I love technology. I love banking too. Where do technology and banking meet? Simply put, banking without technology cannot exist – both internally, running the bank operations and externally, offering banking products to clients. Everything from running the old fashion teller line simple products like making a deposit into your checking account to making a deposit using your mobile phone is done using technology.
When I first started consulting for small community banks I used to advice to them to offer the most current banking technology products to their clients so they could compete with the large banks. And to clarify, small community banks for purposes of this article, I mean smaller than $250 million in assets. However, as I started visiting banks—especially outside the Twin Cities—I learned that their clients don’t necessarily want or need the state of the art technology, not even some products that have been out for a while. For example, I have a client that has a branch in a suburb of the Twin Cities and another branch up north. One day, we were talking about making sure we offer everyone e-statements in order to increase efficiencies. The employees from the Twin Cities office (including myself) thought it would be an easy sell when the branch manager up north said, “Wait, my customers don’t want e-statements. Some of them don’t even have online banking. In fact, they look forward to coming to the bank to pick up their statements. There is no way I will be able to put them on e-statements.”
There was another incident where I was encouraging a bank to sell remote deposit capture to their business clients when they stopped me and said, “We only have one client who may probably want to use this product so we don’t think it’s worth it for us to invest in it.” So after several incidents like these ones, I have changed my perspective on technology and what small community banks should offer their clients. Now I advise them to offer the technology products that their clients want and/or need based on where they are geographically.
Having said that, I still strongly believe that community banks should strive to keep up with technology in two areas: 1) internally: so their employees have the best and most efficient way to do their work and serve their clients while keeping their client data secure; and 2) externally: offering the banking products that most large banks and other community banks offer so they stay competitive. My hope is that community banks don’t use the excuse that their clients don’t want or need the technology to stay behind the times.
For the community banks that have branches in the cities as well as in the rural areas, they struggle with the balance of offering the most up to date banking products, which cost money to implement and keep safe. But they have no choice. Due to their geographical locations, they must offer all the choices to their varied clientele in order to stay competitive. They have to take the risks and added expenses of implementing new technologies or the risk of losing customers (or not growing) by not having it. Once again small community banks struggle making the right decisions to stay alive and succeed.
My advice is to take calculated risks based on what your customers are asking you. Know your client base, do your research (meaning, know what the cost of implementing the new bank products is, who wants it, which clients are asking for the new products, charge accordingly, do a risk analysis on the new products so you know how to mitigate the new risks, implement a well thought out marketing plan, train your staff to sell the product), and go for it.
Malzahn Strategic can help you choose which technology products to offer to your clients, which ones to implement later, and which ones to not invest in.