NAVIGATING to DIGITAL
By Doffing, Matt | |
Proquest LLC |
FOR
In other markets consumers have responded quickly to digital solutions. It took Apple's iTunes just seven years to become the world's largest music retailer. Google Maps became the largest player in its market in just 18 months. Now
Even though community banks do not have the resources to beat VC-backed companies at the digital game, experts addressing industry meetings across the country urge smaller banks to adopt digital products or risk losing customers.
A combined approach
Yet, at least one community bank is promoting digital products without abandoning the relationship-based business model:
In 2009,
"Then we hit a wall," said
The Great Recession proved to be a catalyst for the bank to pursue a combined digital/branch banking strategy. "We had an opportunity to come out of the recession ahead of our competitors," said
In 2009,
While the world moves to digital, one thing is not changing,
"If you look at internet banks, many people have accounts with them," Mozena continued. "But in the customers' mind, the internet bank is not their bank. They still think of the people they can talk to about their finances. You can't only go digital; this business is still about in-person relationships, even at the retail level. So, we chose to do both physical and digital updates together."
In three years that followed, the bank was the first in its market to offer mobile remote deposit, mobile banking and person-toperson payments. It rolled out a new online banking platform for both consumers and businesses. It also added a feature to its website to allow customers to chat online with a bank representative.
At the same time,
The digital advantage
Digital banking products allow community banks to build relationships with a younger customer base while also driving the cost of deposit accounts down,
College-age customers soon become the people who buy cars, insurance and houses;
The benefit of mobile banking for banks isn't just becoming more attractive to younger customers. If younger customers use their phones to bank, they will show their parents how to do it. "One part of your customer base will train another part for free," Mozena said. "If someone in the Boomer generation has an iPhone, it is likely because their kids showed them what it can do."
Throughout 2013, deposits made through mobile capture grew to 548 transactions a month from 143, Mozena said. "This results in direct savings for the bank because we didn't have to pay a teller to process each transaction," he said, noting that the bank expects its digital products to pay for themselves.
Given the ease of access for account information over the internet,
Given the older demographic of
As a result of the upgrade,
It also has found some efficiency in its digital product offerings. While the bank had to drop assets and employees as it struggled through the recession, it has come out on the other side with
Using online banking to get customers to go mobile
The bank decided its target market for mobile banking is customers between ages 18 and 30. "We wanted to reach this segment because they are just getting into their spending years," Jacobs said. "That's when we want to have a long term relationship with them."
To raise customers' awareness, the bank plastered marketing for the product in its 12 branches in southern
The bank also trained all its staff to use the product. "We essentially gave them no choice but to bank on their phone," said
Within 90 days of launch in 2008, FNBT enrolled 154 individuals. Of those enrolled at that time, more than 80 percent were between ages 18 and 45 with household incomes in the range of
Today, the bank has more than 6,031 customers enrolled in mobile banking. About 83 percent are between ages 15 and 55 with household income between
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