Today, banks, credit unions, and other banking service providers find themselves at widely varying stages in terms of the scope and sophistication of their digital capabilities and service offerings. Improving customer acceptance and engagement with digital banking products and services requires an understanding of digital technology trends, along with a structured, strategic approach for the deployment of digital channel enhancements.
Digital trends in community bankingIn many respects, the digital transformation in the banking industry – particularly for large banks and credit unions – has been progressing at surprising speed. After all, it has been just more than 20 years since the first deployments of e-banking systems made online banking truly practical.
Within just a few years, online banking became mainstream. According to a series of surveys commissioned by the Federal Reserve Board and the University of Michigan, the number of consumers who reported using online banking grew from a mere 10.7% in 1999 to 51.7% in 2006.1
At about the same time that survey was completed, the emergence of tablet devices and smartphones began driving demand for mobile delivery of e-banking services. Soon, customers could view their account balances and transaction-level account data across a number of channels, including telephones, desktop computers, tablets, and smartphones.
To be sure, challenges existed with native device operating systems. In addition, there was a lack of complete straight-through transaction processing as the back-office processes often lacked the workflow and process automation that was needed to integrate with the front-end internet banking and mobile banking systems.
In many cases, gaps between the end user’s self-service actions and back-office execution still exist at many banks for functions such as new account applications, card controls, notifications, and customer requests. Whether driven by weaknesses in the technology itself, a lack of true real-time integration, or management policy, these gaps have led to significant variances in service levels and inconsistencies in how customer interactions are handled. Often, significant variations occur within the same financial institution across various channels. Even if end users have not yet discerned these differences, they will soon. For example, why can customers add overdraft protection online in five minutes but doing so in a branch takes at least twice as long?
The industry response to this shortcoming has been a move toward an “omnichannel” approach in which the customer experience is consistent, regardless of which channel is used. This response is still ongoing, even as the industry moves on to the next phases of mobile technology such as person-to-person payments, mobile bill pay and card controls, self-established account activity notifications, and integration with personal financial management features.
Observation suggests that most banks and credit unions already recognize the urgency of this digital culture and its transformation of consumer and business behavior and expectations. The industry is witnessing a dramatic run-up in CEO interest in trying to understand, evaluate, and implement various enhancements or full-scale rollouts of new digital banking services.
For example, in a recent Crowe webinar, executives from a variety of banks and credit unions were asked where their organizations’ digital transformation efforts currently stand. The majority of those responding (almost 87%) said they currently are working on it, while fewer than 8% said they either had not started or were just getting ready to do so this year.