By Dan Latimore, Banking Technology Researcher and Executive
I had the pleasure of moderating a roundtable of roughly a dozen community bankers at an event hosted by Apiture in early October. We focused our conversation on three broad areas: Data, AI, and Deposit Growth. In a robust two-and-a-half-hour discussion that was so lively that we skipped the break, I heard some great new perspectives.
Data is the lifeblood of any bank and plays a key role in both AI and deposit growth. Attracting data talent can be a challenge for a smaller bank, so I was struck by the executive who discussed a comprehensive plan built on a long-term data strategy that provided a clear roadmap and career path for potential hires. A robust data strategy has proven very effective at bringing in technical talent, and while many FIs have returned to the office (either full-time or hybrid), most were open to remote arrangements for technical work if it meant they could bring the right talent onboard.
Another aspect of data related to what Apiture knows about its bank customers. As Celent has long advocated, banks would like to know what their peers are doing and find it valuable to hear insights along the lines of, “At banks like yours, the percentage of online customers who use bill pay is…” Smaller banks can certainly benefit from the experiences of their peers when they find the right trusted third party to aggregate and disseminate that sort of information.
Finally, like most banks, their data is “messy” and they’re dealing with “data overload.” They’d like automated access to real-time data, instead of having to manually wrangle it from many different systems. Historical data can be mildly useful to understand the past, but predictive capabilities that produce prescriptive ideas are much more useful, particularly when used to directly support customers (e.g., to help owners better manage their businesses, or provide cross-sell tools and capabilities).
AI is very interesting, but having looked at tools like ChatGPT, these bankers don’t want to build it themselves; if a partner can bundle it in with other solutions and take care of issues, they’d be more inclined to try it for specific use cases with an attractive ROI. Pre-packaging those use cases would make it even more compelling for those banks.
One institution, for example, is using a conversational AI tool called Posh. 90% of the time it successfully deflected calls from the agent and handles four chats for every one call. Marketing (not operations) reviews calls every week as a quality control measure. On the wish list: evolving beyond reactive question answering to proactive cross selling (“I see you don’t have a checking account…”).
Deposit Growth is a completely different issue than just a year ago. Generating core deposits is clearly important, but retail is not where the bankers are looking; instead, they’re using technology to offer features and packages of services that attract small business and commercial customers at a sustainable cost.
One banker was very specific about the importance of technology in driving deposits. They’ve been “weathering the storm quite well” given the ease of their digital account opening process. He compared his low-friction digital solution to a large, national brand’s process during Covid that required people to be at a branch in person. He notes that as the younger generation ages, they will not tolerate friction when it comes to opening an account, particularly given the many alternatives that let you open an account very easily and quickly. He also notes that technology can tap into data in a way that is far superior to the judgment of a human.
We also had mild tangents, as any good discussion does. On whether to create a separate digital-only bank as a means of evaluating a new tech stack, the consensus was that it is now economically viable to do so without creating a separate brand given technical capabilities (like Apiture’s) today.
Banks differed on the issue of geographic expansion, although all had to navigate risk departments when making their decision. Strategies ranged from “we’ll stick close to home since we’re all about the relationship,” to “we’ll serve neighboring states if new customers call us,” to “we’ll go nationwide if that’s what someone wants — and we support them well regardless of where they live.”
Use cases and ROI continue to be major considerations for these banks, as does time necessary to implement. Apiture, like others serving these smaller firms, must be crystal clear in articulating the costs and benefits of specific solutions and take on as much of the implementation burden as they can. No matter what business you’re in, there’s no substitute for speaking directly to your customers and letting them hear from each other. What you do with what you learn is up to you, and having made the investment, you should make the most of it.