Most everyone today has likely used some form of mobile or digital banking when conducting personal or professional transactions with his or her preferred institution. From managing several accounts online, to the ability to transfer money via an array of digital transfer platforms, the banking industry is not immune to the sweeping technological advancements that shape industry, culture and society in today’s digital age.
“Consumers are increasingly more tech savvy and, overall, are demanding 24/7 access to their money. These cultural phenomenons, paired with the fact that smartphones are continuously innovating, are forcing the banking industry to become more digital and mobile-friendly,” says Ravi Kumar, head of internet banking for CIT Bank. He adds that he expects the move toward digital banking will continue as technologies and consumer preferences keep evolving.
Paris Roselli, senior vice president of digital banking at M&T Bank, says he first noticed general shifts towards online banking in the late 1990s, in line with the early stages of growth of the world wide web. “There were online-only banks and early adopters within the industry. Online-only banks struggled and traditional banks generally came out ahead once they adopted new technologies,” Roselli explains.
“This [shift] is customer led,” says Chris Maher, chairman, president and chief executive officer of OceanFirst Bank. “This is not the bank trying to drive someone to a particular channel; these are customers saying, ‘This is how we want to bank with you.’”
Customers Want Convenience
Smartphones, tablets and other digital devices have granted us instant gratification and near instantaneous access to whatever information we may be seeking. This technological reliance has been engrained in many of us, and when we don’t get that same instant gratification or convenience in various aspects of our lives, it’s noticeable and often frustrating.
Simply put, consumers desire convenience, and banks have taken notice.
“[M&T Bank] just launched person-to-person payments with Zelle in our online and mobile banking platform,” says Roselli. “It allows people to pay each other by using a mobile phone number or e-mail address. We have exceeded our business case goals and have seen great customer uptake and usage.”
As a result, customers can write fewer checks, and visit the ATM less frequently when they want to give money to people they know – perfect for situations like splitting the check at dinner, for rent, or for chipping-in on a retirement gift or for little league uniforms.
“Apps such as Zelle, BillPay and PeoplePay make it easier to access cash fast from either a savings or checking account,” Kumar adds. “This helps individuals to be more strategic about how they access their savings. If a consumer wants to open an interest yielding account for a specific reason, such as saving for a house, vacation or unexpected emergencies, they can do so without sacrificing access or convenience.”
Aside from personal transactions, transfer platforms can be extremely beneficial to businesses as well.
“A small business owner will be able to get paid by a customer around the clock; 365 days a year – think a plumber fixing a leak in your house on a Sunday night,” adds Roselli, whose bank’s Zelle platform will be extended to small businesses in 2019. “We will have tools so the business owner can send a request for payment/invoice electronically and the customer can reply with a payment. No more ‘net 30.’ The invoice and payment can integrate with accounting software, and the small business owner can spend more time running the business, instead of managing the paperwork.”
Convenience also entails ease-of-access, and the ability for companies to reach a wide audience via social media has also been beneficial to companies looking to re-brand or let customers know of a new, exciting direction it is headed towards.
“We did a complete redo of our website to really bring us into the modern age,” says Bob Bardusch, Valley’s chief operating officer and executive vice president. “There was no support for Valley to have a presence and a voice on social media platforms [such as Facebook and LinkedIn] just a few years ago. We’ve now jumped into them in a big way so we can not only have a voice, but manage that voice in the marketplace.”
This foray into social media has perfectly aligned with Valley’s rebranding and new logo (Valley instead of Valley National Bank), and has afforded the company endless possibilities to tell its own, new story through its online image and interactions as well as solidify the new direction internally to employees.
Of course, people may still want to go talk to a banker in person or they may need to withdraw money, and in these cases, Bardusch says that virtual teller machines can provide these services without sacrificing convenience. “We feel that [virtual tellers] add convenience,” he says. “Sure, it’s not a mobile app, but a mobile app doesn’t give you cash.”
True 24/7 Access
Transforming an institution to a more digital based approach is not without its challenges.
As Roselli says, “At many institutions, the core banking systems are very robust, but they were never meant to connect directly to the consumer. This means many institutions need to re-tool their core capabilities to operate in a more dynamic 24-hour, 7-day environment with direct consumer interactions.”
He says that once institutions get over those hurdles, a lot of benefit can be derived for both the bank and customers, manifesting in simpler business processes, and immediate access to information at any hour of the day.
“The nature of the conversations with the customer began to change dramatically,” Maher says. “We found that some of the solution was the technology, but an even bigger part was the training and education of our staff so they can handle a type of question that they had typically not gotten before.”
Maher says that OceanFirst Bank has a certified training program where each banker spends about seven weeks going through a class to ensure they know how to help a customer if they have a problem with some of the newer products and technologies. By the end of the year, Maher says that around 500 employees will be certified by the program. “It was a real change for our people to become experts in new technologies,” he says.
Mobile communication not only benefits customers, but employees as well, as they can quickly look up balances for customers or approve things such as invoices or a new requisition for a person on their cellphone, allowing them to be virtually anywhere while still being accessible and able to provide service to customers.
“Before, the notion used to be that you had to be in the office to be working. That has changed … you don’t have to physically be [in the office], but you can be connected mentally and emotionally through e-mail, text, Skype, video calls and more,” Bardusch says. “We really want [our employees] to not just sit in the office, [but instead] get out there, be mobile, and spend more time with their customers, because ultimately, that is how we provide better products and services.”
Security Remains Paramount
Kumar points out that convenience and security are not mutually exclusive.
“We are focused on ensuring customers stay protected without compromising their convenience,” he continues. “For example, we recently implemented the use of a one-time passcode, which reduces call time and eliminates the need to ask security questions, which can be more susceptible to fraudsters.”
“The customer expectations for digital service is often based on what they experience with companies like Amazon or Netflix – ease of use, speed and accuracy,” Roselli says. “Those demands in the banking sector must be balanced with robust security.”
This entails moving beyond just login and password, and instead using bio-metrics (such as voice, finger or face print), computer/phone “fingerprinting,” geo-location of the user, and more. These all cumulatively provide a more robust level of security than ever before.
Support for electronic payments like Apple Pay and Android Pay can also make transactions more secure. “With those applications, you no longer share a card number, so it is a far more secure transaction environment that is much better than someone handing a card to a merchant where there is an opportunity for that card to be scanned, copied or compromised in some way,” Maher says.
“Security is absolutely the most paramount thing that we do every day,” Bardusch adds. “For example, if we are enabling cloud technologies, which we have done quite a bit of over the past 18-24 months, there is a lot of work that goes into partnering with the information security group and really driving security, privacy, safety and soundness into every part of the organization. We need to make sure that if we are putting information into the cloud, that we have the right encryptions and data protections on the entire route that data travels, be it at rest or in transit.”
The Future of Banking
As technology continues to advance and becomes more integrated into our daily lives, banking as we know it will also continue to transform.
Roselli believes that in the future, the banks will be where the customers are. He says that you could see tighter integration with traditional banking (money movement, finance management, data, etc.) to third-party sites and services.
“Just like one can make payments seamlessly at the end of an Amazon shopping experience, people will be able to pre-qualify for a home or car, get a loan, etc., directly within the real estate or car sales website because customers will be able to selectively share their financial data when and how they want,” he says, adding that one could expect more integrated, simple and secure ways to transact when buying gas, groceries and other everyday items. “Your bank will power your financial life while integrating seamlessly with your personal life,” he concludes.
“People continue to talk about the death of the branch, but we don’t see that,” Bardusch adds. “I don’t see branches dying in 5 to 10 years. Instead, we’ll likely see change. There may be less branches and they may be smaller, but [I see them] changing from being a transactional type of facility to turning into a more advisory [type of facility].”