Community banking and digital banking are not mutually exclusive. In fact, combined, they provide the best of both worlds, allowing community banks to compete against the mega banks, without abandoning their community roots and mission. You can do both, blending the existing well-proven business model of your community bank, with the changing customer expectations of digital delivery, while improving your bottom line in the process.
Community banks have an advantage over pure digital competitors. Customers demand good technology when they want, a real person when they don’t. Community banks have “real” people. People who are known and trusted in the community. That makes the digital transactions feel a little bit more personal, because the customer can picture their warm and helpful community banker at the other end of the digital experience. Available potentially to help (if needed). By ensuring good digital adoption and automation, your key people will have a broader reach, freed from simple requests and tasks, and indeed be available on demand to live up to customer expectations.
Community banks can leverage existing resources and knowledge, while continuing with and optimizing existing business. Most community banks already have a reasonable working model or good niche strategy. No need to change that, but through digitization, you can become more profitable and create scalability. Become more efficient and improve your return on equity. In this context, digitization is not just about online and mobile banking, but also automating the downstream back office support functions.
Every community bank is already in the digital banking space. It is what customers expect. They know what is available from the top online players in terms of digital banking. The notion that your customer likes your people and your service is true. They also know what is available out there from the top online players in terms of digital banking. They want the best of both worlds from you, and with no more fees! They want to continue using your good face to face service, but only if you also provide superior digital service.
Digital banking and automation is a key driver of current and future profitability. Digital transformation could pay for itself, through the elimination of the double entry of data, migration of front-end activity to digital self-service channels, and from a longer customer life cycle. It is also the fastest and most efficient way to expand your footprint and gain more customers, without brick and mortar. And the fastest way to change or bring new products to market. This is especially true with deposit account origination. It is a well-known fact that the majority of customers will open their next deposit account online. Chances are that your existing customer may open their next CD or Money Market Account with a bank that offers online account opening.
Digital transformation should be a strategic imperative, and not a subset of another strategy. Start building your own digital transformation group and develop the in-house competency. Take stock of who you have amongst your existing employees and their interest. It is important to pull together a cross departmental team. Going much broader than IT and Operations. It is all about the customer experience, not the technology. You will find that often, you already have most of the people and talent, with minimal additional recruiting required. It is just a matter of creating focus, group spirit and the right executive support.
When hiring a consultant, insist on a plan for future self-sufficiency. A consultant can add value during the assessment and planning process, to educate the board and during the early days of the project to help organize and accelerate. To bring experience and help you avoid mistakes other organizations made. However, there must be rapid knowledge transfer through real time training and guidance. Teaching your team “to fish”.
It is not about how good your technology is, but rather about how well you use it. No need to have “bleeding edge” technology. Where possible, leverage off existing resources from your core provider or the many independent digital banking providers out there. The standard systems can achieve most, if augmented by some relatively inexpensive custom API’s to your productions systems where there are gaps. It is more about coordinating and pulling the many disparate systems and interdepartmental functions into one coordinated direction. Breaking down silos and overcoming the natural resistance to change. I have seen too many instances where the focus is on building custom software. It is much cheaper and more effective to re-engineer and re-evaluate internal processes to adapt to the standard digital technology, than to build digital systems to accommodate the existing process which often “just happened” and got patched over time, and was most likely designed in a different competitive environment.