Community banks, credit unions must modernize to compete and thrive

A digital-first approach is changing the banking industry — and quickly. All you need to do is look at fintech disruptors like the peer-to-peer payment app Venmo (owned by that other late ‘90s disruptor, PayPal), micro-investment platform Acorns or the fee-free mobile banking app Chime to understand that tech-savvy consumers’ demand is forcing the banking industry to adapt.

Digital transformation has been bandied about for years, but it’s no longer a buzzword and instead is now defining how banks are using technology and modernization to meet their customers’ needs. Consumers are also demanding experiences similar to what Netflix or Amazon offers, a consistent experience across any device, and ease of use. One way to meet this is to adopt a digital banking platform.

Regardless of size, digital transformation is shaking up banking. While large, global banks are often able to invest to quickly scale to what their customers want, community banks and credit unions can be just as competitive in offering products and pricing that consumers want. How? By giving customers the experiences they want, rewarding them with personalized incentives to increase loyalty, and using personalization to meet each customer’s specific need. 

Transform your bank, products and pricing with a digital platform

In order to remain competitive, community banks and credit unions need to adopt an agile model that offers customers the services and experiences they demand.

Most smaller banks haven’t changed their business model much over the years and stuck to an in-person strategy to deliver first-class customer service that built loyalty. In the U.S. there are more than 5,000 credit unions in 2020, a decline of 2.4% since the previous year, and nearly 5,000 community banks, a number that also declined due to asset thresholds. American Banker reports that for these banks to successfully transform and modernize, there are six steps to follow, including adopting a top-down commitment to organizational change and making innovation a priority and part of an organization’s structure. These decisions reside at the top and for a bank to be successful, it needs to be embraced throughout the entire organization. 

Beyond recognizing the need to modernize, a customer-centric approach is essential. In some ways, this is intuitive — community banks have long focused on supporting their customers by investing in organizations or causes they care about, and credit unions operate as nonprofits where customers as members own the bank. In each instance, this gives these banks a unique understanding of who their customers are. What’s trickier is finding out what each customer wants.

Helping these banks better understand what their customers want and allowing them to be nimble in delivering their products, Zafin’s enterprise-wide solutions lets banks determine the products and pricing that meet market and customer demand. 

Zafin lets banks determine who their target audiences are, provide offers to meet demand, and iterate as customers evolve or new consumers enter the market. Our solutions also enable banks to quickly transform lines of business when the landscape shifts. 

For example, when the coronavirus pandemic started, community banks and credit unions were on the front line of helping small businesses navigate through a time of severe economic stress. For a community bank to be able to quickly — and positively — react to unpredictable situations is an essential way to foster customer loyalty and give customers what they want, when they need it most. 

On top of this, a recent Zafin survey showed that during the pandemic 80% said that online and mobile banking is making it easier for them. This adoption rate is projected to increase — the growing Gen Z segment, many of who are under the age of 10 and have yet to establish a relationship with a bank but are digital natives, further emphasizes why digital innovation and personalized experiences will help banks gain more customers in the future. A move to a digital banking platform is not just a solution for now, but the future as well. 

“It’s widely known that the COVID-19 pandemic has accelerated the use of digital banking tools,” Alexandra Roddy, Zafin CMO and EVP, said. “The biggest takeaway, however, is that many banks have not been prepared to match consumers’ desire for a more personalized banking experience because of their outdated legacy systems. [Our] survey shows expectations have changed, and banks now have a massive opportunity to re-evaluate how the systems they have in place may be holding them back from the modernization they know their customers want and need.”

What differentiates Zafin is that our solutions can scale to specific product delivery needs, get these products to market quickly, and use personalization technology for a customer-centric experience. This allows banks to be nimble and cost-effective when innovating to give their customers what they want, when they want it and whether it’s a situation that’s anticipated or not.

Giving customers what they want

The rise of fintechs has shown how customization of products and services can match user demands. Zafin’s solutions make it easy for banks to do the same. Beyond the need to pivot quickly because of coronavirus, our survey went more in-depth to find what consumers want. Here are some highlights:

  • 88% want their banks to provide them with relevant recommendations, but 41% say their current bank doesn’t offer them what they’re looking for
  • 86% of millennials said if they received rewards to help them meet their financial goals, whether it’s saving for a down payment on a house or reducing debt, they would expand their current relationship with a bank or move to one that offers such incentives
  • Online banking is the most important factor when Gen Z and millennials choose a bank while those near or at retirement age look for low fees
  • Nearly 8% of Gen Z does not use a bank. Banks with the foresight to prepare now for this next digitally native generation will be in a good position to establish long-term relationships. (And let’s not forget this generation comprises 68 million people in the U.S. alone.)

Every generation wants to get all the services they need from a single bank. With Zafin’s segmentation targeting and personalization technology, it’s easy for banks to identify — and meet — this demand.

Your bottom line

Time is money. That’s why Zafin’s implementation is fast, meaning that you can move your product and pricing offers quickly to the market and reap the benefits.

We’ve created an 8-step process to get you up and running quickly. Starting with an assessment, we work with you to develop a plan that fits your unique needs. We provide training, configure solutions that work for you, and test and iterate so that you can meet your goals. 

Our goal is to help your product managers get your products to market quickly and have the capabilities at hand to identify, customize and adjust to any changes in the market or consumer demand. The Zafin solution also seamlessly integrates with legacy tech stacks.

At Zafin, we’re with you every step of the way. Our suite of solutions includes easy-to-use dashboards to help you segment and target specific audiences of any size, monitor and measure, and streamline compliance by consolidating product and regulatory information into a centralized repository. 

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