Resistance is Mutable: 5 Keys to Driving Technology Adoption in Financial Services

Technology is continuing its push to take over all aspects of customer workflow in financial services, from paperless onboarding to risk assessment apps to instant loan decisioning to algorithm-based portfolio construction. In fact, there are few aspects of the customer lifecycle that can’t be touched by technology. But “can’t be” is different from “won’t be” and that distinction often comes down to adoption by customer-facing personnel. While few technologies are perfect and there’s often a specter of tech replacing humans, in our experience neither of these is typically the cause of tech adoption struggles. More often than not, tepid adoption is due to a failure to appreciate the intensity of people’s resistance to change.

You may think that the current system is so inefficient/ineffective/clunky that everyone will love the new one, but that is not the case. Why? For starters, nobody likes to be told what to do. Moreover, even when people work with far-from-perfect systems and processes, they don’t always embrace the new, required solution because they have devised work-arounds that have become an integral – if imperfect – part of their routine. Finally, for customer-facing personnel, you can take whatever resistance exists and multiply it by 10 because those on the front lines of customer interactions are understandably anxious about using systems they don’t know and trust when under the pressure of dealing with customers looking for quick resolutions to their problems.

To overcome these obstacles and drive long-term adoption, here are five key components for success:

  1. Understand the audience. When you want to figure out how to get customers to buy, you seek out research and information about their attitudes, behaviors, and pain points to identify points of leverage. Driving adoption is no different. Sitting with, talking to, and watching future users in action will fundamentally shape how you should present the new technology to them and how you can communicate its value more persuasively.
  2. Appreciate their anxiety. Change is hard. As the saying goes, “better the devil you know than the devil you don’t.” Dismissing or underestimating the anxiety surrounding technology change is practically a guarantee that you will underinvest in driving adoption and will fall short of your goals.
  3. Calculate the impact. How much time saved? How much more accurate? And, most importantly, how do those gains translate into benefits to the users and their work? Most change management efforts come equipped with an ROI calculation, but these calculations are often based on a hypothetical future state, rather than the users’ current state. Identifying the time spent on activities today and the potential value of that time redeployed will lead to more compelling adoption communications grounded in reality.
  4. Market the change. Driving adoption means influencing behavior. Influencing behavior is the primary job of marketing (albeit one that typically applied to prospects). The same core elements of a successful marketing campaign – nailing the message, identifying the most effective communication channels, and measuring results – should be applied to your adoption efforts with all the rigor and discipline of a lead generation or customer retention campaign.
  5. It’s a marathon not a sprint. If you were launching a new product to a skeptical market, you wouldn’t promote it once at launch and then never again. Driving tech adoption must be approached the same way. It’s fine to launch with a splash, but if that isn’t supported by ongoing efforts to highlight successes, handle ongoing objections, and measure effectiveness, the opportunity for wide-spread adoption will be missed.

If these five components make driving technology adoption sound like a marketing campaign, that’s because it is. Many businesses talk about “selling” users on new technology but miss the most important inference of this language: before selling, you need marketing. A company may not get as excited about 95% adoption as it does about big, new sales deals, but the amount of money invested in new technology means that it should. A great but unused application has as much value to the company as a big but unsigned customer: None.

Six keys to building a digital bank that delivers

In our recent blog post, we described digital banking strategies that are emerging from traditional and nontraditional industry players. Whether starting from bricks and mortar or monoline, here are six best practices to consider:

Clearly define success

Your institution’s drive to digital banking is indelibly shaped by your current channel infrastructure, ROE/ROA goals, product portfolios and customer bases. So, recognize that digital banking objectives are not all the same:

  • Regional banks are most likely to create digital banking platforms to expand banking operations into new geographic markets faster and cheaper than branch acquisition or build will allow.
  • Monolines, like credit card, financing or segment lenders, are most focused on reducing cost of funding and increasing diversification.
  • The top three are all about defense through offense, and leveraging investment capacity to maintain share and improve profitability.
  • Many are motivated by the chase for younger demographics.

And of course, some banks conclude that evolution is a better strategy than revolution, and focus on enhancing digital banking capabilities rather than launching standalone or sidecar digital banking units.

Get internal support for the development of a digital banking unit.

Change within many organizations – but especially banks, which tend to be conservative – often faces internal resistance from legacy structures, systems, policies as well as organizational inertia. For a digital banking unit to be successful, these internal barriers need to be identified and overcome. Key to overcoming this resistance include:

  • Getting senior management buy-in and active support
  • Ensuring that all relevant bank departments are included in the unit’s design, launch and ongoing rollout
  • Implementing an internal marketing program to gain widespread understanding and acceptance of the new unit

Develop a digital banking unit road map.

Most digital banking units start with a high-yield savings account. Then there is usually a lull before a new product (such as a checking account or a lending product) is added. This delay is due to a number of factors:

  • Banks often create these units with a narrow focus on growing deposits. CIT launched an online bank in October 2011, and its product portfolio consisted of savings accounts and CDs until November 2019, when its launched eChecking (a digital checking account). In the same month, CIT described its digital bank as a “nationwide digital deposit franchise” in an Investor Update.
  • Banks want to analyze how units are performing (in terms of customer acquisition, customer attrition, deposit growth, etc.), what marketing approaches and offers are most effective, and what roadblocks have been encountered.
  • Banks tend to focus investment and energy on the initial launch and not enough on the post-launch period.

This delay in launching additional products can be addressed by creating a rollout plan that also covers the post-implementation period. The plan should include comprehensive feedback mechanisms for providing actionable intelligence to all relevant departments, which in turn improves turnaround times for technology fixes, new product introductions, offer development, and follow-up marketing campaigns.

One bank that has shown the way in rolling out new digital banking products is Citi. In launching a digital-first approach outside of its light branch footprint, one of the bank’s primary objectives was to cross-sell banking products to its huge credit card customer base. In 2019, it launched Citi Accelerate Savings, two lending products (Flex Loan and Flex Pay), and Citi Elevate Checking (a digital high-yield checking account).

Create and launch an integrated marketing plan.

While the technological, operational and product-related issues around the development of a digital banking unit are hugely important, the bank’s marketing department should also be involved in the initial design and development of the unit. Marketing needs to develop a marketing plan that covers:

  • Branding: determining how closely the unit should be associated with the parent bank, and developing a brand and branding guidelines.
  • Targeting: identifying and profiling target segments, and creating a plan to reach them.
  • Media: determining the optimal allocation of investment in traditional and nontraditional marketing channels to reach and engage with targeted consumers.
  • Messaging: developing messaging that both highlights your digital bank channel’s key selling points, and tackles perceived concerns, such as security and privacy. This messaging should be consistently expressed through various media channels.
  • Offers: testing and refining a range of offers (acquisition, cross-sell, referral, etc.) for different segments.

Once this plan has been developed, the bank then has to devote equal energy on the development and implementation of specific marketing initiatives, which should include testing various program components to get feedback on what is working – or not – with a focus on speed and flexibility.

Integrate your digital and human channels.

Even as many consumers move to digital channels for their everyday banking (and even for more complex financial transitions), these consumers continue to prefer a channel mix that includes digital and human components. This is a key advantage that traditional bricks-and-mortar banks will continue to have over digital-only banks, so they will want to leverage digital-human channel integration.

  • PNC is following a digital-first approach outside of its footprint, supported by a very thin branch presence (“solution centers”) in selected markets. In a December 2019 interview at the Goldman Sachs U.S. Financial Services Conference, PNC’s CEO Bill Demchak claimed the bank has been “really surprised to the upside on how important those solution centers are…. We’ve accelerated the solution center build, and we’ll do more than we originally assumed.”
  • Santander Bank’s planned digital bank is expected to operate initially within its footprint, so it will need to coordinate efforts with the bank’s branch channel (and avoid cannibalizing existing clients). In a November 2019 American Banker article, the bank said that the account-opening process will be entirely digital, but clients will be able to access accounts through the branch if they choose.

Build a compelling customer experience.

Even for the most tech-savvy consumers, conducting their banking operations primarily through digital channels is a relatively new phenomenon. While consumers are attracted to the speed, ease and convenience of performing banking tasks online, they remain reluctant to fully commit to the digital channels for all their financial activities (e.g., acquiring new products and services, discussing sensitive financial matters). Banks can in part address this concern by providing the option to engage with the bank through a physical channel. Banks can also build consumer trust and engagement by providing a digital experience that incorporates user experience (UX) design, personal financial management (PFM) tools and content, as well as access to customer support via social media, phone and/or live chat. In a recent ABA Banking Journal article, John Rosenfield, president of Citizens Access, claimed that “designing an excellent customer experience was the highest priority” in creating a digital bank.

Adapting branch networks for a digital banking future

There’s no longer any question that banking has hit the digital tipping point. According to a 2019 American Bankers Association (ABA) survey, the banking channels used most often by consumers are online (37%) and mobile apps (36%), with bank branches now in third place at 17%. But before we declare the branch model is doomed…take note: a 2018 Celent survey found that 77% of consumers prefer visiting a branch to discuss a lengthy topic, 63% prefer a branch for investment advice, and 51% opt for a branch to open a new deposit or credit card account. And Deloitte’s Global Digital Banking Survey revealed that branch experience influences customer satisfaction more than mobile or online channels.

So while banks are investing more and faster in digital platforms, they are also looking to solve the puzzle of next-gen branch banking. Here are 3 ways that banks can reinvent their human channels to perform effectively in a digital world.

Reduce the overall number of branches, but look to open branches to expand reach.

Over the past decade, there has been a net decline of more than 13,000 bank branches in the U.S.

The pace and extent of each bank’s branch reductions have varied widely, driven largely by growth opportunities in footprint geographies and competitive intensity:

  • In April 2019, midwest-focused U.S. Bank announced plans to trim up to 15% of its branches by the end of 2021 as it pursues a digital-first strategy.
  • Wells Fargo’s branch strategy maintains significant branch presence in attractive markets, while aggressively reducing branch counts in other markets.

Lower branch density has reduced the cost of entry into some new markets. While many banks are cutting their overall branch numbers, they are also opening branches in targeted strategic markets.

  • In 2018, Chase announced plans to open 400 branches in 15-20 expansion markets, including Boston, Washington, D.C. and Philadelphia. As a result of this expansion, Chase’s branch network coverage will rise from 69% to 93% of the U.S. population.
  • Similarly, though Bank of America has reported a net reduction of more than 750 branches over the past five years, it has also opened 200 new branches, with another 400 expected to open over the next three years in markets like Cincinnati, Cleveland and Pittsburgh.
  • To achieve its ambition of national presence, PNC has targeted new markets with a digital-first strategy supported by a thin branch network. It recently opened branches in markets like Dallas and Kansas City, and reports these new branches are generating deposits at five times the pace that the bank would expect for a de novo branch in its legacy markets.

Reimagine branches.

Branches have long since begun transformation from service centers to…well, something else. Some banks have set an immediate course for sales, driving service transactions to smart ATMs and contact center hotlines and pulling real estate from tellers to sellers. Other FIs have redesigned select branches or entire networks as everything from experiential attractions to coffee houses to community centers.

Universal trends are fewer square feet and more open space. Matching those changes, branch headcount is lower and skill levels higher. From the nation’s largest banks to some of the smallest, branches are being reinvented.

  • On the regional end of the scale, 132-branch Berkshire Bank is introducing new “storefronts” in greater Boston. No tellers, but if you need to make a conference call, you’ll find free co-working spaces and event rooms. Just be prepared to have a “needs assessment” with your friendly Berkshire banker coming or going.
  • Global bank, HSBC deployed “Pepper,” a humanoid robot in New York City, Seattle, Beverly Hills and Miami. Likely more of a marketing play than a scalable technology innovation, the bank claimed that the presence of Pepper boosted business by 60% in New York alone.
  • Chase–ever practical–launched Digital Account Opening in branches, so the technology can handle the busywork leaving bankers time for providing advice (read selling). And Bank of America is in the middle of a six-year plan to renovate 2,800 branches, flat-out taking humans out of many, leaving only machines.
  • Oregon-based Umpqua takes a contrarian view that people want to bank with people, and invites branch traffic with cookies, chocolate coins, movie nights and marketplaces where small business clients can share their wares with retail customers.

Make physical and digital work together. Human matters.

Intuitive technology is good for reducing cost, but humans are better at driving sales, creating relationships and building loyalty. Beyond the small businesses and aging boomers who still prefer the corner bank to the cool app is the reality that in “money moments that matter,” people turn to people–whether it’s in a branch or a contact center. But those humans must be consistently positive, empathetic and “know” everything that the technology channels know. Winning banks will:

  • Design an onmichannel approach that enables customers to use the channel they choose with consistent experience
  • Recognize the brand value and acquisition horsepower of branch networks
  • Give your customers great digital experiences, but power your human channels with the best in technology and insights to make the most of those moments that matter