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Banks Must Choose Between Grand Aspirations or Results

Digital Transformations: Banks Must Choose Between Grand Aspirations or Results

By Rebecca Martin

Consumers, especially those who already bank with your financial institution, want “more” from you.

Banking leaders have been beaten over the head with this message for 20 years as technology companies launched enterprise relationship management solutions, online and mobile banking, and a host of other software services aimed at improving banking engagement. Digital transformation – translated as buying software – is required to serve households well.

No one wins, though, when consumers are used simply as the reason for digital transformation. The consumer, their needs, and the specific tactics that would help, shouldn’t be forgotten when buying technology.  Practically speaking, that means leaders should avoid getting lured into a non-specific ‘transformation,’ or a grand aspirational vision.

Instead, customer relationship management (CRM) and engagement software – or marketing automation platforms – should be shopped to serve specific growth and loyalty tactics that tie to consumers’ actual financial needs. It’s engagement, not engagement platforms, that grow banking relationships. Leaders need to sift technology based on successful engagement, not generally, but specifically for banking.

Buying Tactics vs Buying Dreams

Often, institutions consider platforms for better depositor onboarding, cross-sell, or borrower retention, that weren’t developed for those use cases. With no industry-specific functionality, they are blank canvas and a set of paints. You, as the customer, are the painter.

Since most banks and credit unions are relatively new to digital engagement, do you see the issue? If you buy one of these platforms, you are about to make a bet that your prediction for successful engagement is correct.

What’s more, you’ll have to wait until you buy it – paying consultants, writers, designers, and marketing technologists often for years – before you find out if you were right. If you buy one of these, you’ve bought your own aspirations and dreams, not a platform ready-made to make them happen.

You don’t need to take this risk. There is a way to measure how much further a platform will get you into the process of better serving customers or members. You’re looking for platforms that offer you a canvas and paints, but that also already have painted the landscape. You just need to add the people and determine what they are doing in the foreground.

What does that look like in a piece of technology? Your measuring stick is customers, and the steps you will need to follow to improve the ways you serve them.

Four Key Questions

Customers need to be at the center of technology buying for banking, and in a very practical way.

Yes, they want “more” from you. But what, specifically, do they want? How do you know? What is the best way to react and engage once you know? And how will that create growth and loyalty for your institution?

While general surveys and studies can help, banking data provides the best answers. The second requires you to interpret that data. The third and fourth are engagement questions, with data defining and triggering communications with customers.

Institutions can measure platforms using these four questions. It is a simple test. You want to know when comparing technology solutions: Does this or that platform sufficiently answer each question? If one does, you’re well on your way to defining the most pertinent functionality needed to find growth and earn customer loyalty, both for your teams and your technology.

How To Set Requirements

Consider a specific consumer need like a mortgage. What do customers or members want from you?

When it comes to decisions about real estate, consumers sentiment fell to its second-lowest reading in a decade, according to a July 2022 report from Fannie Mae on Home Purchase Sentiment.

Digging into the same survey for the last 12 months shows, however, that consumers would prefer to buy a home if they moved, rather than rent. They want to own a home; they’re just not sure they can. This is the “more” customers and members want from you – the steps to make their goals possible.

How do you know who may need a mortgage? Buying a new home always brings with it uncertainty. Institutions need to read the consumer-industry landscape, recognize homebuyers’ challenges or opportunities, and use those insights to engage those signaling a mortgage need. Institutions are turning to specific insight tools like credit monitoring, and Multiple Listing Service alerts, to identify customers applying for mortgage credit, or listing a home for sale.

Be wary, though, when you shop integrations for alerts like MLS or credit monitoring. If you’ve been around marketing tech for a while, you know any platform “can” or “could” use these alerts. But how much time, money, and expertise will it take to make a platform use them properly? Fortuitously, there is an acid test: Only consider providers willing to prove it to you within six months – meaning they promise an ROI in funded mortgages – before they lock you into a multi-year contract.

Enabling Growth and Loyalty

Once you know who signals a need for a mortgage, what is the best way to react and engage?

Unfortunately, when institutions monitor their mortgage or deposit databases, engagement is the most common breaking point. If data shows a depositor needs help, who engages? Is it a personal banker or a loan officer? If it’s a loan officer, how well will marketing coordinate? That’s not traditionally a strong suit for financial institutions.

Here the bank needs to take a data-based identifier from a depositor, determine the best angle for communicating based on that data, and then make contact. Institutions now use intelligent engagement that makes contact on behalf of a loan officer. That is, without requiring marketing to email or to send a spreadsheet, and without manual steps by the loan officer.

Making contact and providing information, though, does not equal a loan application. How does your bank now nurture the depositor to become a borrower? Applications are the event most affecting growth and loyalty for your institution.

Our customers have found that within a database of 50,000 demand deposit accounts – most institutions have far more contacts than that – there are about 1,650 home sellers.

Institutions can seek to earn the business of each one of those borrowers, but to succeed at it they must follow best practices. Successful engagement is an orchestration and synchronization of campaigns, loan officers, and even real estate agents. Your engagement needs to ensure:

  • Loan officers call depositors who’ve listed a home on MLS,
  • Loan officers contact the listing realtor, especially comarketing partners,
  • Appropriate depositors receive campaigns based on their data, with appropriate on and off ramps for journey steps,
  • Loan officers follow up with depositors who began applications, or who agreed to apply but did not, and
  • Comarketing realtors reengage borrowers when loan officers cannot make contact, and/or the marketing campaign does not convert.

Institutions must test platforms in terms of how they support these steps, because it is these actions that make more loans. Then, they should veto platforms not purpose-built for such best practices.

A Tool to Serve

No one wins when consumers are used as generic reasons for digital transformation because they don’t want digital transformations. They have their own goals and challenges, which should be used to define what an institution invests in to serve them better.

Focus on the interactions that matter – along with the approaches that drive growth and loyalty – and use them to define how you buy technology. It is the only way for digital transformations to achieve results.