Community Banks May Find GPT More Friend Than Foe

The downfalls of Silicon Valley BankSignature Bank and First Republic have changed the conversations smaller financial institutions are having with their clients.

Doug Brown, president of NCR, told Karen Webster that bankers are grappling with “customer angst about topics they don’t normally inquire about.”

Among the most pressing topics is deposit insurance, and whether the Federal Deposit Insurance Corporation (FDIC) will backstop funds. Those same clients want to know how they can go about getting that insurance, he said.

“There has been a heightened level of anxiety and concern among the leadership at the community banks — not so much at the credit unions,” he said.

The CUs have not seen the outflow of deposits and aren’t as heavily weighted to business clients’ accounts as the community banks, he explained.

But, as the old saying goes, this too shall pass. Over time, smaller banks can embrace everything from apps to interactive ATMs and even ChatGPT to craft a hyper-personalized approach to each customer interaction.

We’ve been here before, way back in 2008 during the great financial crisis, and the banking sector survived. The crises past and present are underscoring the fact that locally-focused banking is still essential to the U.S. economy, said Brown.

“These banks have a presence in their communities — they’re seen and felt there,” he said. “And when people are panicked, when they have anxiety, they ask for help.”

To respond to those needs and those queries, community banks are going to have to embrace digital-first mindsets to bring omnichannel banking to its fullest potential, he said.

Neobanks — Hype vs Reality

The push to embrace technology may seem like a reaction from new competitors, the digital upstarts that have emerged en masse through the pandemic. At least some observers have posited that the neobanks are the community banks of the future — purely digital players that will push out the branch-and-digital community banks and credit unions into oblivion.

Countered Brown: “There are a lot of bright, shiny distractions that come along — but do they persist? Do they deliver what they need to?”

The neobanks, essentially apps that live on phones, aren’t equipped to live up to that hype, he said. Capital and funding are becoming more expensive than ever, and offering no-fee services is no easy task in this environment, especially when interchange revenues are being pressured, which renders the direct deposit and debit card transaction models harder to expand.

But neobanks have been giving some tailwind to traditional players to embrace digital banking, and that in turn is opening the door for CUs to work with NCR to formulate a strategic response.

North Carolina State Employees’ Credit Union (SECU), the second-largest credit union in the United States, will work with NCR to modernize the digital banking experience for SECU’s 2.7 million members across North Carolina. Those joint efforts, said Brown, will help foster a digital-first, omnichannel experience — connecting branches, apps, mobile devices and ATMs.

The key issue spurring SECU on, he said, “is how they will ‘fuse together’ a member journey … because people do have separate needs. They have times when they need physical currencies. They have times when they need advice and coaching … and they want self-service options too.”

That’s no easy task, he said, as banks must contend with decades-old technology. The Banking-as-a-Service and extensive network model (such as on offer from NCR) extend capabilities beyond the bank itself and integrates payments capabilities across a variety of use cases, said Brown.

Technology can help CUs craft hyper-personalization through real-time data and analytics, he said. Consumer-permissioned data can offer push notifications to consumers as they browse for financial products and services as they start online applications but then walk into the branch.

“The hyper-personalization has to extend into every interaction,” said Brown, no matter where the consumer is on their journey, and the conversations between bank and consumer need to be picked up seamlessly, giving rise to the consumer’s perception that the bank knows them and is here to help. Branches can become models of customer service as consumers walk in with mobile devices in hand and get the help they need. (He likened it to a visit to Starbucks.)

Looking ahead, he said, omnichannel banking will give rise to — and be reinforced by — voice assistants. The tech itself might have been overhyped in years past, Brown said, but now there’s a place for voice to be fused with artificial intelligence (AI), specifically with ChatGPT (and secure authentication) to create an embedded, intelligent, smart assistant to help navigate their day as consumers chart a clearer path toward financial wellness.

“We’re seeing a constant ‘layering up’ of all of these technologies,” he said, noting that for the smaller banks, “they’ve got to transform themselves and make the experience delightful no matter what.”