Lauri Giesen
Lauri Giesen May 13, 2019

Closing the mobile banking gap

What can community banks do to level the playing field against larger national competitors? Here it is, on the level: maybe nothing, so far as that tired cliché goes. That is, not when you can leap frog the field instead.

Kelly Burdette, senior vice president for digital and products for Sheffield, Alabama-based Bank Independent, indeed wants to use mobile banking to “leap frog” what the big dogs do. Fine … but how does this frog get its legs? By linking high-tech devices to high-touch customer service.

“We want to make sure that when our customers deal with us through a digital channel, they don’t feel they are just a number,” Burdette says. “Customers using our channel channels should feel they have the same personal relationship that they always got when they walked into one of our branches.”

That sentiment builds off a long-standing claim by community banks: that their strength against large financial institutions lies in great customer service. But how do you do that in the digital world?

While some community banks and credit unions argued that they offered the same digital services as national banks, that claim wasn’t always true. Often user-friendliness was poor or the institution’s policies and marketing approaches hampered consumer acceptance.

“There has been a big gap between the quality of the mobile offerings of the digital leaders and what most community banks offer,” says James Van Dyke, CEO of San Francisco-based Futurion, a technology consulting firm.

And while technology providers that design the programs can be blamed in some instances, community banks themselves often cause problems, Van Dyke argues.

“A lot of community bank executives are their own worst enemies,” Van Dyke says. “They don’t fully understand mobile banking, so they erect barriers to the use, such as setting risk limits that aren’t reasonable or limiting to whom they target the programs.”

But new technical offerings and changes in approaches by the financial institutions themselves may have improved smaller institutions’ ability compete via mobile.

New benefits include encrypting chat lines so customers can log in less frequently as well as fully integrating mobile offerings to banks’ call centers and core transaction processing. If a customer has a problem with a digital transaction, he can immediately get personal assistance.

Integrating customer service to digital channels means community banks can really take advantage of personal touch aspects that have traditionally given them an edge in the market.

Take Bank Independent, for example. As a 71-year-old community bank with 28 locations throughout North Alabama and about $1.6 billion in assets, Bank Independent wants to use digital to both serve existing customers and expand the bank’s nationwide presence.

To do that, the bank has set up mobile sales offices that support a new digital program. Unlike prior digital versions, it combines online and mobile offerings on a single platform. This makes it easier for customers to use, reducing how many logins they need to move through channels.

While the current program lets customers chat with bank reps via text messaging, those messages are not secure. If the bank representative needs confidential account numbers or other information, they must call the customer and complete the conversation on a more secure channel. The bank plans to upgrade to a system that secures chat so that customers can continue a conversation without moving to another channel.

Make mobile move

Programs like this could reverse a community bank sticking point, rooted in the lack of ease in using many mobile offerings, Van Dyke says.

“When most community bankers choose a technology provider, they start with a shopping list of features and they pick the one that offers the most,” Van Dyke says. “What’s missing are the design and intuitiveness.”

Another big mistake many have made is to put arbitrary limits on the amount that customers can deposit on a mobile device, Van Dyke says. “A lot of bankers are still fearful of fraud so they put the same amount limit or limit the number of checks that can be deposited to all customers, regardless of customer relationships.”

Bank Independent has addressed this issue. When the bank first offered mobile deposit, it had strict limits (like many banks, including major players) on how much customers could deposit. Now digital representatives view each one. If the amount conforms to that account holder’s regular patterns, the bank accepts the check is and gives immediate credit—just as if the customer visited the branch.

“We don’t treat our good customers the same way we would treat someone we didn’t know very well,” Burdette says. “That gives us a real advantage. A lot of the megabanks around here don’t give immediate availability or charge extra for it.”

In just the last year, new offerings have come onto the market that play to customer service strength while leveraging mobile banking’s tech benefits, says Lee Wetherington, director of strategic sight for Jack Henry & Associates.

“It is a fair criticism that community banks have lagged the megabanks in mobile offerings,” Wetherington says. “But in 2019 we will see the gap narrowed and see some community banks move ahead.”

Wetherington points to one offering by Umpqua Bank that provides a platform that integrates mobile banking to top level customer-service functions. Go-To is a dating app-like application that lets customers choose a banker based on professional background, expertise, personal interests and location. The customer can then use secure text and chat to connect with that banker to resolve issues, explore opportunities and receive expertise.

"Customers want to bank on their terms, in the nooks and crannies of their day," Umpqua's executive vice president/chief strategy officer Rilla Delorier told BAI Banking Strategies recently. "But they still need someone to talk to and trust who can guide them. Go-To gives customers their own personal banker that they can chat with on their terms, at their pace."

Make marketing matter

Community banks and credit unions also need to take a second look at marketing. Van Dyke says many banks incorrectly limit their efforts to target young, tech-savvy customers, ignoring others along the way.

Moreover, the content is often just plain wrong. “A lot of banks have stodgy messages that seem to be right out of the ’90s: ‘Bank anywhere, anytime,’” Van Dyke says. “There are a lot more advantages to promote than just availability.”

Such as how mobile banking can reduce fraud, for example.

“Customers can set up alerts and eliminate paper trails,” Van Dyke says. “They can manage transfer limits digitally and review transfers before they are made.”

Bank Independent has some big marketing plans on tap. “We will take a holistic approach to promoting through branches, digital ads and social media,” says Chris King, director of marketing.

And the bank won’t limit its promotions to young people. “We’ve found our mobile approach appeals to all segments of our customer base,” King says.

Time to get a bigger playing field.

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Lauri Giesen has spent more than 25 years writing about banking technology and payments for numerous business and financial publications. 

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