The imperative of trust when financial institutions innovate

As additional bank collapses send ripples through the industry, leveraging best-in-class technology to build trust with consumers remains paramount for success.
May 16, 2023
Narmi Staff Contributor

The failure of First Republic marks the third major bank collapse since mid-March. While this is undoubtedly a point of turbulence within the industry, this is also a moment of untapped opportunity for community banks and credit unions as consumers reflect on who they trust with their deposits. 

Case and point, during the week immediately following the Silicon Valley Bank (SVB) collapse, Narmi customers saw a +23.3% per day increase in deposits as compared to the daily average deposits raised the month prior. As the market changes, consumers are ready to move their deposits to community financial institutions that they trust, but you need to be equipped with best-in-class technology in order to obtain them. 

At our 2023 Innovators Retreat (immediately following the first round of bank collapses this year) we conducted an exclusive interview with Jonathan Alloy, VP of Customer Experience and Innovation at Publicis Sapient. He outlined what banks and credit unions should prioritize as they wade further into uncertain territory and how to invest in digital experiences that build and maintain trust with consumers. 

Read the highlights from our conversation below. 


Jonathan Alloy (Publicis Sapient): Before joining Publicis Sapient to lead industry-wide customer experience and innovation, I worked on Main Street with Wells Fargo and Wall Street with Credit Suisse. So the disruption of the past few months has really hit home for me. I have many colleagues facing uncertainty as employees and clients, and I see how both resilient and fragile our system is.

We are fortunate to have strong protections in place for customers when a bank has difficulty fulfilling its three core imperatives: Managing credit, managing risk, and managing technology. We don’t want to see banks “moving fast and breaking things” because it’s simply unacceptable for your mortgage payment or paycheck to disappear into the ether. We have to keep your money safe and secure.

The expectations that our customers have for us are appropriately higher than, say, a coffee shop. If my coffee gets messed up, you remake it – not a big deal. If my car payment goes missing, if my rent doesn't get paid, if my paycheck doesn't deposit, that can be existential.

My job is to help banks establish and reinforce their brand of trust that people can rely on the bank to be there in good times and bad. When they need help. When they're undergoing financial difficulties. That's when we as an industry step up and really help our customers. We have that bond of trust; we have to earn it every day.

Narmi: When speaking to bank or credit union leadership to try to instill confidence there, how do we help plant that seed of confidence to say, ‘We're not trying to get you to 80 or 90% accurate. We're trying to make sure that you're at 100%, all the time’?

Jonathan Alloy: My conversations with clients focus on how to define success, and then how to measure progress toward their business goals with customers. I'll use an example of servicing. When you have a call center and you have agents that are helping your customers across channels in today's environment, typically what happens is somebody will try and self-service to resolve a problem.

They'll go into the app; they'll go into the website. They'll try and fix it. By the time they come into a branch or contact one of our agents, they haven't achieved self-service results, so they need help from a person – which means from the moment they contact us, they're already in a heightened emotional state because this is their livelihood.

As we said, if they're having a problem with a payment or deposit clearing, or they need to pay their kids tuition for school, or they’re taking out a loan for a house or car, these are really important things emotionally. So, it's crucial that we use the appropriate kinds of metrics to ensure that we're providing a great level of service. 

But what are the metrics that we usually use in call centers? Things like call handling time. Well, call handling time is a negative metric that incentivizes the shortest possible time. We should be looking at a metric like first-call resolution. Were we able to solve their problem in the moment? Not just give them a ticket, hang up and say, “we'll get back to them three days later.” 

Are we equipping our employees with the technology, the resources, the knowledge, and frankly the authority necessary to fix the problems the customers are having in the moment? That creates the bond of trust. That creates the great experience.

That's what turns a servicing encounter into an experiential brand-building encounter. 

Narmi: That’s a great point. You talk about that role of managing technology and that seems to be an area where technology can really provide the most to financial institutions.

Jonathan Alloy: Right. Technology is an enabler. Technology in and of itself is not the goal, it’s a means to an end. It's really about: how do we enable our customers to achieve their financial goals, when, where, and how they want to do it. Whether they're driving in their car, whether they're on the beach, whether they're at work, whatever the case may be. I need to pay somebody for dinner the other night. I need to make sure that my retirement plan is set up right. I need to quickly get a statement or confirm a transaction. I need to fix up my house.

Narmi: In terms of thinking about the problem that financial institutions can solve – and maybe that they're trying to solve right now – what if the problem is trying to build and grow low-cost deposits?

Jonathan Alloy: Well, let's remember that customers choose where to bank, and then it’s the bank’s job to manage assets and liabilities. So deposits are a dependent variable – an outcome of the choices consumers and small businesses make. The independent variable is the trust that our customers have in us to make them believe that their money is going to be safe with us, and that they want to do business with us.

That's what we can influence – their trust and their willingness to let us be their financial partner. The outcome of that is that they entrust us with their money by making deposits. Risk management and asset-liability management are crucial responsibilities and going to be talked about a lot more in the months ahead. They’re core to our effective operations because we can't bank our customers if our bank isn't solvent; so, we have to ensure that. But then, going beyond “our bank exists,” what are the table stakes today? In a post quarantine world, people expect to be able to bank with us where, when and how they want. They expect to be able to bank on-the-go. They expect to be able to self-service through apps and through websites. Those become table stakes because customers aren’t saying, “what’s the best bank app,” they’re using dozens of apps on their phones all day long and considering what are the best experiences from anyone. Then they bring those same expectations to their bank.

Where we can differentiate is ensuring that we are providing them the service that they expect for the customer segment, which can vary. It can vary by generation. It can vary by what people are trying to achieve. It can vary by account balance. There are lots of ways you can segment customers, but understanding the expressed and latent needs of your target customers enables you to focus on building solutions and experiences that benefit them in their ways. It enables you to build benefits that they find of value. 

Narmi: In thinking about the investments in innovation that are worth maintaining as a higher priority, even if right now they don't seem obvious, is there a certain area or are there certain investments that you would recommend?

Jonathan Alloy: There are many startups out there who are actively looking to disintermediate and disrupt the banking industry, and they've got some really compelling products that can do that. It is incumbent upon bank managers to ask themselves,"What is the value that we continue to provide and how do our customers want to obtain that value?"

That's where investments need to go. You don't want to be the taxi industry the year before Uber and Lyft started. You can't rely on regulatory barriers to entry in the same way that the taxi industry couldn't rely on the requirement that people buy medallions, because those rules will change. So, it's crucial to constantly be innovating around, "what is our business model and how do we serve tomorrow's customers today?"

It’s imperative to have the capability to quickly deploy the right technology that builds trust and enhances the customer experience across physical and digital touchpoints. As I said earlier, the core jobs of a bank are to manage credit, manage risk, and manage technology, and the primary focus of all that effort is to build trust. The banks that do the best, are the banks that will weather the storm and emerge stronger.

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The imperative of trust when financial institutions innovate