By Xav Harrigin

The rapid ascent of artificial intelligence, particularly platforms like ChatGPT, has reshaped the financial landscape. These tools have become go-to resources for many seeking financial product recommendations.  However, while they offer instant responses and convenience, they often lack the depth and personal connection inherent to community banks. These traditional institutions, with their rich history, competence, and personal touch, stand uniquely positioned to offer tailored financial advice, especially when enhanced with fintech tools like Micronotes’ Exceptional Deposits™capability.

The Power of Community Banks

Community banks have long been the pillars of local economies. Their deep roots in the communities they serve have allowed them to offer financial services tailored to the unique needs of their clientele. Some of their standout strengths include:

• Personal Touch: Unlike larger financial institutions, community banks have always prioritized individual needs. They take the time to understand each customer’s unique financial journey, ensuring that every interaction is meaningful and beneficial.
• Local Insights: Their intrinsic knowledge of local markets, trends, and community needs sets them apart from larger banks. This local expertise allows them to offer financial solutions that are truly in line with the aspirations and challenges of their customers.
• Trust Building: Through years of dedicated service, community banks have cultivated unparalleled trust and loyalty among their clientele. This trust is not just built on financial transactions but on genuine relationships that have stood the test of time.

Enhancing Customer Experience in Community Banks

In an era where customer expectations are constantly evolving, community banks must find innovative ways to enhance their service offerings without losing their essence. Some strategies include:

• Digital Integration: The adoption of fintech tools can provide a competitive edge. For example, Micronotes’ Exceptional Deposits capability automatically spots statistically exceptional deposits and instantly starts a digital conversation with the depositor in mobile banking to connect him/her with a banker during what is very likely to be a major life event. It’s helpful that the conversation may reduce the 50% probability that the deposit leaves the bank in 90 days. By integrating such tools, community banks can offer a seamless blend of traditional banking with modern technological speed and convenience.
• Educational Initiatives: Financial literacy is crucial in today’s complex financial landscape. By hosting workshops and digital education on financial literacy, community banks can empower their customers, fostering a deeper sense of trust and transparency.
• Loyalty: Reward programs, cashback offers, and special interest rates can enhance customer retention and deepen engagement. Such schemes not only benefit the customers but also reinforce the bank’s commitment to their well-being.
• Financial Health Reviews: Regular check-ins with customers to discuss their financial health, future goals, and potential challenges can solidify the trust and loyalty that community banks are known for.

The Future of Financial Advisory

The realm of financial advisory is undergoing a rapid transformation, driven by both technology and changing customer expectations:

• Tech Collaborations: To stay ahead of the curve, community banks are forging strategic partnerships with tech firms like Micronotes.ai. These collaborations aim to amplify their digital offerings, ensuring that customers get the best of both worlds.
• Hybrid Advisory Model: The future of financial advisory will likely be a blend of AI insights and human understanding. While AI can provide quick, data-driven insights, the personal touch, context, and understanding of community banks remain irreplaceable.
• Regulatory Focus: As technology becomes more integral to finance, regulatory bodies are introducing new guidelines to ensure data protection, ethical AI practices, and overall customer safety. Staying updated with these regulations will be crucial for community banks to maintain their reputation and trustworthiness.

Conclusion

The financial sector is at a crossroads. On one hand, AI platforms like ChatGPT offer unparalleled speed and efficiency. On the other, community banks, with their deep connections, local insights, and trust-building capabilities, offer a warmth and context depth that technology alone cannot replicate. The key lies in integration. By embracing technology, offering personalized services, and maintaining their customer-centric approach, community banks can navigate the challenges of the digital age. The future holds immense potential for those institutions that are willing to adapt, innovate, and above all, stay true to their roots.

By Xav Harrigin

In today’s dynamic banking ecosystem, the significance of deposit retention is paramount. As underscored by a December 2022 article from American Banker on deposit competition, the year 2023 has seen a renewed emphasis on deposit competition. This resurgence highlights the pivotal role of deposits in determining a bank’s service quality, fostering customer trust, and ensuring economic stability. Deposits are more than just numbers on a balance sheet; they provide the essential liquidity for daily operations and loan funding and stand as a testament to a bank’s ability to nurture customer loyalty. Furthermore, a piece titled “How To Prioritize Deposit-Gathering in 2023” from Forbes accentuates that the upcoming years will see banks and credit unions racing to secure deposits, making retention strategies a more cost-effective approach than acquiring new customers.

Parallel to the urgency of deposit retention is the strategic importance of guiding customers through significant life events. These events, be it home purchases, entrepreneurial endeavors, or personal milestones, pose both challenges and opportunities. Banks that proactively address the financial needs stemming from such events not only build deeper relationships but also mitigate the risk of customer churn. In this context, assisting customers transcends mere transactional interactions. It becomes a manifestation of empathy, understanding, and a commitment to being a customer-centric institution in a fiercely competitive market.

Amidst this backdrop, Micronotes unveils its innovative feature, Exceptional Deposits™, offering financial institutions a strategic edge. Exceptional Deposits™ is a game-changing tool that empowers banks to identify and capitalize on deposit retention opportunities. By diligently monitoring customer account balances, it spots significant deviations from regular balance patterns. To illustrate, for every 1,000 customers, there’s a potential of $1,000,000 in large at-risk deposits, given that about 1% of accountholders have a balance that is about $100,000 greater than their average balance over the previous 5 periods.

The feature is replete with benefits:

• Dynamic Balance Monitoring: It keeps a vigilant eye on checking and savings account balances.
• Opportunity Identification: Any balance surge is an invitation to understand a customer’s life phase and extend timely assistance.
• Engaging Customer Interaction: Identified customers encounter a bespoke interview on their digital banking platforms.
• Proactive Customer Outreach: The tool enables banks to actively engage customers, particularly those navigating significant life transitions.
• Enhanced Communication Channels: Micronotes also offers email and SMS deposit and investment product information delivery options for amplified outreach.

Micronotes has adeptly integrated Exceptional Deposits™ into its Campaign Manager. Once activated, it operates autonomously, from balance monitoring to customer interview initiation and lead delivery to the front lines.

Customer engagement is more than digital clicks. Responses to prompts like “Call Me”, “Learn More”, or “Share now” trigger an immediate lead email to a designated banker, ensuring timely addressal of customer needs.

In conclusion, Exceptional Deposits™ is a beacon in the banking sector, arming financial institutions with the tools to not just retain their deposit base by helping customers and members through major life events. For those keen on redefining deposit retention and growth, Exceptional Deposits™ paves the way. For deeper insights or queries, connect with Micronotes.ai at [email protected].

By Xav Harrigin

The Independent Community Bankers of America (ICBA) ThinkTECH Accelerator Demo Day is a nationally acclaimed program that promotes early-stage solutions designed specifically for community banks. The program is known for its commitment to fostering innovation in the banking industry, connecting the most innovative fintech companies with community bankers and industry leaders. At a recent Demo Day, Parker Steed, VP of Sales at Micronotes, delivered a compelling pitch that showcased the company’s innovative, AI-enabled, cloud-based marketing automation solutions for financial institutions (https://www.youtube.com/watch?v=Y_Mt84zq0qI, starts at 39:32).

Steed began the pitch by reflecting on the evolution of banking from in-person branch visits to digital interactions. He shared a personal anecdote about how banking has changed over the years, highlighting the importance of Micronotes’ mission to help community banks maintain strong connections with their customers in an increasingly digital world. He then emphasized the importance of emulating the traditional branch conversations in online and mobile banking environments, a feat made possible by Micronotes.ai’s cutting-edge technology.

Micronotes.ai, based in Boston, serves about 140 community banks in the U.S. The company’s growth has been supported by a distribution relationship with Fiserv and investments from Experian Ventures, TTVCapital, and most recently, Bank Tech Ventures. Being part of the ThinkTECH Accelerator has further enabled Micronotes.ai to connect community banks with their customers using big data, advanced analytics, and engagement technologies.

Steed’s pitch focused on two key areas: deposits and loans. He explained how Micronotes.ai’s technology identifies opportunities for exceptional deposits and initiates conversations with customers to retain those deposits. The company’s AI-driven marketing automation also helps banks predict customer behaviors such as delinquency and attrition, enabling banks to proactively offer solutions like overdraft protection products and retention strategies.

The Micronotes.ai solution goes beyond traditional banner ads in online and mobile banking. It offers 26X the click-through rate (CTR) of banners, more engagement, and most importantly, it starts conversations that enable banks to learn from and about their customers. This approach helps to keep the “community” in community banking.

Steed also highlighted how Micronotes.ai can help uncover “camouflaged small businesses” through the retail banking side of a bank. By identifying these businesses, banks can cross-sell products like small business credit cards or loans without increasing headcount.

The pitch concluded with a demonstration of how Micronotes.ai uses Experian credit data to identify creditworthy customers and find meaningful savings if they were to consolidate their loans with the bank. This personalized approach not only enhances customer experience but also helps banks retain and grow their customer base.

In a world where customers are constantly bombarded by ads from competitors and large fintechs, Micronotes.ai offers a solution that keeps community banks competitive and connected with their customers. It’s not just about retaining and growing deposits or booking better loans; it’s about starting meaningful conversations, developing relationships, and building trust.

Micronotes.ai is revolutionizing the way community banks engage with their customers. By leveraging big data, AI and machine learning, the company is helping banks to better understand their customers, predict their needs, and offer personalized financial solutions. The result is a win-win situation: customers feel understood and valued, while banks increase their revenue and deepen their customer relationships.

If you’re a community bank looking to take your data and make it actionable, Micronotes.ai is ready to help. As Parker Steed concluded in his pitch, “If you need to retain and grow deposits or book better loans, give us a call, we’d be happy to help.”

In the previous two articles, we’ve discussed strategies for growing deposits from the existing customer/member base. It’s now time to look outside the financial institution for new deposits and beyond traditional advertising practices.

One of the advantages of working with a lot of financial institutions is the ability to overcome data scarcity problems that enable the use of algorithmic techniques that have historically been confined to larger financial institutions with tens of millions of customer records.  For example, a financial institution with 25,000 customers and a 10% annual attrition rate has to spend marketing money to replace 2,500 customers per year.  Let’s further assume that only 20% of those lost customers are profitable, that means that only 500 of those lost customers have desirable characteristics for new account acquisition.  That’s just not a large enough sample to build a robust lookalike audience in most major social media sites (e.g. Meta), which require on the order of 5,000 records to build a robust lookalike audience for target marketing.

Why is the ability to build a lookalike audience important in the quest for new customers?  Answer: Because customer/member acquisition cost and the quality of those acquisitions matter.  Lookalike audiences are important because they allow a desirable audience to be defined using one set of attributes (e.g. deposit balances, credit scores, profitability), and then find a similar and desirable audience using different attributes (e.g. interests, group membership, political affiliation).

These ideas come together into a powerful acquisition strategy when aggregated data sets containing tens of millions of customer deposit records are used to create a seed or source audience from which the major social media platforms can build a robust lookalike audience.

For example, let’s say a financial institution’s operating footprint is 25 counties across 2 states.  And that financial institution wants to acquire deposit customers who demonstrate the capacity to make large deposits into the bank as shown in Figure 1.

Figure 1 – Anomaly large depositors make deposits that are far above their average deposit balance over previous periods.

The financial institution knows who these people are but, unfortunately, there are only 95 of them in the database; far below the threshold to build a robust lookalike audience.  However, for Micronotes, this is a soluble problem because we can find about 10,000 anomaly large depositors in our aggregated client database.  Once those 10,000 records are published as the source or seed audience for the lookalike audience, the remaining work in creating a target audience is to impose the requirement that lookalikes be confined to the two states and 25 counties in which the financial institution operates.  Then, of course, a compelling offer must be made to convert those lookalikes into customers or members.

In future articles, we’ll discuss the performance of lookalike campaigns and how they enable small financial institutions to fully compete with larger financial institutions in new customer/member acquisition.

In the previous deposits-focused article, we discussed how to detect and immediately act on anomaly deposits to keep those deposits from exiting the financial institution’s balance sheet.  In this article, we’ll discuss asking existing customers/members for deposits held elsewhere, programmatically, because that’s always the first order of business.

The most obvious sources of deposits held elsewhere by existing customers/members are the direct deposits being made by your customers/members to other institutions.  The financial institutions we serve have typically established a direct deposit relationship with fewer than 25% of their total customer/member base, leaving a lot of room for growth.   The lack of a direct deposit relationship with so many customers/members reduces the deposit base and increases attrition.  For example, past attrition studies we have published demonstrate that holding all other variables constant, a customer with direct deposit has 0.42 times the odds of leaving the financial institution versus a customer/member without direct deposit*.   For example, if the odds of attrition of a customer without direct deposit averages 10%, the odds of attrition of a customer with direct deposit average 4.2%.  This metric won’t surprise anyone in retail banking, the direct deposit relationship is king**!

So, a simple way to improve both deposits and retention is to programmatically ask your customers/members without direct deposit to establish direct deposit with you like this (this particular example is for loan customers):

Figure 1

The “other” button enables the user to describe exactly what it would take, sometimes surprisingly!

Figure 2

Summarily, use technology to ask your customers what it would take to move their direct deposit relationship, then get the direct deposit relationship to increase deposits and cut attrition risk.  You’ll probably be the only financial institution that ever asked.

In our next installment, we’ll talk about how to:

• Attract customers who can make large deposits.

*Study of 779 customers lost over 2 months out of a total of 67,424 customers total), 283 of which were deemed “profitable.” by the bank.

** “Holding all other variables constant, each additional e-service (e.g. bill-pay, debit card, e-statements) a customer takes multiplies the odds of churn by 0.73.”