When we published our predictions for 2023, no one anticipated this year would include three major bank failures, a tenth consecutive interest rate hike by the Fed, and potential deposit insurance reform.
At our 2023 Digital Account Opening Summit, industry experts and trendsetters weighed in on how community banks and credit unions can best prepare for continued uncertainty and turbulence throughout 2023 and beyond. Virtually all of the conversations during the summit came back to one crucial concept; as an industry, we must rebuild and foster trust with consumers. Many of our speakers focused on three salient ways this can be done: by ensuring consistent communication and engagement with customers and members, showing flexibility and nimbleness during times of change, and maintaining a strong balance sheet.
Theresa Hainsworth, VP of Operations at Arrowhead Credit Union, explained during the Credit Union Track session that top-tier member engagement begins by understanding where your members are and then leveraging those channels effectively. “We always want to be where our members are and where our members need us, not where we think they need us to be,” she noted.
Whether it be via email, text messages, or even social media, these touchpoints can take place at an astounding rate. While consistent communication can be harnessed as a superpower for community banks and credit unions if done correctly, it can also quickly spin out of control if the narrative is not well crafted.
During the session 2023 Uncovered: Exclusive Insights and Predictions, Nitin Mhatre, President and CEO of Berkshire Bank, highlighted the impact social media had on the collapses of Silicon Valley Bank, Signature Bank, and First Republic.
“An important consideration for us to think about is the role of social media in defining what your consumers think about the strength of your institution and how that impacted some of the failed banks here,” Mhatre noted. “Just like we are preparing ourselves for cybersecurity from a resilience perspective, we need to do that for social media as well.”
While consumer trust can be influenced almost instantly as a result of social media, if leveraged correctly and with a clear brand voice, it can be a great tool for building open lines of communication. During the session Brand Power: How to Leverage Your Identity as a Catalyst for Deposit Growth, Jill Castilla, President and CEO of Citizens Bank of Edmond, highlighted the benefits of having a consistent way to communicate with customers on key thought leadership topics, thus further building trust.
“The thing we do differently than most is we utilize a lot of digital for communications,” Castilla said. “We have 24/7 coverage on our phones and we utilize social media extensively. I provide my cell phone number out to the world, including our customers… I think digital channels and social media allow for so many opportunities.”
Mhatre also emphasized the importance of having employees (no matter their level) communicate consistently with customers, thus ensuring they understand how your financial institution is bettering and focused on the local community.
“[We] constantly reiterate and communicate to customers, ‘here’s what we’re doing, here’s how it helps our customers and communities, and here’s how we are going to continue to report on our progress.’ And the more you do that, the more you continue to build that trust… Everything is about relationships. Relationships are based on trust, and trust is a pure function of communication.” – Nitin Mhatre, President and CEO of Berkshire Bank
One of the key differentiators that community banks and credit unions need to lean into is the ability to leverage their relationships to connect on a deeper level with customers and members. By empowering employees to think critically and problem solve on behalf of customers and members, this allows community banks and credit unions to remain flexible, especially during times of change.
Tansley Stearns, President and CEO of Community Financial Credit Union described how she focuses on helping employees maintain an innovative and member-focused mindset. “When we think about innovation, it certainly is about how we can transform products, services, and delivery,” Stearns said.
“It’s about the mindset that we want to create across the organization because I think idea generation is fraught with failure, and you’re not doing it well if you don’t fail.” – Tansley Stearns, President and CEO of Community Financial Credit Union
“[Our goal] is to make sure that people across the organization have that competency so that as they listen and identify the needs that our members have, they can address those and help us to transform.”
When it comes to remaining flexible, technology can be the defining factor that sets smaller banks and credit unions apart. Tom Michaud, CEO of KBW, echoed a similar sentiment in his session, The New Era of Deposits, when he highlighted that community financial institutions can ‘out local’ big banks due to their relationships and top talent, but it is their technology offerings that will allow them to bring in and grow their businesses. “You have to be a fast follower. You have to have the features,” Michaud said.
By not always being the first out of the gate on new (and sometimes overly complicated) enhancements, community banks and credit unions can be more nimble and better respond to emerging trends in the industry while simultaneously meeting the unique needs of their customers and members. By having technology that is reliable and user-friendly, community financial institutions further reinforce that sense of trust since users know it will work when and how they need it to.
“You need to stand up as someone who is current, because if [consumers] don’t think you’re current I could see that impacting the trust," he continued. "Tech used to be a vertical, I now believe it’s a horizontal. I can’t imagine a business where they don’t think about tech. Tech is impacting everything.”
As a potential recession looms, banks and credit unions must continue to strengthen their balance sheets. By ensuring their solvency throughout this time of uncertainty, smaller financial institutions help to not only build trust with consumers, but they also establish stability across the entire industry.
Some financial institutions may heed this as a warning to pull back on expenses, but our expert panelists warned against doing just that.
“You’ve got to think about how you reprioritize the components of your strategy that drive the long-term shareholder growth,” Mhatre noted. “If you don’t believe that technology and holistic digital transformation is going to change your business model, then you’re in trouble… You need to keep moving forward on that journey, because if you don't, someone else will.”
And in terms of a strong balance sheet, nothing beats low-cost deposits.
“I am a believer that deposits are the special ingredient for a bank… Deposits really are the lifeblood.” – Tom Michaud, CEO of KBW
Want to learn more about how Narmi powers an entirely digital, fully-automated, and wildly fast digital account opening solution that enables massive deposit growth?