Publications & Resources

March/April 2010
New Look for the Community Bank

 

The New Community Bank: Open Anytime, Anywhere

By Branwyn Rhodes

There was a time when a community bank was limited to a pool of potential customers who lived or worked within a ten-mile radius of a branch. Customers were restricted to doing business during the hours the bank was staffed, typically 8:00 am to 5:00 pm, Monday through Friday, and a few hours on Saturday.

But today’s banks are utilizing technology to redefine “community” and expand their footprint, as well as their business hours. “The technologies that we deployed allowed us to extend our footprint and hours of operations beyond the limited constraints of our 12 branches and at a fraction of the cost,” explains Joshua Everton, assistant vice president and eBanking manager at Bank of American Fork in Utah . “We are virtually able to service customers anywhere at anytime through our remote deposit, online, and mobile channels.”

The automation of financial services has also been a critical key for community banks that want to attract new customers and retain current clients. “We have been able to attract new customers by offering online account opening,” says Jeff Lewis, executive vice president of retail banking at Frontier Bank, the largest commercial bank headquartered in western Washington , with more than 50 branches throughout Washington and Oregon . “After researching competitive products online, the ability to open an account – right then and there – becomes a major factor in a customer’s decision to act. Furthermore, many of our existing customers live in outlying areas, and they appreciate the convenience of banking from their home or office.”

Everton reports similar experiences. “Shortly after I started working at Bank of American Fork, I did an audit on customers who had moved accounts. What we found is that many of these customers were taking advantage of online opportunities – somewhere else. It was clear that with improved online services we could retain these customers. Once we offered our customers the convenience of online savings, our retention rate increased by 38 percent.”

Research supports Everton’s findings. One survey reported that 74 percent of the respondents preferred opening and funding a new bank account online, and 69 percent of the survey participants consider visiting their financial institution “a chore.” And then there’s Generation Y – 75 million potential customers who want to do everything online.

For the community bank that has established a reputation for friendly, convenient service, offering account opening, deposits and the origination of loan applications online is a natural next step in accommodating today's busy and mobile consumers.

Next Steps

If you’re ready to provide the convenience of online services, the best place to start is by researching technology companies that specialize in this area. Integration is key. You will want to work with a company that understands how to integrate the platform with your core processor as well as other ancillary programs, including your card-ordering service, id verification system and any forms providers.

It also will be to your advantage to work with one company that offers the full array of solutions, from account opening and deposits, to loan processing and tracking. A system that provides both automated account opening and funding as well as online lending provides the best cross-sell opportunities. With this kind of end-to-end platform, when a customer opens up a checking or savings account, the system can examine credit and qualify the individual for auto loans, mortgages and credit cards – all automatically. Even if you decide to start out by offering just online account opening and deposits, it will be much easier to add lending capabilities down the road when you’re ready, if you work with a company that can handle both parts of the equation.

You also will want to carefully compare pricing and fees. Some technology providers require an investment upfront. Others allow you to “pay as you play.” Often a fee structure that’s transaction-based is a better buy and more affordable for banks of every size.

Return on Investment

Once you have established the investment costs, what kind of return can you expect? Any investment in new technology should provide a payback, and fortunately many of the benefits of automation are easy to measure.

Lewis appreciates the ROI that Frontier Bank received in just the first month of using an automated online system for new accounts and deposits. “We were very pleased,” says Lewis. “Within one month we reached $1 million in new deposits via the system. About half of these new online accounts were established by existing Frontier Bank customers; the other half was set up by consumers who were new to the bank.”

Everton has positive findings to report, as well. “Deployment of online account opening service in recent years has been instrumental to our "e-expansion" into new Utah communities that we do not currently service with branch operations. Selecting good financial technology partners that provide automation and cross-system integration has made it possible to live our brand promise of “Big City Banking – Small Town Service.”

Branwyn Rhodes is the director of communications for MeridianLink, Inc., a leading provider of enterprise business solutions for the financial services industries. She can be reached at 714-708-6950, ext. 2475 or branwynr@meridianlink.com.

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