By David Eads
With the market growth of “mobile-first” consumers, bankers have recognized the need to create more user-friendly experiences for these customers. Because initial engagement (and the ability to keep customers engaged) is a major component for growth, bankers are now leveraging technology in smarter, more effective ways when it comes to their application processes — realizing better conversion rates, lower abandonment rates and improved customer experience.
Perhaps the biggest change is in the industry’s shift from how it has been doing sales for the past 30 years and instead, taking lessons from the eCommerce industry, which has been successfully adapting to the preferences and needs of mobile consumers for some time. Online retailers have learned the value in leveraging customer data analytics to help make more appropriate, relevant product suggestions initially, and then following that with a frictionless, streamlined customer experience. In short, they create a faster and easier checkout process, which in turn discourages cart abandonment and ultimately increases sales. Banks can achieve the same success by not only marketing the right products and services to the right customers at the right time, but also creating and supporting a truly frictionless checkout process for those consumers via their mobile devices.
A case in point is NBKC Bank based in the Kansas City suburb of Overland Park, Kan. ($580 million in assets), that recently replaced a legacy onboarding system with a more intuitive and user-friendly digital sales platform. Previously for account opening, NBKC used a standard online form that went to a human for processing, meaning that customers still had to physically come in to a branch to complete the application process. By converting to a digital sales platform, the bank saw an almost immediate increase in website traffic, resulting in a 10 times increase in applications and a 70 percent application completion rate — much higher than with the previous system.
“NBKC is committed to providing an optimal banking experience for our customers and that extends throughout our branch and digital banking environments,” said Melissa Eggleston, chief deposit officer of NBKC. “Our mantra is ‘simplicity,’ both for our staff and our customers, and increasingly our customers want that interaction to happen on the screens of their mobile devices, so we are working hard to meet and exceed that expectation.”
By adopting a digital approach, banks like NBKC are improving their sales and conversion rates through a simplified front-end experience for customers. More importantly, however, they are making much better use of valuable customer data that they already possess. In fact, it is this approach that represents perhaps the biggest change in how retail bankers think about growth. The most successful retailers are the ones that truly know their customers’ needs and preferences and fine tune their marketing and sales initiatives to ensure that they present relevant information to the right customer at the most opportune time.
From a banking standpoint, “personalized service” now means the ability to do this very same thing.
For years, bankers have relied on “Share of Wallet” as the standard metric of marketing success, but this is a shortsighted concept. Retailers calculate the value of relationships with customers over time and in doing so, make those relationships more meaningful for their customers and more profitable for the retailer. Bankers should begin to consider the lifetime value of establishing a “relationship annuity” with their customers. This is particularly relevant for driving growth among millennial and Generation Z customers who, as they mature as consumers, will need more products and services from their financial providers, such as auto loans, mortgage loans, retirement and college planning.
For banks that are in growth mode, there is an additional benefit to be realized as digital marketing provides a proven strategy to both establish market share in new areas, without the expense of traditional brick-and-mortar branch locations, and position banks to more strategically plan future branch construction to meet existing, localized customer demand based on digital banking use.
Just as eCommerce has redefined the retail industry, digital marketing to mobile-first consumers (or, “digital natives”) is having a similar effect on retail banking. With increased competition coming from the largest financial institutions and a host of non-bank, tech-savvy disruptors, community and regional banks that are slow to adapt are particularly vulnerable to opportunity costs — something that can be almost impossible to overcome. In retail, we’ve seen established, historic brands fall by the wayside while others have fully leveraged eCommerce and have grown exponentially. It will be interesting to see where the dust ultimately settles within our industry.
David Eads is CEO of Atlanta, Ga.-based Gro Solutions Inc., which provides digital growth solutions for financial institutions. For more information, visit www.grobanking.com.