Reality Checks for Community Banks Switching to a Digital Model

It's trendy for smaller financial institutions to talk big about pursuing a digital delivery model. But are they ready for the new reality that awaits them? The cultural, operational and marketing shifts they will have to make?

What does the phrase “community bank” mean to you?

It’s safe to say that most people would associate the term with a relatively small bank with strong customer service and moderate rates that serves a narrow range of geographic communities centered around a handful of branches. In this case, the bank’s communities would be quite literally composed of the very people visiting their branches — those who work in the immediate area and put their kids on the bus for school every morning.

How do you, then, define “community” if your bank is relatively small with good customer service and moderate rates that serves depositors throughout the entire country — virtually?

Online-only “community” banks have forced marketers to redefine their interpretation of what constitutes a traditional community. Does an online-only community bank define their community as the area within a 10-mile radius of their office/headquarters, a 10-mile radius around each deposit-taking ATM, or simply anyone they can reach with a mobile device?

Let’s explore some parameters around which banks could organize their sense of community when they have depositors banking with them digitally anywhere across the country, as well as some ways to help understand how to better market to this newly-defined community.

Digital Delivery Changes How Community Banks Are Marketed

The cornerstone of a virtual bank is its website. Inbound web traffic could bring in a broad mix of window shoppers, applicants, current customers, past customers, employees and job seekers. Every one of these constituencies represents a different part of your new community.

While visitors to a website may come for many different reasons, it is frequently the result of acquisition efforts generated through multiple marketing channels — both off- and online. Advanced analytics tools allow you to understand the type of traffic you are receiving and analyze where it is coming from in order to best shape the experience in your web channel. Getting to know your audience segments better using demographic data, messaging analysis and navigation habits helps marketers improve both their products and their delivery by anticipating people’s needs.

From a marketing perspective, things like the homepage — with its various banner ads — takes the place of in-branch posters for online-only institutions. An interstitial page in the online banking login process takes the place of the historical teller-seller. Cross-selling emails take the place of in-person opportunities. While the experience evolves, the marketing methods stay consistent.

Putting the ‘Social’ Back in Social Media

Think about the CEO of your bank reaching out and extending a hand to your customers. That is what social media can accomplish in absence of a traditional branch network. Networks like Facebook, Twitter, LinkedIn and even Instagram attract digital denizens that comprise your new online community, allowing you to engage and interact with them at the interpersonal level they won’t get through the branches they don’t use.

By providing content at a strategic level like this — content that resonates with people at a personal level — you can foster relationships that are almost as strong as those in-branch customers once craved. In terms of customer service, the 24-hour nature of social media can even increase people’s sense of connection and satisfaction with their banking provider… that is, if your employees are plugged-in and paying attention. You can’t just switch to an all-digital delivery model and still expect to keep banker’s hours.

All too often financial institutions do not respond to questions or comments from their community members on social media. This is a big no-no for institutions trying to move towards a digital model. While bank marketers certainly have to tread lightly with compliance- and privacy-related issues, no question should go unanswered, and response times need to be prompt — within 24 hours, at the very least. You can’t ask consumers to make big service sacrifices simply because you want to offer a more efficient delivery system — one that only benefits you. I mean think about it: if a customer walked into your branch and asked you a question, you wouldn’t turn your back on them and walk away, or make them wait in your lobby overnight before they got an answer. So why does this happen so frequently in social channels? Engaging in a two-way dialogue through social channels is a fantastic way to get to know your virtual communities, and build a real sense of connection with them.

‘Their Customers’ Are Also Part of Your Community

Not every visitor to your website or social media channel is going to be current customer. In fact, you want your online community to be filled with customers from other financial institutions. Otherwise, you’re operating in a vacuum. After all, if you were running a brick-and-mortar network, you couldn’t survive if the only people you were talking to were current customers inside your branches. With a digital delivery model, financial institutions need to create opportunities to attract and talk to members of their community that have yet to bank with them, and this is only going to occur in the online channels you create and support.

When you pursue a digital delivery model, you will need to constantly be thinking about where and how you will be increasing the size of your online universe. Keeping your sales funnel fueled with a steady stream of prospects will require most traditional institutions to make massive shifts in their operations, culture and marketing.

This is one reason many online-only banks are developing (or reigniting) affiliate and partnership programs to cross-promote services and product offering. These mutually beneficial relationships widely expand the makeup of banking communities and allow banks the opportunity to grow at a more rapid pace.

New visitors — no matter their source or origin — will give you the opportunity to create online audiences for future targeting through the use of tools like cookies, expand your lead generation lists, identify any holes in your online account opening experience, and capture referral-based conversion trends that develop over time.

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