The Digital Transformation Playbooks for Financial Institutions

Challenger banks and bigtech have transformed both the customer experience, and what people expect from their financial institution. To catch up to their level of innovation, strategy and user experience, community banks and credit unions must first solve three main challenges: Vendor lock-in, disjointed experiences and manual process. Here's how to start.

Challenger banks and fintechs have changed the way customers look at banking. Where once they saw a brick-and-mortar place to deposit their money and move along, today they expect innovation, initiative and, above all, a flawless user experience. In order to come to the table in this new world order, community banks and credit unions must begin by addressing three key challenges: vendor lock-in, disjointed experiences and manual processing.

One Size Fits None: Escaping Vendor Lock-In

From the way they spend their free time to the way they do business, the modern customer is looking for personalized experiences from the companies they interact with.

Community banks and credit unions are no exception. Unfortunately, a lack of financial and technical resources can prohibit the flexibility to pick and choose the best vendors to help achieve this. Instead, community banks and credit unions have opted for cheaper vendor solutions and applications on the market.

While such vendors initially seem appealing for their price point, once locked-in, their one-size-fits-all software offerings can raise significant problems, including slow, inflexible legacy applications and a lack of access to customer data. This has left community banks and credit unions, traditionally renowned for knowing their customers and members better than anyone, unable to dictate their own digital roadmap or deliver the personalized, tailored experiences they know their customers and members want.

Community banks and credit unions face a stark fork in the road: Break free from vendor lock-in and join the digital banking revolution, or go down with the ship.

For community banks and credit unions ready to join the digital ranks, a digital-first banking platform is the key to facilitating a smooth transition. As opposed to locked-in vendors, the right platform will involve financial institutions directly in the partnership with two critical components at play.

First, unfettered access to any third-party vendor is key.

The Backbase platform allows financial institutions to fully configure and control their own user experience based on their in-depth customer knowledge. It achieves this by allowing banks and credit unions to easily mix and match services from best-in-breed fintech providers and application programming interfaces (APIs) without worrying about vendor lock-in or being stuck with a legacy core banking system.

Second, open access to customer data is essential to allowing banks and credit unions the freedom to direct their own digital destiny. Backbase provides institutions with insights into feature and function adoption, behavior attributes, transaction insights and user interface preferences. This allows banks and credit unions to identify new cross-sell and upsell opportunities, as well as provide customers and members with unique product offerings that help them meet their financial goals.

In addition to providing banks with end-to-end empowerment over their digital roadmap, the right digital-first banking platform will reduce infrastructure and solution maintenance costs and allow for scaled innovation. Backbase is one such platform helping small banks and credit unions to scale cost-efficiently, freeing them from vendor lock-in and putting their futures back into their own hands.

Fragmentation: The Enemy of Innovation

Consumers look at a bank or credit union and see a single financial institution, whether they are taking money out, putting it in or investing. However, as soon as we look inside the bank or credit union, we see it is not so simple, with most banks divided into numerous different subheadings, be it by business line, product line or a combination.

At best, this can lead to unsynchronized teams and legacy software, seeing duplicate work carried out by different teams and bogging down time which could be spent on innovation or sales leads. At worst, it can lead to inconsistent, fragmented customer or member experiences across each touchpoint.

While this may not sound like the end of the world, consumers looking from the outside in will see this as an enormous failure on the part of the entire financial institution; particularly the new generation who expects services to be available both on-demand and to their exact specifications. A financial institution that fails to meet people’s expectations could very quickly see lost customers or members and revenues.

Thankfully, omni-channel solutions like Backbase’s Digital-First Banking Platform can unite a fragmented bank or credit union by harnessing the data and functionality from underlying systems and dispensing it to all channels simultaneously. This ensures that whether a customer or member interacts at a desktop, via mobile app, visits a branch, calls into a help line or utilizes an affiliate, each touchpoint is contributing to a seamless, tailored experience.

In addition to improving customer experience, the Backbase solution also empowers employees to take a more digital-first approach to their own operations. On average, the platform delivers an average 20% boost in new sales revenue for small banks and a 15% boost in upselling.

Problem with Manual Processing: Redirecting The Human Touch To Where It’s Needed Most

Nobody wins with manual processing; not the employer, not the employee and certainly not the people the institution serves.

Yet this approach still looms large among many community banks and credit unions. This can largely be put down to an “it’s what we’ve always done” approach. While understandable, it is no longer viable. Employees’ valuable time is being consumed with costly ‘busy work’ that they could be spending on customer or member relations. Manual processing also allows greater room for error when compared with automation.

By taking advantage of straight-through-processing, community banks and credit unions can easily capture and automatically route information to the right backend system. This allows the business to increase efficiency and save money. It also critically frees up employees to help customers or members when they need a human touch most. Sensitive topics such as home loans and mortgage payments are best discussed in person with empathy, something an algorithm can’t complete.

The Backbase Flow solution provides tailor-made automatic workflows to simplify and expedite account openings, loan originations and various self-service tools in five minutes or less. This streamlined workflow provides employees the mental space to provide personalized attention to customers or members.

Digitizing Community

While fintechs tout high-tech solutions to new and existing customers and members, community banks and credit unions are poised to succeed in their own right by digitizing their deep community ties and customer and member knowledge. By adopting empowering solutions like Backbase’s digital-first platform, community banks and credit unions can free themselves from the bonds of ineffective lock-in vendors, fragmented operations and manual processing.

To find out more download the playbooks:

Community Bank Playbooks

Credit Union Playbooks

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