By Xav Harrigin

The banking industry is undergoing a digital metamorphosis, with Generation Z (Gen Z) leading the charge. Data from Morgan Stanley Research and AlphaWise reveals a growing trend: a significant portion of young smartphone users are already onboard with mobile banking. Insider Intelligence’s projections further emphasize this, predicting a surge in Gen Z mobile banking users by 2023. However, Experian’s insights suggest there’s room for improvement, especially in the onboarding process. As Gen Z’s digital preferences evolve, community banks face the pivotal task of merging their time-honored values with the digital banking demands of today.

The Era of Digital Dominance 

The shift towards digital banking is clear and undeniable. Forbes Advisor’s recent data showcases the majority of U.S. adults now prefer banking via digital platforms, a stark contrast to those still favoring in-person banking. Deloitte’s survey provides a deeper dive, highlighting the digital expectations across generations, especially Gen Z. McKinsey’s findings align, spotlighting the growing demand for top-tier digital services. For community banks, this digital era is both a challenge and an opportunity. Staying at the forefront requires not just acknowledgment but active adaptation to these evolving preferences.

Merging Old-world Charm with New-age Tech

As the banking landscape evolves, there’s a clear trend: traditional bank branches are on the decline, as highlighted by Bankrate. This shift suggests a move towards a more digital-centric model. However, the heart of banking isn’t solely in technology. McKinsey emphasizes the importance of integrating modern tech without losing sight of foundational values. Deloitte’s findings resonate with this, pointing to the need for a balance between the efficiency of digital platforms and the personal touch that has long defined good banking. In essence, the future of banking will be about blending the best of both worlds: leveraging the convenience of digital advancements while preserving the trust and relationship-driven approach of traditional banking.

A Win-Win Digital Transition 

The digital transformation in banking is more than just a trend; it’s a game-changer for both banks and their customers. G2’s insights emphasize the enduring nature of this transition. KPMG showcases the myriad advantages of digital tools in banking, from capital decisions to enhanced customer experiences. Forbes delves deeper, highlighting the holistic transformation in banking processes. A case in point from Deloitte: Bank of America’s shift towards mobile deposits, is attributed to their robust digital investments. For community banks, this digital era is a golden opportunity, promising mutual growth and benefits.

Conclusion

The banking sector is at the dawn of a digital era, steered by Gen Z’s tech-savviness and the broader shift towards online platforms. This transformation is foundational, reshaping banking interactions from the ground up. Community banks stand at a crossroads, tasked with integrating digital advancements while preserving their core ethos. The essence of personal touch and community trust remains invaluable. In this digital epoch, community banks are poised to redefine banking, ensuring they’re ready for both today’s demands and future challenges.

By Devon Kinkead

As Ron Shevlin of Cornerstone Advisors likes to say, checking accounts have become “paycheck motels” – that is, temporary places for people’s money to stay before it moves on to bigger and better places.

Given the all-out war for deposits right now by competing financial institutions, we see this temporary cash housing problem as a serious but preventable threat to the financial well-being of our client financial institutions and their respective customers and members.

Nothing New to Micronotes

We’ve been helping financial institutions increase deposits for years using our proprietary microinterview engagement technology targeted by machine learning.

Quoting Tom Novak, VP and Chief Digital Officer of Visions Federal Credit Union in a 2021 Q2 case study, “…Micronotes is a conversational AI tool, digital marketing tool, where we use machine learning on the backend to more effectively target and curate offers and messages to our digital banking members. One of the best outcomes we experienced a couple years ago, before COVID hit, was when we were in a little bit of a liquidity crunch. We needed to tell our members that we had great deposit rates, and that they could bring those deposits to us and we’d reward them with nationally leading interest rates – or dividend rates, as we call them on the credit union side.  We developed that through Q2’s SDK (software development kit), which is part of the Innovation Studio. It let us curate those messages and integrate them into the digital experience. In a few short months, we brought in over $8 million in deposits, retaining those deposits on our books.”

Our strategy for increasing deposits for our clients is:

1. Hold on to the deposits you have!
2. Ask for deposits held elsewhere, programmatically.
3. Attract customers who can make large deposits.

Watching Deposits Check-Out

How often has a customer or member parked a large sum of money in her checking or savings account while deciding what to do with it next? Did the banking institution reach out to discuss investment or new mortgage options for that big deposit? Probably not.

So what happened next? She probably moved the money elsewhere and 3 months later saw a billboard advertising great CD rates from her banking provider; too little, too late, and way too slow.

A better strategy is to detect deviations from an average account balance, deploy Micronotes and start a mobile or online banking conversation with your customer/member about investment opportunities and/or new mortgage/loan options; with a personal approach.

For example, look at these 10 real checking account balances that are 1-2 months apart (table 1):

Table 1

These 10 accounts all show anomalies given the balances at time 3, which are all North of ten times the average balance over the previous two periods.   Given the net interest margin advantage of having large deposits sitting in low-yield accounts, the risk of losing the deposit is now the key question.

The risk of losing an anomaly deposit can be computed by looking at anomaly deposits that exited the balance sheet within 30 days of the deposit and is a value from 0-1, 1 being 100% probability that the deposit will exit the financial institution balance sheet in the next 30 days.

However, this computation is unnecessary because the anomaly deposit represents a low-cost automated opportunity to learn about the large depositor’s life and needs. For example, a personalized microinterview with the mobile banking customer can be automatically triggered to uncover important information as shown below in Figure 1.

Figure 1

From this one question, we use branch and skip logic to pinpoint the depositor’s situation and needs and direct her to the right banker for options to retain the deposit.

The application of this simple method of detecting anomaly deposits, triggering a discovery conversation in mobile/online banking to understand context and intention, and connecting that customer to the right banker in your organization is a simple but powerful way to reduce the probability that your financial institution becomes a large deposit motel where deposits check-out at noon.

In the next installment, we’ll go through how to:

• Ask for deposits held elsewhere programmatically
• Attract customers who can make large deposits.

Digital reviews like the ones on Google have the power to create or destroy customer relationships. As all banking providers become online banking providers, it’s crucial to have your digital banking system working on the “create” side of the equation.

According to Forbes, you need to give your online banking customers a reason to rave. “If you want good reviews, give your customers a good experience. If you do nothing else, make your customer happy when it matters most — before they leave your branch, your website, or hang up the phone.”

Micronotes clients systematically connect mobile and online banking customers to review sites by asking them to leave a review, and it works. For example, one campaign by one of our community bank clients ran for one month. It generated 30% of all Google Reviews for the bank (6 of 20), all of which were positive and remarkably similar in

Digital reviews like the ones on Google have the power to create or destroy customer relationships. As all banking providers become online banking providers, it’s crucial to have your digital banking system working on the “create” side of the equation.

According to Forbes, you need to give your online banking customers a reason to rave. “If you want good reviews, give your customers a good experience. If you do nothing else, make your customer happy when it matters most — before they leave your branch, your website, or hang up the phone.”

Micronotes clients systematically connect mobile and online banking customers to review sites by asking them to leave a review, and it works. For example, one campaign by one of our community bank clients ran for one month. It generated 30% of all Google Reviews for the bank (6 of 20), all of which were positive and remarkably similar in language and tone.

• The staff at XXX Bank are very friendly and helpful and always call me by my first name when I walk in or come through the drive-through. Great staff!
• The staff at XXX are so friendly and helpful; it makes banking so fun and easy. Also, you get the latest banking news with Todd by listening to the mighty 920 on Monday mornings. So fun! Good listening!
• The staff at XXX are always so friendly and considerate. We have had nothing but positive results with all our banking needs at XXX.
• I could not be happier with the experience at XXX Bank. The staff is wonderful!
• Everybody has been great, excellent customer service, whether I’m opening a new account, getting a loan, or dropping off a deposit. Sending home the dog treats when our old dog couldn’t make it in really made our day, not to mention our dog’s day when we got home.
• We love dealing with XXX Bank. The staff is very friendly and helpful. They always know who we are and call us by name. Excellent customer service. 🙂

Consumers are talking about your financial institution 24/7, and in today’s world, they aren’t just limited to their neighbor – they have the whole web at their fingertips. Amazon and Google have taught us many things, not the least of which is to check the reviews before making any purchase decision.

The banking industry is not exempt from this trend and needs to be proactive in managing its brand on the web. That’s why it’s important to continuously connect your brand ambassadors in your high-traffic digital banking channels to review sites to shape and amplify your brand message positively.

Micronotes.ai helps financial institutions leverage account, transaction, credit, and Microinterview® response data via the digital banking channels to start conversations, develop relationships, and build trust — which can be amplified via positive reviews automatically. So it’s time to get and stay on the creative side of the review equation.