

Scott Anderson, chief economist at the Bank of the West, points out that since the pandemic began, his bank’s headquarters state of California has already been economically hit “like an earthquake, and this is only the start,” as forecasts envision the deepest U.S. recession in decades.

Bankers looking to court and keep retail and small-business customers need to strap in and be prepared for harsh economic conditions. Account teams and top brass need to weigh the benefit of collecting fees versus appeasing customers. It’s one thing to cut customers slack for a few weeks, but if the financial shakeout from the pandemic proves as seismic as predicted, relationship teams need to consider how much they are willing to sacrifice to keep new and long-time customers happy.

Banks may also be forced to review how they establish goals for and compensate their account teams. In a world where most accounts are opened and managed online, often facilitated by human relationship managers, banks may want to “align incentives and compensation around operating in the digital environment [where] call center agents and other bankers play a bigger role in moving the process along,” says Montez.

“The further we get into this, with no relief in the near term, the more important it is for banks to make strategic considerations about all of this,” Montez adds. “We’re still in a learning phase, but this is causing more executives to think about how they want to operate in the future.”

For institutions that have long been investing in their digital channels – KeyBank among them – the technology to support more online account openings, transactions and interactions may not be as big an issue as the simple human interactions underlying this transition.

“We’ve been having more conversations over the phone, especially with heavy branch users, [helping] them with opening accounts or the digital origination experience,” Sloan says. “We also want to see how they’re doing, let them know we as a bank are there. We want to be human first, banker second.”

And for banks that can make the leap, there are potential silver linings. Malcolm Cohron, national digital transformation services leader at BDO Digital, believes that digital-first customers not only tend to be less expensive to support, but also are less price-sensitive and generate more positive word of mouth.

“In this post-COVID-19 world, banks can actually attract new customers by offering solutions that keep them away from physical branches,” he says. “Banks are finding new growth opportunities through online and mobile channels, proving once more that consumers are increasingly attracted to the convenience and speed of mobile and online solutions.”

 

For additional insights on customer acquisition, download the latest BAI Executive Report, Connecting with customers . . . and keeping them

 

Karen Epper Hoffman has been writing about banking and technology issues for nearly a quarter of a century for publications including American Banker, Bloomberg Businessweek and Financial Times’ The Banker. She has also spoken and moderated panels at industry conferences.