The COVID-19 pandemic is creating new challenges for banks, as social distancing measures are pushing more customers to look for in-person services online, like loan deferrals and financial planning. In this month’s Digital-First Banking Tracker, PYMNTS spoke with Jamie Warder, EVP of KeyBank, about how the bank is using data analytics to understand customers’ shifting needs and enable access to digital alternatives.
Branch visits are vital to customers’ financial lifestyles, despite mobile and online banking’s growing popularity. All generations, including 64 percent of baby boomers and 56 percent of those from Generation Z, largely prefer opening accounts in person rather than doing so online, for example, meaning in-branch experiences at financial institutions (FIs) need to be just as advanced as their online offerings.
One bank working to ensure its in-branch systems match its online capabilities is Cleveland, Ohio-based KeyBank, which operates 1,197 branches across the country and handles more than $137 billion in assets. Banks looking to meet customers’ standards must have a holistic view of the digital experience and consider all aspects of their operations rather than prioritizing one over another, according to KeyBank Executive Vice President and Head of Digital Banking Jamie Warder.
“We don’t think about digital just as a client-facing tablet,” Warder explained. “We’re thinking about how we digitize our channels, our branches, our contact centers, our relationship managers and our operations teams. We think about digital very broadly in that way.”
Guided conversation systems that facilitate communication between bankers and customers are at the center of many banking operations, ensuring FIs can supply their customers with the services they need. These data analytics-focused systems help banks sift through myriad data points in real time, enabling them to provide bank staff with data about customers for more targeted financial product and service recommendations.
The COVID-19 pandemic has challenged nearly all in-branch processes, however, and FIs are thus leaning into these and other digital means since the outbreak to ensure their services are available to customers in need.
Knowing the Customer
Guided conversation systems can be banking game-changers under normal circumstances, harnessing various data sources to help bankers recommend products or services for customers based on their financial needs and lifestyles. No two customers have the same situations, so a one-size-fits-all guideline for bank staff would be less effective than a system like KeyBank’s, which dynamically adjusts its recommendations for each customer.
“[For] a small restaurant chain, it might talk about the way … merchant applications can help [it] with taking orders and taking payments at the table,” Warder explained. “[For] a doctor’s office, it might talk … about how [it] can do patient scheduling through [its] merchant system. If you’re a consumer, it might understand the different types of debt that you have and ways that you could consolidate that debt to save money.”
These programs take data, such as demographic and economic details, from customers and third-party sources, then analyze them to fine-tune recommendations. Harnessing data in this way is common in the banking industry, with 59.3 percent of FIs either actively using or exploring advanced data analytics systems. Just 10.9 percent have developed sophisticated predictive and prescriptive capabilities, which can determine forecasts for future trends and recommend appropriate courses of action, and 27 percent report using such data for basic functions, like visualizing historical trends.
The information upon which these systems rely — income levels, professions, homeownership status and financial goals, among other options — is largely gathered in person, but these direct interactions between customers and staff are now infrequent given current stay-at-home guidance. Many FIs are instead turning to mobile and online channels to interact with customers — and such technologies are helping to close the customer service gap.
Adapting to Social Distancing
The COVID-19 outbreak has been a challenge for FIs as consumers adhere to stay-at-home, social distancing or quarantine orders. Warder feels that the banking industry was prepared for this challenge, however.
“The good news is that banks have been working on this for decades now,” he said. “The work we’ve done in the past to digitize most of our experiences and processes is serving us well now that some of the options have been decreased. We’re seeing a surge in activity digitally as clients are choosing to interact with us in this way.”
Many banks have kept their drive-thrus and ATMs available as alternatives to digital-only options, ensuring customers without home computers or smartphones retain access to their financial products. Contact centers are helping as well, giving bank customers multiple methods through which to connect with bank staff.
The Small Business Administration (SBA) Paycheck Protection Program (PPP), which is meant to help businesses with 500 employees or fewer, has been one of the largest banking developments during this crisis. Such organizations can apply for loans at participating FIs and have the government forgive them as long as they do not lay off any employees, which may prove essential to those that may have had to reduce their workforces to stay in business. These loans are typically issued in person, but that is a near-impossibility during the coronavirus pandemic.
“[Banks] were able to digitize that in order to very quickly help clients without them ever having to talk to anybody [in person],” Warder explained. “[Banks have] also increased limits on remote deposit capture, so even for the larger transactions, clients can use digital capabilities more than they would have before the crisis.”
Digital capabilities are useful given current circumstances, but the outbreak will eventually recede. Digital-first banking is thus still required to overcome other ongoing obstacles, including those related to competition.
Looking Beyond the Outbreak
Emerging competition from banking-as-a-service providers is one such challenge, according to Warder. Companies ranging from Apple to Google to Uber are all diving into banking services, working to offer checking accounts, online payments and credit cards. These developments come with new expectations from customers, however.
“Their expectations are being set by technology companies … and they want to see that same type of transparency and speed and ease of use in their bank relationships,” he said. “It puts a lot of pressure on banks to learn how to design great products and great digital experiences that live up to [something like] the Netflix experience.”
Banks can lean into this challenge with good design, Warder added. A robust suite of features like online payments and preapproved loans are essential for good digital banking experiences, but customers will not even get through the virtual front doors if stymied by complicated interfaces.
“Creating great experiences isn’t just about people who know technology and banking, but also about actually harnessing people who can think through every detail from the color of the button to the layout of the page,” he explained. “You can’t create great digital experiences if you don’t create a great capability around design.”
This is easier said than done, however. The ongoing pandemic may be at the top of banks’ lists of concerns right now, but they will need to consider such guidelines if they wish to harness digital-first technologies, like guided conversation interfaces, to compete against new players. Ensuring customers have the services they need when they need them will be vital not only during the COVID-19 outbreak, but also for the foreseeable future.