Digital banking can be more than glorified self-service

Banks need to embrace all the technological tools available to rebuild that close relationship with their customers via their phones.

Banking institutions needed to make big adjustments on the fly two years ago, when the pandemic started, but by now they should recognize that when it comes to digital engagement, the future will look much like the past year.

Branches were already closing before the arrival of COVID-19. Assuming this trend continues, banks and credit unions should be asking themselves how they will get to know their customers going forward, considering how heavily they have relied on in-person interaction for the past 100 years. They will have particular challenges getting to know customers they have added since 2020, as many haven’t even set foot in a branch or met a bank employee face to face.

Over the years, banks gradually realized that they needed to improve the customer experience through enhanced self-service. The ease of using asynchronous transaction services like automatic bill pay, remote check capture and direct deposit allowed banks to deliver a much more convenient way to interact with their customers. But “interact” is the wrong word, as that implies some amount of give and take.  All the customer was doing was finding and taking, without the bank’s involvement.

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In reality, banks have been effectively disintermediating themselves with every new tool added to their mobile banking app and losing the opportunity to offer advice in real time.

Some of these services, like auto bill pay and direct deposit, have made the customer relationship stickier. Stickiness, however, doesn’t make a customer feel closer to their bank – this is especially the case for younger consumers, as indicated by in a recent BAI Banking Outlook report. The customer can complete all but the most technical of transactions on their phone at any time and frankly doesn’t miss going to the branch in the least.  But banks haven’t developed a similar delivery mechanism for advice, whether it is around lending, investment or small-business needs.

We are currently seeing an inversion.  Where once bricks and mortar was primary and digital tools were added to enhance that experience, now banks need to think of the digital experience as central to how they engage with their customers.  Increasingly, consumers will come to expect a rich online experience, especially one that includes advice, and only walk into a branch for the most complex of transactions, if at all.

Banks need to utilize their talented workforce through video chats with document sharing, combined with a back end that allows the banker to gain insights into their customer using smart CRM technology. Not only would this closely approximate the experience we as customers are used to getting in a branch, but now we should be adding in the intuition from algorithms running in the background that capture transaction history and language recognition from previous conversations.

Combine this with the convenience of same-screen document sharing, signing and e-delivery, as well as the ability to have dialogue with more than just the account at the same time – this could mean connecting with their adult children or their CFO.  Now that everyone has embraced technology through necessity during the pandemic, we have the opportunity to marry the best of both worlds – digital convenience with human interaction.

Recent research shows that, while individuals are more likely to ask for financial advice from friends and relatives, they are surprisingly open to taking it from banks when offered.  This is the window through which banks need to climb.

Much the way corporate America worked from home using video technology to connect, banks need to embrace video banking. If one were to look at other industries affected by lack of face-to-face interaction, health care offers a good analogy. According to a McKinsey study, telehealth utilization has stabilized at almost 40 times pre-pandemic levels after peaking at 78 times previous usage at the height of the pandemic.

Rather than thinking about digital banking as glorified self-service, banks need to embrace all the technological tools available to them to rebuild a relationship with their customers through their phones.

Given the digital age in which we are living, this is the only way that banks will remain as close to their customers as when we used to idly chat with a teller while depositing checks or having our savings passbooks updated.

Mike Sha is co-founder and CEO of SigFig.