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Biggest Opportunities for Digital Banking Post-Covid

Strategies and tactics from our Digital Banking Transformation Summit Experts
Written by
Ryan Donaldson
Aug 8, 2021

With vaccinations underway and a sense of normalcy returning to everyday life, the big question of “What comes next?” has been the focus of much speculation since the start of the pandemic.

To help move the conversation beyond simply guessing about what the future holds, we recently brought together some of the most innovative and informed leaders for our Digital Banking Transformation Summit.

As digital channels continue to be the primary way people bank & manage their finances, we uncovered with our panel experts the biggest digital opportunities for regional & community financial institutions post-Covid.

What Are Some Of The Lasting Changes To Retail Banking To Come Out Of The Pandemic?

Even before Covid-19 upended the traditional relationship many people have with their bank and credit union, it was clear that digital-first channels were growing in importance. When social distancing measures and branch closures started impacting how financial institutions reach and serve their communities, there was little doubt that investing in digital was part of defining the “New Normal”.

During the second session of the Digital Banking Transformation Summit, McKinsey Partner and banking expert Peter Noteboom shared the conversations he’s heard taking place in boardrooms of banks during the pandemic, “I don't think there's a single CEO or board member that would say that they don't wish they had more digital capabilities going into 2020 than what they ended up with,” further explaining that the financial institutions that made early investments in their digital infrastructure, applications, and their ability to engage with customers all benefited greatly. With many later seeing those critically important shifts as life-saving investments.

“I think the same way we've seen customer interactions with channels changing as they shifted to digital, the thought processes within boardrooms and the executive suite have also shifted,” Peter pointed out. “With many of the trends they thought they had years to address, that timeline has really compressed.”

With many of the trends they thought they had years to address, that timeline has really compressed.

For Michelle Spellerberg, VP of Digital Strategy, and the Alliant CU team the acceleration of digital was most noticeable through both a spike in support contact and more members making the switch to mobile banking. As their members navigated the challenges of the pandemic, Michelle and her team observed an increase in contact from people seeking digital solutions for typically in-branch banking services; “People are really trying to be hands-off and doing more and more digitally – even with more complicated transactions.”

New Opportunities For Digital Growth

Opportunity #1: Embracing fintech as a friend to financial institutions.

For too long, the conversation around technology disruptors in banking has pitted traditional institutions against fintechs. This zero-sum look at fintech has only served to confuse and hide the opportunities that exist for the majority of credit unions and community banks.

Expectations of digital banking functionality and user experience have evolved. As Plaid’s Head of Product Niko Karvounis shared, Plaid’s research into consumer & member expectations has shown an increase of demand for connectivity from users trying to turn one account into their primary banking hub.

Being able to provide account primacy for users is an attractive goal for community and regional financial institutions, and partnering with fintech vendors like Plaid allows them to meet user expectations. This was the motivating factor for Michelle and her team at Alliant to partner with Plaid after seeing an increase in the usage of aggregators from people trying to better manage their money.

“We can get to the point where we're able to aggregate the data, use the data, and then automate some of the things that are going to make their financial life better. I think that's really the next big step.”

In addition to fintech providing approachable and affordable solutions for connecting user data, selecting the right fintech vendor relationships allows credit unions and banks to grow their digital functionality without having to invest in added developer and IT resources.

A poll we conducted during this session asking about the biggest challenges Financial Institutions are facing with their digital transformation revealed some common trends we’ve heard from our customers. Second to limitations from core banking system providers, a lack of developer and engineering resources, and confusion around the ROI of digital investments are the top pain points felt by the industry. Despite changes in thoughts around the pace of adopting digital-first solutions, Peter pointed out that leaders of mid-cap banks and credit unions still feel they, “can’t be all things to all people.”

Opportunity #2: Look for ways to streamline processes & user experiences within the digital products.

In addition to fintech providing approachable and affordable solutions for connecting user data, selecting the right fintech vendor relationships allows credit unions and banks to grow their digital functionality without having to invest in added developer and IT resources.

A poll we conducted during this session asking about the biggest challenges Financial Institutions are facing with their digital transformation revealed some common trends we’ve heard from our customers. Second to limitations from core banking system providers, a lack of developer and engineering resources, and confusion around the ROI of digital investments are the top pain points felt by the industry. Despite changes in thoughts around the pace of adopting digital-first solutions, Peter pointed out that leaders of mid-cap banks and credit unions still feel they, “can’t be all things to all people.”

If you wait until contract stage to get legal and compliance & risk to sign-off, you've waited too long and you're going to get more questions than answers.

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The solution for this pain point Michelle Spellerberg outlines, is to bring your compliance team member and regulation business partners into the process early and often. “A ‘best practice’ for me has been to bring them into demos we’re doing with vendors, and have them talk to the vendors early. If you wait until contract stage to get legal and compliance & risk to sign-off, you've waited too long and you're going to get more questions than answers.”

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