JULY - 20208Although web banking was launched in the mid-1990s, and mobile banking as early as the early 2000s with WAP and application platforms like NTT DoCoMo's i-Mode, modern customers have come to expect these tools from their bank as "table stakes." With the launch of smartphone banking apps, some younger customers never even visit a bank branch at all and bank completely digitally.Paradigm shifts like these can be extraordinarily challenging for smaller regional banks and credit unions, with limited staff and budget, and limited access to high-quality IT professionals. The conundrum in banking is that if a small financial institution does not at least have basic digital tools, its customer base will diminish and simply age out.Vendors to the rescue!Given the requirement of banks of all sizes to maintain digital channels like web and mobile banking to be considered a competitive banking choice, many have turned to third-party vendors to supply and maintain these tools. However, the business drivers behind each actor can sometimes be at odds, with customers paying the price for the mismatch. Third-party technology suppliers' business goals are achieved by standardizing as much functionality as possible and providing limited customization capabilities in order to maintain a standardized codebase, support managing functionality and security upgrades in an organizations fashion, and to support scale. At the same time, while banks and credit unions may respect those goals and understand their value from a security and sustainability perspective--their business goals are achieved by carving out some sort of differentiated customer experience. The conversations small banks are having is that customers find banking is boring, a commodity activity, perfunctory. "Why would I choose you over the bank on the corner? What is the difference in experience I am going to receive?"In survey after survey, customers state that they expect their bank to look to the future, pay attention to trends, and protect their information and their money. Most customers are even willing to pay for this, or at least agree that it should be a part of how a bank spends its operating budget. Without some sort of investment in current and future technology and innovation--modern banks, no matter how small and trusted, may not stand a chance.How much is too much innovation for a community bank?Some larger banks have committed wholeheartedly to technology, as well as reduction in branch costs, innovative and customized web and mobile app experiences, often spending substantial marketing budgets to position these capabilities to customers. A few have By Dan Armstrong, Chief Digital Officer, Customers BankINNOVATION IN A COMMUNITY BANK?Dan ArmstrongMY OPINIONIN
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