The Financial Brand Insights - Summer 2022






AND PERSONAL ATTENTION Meet Consumers' Wants and Needs By Evolving and Automating Branches WHAT'S IN A BRAND NAME? Reintroduce Yourself to a New Generation

In This Issue





The Value of Turning Bank Employees Into Entrepreneurs 41

Overlooked Open Banking Opportunities 3

4 Key Changes Happening in Bank Marketing in 2022 13 for Noninterest Income 7 Headwinds on the Horizon


Balancing Branch Automation With Consumer Demands for Optimal Growth

Maximize Differentiators to Supercharge Growth 63 Inclusive Leadership: Four Best Practices 59

How Banks Can Capitalize on Their Data to Stay Competitive 25 Five Brand Strategy Rules for Banks to Accelerate Growth 29


Banks Must Automate Data Preparation to Unlock Business Value


The Shift in Small Business and Financial Institution Relationships



How to Transform Online Bill Pay Into a Personal Finance Tool

Real-World Advice on Digitization in Banking From an Experienced SVP


Why Bank Martech Platforms Need a First-Party Data Identity Foundation

Onboarding in Retail Banking: Who, What, When and Why 21

More Than We Believe 37

What’s In a Brand Name?

3 Keys to Building the Right Credit Card Product Strategy 55





Overlooked Open Banking Opportunities

needs of consumers. What if the financial industry worked together to enable consumers to choose the financial services that best meet their individual needs — both inside and outside of the bank? Open finance is the answer. And megatrends in the technology, regulatory and competitive landscape — as well as heightened consumer expectations for seamless digital experiences — are driving the need for it. An Environment Ready for Innovation The financial industry is changing at an unprecedented pace and is showing more opportunities for innovation than ever before. But, the challenge in front of us is that we have a closed and complicated ecosystem. Both the 2022 White House Executive Order on crypto data assets and the 2021 Executive Order pressing the Consumer Financial Protection Bureau to finalize rulemaking on Section 1033 of the Dodd-Frank Act call for an open financial system that better supports innovation, secure data sharing and access to affordable financial services. The rise of alternative financial providers — including digital-first challenger banks — have also exposed the limitations of legacy systems. Today’s financial ecosystem just doesn’t support secure and reliable data sharing — data sharing that is required to meet customer demand and fuel innovation. Here are just a few examples of how these legacy systems impact everyone: • Consumers can’t connect their accounts, so they can’t benefit from the innovation and powerful digital solutions that will help them manage their finances. • Financial institutions can’t access and act on data internally. Or when customers and members try to connect to their accounts, and it fails, they blame their bank or credit union for the bad experience. • Fintechs are left with less secure and reliable options to power their solutions.


Money struggles have been linked to everything from divorce to higher rates of depression and anxiety to migraines, high blood pressure and heart attacks — not to mention homelessness, suicide and hunger. According to a Capital One Creditwise survey, 73% of Americans rank their finances as the No. 1 stress in life, ahead of politics, work and family. Even talking about the stress of money is something most of us bury deep down. In fact, a survey from LendingClub found that while 68% of people believe that their financial situation isn’t unique, only 20% to 30% are willing to actually talk about it with someone. Instead, we let the anxiety of money negatively impact our relationships and our health. Everyone has unique financial challenges and broad solutions don’t always meet the individual Open banking isn’t just the latest buzzword for the financial industry — it’s a rallying cry for meaningful innovation to empower the world to be financially strong. It enables financial institutions and fintechs to access and act on financial data to create personalized experiences, increase the pace of innovation and drive industry collaboration.

An Ongoing Struggle: Nearly three-quarters of U.S. consumers say finances are their primary source of stress.





Matt Luhn

Ginger Hardage

Omar Johnson

Duncan Wardle

Daymond John

Magic Johnson

Open finance means that companies, financial and otherwise, can build and offer consumers and businesses digital products that help them understand and manage their financial lives better. For instance: • Banks and credit unions can collaborate with various providers to deliver a wider variety of services based on consumer data. • Nonfinancial institutions and fintechs can gain a broader and more accurate basis upon which to create consumer-centered financial technologies outside of a bank. • Consumers can choose the data they share, decide how they engage with their finances, and gain unparalleled access to products and services they may not have otherwise had access to — resulting in greater control over their financial future. Open finance is about extracting more value from consumer financial data so that banks and credit unions can create exceptional customer and member experiences, discover new business models, make smarter decisions, mitigate fraud and risk and support financial wellness. It’s time for both financial institutions and fintechs to focus on how they can adopt methods and practices that will drive innovation internally, and create loyalty externally with consumers. Consumers want to know who is going to help them solve a problem. That way financial institutions are not competing on just the price of their service, but also on who can solve the most problems and drive positive outcomes for the consumer. With open finance, you can unlock the power of financial data to meet those needs and change lives. ▪ About MX MX powers the open finance economy by unlocking the value of financial data with secure and reliable financial APIs. MX is enabling trusted access to financial data and making it actionable for intelligent decisions and personalized money experiences. Our ecosystem connects more than 13,000 financial institutions and fintechs.

Financial institutions and fintechs that embrace open finance will be better positioned to deliver personalized better consumer experiences, tap into new business models and discover new sources of revenue. How Open Finance Differs From Open Banking Open finance is the next step beyond open banking, enabling access and sharing of consumer data to more financial products and services — not just banking. This includes loans, consumer credit, investments and pensions. It also enables wider integration of financial data with nonfinancial industries, such as healthcare and government. If we truly want to create an open financial ecosystem, we need to enable the entire financial footprint of consumers. And consumers want a more unified and complete picture of their finances: 90% of people said it would be valuable to see their finances in one place; however, only 40% said they could currently do it, according to an industry survey. The Benefits of an Open Finance Solution Open finance is the great amplifier to help empower the world to be financially strong — and lessen that financial stress we talked about earlier. Open finance enables this by effectively putting financial data in the hands of consumers and enabling them to choose the financial services that best meet their individual needs — both inside and outside of the bank or credit union. Customer Experience Mismatch: Nine out of ten of people would like to consolidate their finances in one place, but just under half say they can do that now.

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Headwinds on the Horizon for Noninterest Income

WHAT IS NONINTEREST INCOME? NII is broadly defined as income generated from sources unrelated to the collection of interest payments. NII includes fees charged for services such as overdraft fees, ATM fees, credit card fees, wire fees, account research fees, late fees, statement production fees, dormant account fees, transaction service fees and safekeeping fees, among others. It also includes the gain (or loss) from the sale of real estate loans on the secondary market, interchange income, and, in the credit union space, income from unconsolidated CUSOs (Credit Union Service Organizations).

By CUNA Mutual Group

In the low-margin environment of the last decade plus, financial institutions have grown to count on noninterest income (NII) to maintain a healthy bottom line. But as consumers and regulatory bodies push back on fees and traditional sources of NII become less available and profitable, bank and credit union executives are increasingly concerned about finding new ways to fill the income gap. As Cornerstone Advisors reports in its study “What's Going On In Banking 2022: Rebounding From the Revenue Recession,” the percentage of credit union executives who were worried about NII nearly quadrupled from 2019 to 2021 (from 10% to 39%) and the percentage of worried banking executives nearly tripled (from 11% to 29%). Current Trends in Noninterest Income We have seen declines in NII or key components of NII for banks and credit unions in recent years. It’s worth noting, however, that differences in business models and call report definitions of NII required by banking vs. credit union regulators can make direct comparisons imprecise. Banks have seen their NII as a percentage of average assets erode over the past ten years. (Figure 1) Unlike at banks, NII at credit unions has been relatively flat over the past 10 years. However, when we look at the two biggest components of credit union NII – fee income and other NII – we see some dramatic shifts below the surface. (Figure 2) Credit union fee income as a percentage of average assets has been in decline for roughly a decade. While growth in other NII as a percentage of average assets has helped offset those losses, there are clear indicators future NII growth will be buffeted by powerful market forces.

Figure 1

10-year trend of bank noninterest income

Basis points (as of Q4 for each year)

160 180 140 120

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 100 THE FINANCIAL BRAND © March 2022 SOURCE: FDIC Quarterly Banking Profile

What’s fueling the storm—and what steps can you take now to manage the risk? As pressure grows on the bottom line, the search is on for new, sustainable revenue streams that deliver sustainable customer value.

Figure 2

10-year trend of credit union fee and other operating income

Basis points (as of Q4 for each year)

65 70 75 80 85 60 55 50 45

Other operating income/average assets

Fee Income/average assets

2011 2012 2013 2014

2015 2016 2017 2018 2019 2020 2021

THE FINANCIAL BRAND © March 2022 SOURCE: NCUA 5300 Call Report data





Noninterest Income Headwinds There are good reasons to believe three important sources of NII will decline going forward. Here’s why. Overdraft Protection Programs • Regulatory and legislative scrutiny of overdraft protection programs (ODP). Megan Balogh, director of corporate and legislative affairs at CUNA Mutual Group, reports that governmental bodies have examined ODP for more than a decade and some banks and credit unions have acted to eliminate overdraft fees. Adds Balogh, “We expect to see more proactive work by financial institutions to find the right balance to meet consumer needs through overdraft fees in the months and years ahead – and the federal financial regulators are taking a close look at the issue.” • Consumers are strongly against fees and willing to vote with their wallets. Even though just 16% of households reported having overdrawn their account at least once in 2020 (according to research cited in Filene Research Institute’s Overdraft Protection Programs report), consumers have strong negative feelings about these fees. In a recent survey by CivicScience, 61% of adult consumers indicated they were somewhat or very likely to switch from their primary bank to a new one to avoid monthly service fees, ODP fees, or other related fees. And nearly three-quarters (74%) would somewhat or strongly support a federal law limiting or altogether banning retail banks from charging ODP fees, minimum balance fees, or other related service fees on standard accounts. • The competition is dropping ODP fees. Some neobanks (companies that provide banking services through an app or website) have made a complete lack of ODP fees a key element of their value proposition. Figure 3 takes a closer look at the current (as of 3/30/22) overdraft policies of two leading U.S. neobanks.

Figure 3

NSF/Courtesy Pay fees were or are expected to be a top 3 revenue driver Figure 4

Figure 5

Forecast of buy now, pay later user growth

“We’ll spot you up to $200* on debit card purchases and cash withdrawals with no overdraft fees. Eligibility requirements and limits apply.” “Chime members who receive a qualifying direct deposit of $200 or more a month are eligible to enroll. Limits are determined by Chime based on factors such as account activity and history.”

Millions ● % of internet users

Were top three in pre-pandemic period (January 2019 - February, 2020






19% Expect them to be top three in 2022 11% Expect them to be top three in 2023

“Acorns Checking clients are not charged overdraft fees, maintenance fees, or


ATM fees for cash withdrawals from in-network ATMs.”


Note: Credit union CEOs are overrepresented in the 2022 study sample relative to 2021.






THE FINANCIAL BRAND © March 2022 SOURCE: Alkami Technology, Inc.

2020 10.0%

Not to be outdone, numerous traditional banks and credit unions have eliminated, reduced or found ways to help consumers better manage their ODP fees. For example, PNC introduced its Low Cash Mode to help its Virtual Wallet customers avoid overdraft fees. And with its recent announcement that it will eliminate all overdraft fees, returned-item fees and overdraft-protection fees in Summer 2022, Citibank is the first of the "big four" national banks to go this route. The table below includes a sampling of credit unions that have made their ODP policies more consumer friendly. And recent research from CUNA Mutual Group indicates credit union executives expect nonsufficient funds (NSF) and Courtesy Pay fees to become less important as a source of revenue going forward. (Figure 4)






THE FINANCIAL BRAND © January 2022 SOURCE: eMarketer

Expected Decline in Mortgage Sales As Steve Rick, chief economist at CUNA Mutual Group, noted in the March 2022 Credit Union Trends Report, we can “expect mortgage interest rates to average 4.25% to 4.50% for the remainder of the year, effectively ending the mortgage refinance boom.” Another factor driving down mortgage loan originations is the record low inventory of homes for sale. Low inventories are suppressing purchase mortgage originations, which translates into fewer mortgages to sell to Fannie Mae and Freddie Mac. Profits (or gains) on the sales of mortgages represent an important source of NII for both banks and credit unions engaged in mortgage lending. Drops in Interchange Income The rise of buy-now-pay-later (BNPL) and point- of-sale (POS) financing represent a headwind to interchange income to the extent that these financing options are being used in lieu of credit cards. The following graph shows the dramatic expected growth in the number of consumers using BNPL financing (Figure 5). According to recent research sponsored by Breeze, the credit card substitution effect appears to be real. The survey of 1,500 adult consumers found 63% of BNPL users believe BNPL is a better option for financing purchases compared to a credit card. The remaining 37% indicated credit

cards were a better option. Furthermore, 61% of BNPL users said BNPL has reduced their credit card usage. How Concerned Should You Be? Financial institutions of all sizes are highly dependent on NII—some to the extent that they would have a negative return on assets (ROA) if this income were to disappear. When we look at credit unions, we see that they have been dependent on NII for positive ROA since at least 2011 (Figure 6).

Figure 6

Advantis Credit Union

PrimeWay FCU

What credit union ROA would look like without noninterest income

Affinity Credit Union (IA)


Alliant Credit Union

Self-Help FCU

Ratio values (as of Q4 for each year)

Altura Credit Union

Tri-CU Credit Union

-50 0 50 100 150

Connexus Credit Union

United Federal Credit Union


ESL Credit Union

University CU (CA)

MAX Credit Union

UW Credit Union

ROA less noninterest income

Metro Credit Union (NE)


-100 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 THE FINANCIAL BRAND © March 2022 SOURCE: NCUA 5300 Call Report data

Power Financial CU

Westerra Credit Union





The picture is much the same for banks with ROA less NII running negative over the past 10 years (Figure 7). Although a situation where NII would simply evaporate is unprecedented, being highly dependent on shrinking sources of this income is a situation no financial institution can afford to ignore.

• Observe and model low-cost peer financial institutions. Could their tactics work at your bank or credit union? • Partner with fintechs. This can be a smart way to offer new services and/or cut costs. Aggressively Seek Out New, Sustainable Revenue Streams That Deliver Tangible Consumer Value To find new revenue streams in these market conditions it’s imperative to offer products and services that deliver tangible value to consumers—that is, benefits that exceed the real or perceived costs of the product or service. Here are a few options to consider. Insurance, retirement planning, and investment services. These are product categories where the average consumer is more likely to need personal assistance and could be a good niche for your institution. A 2020 report from Accenture found that more than a third of bank customers said managing their money was overwhelmingly confusing and 48% reported they’d pay an extra fee for services like personalized loans, automated savings and investment tools, and long-term financial planning. One caveat: Make sure customers know you offer these services. It’s not unusual for consumers to be unaware of the range of services available through their financial institution. Products that help consumers avoid unnecessary fees, especially overdraft fees. Consider offering services like instant lines of credit, “early wage access” (which lets consumers tap into their deposits faster), and automatic small dollar loans for customers at risk of an overdraft. Many of these could generate revenue but are more likely to be seen as a valuable service — rather than a fee — by the consumer. Plus, they’ll help build goodwill and position your institution as a true financial partner. One closing thought. Consumers still care about trustworthiness. This is an area of strength for traditional financial institutions and continues to be a crucial differentiator when compared to fintechs — leverage it. ▪

Figure 7

What bank ROA would look like without noninterest income

Ratio values (as of Q4 for each year)

-50 0 50 100 150


ROA less noninterest income

-100 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 THE FINANCIAL BRAND © March 2022 SOURCE: FDIC Quarterly Banking Profile

Steps to Consider Now There’s no one-size-fits-all way to address these challenges, but there is one word to keep in mind: Optimization. How can your institution optimize your business model, your cost structure, and your revenue streams? Closely Examine Your Business Model and Seek Opportunities To Cut Costs Determine if your institution is overly dependent on challenged NII sources like ODP fees, mortgage sales, and credit card interchange. If you are, it’s time to minimize this dependency. This isn’t an easy ask given the current state of inflation, technology expenses and hiring challenges created by “The Great Resignation,” but the following can help: • Work with vendors to drive optimization. Ask your investment services and insurance partners how you can drive more revenue from these offerings.

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4 Key Changes Happening in Bank Marketing in 2022

Achieving success in marketing has always required agility and a willingness to try new things. 2022 won’t be any different: Banks and credit unions should expect the unexpected, and plan for what they can. There are at least four big shifts happening in the marketing world that are making 2022 a year for strategic adaptation. Smaller financial institutions are being impacted by these changes more than the big banks, but even the largest are feeling the effects. 1. Say Goodbye to Third-Party Cookie Tracking Odds are that unless you were deeply involved in the world of marketing technology, programmatic media buying or consumer data aggregation, this statement may not seem to carry a lot of weight. But it’s crucial. Here’s why. Cookies are very small files that accumulate on your computer or device when you browse the internet. A “first-party cookie” allows website operators to remember your preferences and tailor

your experience when you return to their site later. Third-party cookies enable your browsing behavior to be aggregated into large data sets and used to serve you ads across a wide variety of websites. Thanks to legislation such as the California Consumer Privacy Act (CCPA), consumers will soon have to give explicit permission for their browsing data to be tracked and shared. In effect, this limits the simplicity and easy data access that advertisers have relied on for years. However, it does not mean the end of first-party cookies or the ability to precisely target an audience with ads. Few consumers knew their behavior was being tracked because the digital advertising industry was allowed to do so without permission, including buying and selling the resulting data. It was an unregulated industry worth billions of dollars, and it was built on data that most people had no idea they were generating or that was influencing their buying habits. Once third-party cookies are fully retired, consumers’ data will be far safer and more secure. And banks and credit unions can lean

into the change. You already serve as a trusted guardian of people’s financial lives. It only makes sense that you would support increased privacy and security for their data as well. And by some estimates, a quarter of consumers will continue to allow their data to be tracked and aggregated — that means the future will still include some of the tactics banks have relied on for years.

By CW Warwick VP of Consumer Marketing & Program Design at Kasasa and Thomas Shields VP of Marketing Enablement at Kasasa

2022 is a year of shakeups in marketing. Community banks and credit unions are feeling these changes more acutely than large banks. But no financial institution can avoid the consequences entirely. Changes in use of cookies, social media, video and 1:1 marketing present opportunities as well as challenges.

Not All Data Tracking Will Disappear:

Roughly one in four customers will let their data continue to be tracked, even after third-party cookies go away, creating an opportunity for trusted bank marketers.





There are options for you to build your own audience and implement marketing tactics that are traceable and preserve the privacy of your account holders and target audience. What community banks and credit unions can do: The most important action item here is to acknowledge that third-party cookies are going away and pivot to marketing tactics that don’t rely on them so heavily, such as direct response marketing. Some community financial institutions may not even experience a change at all because they didn’t rely on the third-party data ecosystem to begin with. 2. Banks Must Closely Follow Social Media Changes Facebook (or Meta, as the parent company is now called) has been a massive player in the digital advertising space. Not just within its own social media platforms but across the entire internet. That era is winding down, precipitated by Apple’s changes to advertising tracking within iOS and evidenced by Meta’s falling stock price. Many people are scrutinizing big tech companies such as Meta, Twitter and Google to see if their platforms and policies cultivate division and negative societal effects. As with most novel technologies, that question has more to do with how people use the platforms than how they are structured. But it’s still worth looking at the situation objectively and making sure that how you use social media aligns with your values — it’s a decision that each business must make for itself. Engage on Social: Social media platforms will continue to offer valuable marketing opportunities because they have become virtual neighborhoods where consumers spend time.

What community banks and credit unions can do: Whatever the changes to social media advertising or the public opinion about big tech, the platforms themselves are crucial for connecting with consumers and growing your audience. And they will continue to offer valuable marketing opportunities because they have become virtual neighborhoods where consumers spend time. Your institution can and should create visibility in these neighborhoods, just like you do in physical neighborhoods. And the more connected you are to your audience on social media, the more effective your marketing efforts will be as a whole. 3. Shortform Video Is a Big Opportunity for Online Content Video has dominated social media platforms in recent years. The rise of TikTok may even represent a peak in the use of video. You can see TikTok’s influence across Facebook, Instagram, Twitter and Snapchat. In 2020, Americans spent 15 minutes a day watching videos on their smartphones. When you’re talking about 10- to 30-second clips, that’s a lot of videos by different creators. What community banks and credit unions can do: Seek to add value and build trust with your audience. The key to posting videos to social media is to create content that aligns with your brand. As a community bank or credit union, you can reach people with meaningful content even if your team is small and wearing lots of hats. 4. Engaging Bank Customers 1-To-1 Is Crucial While digital advertising is undergoing an uncomfortable shift, direct response advertising and communication are enjoying newfound relevance. Direct response advertising methods typically include physical mail, email and telephone outreach. Email marketing is an effective channel troubled by unreliable metrics — another result of the consumer-friendly privacy shift initiated

With the right technology partner, communicating over text message is secure, convenient and builds trust with your account holders. Best of all, it is equivalent to calling them on the phone, so it isn’t governed by the same regulations (such as requiring explicit permission and opt-out mechanisms) as broadcasting promotions to a shortcode list. Turn 2022’s Tough Challenges to Your Advantage If you haven’t already, take some time to document the marketing outcomes you’d like to see in 2022. This will create a landmark you can use to measure against and help reorient your strategy as needed. In the world of marketing, there are always new shiny objects that will distract you from the bigger goal if you allow them to. Now is also a good time to examine your marketing ecosystem and find out how dependent you are on third-party cookies for your campaigns. If you don’t rely on that type of data, then you don’t need to feel concerned about the coming changes. If you do depend on third- party data to run marketing, then you can get a head start on finding alternative partners and technology to hit your objectives. 2022 won’t be a cakewalk for anyone who uses digital advertising, but it can launch your financial institution into a much more sustainable, consumer-friendly way of communicating and growing your business. ▪ Additional Resources: Learn more about how to deal with the marketing challenges of 2022 in our podcast: Thinking Outside the Vault

Add This to Your Marketing Toolbox: Banks can attach a unique QR code to each recipient in a direct mail campaign and track who visits their site.

by Apple (to the dismay of many marketers). The emphasis for email will probably shift toward firmer metrics such as click-through rate. Physical mail is bouncing back in a huge way thanks to the use of QR codes and personalized URLs (PURLs). It is possible to send a unique QR code to every consumer in a database and have incredibly accurate reporting on who scanned the code and visited your site. This degree of visibility is every marketer’s dream! Although the phrase “telephone outreach” may trigger thoughts of family dinners interrupted by pushy salespeople, the landscape has changed in huge ways. Today SMS/text messaging has become an incredible channel for holding 1:1 conversations with consumers, and it’s a channel that consumers want to use. To be clear, we’re not talking about using shortcodes to build lists of phone numbers to broadcast promotional text messages. We’re talking about the ability to single out individual account holders and talk with them over text message. A common example of this is a loan officer who is collecting the necessary documents to close an auto loan or mortgage. What community banks and credit unions can do: Consumers want to feel seen and heard, especially by the bank or credit union that holds their money. SMS texting and other 1:1 communication channels help you meet those consumers where they are, and you don’t even need employees to use their personal phone numbers to facilitate the exchange.





Figure 1

The Shift in Small Business and Financial Institution Relationships

By Allison Cerra Chief Marketing Officer at Alkami Technology, Inc.

COVID impact on small businesses

“COVID accelerated our desire to reimagine the business with investments in technology” (Completely / mostly agree - 4 pt. scale)

Small businesses account for more than 60% of net new jobs created, generate 44% of GDP, and drive the U.S. economy. Organizations with fewer than 500 employees represent more than 99% of paid-employee firms, employing close to 50% of the private workforce. The pandemic has landed blows on small businesses since 2020, but it also broke the U.S. out of a decades-long slump in entrepreneurship. Small businesses are bouncing back in greater numbers, and our research found that those in business pre-pandemic mostly endured the hardships with the help of digital transformation. As a result, small businesses in our survey are open to working with fintechs and other tech companies to recover faster and with greater ease. Many have been embracing deeper and stronger relationships with these companies since COVID emerged. (Figure 1) In order to understand how COVID has impacted small businesses and how they feel about the future, and to measure the growing threat of nontraditional lenders to traditional financial institutions, we surveyed 400 small businesses to understand more about their outlook, priorities and perceptions regarding banking and lending. All participants in the survey identified as working full time (or being self-employed) by A survey finds that as small businesses shake off the impact of COVID, they are increasingly open to working with fintechs and other tech companies. But primary financial institutions still hold the upper hand – and the advantage is theirs to secure or squander.

Older SMBs have adopted less tech. Among 10+ year-old businesses: 53%









# of employees

“COVID created new opportunities for financing through alternative or new funding sources” (Completely / mostly agree - 4 pt. scale)

Among orgs who obtained a new loan in the past two years: 71%









# of employees

THE FINANCIAL BRAND © March 2022 SOURCE: Alkami Technology, Inc.

a business in the U.S. with fewer than 300 employees; as owner, C-level executive, or finance manager role and at least involved in the company's business loan and banking account decisions. The Financial Institution/ Small Business Relationship Is Fracturing… While COVID made things extremely difficult, it hasn’t stopped most small businesses. Nearly all that we surveyed have transformed in response to COVID, with 40% making these changes permanent.





COVID forced rapid adaptation through technology investments, which generated quicker, easier methods for financing when businesses needed it most. Small businesses are able to secure loans from fintechs, or willing to view fintechs as a viable lending option beyond their primary financial institution. This openness to alternatives is chipping away at the relationship between traditional financial institutions and small businesses. Nearly all small businesses surveyed have developed a working relationship with a tech partner. Those relationships have earned these tech companies enough confidence that small businesses with a preexisting relationship would be much more likely to trust suggestions from these partners than they would another bank or credit union that is not their primary financial institution. Without primacy, financial institutions lose not only on trust, but also loan consideration against small businesses’ new partners. (Figure 2)

half of small businesses obtained a loan; those in our survey mostly applied for business lines of credit (32%) or a business term loan (22%). Securing these loans was not as simple a process as small businesses needed it to be, causing frustration with lenders. (Figure 3)

Figure 4

Participant perceptions of business banking’s future Figure 5

Tech partners small businesses would consider as lenders

“The bank of the future will be a technology company” (vs a financial services company)





Figure 3



Small business perceptions of business lending and financing processes during COVID

No difference on Megabank customers vs. Local/Regional FI customers ( 86% vs. 83% )





Primary financial institution

No difference on Megabank customers vs. Local/Regional FI customers ( 45% vs. 49% )

Small businesses

Regional and Community Financial Institutions


Another bank/credit union 46%

“Lenders have been poorly informed about programs and resources made available through state/federal lending opportunities” (Completely / mostly agree - 4 pt. scale)


THE FINANCIAL BRAND © March 2022 SOURCE: Alkami Technology, Inc.

THE FINANCIAL BRAND © March 2022 SOURCE: Alkami Technology, Inc.

technology to continue their transformation. Small businesses are showing how integral tech has become for them by putting their money where it matters; more than half cite technology as a key investment priority. But financial institutions are not out of contention for seizing a broader relationship by financing these investment priorities. While tech players have gained significant ground in trust and loan consideration, the majority of small businesses believe the “bank” of the future will be a financial services company as opposed to a technology company. That said, fintechs are closing the gap by broadening the financial services they offer, requiring traditional financial institutions to respond in kind with their digital capabilities. (Figure 5) Takeaways for Strategizing As small businesses begin to thrive again, their emerging relationships with fintechs underscore the paradigm shift to which local and regional financial institutions must adapt. Small businesses are generally in better shape than expected, but they still need financial institutions. And while fintechs are disintermediating, financial institutions can still compete. Although larger small businesses benefitted from tech transformation, they

found credit was hard to come by with local or regional financial institution lenders. To fill the gaps their primary financial institutions leave in lending and technology, small businesses are open to alternatives, including fintechs. In fact, they’d prefer a tech partner over another traditional financial institution where there is no prior relationship. Financial institutions can find opportunities in lending as they always have while providing competitive digital experiences to make controlling finances easier for recovering small businesses. The key is to meet the needs of their business customers and members. ▪ About Alkami Alkami Technology, Inc. is a leading cloud-based digital banking solutions provider for financial institutions in the United States that enables clients to grow confidently, adapt quickly and build thriving digital communities. Alkami helps clients transform through retail and business banking, digital account opening and loan origination, multi-payment fraud prevention, and data analytics and engagement solutions. To learn more, visit

Those who got a loan in past 2 years: 62%

“Lenders have been slow to respond, making the lending process very time-consuming” (Completely / mostly agree - 4 pt. scale)


Which tech partners’ suggestions small businesses would trust Figure 2

Those who got a loan in past 2 years: 62%



THE FINANCIAL BRAND © March 2022 SOURCE: Alkami Technology, Inc.



Despite these negative sentiments, only 19% of small businesses reported they considered or chose to switch financial institutions due to COVID. Almost half of small businesses went as far as saying they felt no impact on their relationship. And when it comes to loan consideration, the primary financial institution is the clear preference among small businesses, even when evaluated against emerging tech players with whom they have developed deep relationships through the pandemic. (Figure 4) Where Financial Institutions Can Compete Emerging from COVID, small businesses are doubling down, particularly by investing in






Primary financial institution

Another bank or credit union 14%

THE FINANCIAL BRAND © March 2022 SOURCE: Alkami Technology, Inc.

…But the Primary Financial Institution/Small Business Relationship Still Holds Sway The impact on the relationships between small businesses and their primary financial institutions has only become clear as the U.S. economy recovers. Within the past two years, more than





Marketing research company Mintel found that some big banks are emailing customers 19 times within the first month of opening an account, others were found to send emails every other day, while one bank only sent a single communication during the onboarding process. Clearly, onboarding lacks any real guidelines or guidance within the banking industry. 4 Ways Banks Can Measure ‘Stickiness’ At what point does onboarding begin? When a customer walks into the branch? When they call customer service? When adding a new product or service? Most banking marketers would agree the onboarding process encompasses the first 90 days of the new relationship from start to finish. John Ward, Executive Vice President and Chief Marketing and Product Officer at American Savings Bank, identifies four metrics that help determine whether a new customer is “sticking.” He notes that “each bank decides how they measure and what definitions they assign to each measurement.” 1. Primary financial institution. “At American Savings Bank, we are invested in making our customers’ dreams possible and providing them with personalized solutions to fit their needs and financial goals,” says Ward. “From opening an account to buying their first home and planning for a comfortable retirement, everyone gets a banker who will make banking easy and support them every step of the way.” Ward adds that onboarding is largely about the customer’s relationship with a banker. This way, they have a trustworthy adviser to speak with to hopefully build a long-term relationship. Reducing account opening time is critical — it takes roughly 40 minutes in a branch versus 10 minutes online to open an account. “Providing convenient digital banking solutions is critical to long-term customer engagement,” says Ward. “By offering an online appointment system to meet with a banker through a video call, we’re making banking convenient and accessible for customers.”

By Rachelle Sokan Senior Vice President of Marketing at Amsive

Onboarding in Retail Banking: Who, What, When and Why

Smart marketers knows that onboarding is an essential part of building long-term relationships and revenue, especially in retail banking. Yet customer onboarding to familiarize new customers with products or services is far too often neglected in the banking space. Only 50% of financial institutions say they engage in customer onboarding, according to Customer Contact Week. In many cases, onboarding isn’t even a process that’s actively managed or regularly evaluated across the bank. While branch locations often help play a big role in onboarding, they operate in silos, separate from the marketing department and without any best practices on the necessary number of touch points or channel mix. Effective onboarding of new customers is essential to building long-term relationships and growing revenue in banking. Yet only half of financial institutions even engage in customer onboarding. And few do it well. Learn how to overcome the roadblocks, as well as the correct way to measure onboarding impact.

This Isn't Good: The percentage of financial institutions engaging in customer onboarding is 50%





the dreaded “We don’t own the systems or teams that drive these.” “A customer of ours follows a ‘2x2x2 process’ — meaning they call or email on day two, week two, and the second month,” says Wilson. “Yet they don’t have a structure and framework in place to analyze or debate that approach across the organization.” What would they change about the process? What would be a better follow-up process and why? They don’t discuss if they have the data to measure success. If they aren’t able to obtain that sort of actionable data due to obsolete technology, they won’t be able to accomplish necessary steps, such as determining the best time to cross-sell a product or service. 3. Unclear ownership. “Onboarding is one of those things in a bank where there are a lot of cooks in the kitchen,” Wilson observes. “It’s common with most customer-facing processes that there are multiple internal stakeholders that play a role in the customer experience. With onboarding, the stakeholders include product managers, channel managers, business unit owners, and brand/marketing managers.” The marketing department often isn’t brought into the onboarding mix — surprising when you consider that marketing strategies for new customer acquisition and cross-sell are extremely important to bank success. How to Onboard Efficiently and Successfully Fortunately, there are steps that banks and credit unions can take to help turn onboarding to their advantage — each addresses the current challenges faced by most institutions. Get clear on the objectives of the onboarding process. Start with what all stakeholders need to accomplish first — is it about PFI or cross- sell goals? Measure the current onboarding processes and look for ways to optimize, or even provide better tracking and reporting of the customer journey. Map out the process the old fashioned way. Determine what can be changed, such as

onboarded fast and pivoted quickly to cross- sell? Is it to obtain PFI status? There are very few times that team members at a bank actually run through and map out the onboarding process in detail with all cross-functional stakeholders. These days this would require getting stakeholders in a room on a Zoom call and walking step-by-step, determining customer touchpoints and assigning values to them. For example, deciding if there are 10 touchpoints or communications with a new customer during the onboarding process, how you’d rate each step in terms of experience against objectives, and what data will be used to measure this. Where Banks Go Wrong: Digital teams fail to map out and walk through the onboarding process with all the internal stakeholders to determine what's missing or takes too long. Novantas found that the rate of switching primary providers is generally low, but customer needs can change, as in the case of Covid’s “digital wakeup call” to consumers. Consider this: According to Forrester, 14% of U.S. adults banked online for the first time due to the Covid pandemic . Satisfaction with their experiences was high, which indicates that they will continue to embrace online usage. What’s more, a J.D. Power survey showed that 26% of consumers plan to use online banking more than they did pre-pandemic. 2. Driven by outdated technology. The fact is, the technology at hand becomes a deal breaker for onboarding improvement initiatives. Current onboarding technology might involve multiple systems and third-party data feeds, leading to

Missed Opportunity: The marketing department often isn’t brought into the onboarding mix.

Ward further explains that helping customers set up direct deposit and creating a personalized customer profile are important. When a customer has signed up for direct deposit, and shows at least three months of deposits and paid out three to four bills online, chances are they are considering the bank their primary financial institution (PFI). 2. Digital customer. The second metric to look at is the customer’s digital activity — more specifically, paying bills online, doing transfers and other online transactions. These customers have proven to be open to other products and services. 3. Percentage of digital transactions. How many digital transactions is the customer conducting? This is a key metric reported to the bank’s board of directors since it shows how efficient the bank is. 4. Net Promoter Score. How likely are your customers to promote your brand to their friends and family? Customers who are predominately digital have a high NPS and tend to be loyal with Minutes Count: It’s crucial for banks and credit unions to reduce the time it takes to open a new account — on any platform. It could make or break the customer relationship.

channel modifications. For instance, instead of a phone call, send an email. Determine how often communication is appropriate; use your current benchmarks and test with a small sample of customers. Get help understanding your audiences and deliver relevant messaging utilizing the most effective channels for the audience. In the meantime, continuously monitor channel engagement. An outside partner like Amsive can help with workshops that help drive onboarding transformation. Identify an orchestrator for the onboarding process. Ensure this project owner has a solid understanding of each step of the process and who is responsible, and consolidates all input and output during the process. A simple responsibility assignment matrix — also known as a RACI matrix or linear responsibility chart — is a great way to get started if you don’t have a process expert in house. Conduct a competitive analysis. Understanding how other banks are optimizing their onboarding process provides insights that can be leveraged to improve your process. Life After Onboarding Once the customer is onboarded, what’s next? The important next step and key milestone is relationship expansion — the data-enabled part of the customer journey in multiple channels. Amsive excels at every stage of the onboarding process and well beyond, helping retail banks build long-term customer relationships through proven onboarding best practices, martech stack- targeted emails and messaging, and much more. Learn more at Amsive. ▪

the bank for the long-term. Key Challenges to Effective Onboarding

When you examine the state of onboarding in today’s retail banking environment, there are three fundamental issues with the process, according to Allison Wilson, Vice President of Strategy and Client Experience at Amsive, a data- centric marketing agency. 1. The lack of clear objectives. What are the onboarding objectives? Is it to get the customer





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