Banking on Relationships How the banking industry’s top decision-makers are rethinking customer engagement for the digital era

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Banking on RelationshipsHow the banking industry’s top decision-makers are rethinking customer engagement for the digital era

Banks have long played an important role in every business and consumer’s financial universe. But as banking goes digital, the way banks build and maintain relationships with their customers is changing — fast. Face time with customers in the local branch is no longer a given. Today, banks are increasingly interacting with customers through mobile and online banking experiences.

So how exactly are new technologies transforming the way banks build relationships and interact with their customers? This report explores the top priorities on the innovation agenda for US banks over the next 24 months; examines how banks view new digital services; plus provides a special breakout section on innovation in small business banking.

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P R I O R I T I E S

What’s Top of Mind for Top Banking Leadership?Banks today have an unprecedented opportunity to redefine the banking experience and cement longer and richer relationships with their customers. But with so much innovation happening across nearly every avenue of banking all at once, where do they start?

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D O Y O U A G R E E T H A T N E W T E C H N O L O G I E S A R E C H A N G I N G T H E W A Y Y O U R I N S T I T U T I O N E N G A G E S W I T H C O N S U M E R S ?

There’s no doubt about it. Nearly all (91%) banking leaders agree that new technologies are dramatically changing the way they engage with consumers.

Banking outside of just the branch is the top priority for bank leaders over the next 24 months.

O V E R T H E N E X T 2 4 M O N T H S , W H AT I S Y O U R T O P P R I O R I T Y F O R I N V E S T I N G I N C U S T O M E R F A C I N G -T E C H N O L O G I E S ?

AGREE

DISAGREE

91%

9%

BANKING OUTSIDE THE BRANCH

86%

IN-PERSON

14%

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O V E R T H E N E X T 2 4 M O N T H S , W H I C H I S T H E T O P P R I O R I T Y F O R Y O U R I N S T I T U T I O N ’ S P AY M E N T S B U S I N E S S ?

When it comes to digital payments, small business customers are twice as important to banks as large businesses. Over the next 24 months, banks also expect to place nearly as much focus on small business payments as they do consumer payments.

SMB’S ARE 2x AS IMPORTANT

TO BANKS

32%

35%

16%

15%

2%CROSS BORDER /REMITANCE

RETAIL

LARGEBUSINESS

SMALLBUSINESS

CONSUMER

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F R I E N D O R F O E ?

The Impact of Technology on Customer RelationshipsStarting with the arrival of the ATM in the 1960s, technology has been driving a wedge between banks and their customers. The latest fintech boom has accelerated this trend, but it also presents many new opportunities for banks. How do banks view the impact of new technologies on customer relationships?

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OVER THE NEXT 24 MONTHS, HOW DO YOU EXPECT YOUR INSTITUTION’S SPENDING ON TECHNOLOGY SOLUTIONS THAT ENABLE CUSTOMERS TO CONDUCT ONLINE TRANSACTIONS AND/OR ACCESS THEIR FINANCIAL INFORMATION TO CHANGE?

Everyone agrees: digital banking is the future. The vast majority of respondents (82%) plan to invest more in technology solutions that enable digital banking.

INCREASE

STAY THE SAME

DECREASE

82%

18%

0%

This proliferation of new technologies is also impacting bank partnerships. Nearly half (48%) of all respondents say that partnerships with third-party financial technology (“fintech”) companies will increase over the next two years.

O V E R T H E N E X T 2 4 M O N T H S , H O W D O Y O U E X P E C T T H E N U M B E R O F PA R T N E R S H I P S W I T H T H I R D - PA R T Y F I N T E C H S TA R T U P S AT Y O U R I N S T I T U T I O N T O C H A N G E ?

INCREASE

STAY THE SAME

DECREASE

48%

51%

1%

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O V E R T H E N E X T 2 4 M O N T H S , W H I C H P AY M E N T S O L U T I O N F O R S M A L L A N D M E D I U M B U S I N E S S E S D O Y O U T H I N K P O S E S T H E B I G G E S T C O M P E T I T I V E T H R E AT T O Y O U R I N S T I T U T I O N ?

This may soon change, as banks are split between fintech startups and other banks as their the biggest competitive threat in the future.

OTHER BANKS

50%

FINTECH STARTUPS

48%

OTHER

2%

Today, banks are still comparing themselves to other banks when evaluating their digital customer experience as opposed to comparing themselves to fintech startups.

W H E N E VA L U AT I N G C U S T O M E R E X P E R I E N C E F O R Y O U R O N L I N E S O L U T I O N S , W H I C H O F T H E F O L L O W I N G D O E S Y O U R I N S T I T U T I O N U S E M O S T O F T E N A S A B E N C H M A R K ?

OTHER BANKS

66%NATIONAL BANKS

26% FINTECH STARTUPS

5%OTHER

3%

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S O C I A L F O C U S

Spotlight on Small and Medium Businesses (SMBs)Small and medium businesses represent one of the largest and most important customer segments in banking. While SMBs are traditionally slower to adopt innovative new products and services than consumers, the onset of new technologies is starting to impact the demands and expectations of this segment as well. Clearly, banks have SMBs in their sights and are gearing up for greater digital engagement.

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W H I C H C H A N N E L S H AV E T H E H I G H E S T L E V E L S O F E N GAG E M E N T A M O N G S T YO U R I N S T I T U T I O N ’ S S M A L L A N D M E D I U M B U S I N E S S C U S TO M E R S ?

Banks today still view in-person branches as the channel with the highest levels of SMB customer engagement.

Looking ahead, however, the future of SMB banking is clearly digital. Seventy six percent say that digital and mobile represent the highest priority channels for their bank over the next 24 months.

OV E R T H E N E X T 2 4 M O N T H S , H OW I S YO U R I N S T I T U T I O N P R I O R I T I Z I N G C H A N N E L S FO R C U S TO M E R E N GAG E M E N T A M O N G S T S M A L L-A N D M E D I U M -B U S I N E S S C L I E N T S ?

DIGITAL WEB

BRANCH

DIGITAL MOBILE

CONTACT CENTER

ATM

High Engagement

27%

46%

18%

16%

12%

DIGITAL MOBILE

46%DIGITAL WEB

30% IN-PERSON BRANCH

18%CONTACT CENTER

6%

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W H AT I S Y O U R I N S T I T U T I O N ’ S S TAT U S I N C O L L E C T I N G C U S T O M E R E N G A G E M E N T M E T R I C S A M O N G S M A L L- O R M E D I U M - B U S I N E S S C U S T O M E R S ?

When it comes to digital experiences, measuring engagement is key. Today, only 36% of banks surveyed are tracking digital engagement metrics with SMBs customers. Within the next two years, the vast majority (74%) plan to measure SMB digital engagement.

DO NOT KNOW

DO NOT CURRENTLY, DO NOT PLAN TO

DO NOT CURRENTLY, DO PLAN TO

CURRENTLY DO

8%

18%

38%

36%

10 20 300 40

This survey was conducted online within the United States by SourceMediaResearch/American Banker on behalf of Bill.com in August 2016, among 205 banking leaders who self-identified as director level or above at a banking institution. For complete survey methodology, please contact Tanya Roberts at troberts@hq.bill.com.