KQ Article

Like most businesses, banks and credit unions sell a product: money. It is sold in the form of loans and CDs. Although customers learn about these and other products through numerous marketing channels, they must visit a branch to buy.

Branch visits, however, are declining. Research conducted by the Council of Financial Competition confirms this. In fact, the results indicate that U.S. customers will make one billion fewer branch transactions in 2012 than they did in 2010. (Again: Two years, one billion branch transactions gone.)

This is why I hear so many banking clients say, “We need to bring customers back into our branches. Let’s use technology to make this happen.”

Now is the time to abandon this way of thinking and consider technology like mobile apps and social media in a radically new way. We need to think of these technologies as the digital branch, an essential and fully functional part of your business, not a separate or subservient entity.

Make the most of mobile
Here’s one great reason: customers who visit your branches cost more to serve than those who conduct business through ATMs, the Internet and mobile apps. Yet according to a recent ICBA Community Bank Survey, only 15% of banks offer mobile apps. The apps themselves tend to provide simple maintenance tasks: account balance and transfers, check image viewing, ATM/branch locators. Very few facilitate transactions. But it doesn’t have to be this way.

Imagine instead a mobile app that provides details about CD rates, programs and the customer’s CD portfolio (including maturity dates), as well as the ability to buy and sell.

Imagine a loan calculator car shoppers can access through a smartphone, right from the dealer’s lot. So when the dealer offers a better rate, your customer can use the app to compare rates and let your institution make a counter-offer. Loan approval is confirmed through the app and the dealer scans a bar code to upload it into their system. All of this happens in 15 minutes.

These apps are closer than you think. But let’s stretch our imagination even further into the future.

• Mobile payments. A customer or member uses a mobile app to generate a bar code with payment details and the friend scans the code with a smartphone to accept.

• Location-based marketing. Notify customers about products and services based on their GPS location. For example, send a notification when they are within 100 yards of your ATM at the mall.

• Seasonal apps. Your institution develops a holiday shopping app that allows users to browse gift ideas, receive merchant coupons, find stores, track purchases and use pre-loaded account funds for payment.

• Business apps. Very few mobile apps cater to businesses, and consumer apps do not provide the functionality businesses require. Why are we neglecting the most profitable segment in mobile banking?

Capitalize on social media
Many banks and credit unions are doing a wonderful job using social media tools. What tends to be lacking is an orchestrated effort to capitalize on all the branding and marketing opportunities these
tools offer.

Take LinkedIn, for example. Profiles of branch managers and loan officers should not read like résumés. They should tell the story of why your institution is unique. Start with a consistent, professional-grade
profile template, because business prospects often search online for the branch manager who contacts them. Also consider adding your tagline, branch address and direct phone number. Branch managers and loan officers should also join local business groups on LinkedIn for networking and lead generation.

On Facebook, the “What can we post?” strategy should become “What can we read?” Customer and member posts frequently refer to life events that connect to your products and services. If a customer says they are “looking at new homes,” why not offer them a new home loan? Using social media tools, banks and credit unions can monitor what customers and members are saying about your brand. But there are untapped opportunities here as well. For example, try expanding your list of monitored keywords to include specific products as well as general offerings. This will help you find audiences who are looking for exactly what you provide.

Brick-and-mortar branches are critical to operations and they will be around for a long time. But this should not prevent your institution from gaining a competitive advantage by developing a powerful, versatile and user-friendly digital branch that brings together mobile technologies and social media in new and surprisingly profitable ways.