We are in the midst of a technological revolution. As smartphone apps and digital transactions have disrupted just about every industry in recent years, depositors now expect their bank to be tech savvy as well. Community banks must stay focused on providing and improving digital services or they risk getting left behind. This is paramount because large, national banks already offer digital products which streamline the customer experience and attract younger banking customers. Below are multiple reasons why community banks must go digital.
Banking customers are moving online at an astounding rate.
Banking customers, both individual and company depositors, have become more tech savvy. By 2020, almost half of the US workforce will be millennials. This means the financial decision makers for your corporate accounts will soon be comprised of this younger, more tech driven generation. Recent studies have shown that 61% of banking customers are accessing their accounts from their phone – and among millennials, those numbers are closer to 70%. This is a trend that cannot be ignored.
This younger generation grew up in the digital age, and their smartphones, tablets and laptops are deeply integrated into their lives. These millennials are accustomed to an online banking experience that is accessible remotely and makes their lives easier. They expect their bank to provide digital services, and when these services are not available, they take their business elsewhere. Community banks must prepare for the future by investing in these services today.
Competition between banks is increasingly happening online.
At this point, going digital is non-negotiable because that’s where the competition is happening. Banks face competition from several online sources in addition to traditional banks that have undergone digital transformation. In many cases, fintech companies offer a customer experience that is digital from end to end. With traditional banking, however, less than 10% of credit products are handled completely digital – meaning at least some step in the process has to be completed offline.
In today’s fast-paced world of instant gratification, any non-digital steps in the lending process could be seen as inefficient and might cost your bank valuable clients. To compete with other online banks and with newly emerging fintech companies, community banks need to revisit their product offerings to find new and innovative ways to offer them digitally.
Digital products can reduce the geographical boundaries of your community bank.
In the past, community banks reached the customers who walked past their doors and lived down the street. While your community is still a market you should heavily target, offering digital products can help you reach customers outside your community.
Lots of community banks have been established for a long period of time, so the majority of people in their area already know about them or have been exposed to their ads. What better way to grow your client base than to grow your geographical footprint. Going digital can reduce or even eliminate many geographical barriers, allowing you virtually unlimited growth potential.
What are the obstacles to going digital?
First and foremost, going digital requires change. It requires new service providers, new technology and new strategies to reach new online clients. It is human nature to resist change, but history has shown that to be a grave mistake in the business world – just take a look at what Amazon is doing to other industries who have resisted going digital.
In addition, community banks often resist going digital because the space is unfamiliar to them. Their leaders have established themselves as masters of relationship banking, and online banking seems to be the exact opposite of how they’ve meticulously built their businesses.
But there is an important caveat. When going digital, community banks actually have an advantage that their newer competitors lack: the relationships they’ve spent so long developing. Community banks are already experts at relationships, and they can take that expertise online to offer a relationship-oriented online experience that many new companies just can’t match. It may take new thinking on the part of bank leadership and new marketing strategies, but these challenges must be met if community banks are to survive in the digital age.
How can ADM help your transition to digital?
One easy way you can make the move to digital banking is by joining ADM’s network of banks. We work with community banks just like yours to find safe places for our customers’ deposits. This program is simple and involves little work on your part, but it brings company deposits to your bank from across the nation.
Interested in joining ADM’s network of banks? Let’s chat!