It’s 2023 and Elephants are Dancing

In reading about all the FinTech lenders that have been re-imagining the customer digital journey, if you were an outsider (or a PE investor? ), you’d be left thinking that the banks and credit unions were all customer-journey challenged elephants destined to lose customers.  Elephants, who are sitting on their hands, even though they oftentimes have better rates.  But this is far from true. “Online-oriented” banks and credit unions have an ever-strengthening hand that they are playing.  They are providing their customers and members with the service they’re looking for while outrunning the fintech models by improving their customer experience, but also leveraging their sophisticated call center capabilities.  Here are two examples:

My dear 80-year-old mother, my iPhone-using, cross-country skiing mother, recently got a talking to from her son about how much more interest she could garner by moving her savings from a local brick-and-mortar-focused bank into an online outfit. We found that her interest rate would go from 0.5% to 4.0% instantly – it adds up.  Easy right? We fired up the iPad on Sunday morning and got her started in opening an account at one of the leading online banks that you’ve undoubtedly heard of.  But no! She didn’t pass the onboarding identity check as they couldn’t verify her existence and would need to wait to hear from a rep.  Crazy right?  In my Gen X point of view, I was furious and impatient, “what do you mean it can’t be done instantaneously?!”.  Then again, I should have tempered this with the understanding that she hasn’t needed consumer credit since the 80s. Much to my surprise, come Monday after I had returned home contemplating how hard it would be to act as ‘remote support’ for her ongoing digital journey, my mom was called by “a nice woman,” who walked her through the process and <boom> the online bank now has a significant, sticky, new online customer that is quite pleased with their rates.

What would a fintech mantra have called for?  I’d bet a paycheck they’d respond only to those that made it through the digital native process.  Before you think of that as ‘the cream of the crop strategy’, what percentage of society is that really?  And does that percentage have as much money to put into an online savings account as the older generation?  On the surface, her new online bank seems to care more about her making a bit of money on her money than… dare I say it… her hometown bank.  By combining technology and training staff on end-to-end processes (this was not that call center agent’s first rodeo), the elephant can dance. The whole experience was a real surprise to me.

In another example, at a large online-oriented credit union client of ours, I got a front-row seat of the customer journey from the other side of the fence. I had the pleasure of meeting the heads of open banking, customer journey, and customer interaction at a holiday luncheon. Those groups don’t all talk together about end-to-end journeys that often. While open banking at first is perceived as “allowing our members to provide access to their personal financial data to others,” it is now being understood as an opportunity to initiate the customer journey.  A journey to keep a member from being pulled into the fintech journey, where the rate is much worse than the credit union can provide!  In this case, the online credit union is working to establish a small set of predictive features from the open banking request that will trigger outreach to the member, highlighting the basics of the credit union’s competing offer (as in we think you are shopping for a personal loan; our rates are highly competitive, and we can approve you in 5 minutes…).  It’s not hard to imagine the Elephant moving to a more sophisticated dance (let’s call it a ‘cha-cha-cha’) by running a soft inquiry and providing a firm offer of credit, but I suggest that a timely, but basic, triggered communication will start to become very common. And, in most cases, it’s good enough.

Execution is the hardest part of any plan, and the team at CC Pace excels at helping to turn strategy into results. Give us a call or reach out to me on LinkedIn to explore the ways we can help you tap into a more efficient customer journey process. We know your elephant can dance, and we can help.

Almost everywhere we look, we see the signs of a rapidly progressing transformation to an online, digital future, in the way we communicate, consume entertainment, shop and manage our finances. Very surely more and more aspects of our daily lives are changing at a clip unlike anything we’ve seen before. Is it possible the banking and mortgage industries are immune to this transformation? Absolutely not.

But disturbingly, a survey by Mindmatters Technologies Inc., a firm that specializes in helping clients maximize innovation in new product development, found that 81% of US businesses do not have the resources needed to fully pursue the innovations and new ideas capable of keeping their companies ahead in a competitive marketplace. Polling from CC Pace’s own recent survey (Mortgage Banking & Technology: Lenders’ Perspective) found that thus far, fully 80% of lenders have failed to take substantive steps towards creating the capability of offering their customers a truly end-to-end digital mortgage experience.

Banks and lenders continue to find themselves trapped by mature, complex processes, products, and systems, and the cost of breaking these chains to enter the digital age will only continue to mount. Further, lenders exhibit little confidence that their software providers are doing enough to help them with the transition. Evidence of this concern is validated in our recent survey where we found that 64% of lenders today continue to be “unhappy with” or “resigned to” their current technology provider.

Even as many in the banking industry struggle to overcome inertia in their move towards digital, they are feeling threatened by “outsiders” who are not as bound by the past, thus are able to more freely design, build, and launch solutions that offer cutting edge technology and processes that better meet the demands of today’s consumer. Whether motivated by fear of survival or the desire to be an industry leader, one thing is for sure: lenders can ill afford to sit idly by, waiting for the future to arrive.

Consequently, lenders are increasingly deciding to take the future into their own hands. For some, that means moving away from traditional vendor-supported platforms in favor of developing technology in-house, but such moves are not for the faint-hearted. Many more are finding that the most cost-effective (and risk averse) strategy for moving into the digital age is to begin building on top of their existing platforms to effectively cross the chasm. Bolting new capabilities onto legacy systems from among a host of FinTech upstarts, coupled with adopting aggressive process reengineering and business transformation projects can allow them to attain new benchmarks of success.

With many lenders lacking the time and resources to sustain a complete technology overhaul and engage in an end-to-end business transformation, often they turn to third-parties, including CC Pace, to help pave their way to success in the digital age. Employing innovative ideas, judiciously selected technology additions, and a well thought out approach to reengineering can allow almost any lender to successfully reposition themselves to attain their digital transformation goals.

I’ve always said, “it all comes down to execution”. A key component to successful execution is knowing that successful process reengineering is less of an IT effort and more of a strategic business design project. For lenders to catapult themselves successfully across the chasm into the digital age, it will require a balanced approach of taking the future into their own hands, designing a realistic roadmap, finding the right partner to work with, and executing flawlessly. You see problems; we at CC Pace see solutions.