If you missed last week’s American Bankers Association Annual Convention in Chicago, we’ve got you covered. Hunter Young, or President of Financial Marketing Services, attended the sessions, spoke with banking leaders, met with exhibitors and now offers these five takeaways from the conference.
1) If data is the new oil, banks need to tap more wells and engineers.
Data management is about flexibility and experimentation. For banks to move on to the next era of customer insight the right people in the organization need to understand how to ask the right questions of the new collective data.
This isn’t easy. Banks seem to fear the how it will get done, not the why it needs to get done.
Today’s customer is more digitally savvy and expects the experience to be more personal. Data is truly the backbone of the personalization needed to meet the desires of the next generation of customers. Rather than delivering a web page that offers the same static experience for months, data can help you personalize marketing and digital banking features based on recent customer actions. We’ve reached a point where someone who is not in the market for a HELOC shouldn’t necessarily get an email about how your bank offers these lines of credit. Likewise, a student currently in a doctoral residency program could begin receiving information about opening a practice, post-graduate budgeting, or refinance options at least a year before they complete their education.
The new personalization era is about proactive communications and tailored digital experiences. This requires a foundation of strong relationship, demographic, behavioral, and transactional data.
2) Banks are primed to attract top talent and must be open to what the next generation wants in an employer.
Despite being a strong, secure career of choice in the last century, many feel the financial industry lost some of its attractiveness as an employer of choice during the last decade. Fortunately, the banking industry has the potential to quickly regain its “cool.”
The rise of technology, new approaches to digital banking and the ability to shape the customer experience have created innovative and exciting positions within our industry. But to attract today’s millennials, and the next generation of talent that follows behind them, banks need to offer significant challenges and provide valued benefits. This could mean helping out with student debt or less strict vacation policies rather than simply rewarding strong performance with an interesting travel opportunity.
You might consider creating “Digital Banking Advocates” who train other employees on new technologies and how deeper features can enhance the digital banking relationship. Or forming inclusive Innovation Committees to improve customer experiences for both online and offline. Consider the honest feedback you get from your younger employees as it may reflect the feelings of your customer base for years to come.
And, please, look at your onboarding process for employees. Do you create clear job descriptions, set proper expectations, and instill culture and knowledge for your new associates? While the younger generations may be less patient, their loyalty might surprise you if they are made to feel included and valued. Take a look at your employee hiring and “first 90 days” process. A lot of good can come from improving how you attract and onboard employees—young and old.
3) New technology and integration decisions loom large for banks of all size.
The number of new choices in technology is growing and the decisions are becoming more complex. How do banks navigate this change? The debate at the conference was strong this year.
Fintech has become an all-encompassing term, but it is important to differentiate the types of financial technologies on the market today.
Disruptors (think Paypal, Venmo, QuickenLoans) are taking market share and “engagement” away from primary institutions. A few years ago this group was thought to take over the industry, but the “takeover” has been slowed and complicated as more banks have begun to adopt new technologies.
Legacy fintech companies represent the old guard of financial technologies. They often buy up smaller players and tack on solutions to their existing offerings. These companies may not be as innovative and your bank can be hurt when trying to add a more progressive solution to a legacy core.
Friendly fintech companies are partnering with all sizes of banks large and represent one of the fastest growing segments of financial technology. These progressive, fast-paced innovators don’t always have a deep knowledge of bank systems and culture, but they can offer highly attractive products that help their bank clients stand out in a sea of sameness.
Whether it is payments, cloud software, digital lending, voice, chatbots, or cryptocurrency, the fintech sector is becoming a new avenue for expanding choices and deepening customer relationships for banks. Yes, the evolution of mobile and tools like Remote Check Deposit happened quickly, but the next generation of technology is more involved and is moving even faster.
To keep up, banks should look to understand the desires of their current customer base and involve them to test potential tools. Such actions will help you make informed decisions about the next evolution of customer experience improvements.
4) Cyber threats are evolving and the responsibility is on banks to enhance security.
General Michael Hayden, former Director of the National Security Agency, made it clear to bankers in the audience that the government won’t be able to protect banks from all of the modern cyber threats. Bank leaders in IT and Risk departments need to further educate themselves on evolving threats and appreciate how the risk equation is changing. The equation is…
Risk = Threat x Vulnerability x Consequence
Vulnerability has long been the focal point of the risk equation. Today the shift is toward the consequence factor of the equation. Risks, such as breaches in data and other consequences, are an increasingly important factor in determining whether or how to enhance a process or customer experience. Given the light speed of communication, reputational consequences have never been more important to weigh in the risk equation.
Many emerging solutions rely on complex data encryption and biometrics. Some think passwords may be dead with the next two to five years. And while customers are more fearful of their data and identity being compromised, they are still hesitant to adopt some of the newest security measures. Education will be key over the coming decade as digital banking solutions continue to update their sign-on and transactional security tools.
5) Banks are reasserting themselves as the backbone of economic development across the country, but government can help stimulate further growth.
President Trump’s economic advisor Gary Cohn addressed the artificial asset thresholds (specifically $10 billion and $50 billion) in bank regulation and discussed how important it is to get a legislative change in place as soon as this year. Cohn described the process of raising the $50 billion threshold to greater than $200 billion as a “real shot” by year’s end.
“I don’t love the fact that we’re creating an artificial line,” Cohn said. “The idea a bank would turn away a deposit because their balance sheet would get grossed up and be subject to more regulation is a little bit wacky.” Most bank leaders seemed to agree and pointed to the work that needs to be done to adjust the costs associated with a bank that wishes to grow responsibly when moving towards these thresholds.
Cohn emphasized that the Trump Government’s three-legged stool of regulatory reform, tax reform and rebuilding infrastructure is still a work in progress due and has been delayed in getting the right people in the right positions to create the changes.
A common theme remained the potential for the financial community to help rebuild cities and towns across America. Be it banks’ response to this year’s devastating hurricanes or improving balance sheets to allow banks to do more in their local communities, the need for strong financial institutions has never been more apparent.
This article written by Hunter Young was originally published by ABA Bank Marketing. View the original article here: http://ababankmarketing.com/insights/5-takeaways-aba-convention.