When you’re a Chief Experience Officer for a large bank, your antennae are always up for clues to how consumers see your institution. Some clues are closer than others. For Beth Johnson, CXO for Citizens Bank, when her 18-year old daughter recently opened her first bank account — digitally, not surprisingly, using Citizens Bank’s mobile app — her mother was paying close attention.
“It was good to see it through her eyes,” Johnson tells The Financial Brand. That kind of input helps the bank to stay relevant with consumer expectations shaped by other digital service providers like Uber.
Citizens Bank, at $177 billion in total assets, is the 17th largest bank in the U.S. It has about 1,000 branches scattered among 11 states (mainly in the Northeast and Midwest). It also operates national student loan and indirect auto lending businesses, as well as a direct bank, Citizens Access, which launched in 2018.
Beth Johnson joined Citizens Bank in 2013 from Bain and Company. She rose from head of Corporate Strategy to Chief Marketing Officer and Head of Virtual Channels to CXO in January 2020, reporting to Chairman and CEO Bruce Van Saun.
CXO is a new position at Citizens. Johnson says the institution saw a need to “elevate how we thought about experience — particularly digital experience design powered by analytics.” The bank has been using data analytics extensively in marketing and for creating their digital experience. “We wanted to create an enterprise experience organization on both our consumer and commercial businesses,” says Johnson.
Between her analytical background and her current broad scope of responsibilities, Johnson is situated at the crux of many trends impacting retail banking — in particular the tension between a large physical branch network on the one hand and fast-changing consumer habits on the other.
What the Digital Surge Means for a Big Branch Network
Citizens Bank’s situation — branch versus digital — is faced by most traditional American financial institutions, varying only by scale. Digital transactions have risen from steady increases to a major bump once the COVID-19 crisis took full effect. At the same time, the bank’s large branch network almost overnight went from gradually declining traffic to a big drop during the pandemic, with only a partial return to date.
Johnson states that the bank saw a 25% increase in use of its digital channels during the first few months of the pandemic, and that the upsurge continued through June. “Our customers are now doing more check deposits with remote deposit capture than they’re doing in the branch,” Johnson states. “I think it is unlikely it’s going to go back.” The bank is also seeing higher usage of live chat and video interaction as well.
By contrast, Citizens’ branch traffic was down 50% year-over-year during the height of the COVID lockdown. Some of that lost traffic came back in May and June, Johnson states, so that the branch traffic was down about 20% as of the end of June 2020. “I think it’s going to level off for at least the near future,” she says. Johnson also notes that branch traffic had been declining about 7% year-over-year for Citizens prior to the pandemic.
But even with that partial rebound, “the idea of the branch being the primary channel is a thing of the past and should go away. Instead it should be the right channel for the right interaction with the customer.”
COVID’s impact aside, Citizens Bank has been transforming its large branch network for several years, Johnson states. This includes renovations, consolidations and, in some cases, closures. Overall, branches are shrinking, with fewer teller stations and more automated transaction capabilities. “The branch network isn’t going away, Johnson states, but we certainly may not need as many locations because digital adoption is accelerating and consumers are not visiting branches as much.”
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So, What’s the Right Use for In-Person Banking?
The rise of mobile banking is not the only reason why fewer people visit branches. Johnson points out that the pandemic lockdown experience increased interest and comfort with live virtual channels, like Zoom or other two-way video services.
She says that for some situations, such as buying a home for the first time or a significant wealth event, people still prefer a face-to-face conversation, to help establish a personal relationship. But that conversation might not always be in the branch now. It could be by phone or video. Asked if she believes if it’s possible to establish a personal relationship remotely, Johnson responds that “We’re finding that it’s closer than we thought. All of us are doing so much Zoom interaction in our daily lives, it’s feeling more natural than it did pre-COVID. I believe we’ll see more and more of a shift there and more comfort in those channels.”
However, not every consumer or small business owner will want to meet with a banker that way, which is why branches will remain relevant. “Customers like to be able to use the channel of their choice,” Johnson notes, but adds that “we’ll see how it balances out” over the coming months.
Even as banks and credit unions venture further into the realm of financial wellness and advice, the traditional assumptions and practices are changing. For about four years, Citizens has been offering retail customers a financial check-up, much like an annual physical health check-up. It is still done primarily in the branches, but here, too, COVID has had an impact as the check-ups have been extended to remote channels. So far that’s mainly been over the phone between the customer and branch personnel, says Johnson, with information provided by email or other digital means. The trend could be further extended to an all-digital check-up.
Already, the bank has integrated the wellness program across channels. Not only can the appointments be made digitally, but a digital tool poses preliminary questions to make sure the subsequent conversation with a banker is highly relevant.
In the wealth management space, Citizens has been offering a digital investment advice platform called SpeciFi since 2017, in partnership with SigFig. The SpecifFi service is also integrated into the bank’s online banking platform, the company states.
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Contact Centers, Chatbots and Data
Citizens launched its first customer-facing chatbot during the pandemic and will be expanding its use in the near-term, according to Johnson.
The bot is driven by artificial intelligence, but is text-based at this point, which, Johnson notes, was easier to implement quickly. Being text-based the chatbot has stop/start capability, enabling consumers to step away to deal with a child or other situation and come back to where they left off.
The chatbot helps the bank send routine questions out of the contact center. “It’s surprising how many people call for password resets, their balance or a simple money transfer,” says Johnson. Digital channels not only provide a better experience, she continues, but let the bank invest in customer experience versus the cost of having people answer the phone for very simple questions.
A key chatbot feature, however, is being able to seamlessly hand-off to a live agent or to a branch staffer when a deeper discussion is needed. “Having the ability to go between channels easily is really important to the experience,” Johnson maintains.
She believes that the evolving role of contact centers is similar to that of the branch: to be the channel for more complex interactions and for providing advice.
The CXO separates “advice” into two distinct categories: “insights” and “deeper advice” — both driven by data. Insights are chiefly digital including such things as letting a consumer know when their spending is inefficient, including, for example, notifying them if they have three subscriptions that look similar “or may not make sense in the context of their current life.”
Deeper advice can include some of the “rich content” the bank has developed around, for instance, buying a home, but also refers to individual interactions face-to-face or virtually.
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The Future of Retail Banking
The focus on data-driven customer experience — whether in-person or digital — is critical, Johnson maintains, because the experience provided by banks and credit unions truly competes with everyday experiences with the likes of Uber, Netflix, Spotify and Amazon. That’s the frame of reference that all consumers increasingly have, and that younger consumers, like Johnson’s daughter absolutely have.
“The customers of the future are shaping their banking expectations through other experiences in their lives,” Johnson firmly believes.
Equally true, she maintains, is that there are differences between banking and other forms of e-commerce, one being the importance of security and trust.
“Money is a highly emotional topic for many people,” the banker observes, “which creates a bit of a difference from some of the other companies.”
Based on those factors, and the upgrades many financial institutions are making to their digital capabilities, Johnson predicts that the industry’s primary players will be substantially the same over the next three years, although “new entrants will continue to push our thinking.”
Overall, however, Johnson believes many incumbent institutions are in a good spot.
“I do believe that retail banks are strategically advantaged with our customers today given the data we know about them, security concerns and the fact that we are regulated. That will enable us to answer the call to have strong customer experiences for our customers.”