For community banks, there is no shortage of disruptors. Between bigger banks, fintech upstarts and their own peers, the playing field is rife with competition. To stay ahead, these financial institutions need to invest in modern banking technologies that can provide unique customer experiences and seamless execution on the backend.
But there’s an inconvenient truth for community banks: many of them simply aren’t prepared to take advantage of new technologies that are available.
Some lament having invested in a technology they don’t have the internal expertise or partner support to use. Others find they’ve used their budget on what they thought was a great technology investment, only to find out they need to buy additional features, services and ancillary products to make it useful.
With the right mindset and execution, community banks needn’t be stopped by these crucial implementation challenges. Here are four steps every community bank needs to take to overcome this inconvenient truth:
Define the Problem Technology Will Solve
Technology for technology’s sake isn’t a sound strategy: community banks have to identify the problems they want new technologies to solve.
Of course, this mentality holds true for any financial institution, but the size, scope and nature of those problems differ for each. One of the world’s largest banks, for example, may have the problem of a super complex environment. They’re product-based and they want to be platform-based. They want to use open APIs to innovate and differentiate; they need to leverage customer journeys across channels. They want to use data. Most community banks have a less complex environment—but they want all of the same things. Defining the specific problems a particular technology can help will bring focus and clear results to their tech investments.
Stop Thinking About Technology in Terms of Product
Community banks tend to view and select technology in the form of products. They may see a stat like the fact that 42% of consumers now bank using a mobile app, and then start looking for a mobile app to offer to retail customers.
But what does that mean for a small business customer who holds her business and personal accounts with her community bank? Despite having a slick mobile banking app for her personal banking needs, she can’t use it to manage her business bank accounts It’s a flawed user experience that could have been avoided had the bank looked at technology through the lens of the customer’s journey.
Community banks need to take an outside-in view of the client experience and view the bank environment through a simplistic lens. What is the platform of record where all client information sits? What does it enable, or should it enable?
The technology investment should simplify and consolidate the bank’s core system so it can continually deliver an optimal customer experience.
Rethink the Bank’s Value Proposition
Remember that Henry Ford quote? “If I had asked people what they wanted, they would have said faster horses.” A faster horse doesn’t win in banking anymore.
Community banks need to be willing to adjust their internal perception of what banking has become, and how they can use technology as a differentiating advantage. This will require them to look closely at how the organization is put together, what the core banking base platform looks like, what channels customers use and what channels they want to use.
Banks also need to revisit how they acquire customers and interact with them. Only then can they use technology to deliver compelling, digital, data-driven contextual experiences without human involvement—but with a personal feel.
This reimagining will be difficult and uncomfortable for many. But avoiding this important process will be deadly a decade from now.
Don’t Spend Passively
Community banks must invest ruthlessly in their technology forget maximum benefit. Passive investments yield lukewarm results. A bank that decides it’s going to focus on its business banking segment must commit to technology investments that are disruptive, and enable an untethered, white glove customer experience. From there, they can move onto other questions, like how to monetize, how to use data—and how to drive a digitally seamless and contextual experience. But it all starts with identifying that core focus.
Community banks need to accept that everyone is facing the challenge of how to deal with legacy systems and processes, how to respond to change and how to respond to the innovation dilemma. They are more than capable of overcoming all these unknowns—but only if they are willing to address these four critical issues before pulling the trigger on their technology investment.
Spencer Jones is the Enterprise Product Officer at FIS