Find out how your bank can address challenges caused by COVID-19 and economic turbulence with digital technology
Today, banks, credit unions, and other financial services providers find themselves at widely varying stages in scope and sophistication of their digital capabilities. And in the midst of a pandemic, when branches are closing and new-account activity is low, the ones that have successfully implemented a range of digital service offerings have a competitive advantage.
Improving customer acceptance and engagement with digital banking products and services requires an understanding of technology trends, along with a structured, strategic approach for the deployment of digital channel enhancements.
Pre-COVID-19 trends in community banking
In many respects, digital transformation in the banking industry – particularly for large banks and credit unions – was progressing at surprising speed before the pandemic. After all, it’s been just more than 20 years since the first deployments of e-banking systems made online banking truly practical.
Within just a few years of its debut, 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 51.1% in 2006.1
Around 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, complete straight-through transaction processing was lacking as the back-office processes often did not incorporate the workflow and process automation needed to integrate with the front-end internet banking and mobile banking systems.
The state of digital transformation today
The economic shutdowns and slowdowns brought about by COVID-19 intensified the urgency for moving toward digital delivery of banking services and customer communications and for integrating these technologies with internal processes.
At many banks, gaps between the end user’s self-service actions and back-office execution still exist 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 services company 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 increase of CEO interest in trying to understand, evaluate, and implement various enhancements or full-scale rollouts of new digital banking services.