Seventy percent of Americans say that digital banking is at the core of their banking preferences, according to research from The Harris Poll, commissioned by Apiture.
Knowing the importance of an effective digital strategy, we asked Jen Dimenna, SVP of Enterprise Partnership Management, about some of the roadblocks to digital transformation and how community financial institutions can stand out against the national brands.
Q. Some have suggested that community banks and credit unions are hesitating when it comes to tech adoption. Do you agree?
A: While there may be a perception that community banks are hesitating to adopt new technology, every community institution faces tradeoffs when it comes to budget and strategic decisions about who they want to serve. We talk to institutions every day who are making decisions about how technology can help them implement their strategy, and they look to partners like Apiture to help.
For example, institutions that want to grow beyond their existing community footprint can invest in a robust digital account opening solution, or they can establish partnerships and create an embedded banking solution. Those seeking to attract Gen Z and millennials need to invest in a modern, intuitive mobile app with features like peer-to-peer payments, budgeting and expense tracking, and credit score monitoring. They also need to allocate dollars to social media and other digital advertising channels.
Q. What are the best ways for smaller institutions to get started with digital transformation?
A: The key is to focus on what business problems you need to solve and then identify the technology partner who can help you solve those problems. It will never work the other way around. You can’t start by adopting new technology and then trying to figure out what business problems that technology can address.
New technology — including APIs and machine learning applied to your data sets, combined with modern partnership ecosystems — is creating never-seen-before problem solving flexibility for your institution. It allows you to unleash creative business problem solving without being constrained by legacy technology. This has long been part of the sales pitch of tech vendors to financial institutions, but business problem solving is becoming faster, better, and cheaper than ever.
Q. What are some challenges facing community financial institutions when it comes to tech adoption?
A: Uncertainty and lack of expertise. Without the right context, financial institution execs can interpret every headline about technology evolution as a harbinger of future obsolescence. Smaller institutions need to rely on trusted partners to help them identify and implement new technologies to solve business problems to ensure future growth.
Q. What future technology do you see as most important or significant in the banking industry?
A: Generative AI is likely to shift our banking model from one that is customer driven to one where the financial institution assumes a much more consultative, proactive role. Importantly, AI will allow this to happen at scale.
Today, account holders drive interaction with their financial institution based on a need like paying a bill or checking a balance. With AI-driven technology, your institution can use data to understand user behaviors and preferences and proactively suggest actions based on individual needs. For example, if you identify an account holder who hasn’t made a regular payment, you can send them a notification offering to pay on their behalf to avoid late fees. Or based on spending patterns, your institution might identify that an account holder’s family is expanding. You can propose opening a new family banking account to help them begin saving as early as possible for college and new baby expenses.
Q. How can community banks and credit unions differentiate themselves through technology?
A: Community financial institutions are known for providing personal service to their account holders in the branch environment. But with users choosing to bank through digital channels more frequently, institutions must provide that same level of service and support in a digital environment.
Banks and credit unions possess a tremendous amount of data about their customers or members — who they are, how they spend, and what they want — and those that leverage tools that meaningfully use this data will truly differentiate. Your account holders want to believe that your institution knows and understands them. With the right tools, you can offer tailored products or services that perfectly match the current stage of an account holder’s life.
Let Apiture help you in your digital transformation journey. Contact us today.
