Making the Shift to Online Account Opening - Joe Sullivan, CEO Market Insights
There are few people in the banking world that can match Joe Sullivan's experience working with banks and credit unions and insight into the human dimensions that drive banking success. Joe is a frequent speaker to banking groups across the country. Most recently, Joe has developed a presentation, Finding Passion for your Post-COVID Life, that invites participants to look at what they have learned during the pandemic and what changes may be needed when the masks come off.
M6 Marketing, Managing Director, Langdon Andrews caught up with Joe to find out how banks and credit unions can adjust to the increasing numbers of accounts opened online.
LA: Joe, unfortunately for most smaller institutions, the shift to online account opening has been benefitted the largest banks, like BofA and Chase. Is this a trend that smaller FIs need to address?
JS: Yes, absolutely FIs that don't make it possible to open and fund new accounts online will be Irrelevant. The numbers from Cornerstone Advisors tell the story that of the 66% of accounts opened online, 57% were at large banks, 15% regional, 8% Credit Unions, 2% Community Banks, and 18% digital-only. But no one can really rest easy. In Q1 2021, Bank of America, Wells, and Chase lost 7% of the checking accounts to fintechs.
LA: Many smaller institutions have added online account opening, but there is much more needed to complete the digital transformation. What is your advice to clients?
JS: In our work with clients, we have identified five essential elements needed to digitally gain new customers and deliver digital banking services.
Be data-driven, so you can provide personalization and contextualization to demonstrate to customers and potential customers that their needs and goals are understood.
Use collaboration to profitably deliver services that fulfill the customers' needs. For example, if your data shows there is a well-defined need for consumer lending. Partnering with a provider of those services is a way to bring in new banking customers and extend your current banking relationships.
Be customer-centric as opposed to operationally focused. Conversations have to be about small business customers, mortgage customers, or customers with families to get everyone on the same page.
Agile - institutions need to act quickly, see market information and trends, monitor customers' chat and social media, and see what is coming up to take a different approach.
Open, talking about APIs because customers want to be able to see a holistic view of their financial information.
LA: When you consider smaller institutions and online account opening, what is their greatest strength, and how do they put that to work to improve online account opening.
JS: The ability to build a personal connection with customers has been their greatest strength, along with their mission to support the communities they serve. Their challenge is how to scale this digitally because customers still value personal service, and many customers, especially those under forty, want to do business with people with organizations whose mission is aligned with their values. In the future, these institutions are going to have to break people's addiction to in-person services even as they work to strengthen their ability to build a human connection in a digital world.
LA: Many institutions have partnered with companies like Strategy Corps or Kasasa to help with customer acquisition. Have you seen benefits in using a third party to improve checking account acquisition?
JS: This an entirely commoditized industry. When I look at Strategy Corps, I see them connecting people digitally to local businesses, attempting to build community, something that has high perceived value. There are countless ways for consumers to store and access money. Ron Shevlin jokes about banks being nothing but paycheck motels. Banking is becoming something we do, not a place we go; it is a verb, not a noun; it is a platform, not a place. Getting back to Strategy Corps and Kasasa, by providing additional services and benefits and linking it to the checking account, provided they are relevant, it's a way they can differentiate.
LA: There are so many choices available to financial institutions today to expand their offerings to customers. MX being one on the consumer side and ZSuite on the business side. What advice would you offer to clients considering additions to their offerings?
JS: Additional offerings have to be in alignment with their market. They have to study the market and their customers' needs'. The critical part going forward will be meeting the needs of consumers going forward post-covid.
Because it will be different, so if you think you knew your customers before December 31st, 2019. Peoples' economic situation, their views about their jobs, their finances, retirement, their life goals. Everything has been upended, some for better, some not for better. So, it is less about adding products and services and more about personalizing and contextualizing the ones that you already have.
We have done a number of product gap analysis studies for banks and credit unions, and we almost always come back with “you have too many products, not too few” and you are not talking about your products or actively messaging them. Making sure that your target suite of products is aligned with the audience that you are trying to go after. The last thing you want to do is offer a bunch of features that they could care less about.
So be clear who your market is, understand them, how they behave, how they think, how They’re feeling as we start to emerge from covid as further vaccinations happen. People have very specific financial needs, and bankers are in a unique situation right now to help with that. So my summary is, understand and study the market, be in alignment with the need of the segments that you are going to serve, and understand that it is probably not about adding more products and features but perhaps repositioning and personalizing the ones that you already.
I'm not saying that there might not be something new that needs to happen. But that is what bankers do; they add a product, know who you are serving, and know how covid has impacted their life, and know that their needs have likely changed, there is a unique and golden opportunity here for them.
LA: That is so true; financial institutions need to make sure the products they offer are relevant to their customers and ensure their messaging and positioning are relevant to the audiences they are targeting.
More about Joe Sullivan and Marketing Insights, Inc. www.formarketinginsights.com