The Financial Brand Insights - Summer 2021

#2 banking publication in the world. Nearly 2 million readers, and host of the fastest growing annual conference in banking.

Summer 2021 VOLUME 2 - ISSUE 2

FINTECH+BANK HYBRIDS ARE THE FUTURE PAGE 03 GROWTH STRATEGIES FOR 2021 PAGE 11 POST-PANDEMIC PAYMENTS TRENDS PAGE 29 THE METEORIC RISE OF CRYPTOCURRENCIES PAGE 33 KILLING THE NEW ACCOUNT BONUS PAGE 37 CREDIT UNION FOCUS: FINANCIAL PROTECTION PAGE 49

SARAH BACEHOWSKI WITH MILLS MARKETING STRESSES THE IMPORTANCE OF COMMUNICATIONS IN BANKING MERGERS AND ACQUISITIONS. PAGE 21

Table Of Contents

Fintech+Bank Hybrids Are the Future of Banking

To Acquire the Best Customers, Stop Offering Sign-up Bonuses Are Crytocurrencies the Most Important Payments Trend to Watch?

Normal for Now: The Future of Digital and Payments Top Tips for Reaching Banking Consumers in 2021 Turning Account Openers into Engaged Relationships

You’re Not Getting the Most From Your Customer Data

Taking Your Communications Strategy to the Next Level in Acquisitions

Gen X, Gen Y, Gen Z… Everyone Wants To Open Accounts 100% Remotely Now

Face the (Strange) Changes in the Payments Industry

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

What Banking Providers Need in Their SMB Toolbox

Blueprints for Building Award-Winning Brands in Banking Deepening Customer Relationships With Empathy and Innovation

Pandemic Opening Members’ Eyes to the Value of Financial Protection

Transformation 65

Profitability in Banking Threatened by Spike

Data Enables Digital

in Millennial and Gen Z Defections

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Fintech+Bank Hybrids Are the Future of Banking

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Figure 2

Consumer use of digital-only banking services

By MX

Do you have an account with a digital-only banking service such as PayPal, Venmo, Chime, Square, etc.?

Few recent banking trends have been as well documented as the accelerated shift to digital. Accenture Research has found that the percentage of consumers who say they use mobile banking at least weekly rose from 32% in 2018 to 50% in mid-2020, while in-branch transactions over the same period in the U.S. dropped roughly 40%. Deloitte writes, “It is now abundantly clear that COVID-19 has acted as a catalyst for digitization” and Forrester Research writes, “From entertainment to shopping, consumers all over the world have tried many digital services and products for the first time. Many consumers have also accessed their financial accounts online via their smartphone, opened a new financial product online, or made digital payments for the first time.” These findings parallel the consumer data gathered in the Ultimate Guide to the Top 2021 Bank Challenges by MX. Nearly all of the 1,000 random U.S. consumers we surveyed for the guide say they’re visiting their bank branch less often and using mobile banking more often than they did before the pandemic (figure 1).

Yes

87%

13%

Are you likely to use digital-only banking services more often in the future?

81%

Yes

19%

SOURCE: MX research © May 2021 The Financial Brand

In addition, 87% say they have an account with a digital-only banking service, with 81% saying they’re more likely to use such services in the future (figure 2). What’s more, in another recent survey, we found that 68% of consumers would like their banking experience to be similar to the experience they have with Netflix, Amazon, and other tech companies that understand their needs and offer recommendations based on their information. In other words, consumers want from their banking providers what big tech companies have been offering for years — personalized, tailored recommendations and services via digital devices. Fortunately, new and innovative technologies available to financial institutions and fintechs alike make it easier to address changing consumer behaviors. However, even though the solutions are readily available it might not be a quick rip and replace scenario. Rather banks and fintechs will have to work together to create digital-first money experiences. The Future of Banking Is Digital So, what’s the best way for financial institutions and fintech companies to move forward? In the

Figure 1

How the pandemic impacted use of branches and mobile banking

Use of branches nowversus before the start of the pandemic

I visit my bank branch more often today I visit my bank branch less often today

13%

87%

Use of mobile banking nowversus before the start of the pandemic

I use mobile banking more often today I use mobile banking less often today

89%

11%

SOURCE: MX research © May 2021 The Financial Brand

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

” Financial institutions can leverage third parties for their agile approach and rapid innovation, allowing them to allocate resources more strategically, expand lines of business, and reduce errors in production. These new innovations will help your financial institution compete more effectively and gives consumers better, smarter and more advanced tools to manage their financial lives. - Brandon Dewitt CTO at MX

past, the conversation often fixated on building versus buying. The problem with this is that no company can build every part of the journey from scratch — and it often doesn’t make sense to do it that way. There are a lot of companies that specialize in certain areas, trying to compete against them by building it all internally is time consuming, costly, and slows down speed to market. On the other hand, no company wants to only buy out-of-the-box solutions that look just like what everyone else offers. In many cases, if you specialize in a certain area, it could make sense to build it on your own and outsource the rest. The best way forward is to move beyond building versus buying to instead think of banking as a network of partnerships. It’s a strategy outlined by CEO of Citi and former head Global Consumer Banking for the bank, who says that she’s focused on creating “a light branch footprint, seamless digital capabilities, and a network of partners that expand our reach to hundreds of millions of customers.” Forrester echoes this strategy when they write that “technology decision makers must abandon the traditional ‘buy versus build’ mentality, and instead adopt a ‘buy, build, extend, and assemble’ approach to creating a banking development platform that takes full advantage of the benefits of commercial components where possible.” Another way to think of the “buy, build, extend, and assemble” model is, as Fraser says, “a network of partnerships.” As Brandon Dewitt, CTO at MX, writes, “Financial institutions can leverage third parties for their agile approach and rapid innovation, allowing them to allocate resources more strategically, expand lines of business, and reduce errors in production. These new innovations will help your financial institution compete more effectively and gives customers better, smarter and more advanced tools to manage their financial lives.”

Although it’s clear that the future of banking is digital, financial institutions and fintechs can’t go at it alone. What we’ll likely start to see is a merging of the two. Fintechs will not be able to scale and just remain fintechs. Similarly, banks that want to survive and stay relevant in today’s digital world, will not look like what we’ve traditionally known as banks. When it comes down to it, we’ve already seen a lot of big tech companies delve into banking — from Apple to Amazon and many more. For fintechs and banks to be successful in the digital world, they’ll have to work together. The right partnerships can offer flexibility, higher connectivity, and speed to market. With this framework, banks and fintechs can innovate in weeks, not years — and do it on their terms. n

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Normal for Now The Future of Digital and Payments

HOWMUCH OF OUR FINANCIAL BEHAVIORWILL CHANGE AND HOW MUCHWILL REMAIN LONGAFTER COVID IS BEHIND US?

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

” Millennials overtook baby boomers as America’s largest generation in 2019, meaning financial services providers must have a strategic focus on this generation of digital natives.

By Cindy McGinness Vice President, Digital Experience at PSCU

As we continue to face many of the same challenges, concerns and anxieties about what the future will hold as the COVID-19 pandemic evolves, one thing remains the same: Consumers want to stay safe and healthy. While we do not yet know what the “new normal” will look like, we have reached a place of “normal for now.” As we look toward the remainder of 2021, how much of our “normal for now” financial behavior will change and how much will remain long after COVID is behind us? Even before the pandemic, shifting consumer preferences were becoming apparent in the digital space, with more consumers adopting online banking, downloading payments apps and changing the ways in which they interact with their financial institutions. COVID-19 has fast- tracked these changing preferences, with digital banking gaining traction and contactless forms of payments rapidly gaining momentum, as seen in PSCU’s 2020 Eye on Payments study. Now is the time to strategize on a digital-first approach to meet consumer needs. Let’s take a deeper look at how the financial services industry can capitalize on the momentum we saw in 2020 with consumer shifts to digital and what leaders should consider for the future. Artificial Intelligence and Data and Analytics for Personalization The idea of being presented with personalized and contextual offers when you walk into a store or a branch might have seemed like an invasion of privacy — or even “creepy” — a few years ago. But times have changed, and consumers now expect

more personalization in all different areas of their lives, including with their financial institutions. Credit unions and other financial institutions should harness the data they have gathered about their members and customers, respectively, to understand how they interact with their institution — including how, when and through which channel they transact — in order to proactively connect with them through multiple channels. Financial institutions have a number of avenues to consider when it comes to personalization. For example, setting up personalized, automatic emails based on rules can successfully target a segment of consumers who need additional financial assistance or reminders to maintain their financial health. Proactive and meaningful connections like this can reduce anxiety, strengthen engagement and increase loyalty through the entire lifecycle of the relationship. Serving and Engaging Digital Natives According to population estimates from the U.S. Census, millennials overtook baby boomers as America’s largest generation in 2019, meaning financial services providers must have a strategic focus on this generation of digital natives, as well as future generations for whom digital is already

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

” Gen Zs’ spending through Buy Now, Pay Later has increased by 201% since last year and that of millennials has grown by 86%. While enticing to consumers during the checkout process, financial institutions have a tremendous opportunity to build loyalty by offering the same capability .

the norm. Their expectations are high, and if your financial institution is not ready to meet their needs, there is likely an eager fintech that is. As institutions consider their branch strategy for the current “normal for now,” it is an optimal time to also examine all touchpoints throughout the entire consumer lifecycle for attracting generational markets. We know digital natives require flexibility. They want to engage when and how they want through a variety of channels, including the convenience and immediacy of social media. They lack patience and do not expect to have to wait to speak to someone, giving chat and AI an opportunity to play a prominent role. Their consumption of media is fragmented. They choose streaming services and social media over television, for example. As such, marketing plans should evolve to include these alternative touchpoints for reaching this market. Ads in newspapers or magazines will no longer be enough — video and other forms of media and communication will become major players. Adoption of Contactless and Mobile Wallets Continues As financial institutions execute on their contactless strategies, it is anticipated that more consumers will begin using this method of transacting as they realize its safety and security benefits, both from fraud prevention and health perspectives as “touchless” options are largely viewed as more sanitary. Contactless adoption is expected to further drive mobile wallet usage as consumers learn the ease of use and gain confidence in tapping to pay. Mobile wallet adoption was originally stifled by merchants without the proper terminals, which reinforced the traditional swiping behavior, but this is no longer as much of a barrier as it once was. In fact, data from PSCU showed that mobile wallet (i.e., “Pays”) transactions and purchases for both credit and debit cards continued to show strong growth

with Card Present activity during the eight- week 2020 holiday season. Debit mobile wallet purchases were up 62% and credit mobile wallet purchases were up 46% year over year. As consumers embraced takeout over in- restaurant dining during the pandemic, restaurants adapted to deploy wireless terminals, also known as mobile point-of-sale (mPOS), which servers carry while delivering food. These new terminals also accept contactless payments, thus increasing the opportunity for usage in a category that was once restricted to traditional methods and further cementing the new behavior. To continue encouraging and promoting the permanent change in consumer behavior, financial institutions should implement digital issuance and push provisioning to increase ease of adoption and keep cards top of the wallet. An Increase in Buy Now, Pay Later (BNPL) Solutions In 2020, online shoppers saw an increase in installment payment options at checkout. According to Accenture data from Afterpay, Gen Zs’ spending through Buy Now, Pay Later has increased by 201% since last year and that of

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

The Impact of Frictionless Giving

millennials has grown by 86%. While enticing to consumers during the checkout process, financial institutions have a tremendous opportunity to build loyalty by offering the same capability. Offering a variety of options — post purchase, during purchases made online and at the point of sale (POS) — will offer consumers value- added services for managing their spend. If not integrated with their financial institutions’ cards, consumers could find themselves with a very fragmented view of their overall financial health. Institutions should have a strategic marketing plan to ensure consumers are well educated and reminded often so they choose their financial institution’s card versus the third-party offer they see during the checkout process. User experience and ease of use will be key to adoption. More Opportunities for Business Banking Credit unions have yet to fully tap into the potential of expanding existing member relationships to form more profitable business relationships, traditionally a strength in the banking market. As consumers grapple with the uncertainty of the economy, they may look to non-traditional forms of work or even take the leap to chase their dream of becoming an entrepreneur. The economy is opening a door that presents an opportunity for credit unions to form business banking relationships. These relationships will need to meet the same expectations for digital engagement as their consumer accounts — and more. The complicated hierarchy of business accounts can create challenges, but along with those challenges comes the opportunity for an expanded client base. Contactless, mobile capabilities, document capture and “bank anywhere” remain consistent themes with business banking. In addition, the business employee who is offered a debit or credit card may become a new member for life through this new relationship.

The toll the pandemic has had on our emotional well-being has encouraged many consumers to seek out ways to remain positive and bring joy. One way to generate positivity is through the giving of time, resources and money. With the uncertainty of the COVID-19 pandemic still a concern for many, it may feel burdensome or inadequate to give a one-time gift. Financial institutions can make it easy to give back to local and national organizations through the functionality of “rounding up” transactions. The “change” is automatically given to a charitable organization, making it turnkey for consumers to give through every transaction. Institutions can offer a selection of partners to give consumers the choice of where they want their donation to go. It is exciting to think of the possibilities that lie ahead for helping consumers feel connected and loyal to their credit union or bank through existing and new digital financial services. As we seek to navigate our “normal for now,” financial institutions are encouraged to keep an eyes- wide-open approach as they consider the needs of their customers and members, ultimately driving to a “new normal” for the future. n Cindy McGinness directs PSCU ’s initiatives to empower the company’s Owner credit unions with innovative and engaging digital solutions. Cindy leads an experienced team dedicated to delivering PSCU’s B2B and B2C solutions in mobile and online channels, in addition to online bill payment services.

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Top Tips for Reaching Banking Consumers in 2021 What Credit Unions and Community Banks Need To Know

due to these exceptional circumstances such as downloading their financial institution’s mobile app. While mobile and online banking was already on the rise, this situation accelerated this shift to new heights. Will Customer Behavior Revert After the Pandemic Ends? Many industries are hoping that the moment the pandemic officially ends, consumer behavior will return exactly as it was pre-2020. Don’t bet

By Stephen Kuhl, CFA Western Union Business Solutions

With news of COVID-19 vaccines around the world, the unprecedented health crisis that shook the globe over the last year may be inching towards an end. Yet the unexpected lockdowns transformed nearly every industry and a return to pre-quarantine business-as-usual may not be possible. Community banks and credit unions were greatly affected, as much of their business model centers on in-person transactions, personalized service and a physical location in their community. Exploring the lasting impact of COVID-19 on banking can help institutions understand what to expect for the rest of 2021 — and beyond. The Biggest Change for Banking Customers During the first half of 2020, banking customers were suddenly forced to adapt to various lockdowns with no clear direction on when regular service would resume. This meant that even if they had little interest in digital banking and solely relied on in-person transactions in the past, they were forced to change their behavior

11 THE FINANCIAL BRAND INSIGHTS SUMMER 2021

” Many industries are hoping that the moment the pandemic officially ends, consumer behavior will return exactly as it was pre-2020. Don’t bet on it.

on it. Due to lingering concerns regarding safety or even the new convenience with regards to remote banking, some customers may balk at the prospect of entering a financial institution again. Such sentiments are understandable as certain areas experienced cycles of openings and closings, forcing customers to find alternative methods of banking. Likely, even when COVID-19 is well under control, customers may already be comfortable with their new digital access and be unwilling to revert behavior. Though this sentiment will not apply to all customers, even the idea of losing a segment of regular visitors is cause for concern. Can the In-Person Experience Be Replicated Online? A significant concern for many community banks and credit unions is that their unique experience cannot be easily replicated in the digital space. This is understandable as on the surface, an online experience can be rather impersonal. However, in 2021 and beyond the alarming fact is that institutions will need to find a way to translate their brand to the online space effectively or risk losing their customers, let alone

attracting new ones. Consider that some of the most popular brands that community institutions compete with have no physical locations but maintain a loyal clientele. Of course, branches will not disappear anytime soon, but they can no longer be the primary focus of an institution’s

strategy for customer engagement. The “Amazon Effect”

The online shopping space exploded during the pandemic, as many turned to ecommerce as a necessity. The convenience, speed and options available in this medium may condition consumers to expect this level of digitization with all of their brands — even their financial institution. While that may be unfair to financial institutions who have greater regulatory constraints and wildly different services, it remains an unfortunate fact that today’s customers will have less patience for a poor online experience because of the innovations available elsewhere.

The 3 Keys To Reaching Post-Pandemic Banking Customers

Since customer expectations shifted throughout 2020, strategy must also change if a financial institution wishes to retain and engage customers. Critical considerations which

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

” Customers may be adopting new tech for banking during the pandemic with few plans to return to their previous actions. This means that financial institutions who wish to retain their base should mirror their celebrated offline experience with their digital one .

13 THE FINANCIAL BRAND INSIGHTS SUMMER 2021 ” In 2021 and beyond, the alarming fact is that institutions will need to find a way to translate their brand to the online space effectively or risk losing their customers. to uncover revenue generating opportunities. Especially today, there is no longer an “in-person customer” or “digital user,” rather they are both. 3. Optimize. Similarly, leaders should ensure communication across all platforms—so customers have access to information regardless of their preference of channel—and design processes which allow any action taken in community banks and credit unions will need to consider include: 1. Personalization. It’s important to understand what customers want and to find the best way to deliver an impactful message. For instance, the demand for international payment services for both personal and business purposes is growing, but a number of community banks and credit unions limit these types of transactions to in- person requests only. This means their customers must physically visit a branch to access these products, which is increasingly inconvenient. Going forward institutions may need to remove barriers and manual processing or risk losing customers. 2. Data-driven decisions. Can you describe your customer? Most users will interact with their financial institution through various channels: online, in-person, through social media and more. To better predict behavior and meet demands, banks should utilize a complete view of their data to gain a thorough and full view of their base

a branch to be performed in other channels (such as online or through telephone and mobile banking). In fact, those who embrace an omnichannel experience could retain more customers than those who ignore this factor.

Why the Demands on Financial Institutions Are Higher Than Ever

After spending much of 2020 confined to their homes, customers from all industries learned to rely on the digital capabilities of their favorite brands, including their financial institution. This shift is a cause for concern for community banks and credit unions who are well-known for their personal approach but less for their digital innovations. Yet it seems that customers may be adopting new tech for banking during the pandemic with few plans to return to their previous actions. This means that financial institutions who wish to retain their base should mirror their celebrated offline experience with their digital one. Those who do not may struggle to keep their once-loyal clientele. n

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Turning Account Openers into Engaged Relationships: Navigating 4 Phases of the Journey

In this article, we discuss ways to optimize your success by adopting strategies and best practices at each stage. Account Opening: Speed is Key In the early 2000s, a Rhode Island technology company named Andera introduced the first platform that enabled credit unions and banks to open deposit accounts online. Fast forward to now, where the percentage of institutions that offered online/website and mobile new checking account opening in 2020 reached 82% and 38%, respectively. We’ve come a long way, right? Sort of. The good news is that most banks and credit unions offer online account opening. However, there’s still work to be done.

By Digital Onboarding

Far too often, banks and credit unions focus almost exclusively on new customer or member acquisition and cross-selling. This approach can be problematic. Institutions that focus on the beginning and the end of the customer and member lifecycles are ignoring the critical middle stages that ultimately determine long- term success. It’s important to recognize that the process for achieving primary financial institution status is a multi-step journey with four stages:

1. Account Opening 2. Confirmation &Welcome 3. Product & Service Utilization 4. Relationship Growth

15 THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Digital applications are notoriously tedious and abandonment rates are high. The biggest culprit? Lengthy application processes. If you think applicants will invest more than 10 minutes opening an account online, you’d be wrong in plenty of cases. Key Point If your online application takes 10 minutes or longer to complete, account openings can be impacted by as much as 40%. Many financial institutions calculate “abandonment rates,” a simple formula that divides the number of completed applications submitted for a final decision by the total number of applicants. However, abandonment rates are often grossly underreported. The issue lies in the way “total applicants” is calculated. With many online account opening platforms, applicant information isn’t saved until an initial set of required fields are completed. Until that’s done, applicants aren’t counted in the denominator. The true abandonment rate equals the percentage of online applicants that clicked an apply now button on an institution’s website but quit the process before their application was processed. In our experience with hundreds of institutions large and small, it’s not uncommon for 70 to 90% of applicants who clicked “apply now” to abandon the process before their applications are submitted for a decision What Are You Doing To Bring ThemBack? It’s a lot easier and cheaper to re-engage someone who already expressed interest than it is to attract someone new. Retargeting abandoned applicants pays huge dividends. By capturing and immediately saving applicants’ names, email

addresses, and mobile numbers, banks and credit unions can send instant email and SMS reminders that motivate abandoned applicants to come back and open their accounts. Typically, abandoners have to remember their application ID numbers to resume saved applications. For retargeting campaigns to succeed, make sure that people can recover their application IDs within seconds. Remember This: 1. Ensure that your online account opening process can be completed in fewer than 10 minutes. 2. Immediately retarget abandoned applicants to motivate them to finish the process. 3. Give people an easy way to recover their application IDs before friction gets in the way again. Confirm & Welcome: Don’t Keep ThemWondering Waiting a few days to follow up with new account openers can mean the difference between a fully engaged customer and an inactive one. Consider This: If you buy a package of paper towels on Amazon ® , you receive an instant receipt. If you open a bank account online, it can take days to receive an acknowledgement. When someone opens their first account at your institution, it’s your earliest and best opportunity to thank them for their business and make them feel good about their decision. This is not the time to start cross-selling additional products. Engage them and build a relationship first. How is your institution welcoming people that opened accounts in a branch? Are they receiving a personalized email or SMS message from the

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

person that opened their account? Or are they walking out of the branch with an armful of brochures and disclosures? How are you welcoming people that opened accounts online? Are you automatically sending them a message thanking them for their business or are you sending a paper welcome kit that will take days to arrive? The first message after account opening typically has an extremely high engagement rate. A prime example: A credit union in the Northeast sees a 90% open rate and an 81% click through rate for the first email message it sends after checking accounts are opened. If done right, your first message will get a lot of exposure. Make sure it’s welcoming and sets expectations for what’s to follow.

additional financial needs arise and will deliver an average of $212 in incremental profit each year.

This is why it’s so critical for proper onboarding to build early engagement. Warning: If a new account opener doesn’t engage and start using their new account in the first 90 days, they probably never will. When Someone Opens a NewChecking Account, They Have a Lot to Do:

● Switch their direct deposits ● Activate their debit card ● Enroll in online banking and/or download the mobile app ● Figure out how digital banking works ● Update automatic payments

Remember This: 1. Instantly confirm account openings and

● Sign up for eStatements ● Update their digital wallet

welcome everyone that joins your institution. Thank existing customers and members for the additional business.

● Understand P2P payments options ● Learn about a rewards program ● And the list goes on …

2. Don’t ruin the moment by bombarding new account openers with piles of paper.

3. Wait until new account openers are engaged and using their new accounts before you cross-sell. Onboard & Engage: Make It Easy To Get Started Most banks and credit unions open a new account and call it a win. However, the only thing they’ve won is the chance to make money or to lose it. When accounts stay open but aren’t used, it negatively impacts the bottom line. If a checking account holder considers your institution to be their primary provider, they’re four times more likely to turn to you when

Banks and credit unions need to make it as easy as possible for new account openers to start using their new accounts immediately. This includes communicating early and often, as well as offering tools and tips to make things easier. Communicate Early When institutions wait a few days or more to communicate with new account openers, the chance of engaging them falls significantly. A best practice is to trigger an instant welcome email or SMS message after account opening. If your systems don’t support real-time communication, try to deliver the first message within 24 hours while you work to improve your technology.

17 THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Remind Them Often JD Power & Associates reported that new account openers should receive five to seven communications from their financial institution in the first 90 days. Yet, most banks and credit unions don’t communicate often enough. We recommend that banks and credit unions concentrate their early engagement efforts on the first 30 to 45 days. Instead of relying on snail mail, institutions should leverage personalized email and SMS communications for a timelier outreach. Before sending a reminder message, confirm whether the customer or member has already taken the required action. If they have, remind them of the next most important action they need to take and suppress any further reminders for the completed actions

Key Point: 82% of consumers open every text message they receive. Note: As customers begin utilizing their new accounts, they wouldn’t need to receive this full set of reminder messages. Messages later in the cadence would apply to customers who haven’t yet:

● Enrolled in online banking

● Switched direct deposits

● Taken other actions needed to fully utilize their new accounts

Basic emails and SMS messages are not enough to get people engaged. It’s important to link your messages to personalized, step-by-step guides and tools that make onboarding tasks easier. Offer Some Help Educate new account holders on what actions that they need to take and do what you can to make tasks easy to complete. It’s all about removing friction. Share member and account numbers securely: These numbers are typically required to enroll in digital banking and direct deposits. But when someone opens an account online, the information flashes on the screen and doesn’t always get recorded. You could mail the information to new account holders, but the letter will take days to arrive. To drive early engagement, find a secure way to deliver sensitive information immediately upon request. Help them enroll in direct deposits: Direct deposit is a main driver of primary financial institution status. Too often, institutions provide a PDF form and ask customers and members to complete it and give it to their employers. This may have been fine 20 years ago, but there are better ways to be supportive. Eliminate forms and invest in

Our Best-Practice NewAccount Opener Messaging Cadence: ● Same day (welcome): Send a message that provides an account opening confirmation and thanks them for their business — email and/or SMS message. ● Days 3, 10, 15, 20, 25, 35 (activation): Continue to send personalized email and SMS reminders, tailoring the communication stream based on the actions each individual has or has not completed. Examples include: card activation, online and mobile banking enrollment, e-statement enrollment, direct deposit enrollment, etc. ● Feedback: Ensure that one of your reminders focuses on capturing feedback about the account opening and onboarding experience so you can resolve any frustrations early-on and optimize your process.

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

technology that enables people to switch their direct deposits in minutes. Simplify the process of updating default payment methods: When someone gets a new debit or credit card, they face the daunting task of compiling a list of all the merchants where they’ve stored a card on file so they can visit each merchant’s website to update their card information. It’s a tedious process. If you provide digital tools that enable cardholders to update their payment information easily, you can grow transactions and maximize interchange revenue. Make it easy to download the mobile app: There are thousands of banks and credit unions in the United States, and many institutions share similar names, which can confuse new account holders. Give new customers and members a simple way to download the right mobile banking app for their devices. Remember This: 1. Deliver the first message within a day of account opening. 2. Send frequent reminders in the first 30 to 40 days to encourage account usage. 3. Provide digital tools that remove friction and make it easy for new account openers to adopt account-related services. Deepen Relationships: Boost Profitability and Retention For most institutions, checking accounts aren’t wildly profitable but are still considered the key to the household relationship. As we noted in the previous section, when a checking account holder considers your institution to be their primary provider, they’re 4x more likely to turn to you when additional financial needs arise. Cross-selling not only impacts relationship profitability, but also impacts retention. When

a customer or member moves from having one product to three, their probability of switching decreases by 10 times . Banks and credit unions often miss cross-sell opportunities by not delivering proactive and personalized offers. In fact, we’ve found that about one-third of banking customers report opening an additional product at a competing institution. Educate Customers and Members onWhat You Offer Once customers and members have been properly onboarded and are actively using the products they opened, it’s time to start educating them about other ways your institution can help with their finances.

● Do you offer excellent auto loan rates?

● Do you offer a frictionless mortgage process?

● Do you offer a bank account that helps teenagers responsibly manage their money? Sharing ratings, testimonials, and awards also goes a long way towards building credibility. Feature quotes and stories about how you’ve helped other customers and members. Include them on your website and in other communications to solidify how relatable and trustworthy your institution is. Cross-Sell Before They Go Elsewhere One out of three banking customers who opened a new product purchased it from an institution other than their primary one. Why are your customers and members opening credit cards with competing institutions? Why are they getting mortgages through Quicken Loans®? When a new need arises, people suddenly tune into advertising and special offers. How your institution can help may not occur to them when they have needs to solve.

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Conclusion: Meet Customers in the Middle

While you can frequently ask customers about their needs, it’s more effective if you can identify when a new need arises. Leverage third-party data to identify customers and members as soon as they begin shopping around (e.g., people listing their homes for sale, shopping for a car, etc.) Not only does cross-selling increase customer and member profitability, but it also has a massive impact on retention rates. Moving from one product to three decreases the probability of switching institutions from 50% to 5% . Remember This: 1. Don’t assume that customers and members will turn to your institution when new needs arise. 2. Leverage third-party data to identify customers and members that are shopping around so that you can make proactive offers. 3. Cross-selling additional products not only improves your bottom line, but it also has a massive impact on retention rates.

Financial institutions have spent too long focusing on the beginning and end of customer and membership lifecycles. The answer to longevity, improved retention rates, and customer loyalty lies in the work you do to engage customers and members in the critical middle stage. Standard email systems and marketing automation systems can work well for acquiring new customers and members. But deeper relationships in the middle and later stages of the customer journey require a platform that enables growth. This growth platform should support instant welcomes for new customers and members and consistent, personalized communication during this middle stage and beyond. With a growth platform to help you improve these strategies, your customers and members will continue to rely on you as their financial institution of choice for years to come. n

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THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Taking Your Communications Strategy to the Next Level in Acquisitions Sarah Bacehowski President at Mills Marketing

21 THE FINANCIAL BRAND INSIGHTS SUMMER 2021

intuitiveness. As FIs, we’re tasked with knowing what people or businesses want and need — even before they do. Therein lies the challenge… how do we deliver at this level? Can we go it alone? Do we have the tools, the skillsets, the infrastructure? Do we have the culture to support this long-term? Does it (or how can it) align with our brand? The continuous push toward leveling up in the digital and technology game is often a driver

By Sarah Bacehowski President at Mills Marketing

We Made it! NowWhat? As families, businesses and communities around the world slowly dust themselves off and prepare for post-pandemic life, the financial industry is waking up to a new and unique set of challenges. From differentiation, to technology, staffing and branch utilization, like it or not, COVID-19 has changed the face of banking forever. Similar to other industries, technology has always been a part of an overall growth strategy, but in most banks and credit unions, it has never been the lead — until now. The pandemic turned what was a slow shuffle toward the edge of the technology cliff, into a hard shove right off the edge. FIs had to get nimble, creative, flexible, and comfortable with a very different way of operating in a very short time period. And frankly, they did. But now what? After successfully transitioning to remote internal operations, and serving businesses and consumers digitally, the technology-first approach has become the new norm, and not simply added value. There is an expectation of not only exceptional digital delivery function, but also speed, accuracy, personalization, and ” It’s an exciting time to be a financial institution, so embrace it. Be Smart, and Be Bold! - Sarah Bacehowski

” ... there’s no such thing as too much outreach or preparation. - Sarah Bacehowski

for a larger decision to find one or more strategic partners, to combine resources — or organizations — to build the best, most competitive and sustainable solution. Enter the acquisition strategy! In an Acquisition … Communication is KEY Regardless of your reasoning — technology or otherwise — if acquisition is a chosen growth strategy to position your FI for future success, it’s important to understand the value of proactive, transparent communication. Over many years in financial marketing and communication, acquisition has been a constant — allowing us the opportunity to build a turnkey process that makes product mapping, meeting regulatory deadlines, internal and external communication, PR, and market entry simple. Or simpLER at least!

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

With retention of both staff and customers/ members being the number one goal, there’s no such thing as too much outreach or preparation. By following a detailed timeline and checklist that begins with an announcement of intent, to all communication needed by closing and conversion, you really can accomplish a seamless transition (figure 1). As long as your three critical audiences — staff (new and legacy), soon-to-be and current customers/members, and communities — are addressed regularly with a consistent and positive message, retention and satisfaction will follow. What’s Your Smart, Bold Move? So however your FI chooses to grow, level up, and differentiate, remember to look up from daily operations — and both inside AND outside the financial industry — for best practices. Just as

COVID-19 accelerated the adoption of technology both internally and externally, the need for FIs to keep doing it better, faster and smarter will continue to be the trend. If there’s one thing we can be sure of, it’s that things will never go back to exactly the way they were — so adaptability is key. Whether it’s an acquisition, strategic partnership, or building the infrastructure from within, keep looking ahead, and relentlessly positioning to serve the customer or member not just today, but for the future. n Mills Marketing is a full-service, strategic marketing firm with over 45 years of experience in the financial services industry. For more information about mergers and acquisitions, please contact Sarah Bacehowski at sarahb@millsmarketing.com.

Figure 1

Key Milestones

Letter of intent is SIGNED

CLOSING

CONVERSION

to staff, customers/members and markets

ANNOUNCE

to new and existing customers/members and markets

CLOSING COMM.

FAQs, marketing briefings, etc.

Product mapping guides for staff training

STAFF COMMUNICATION

Employee rally

CUSTOMER/MEMBER ROLLOUT CAMP.

LAUNCH

3 CRITICAL AUDIENCES • New and legacy STAFF • Soon-to-be and current CUSTOMERS/MEMBERS • Soon-to-be and current COMMUNITIES

PRE-CONVERSION COMM.

Account mapping mailing

Account holder NOTIFICATIONS

MARKET ROLLOUT CAMP.

LAUNCH

23 THE FINANCIAL BRAND INSIGHTS SUMMER 2021

The User Experience is Everything.

Wa n t t o I m p r o v e Yo u r s ? We C a n H e l p .

Derek Baker VP, Sales and Innovation

Crystal Steinbach Digital and Marketing Automation Manager GOOGLE ANALYT ICS CERT I F I ED

M i l l s M a r k e t i n g . c o m

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

Gen X, GenY, Gen Z… EveryoneWants To OpenAccounts 100% RemotelyNow

If you are in financial services, this question must have come up several times since the onset of COVID-19 — “how can we facilitate 100% remote account opening?” In current times, this question is highly relevant and directly impacts your ability to reach account and loan growth goals. While branch closures were temporary, something else became permanent over the course of 2020 — the shift in customers’ preference to go 100% digital. Recent McKinsey research concluded that up to 85% of customers now prefer to

By Deepak Polamarasetty Co-founder of CreditSnap

To deliver what customers have come to expect, banks and credit unions must innovate and make smart technology choices. There is no better way to competewith neobanks and big banks.

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” Recent McKinsey research concluded that up to 85% of customers now prefer to conduct banking transactions 100% digital! Even customers 65 years of age or older.

conduct banking transactions 100% digital! Even customers 65 years of age or older. Bank Account Opening: Is It Really Digital? Daily banking needs are going digital, lending is going online, but one transaction particularly stands out as a digital hurdle — opening a checking or savings bank account. A top three Google search result on this topic suggests a visit to the nearest bank branch to be the best way to open a bank account. Some financial institutions do offer digital account opening applications, but that is where the digital journey ends. After the digital form, the applicant is invariably required to visit a branch to complete some of these final processes — a) sign the documents, b) complete the ID verification for the federally mandated KYC process, and/or c) to deposit cash or check into the newly opened bank account. Interestingly there are solutions to solve for electronic signatures, another few for True ID verification (automated KYC), and another few for accepting electronic deposits. NONE of these work together. The only solutions that bring these technologies together are neobanks OR big banks that have access to a large number of engineering resources. Everyone else — including traditional banks, credit unions, and community banks — rely on financial platforms for innovation, and the wait for a unified online account opening solution has been long and overdue. What Makes up a Good Account Opening Solution? An ideal account opening solution should support the eight pillars that make up a compliant account opening process. It should take the average customer no more than 10 minutes to go from start to finish of the account opening digital journey — also known as “10 Minute Straight Through Digital Account Opening”.

Ingredients of a best-in-class account opening solution include: 1. Product Bundling . Customers should not be forced to submit one application for each account they want to open. If they want to open a checking account and a money market account, then they should not be forced to create two applications. One application should allow for multi-product selection (bundling) and take care of the process at one go. 2. Instant OFAC andWatchlist Checks. OFAC and other AML checks should be instant and in real- time. The applications that are flagged for fraud review cannot be instantly cured, but the happy path applications (no flags) should be able to pass the hurdle and move forward in the instant digital journey. 3. Instant Membership Eligibility Check. For institutions with charters (i.e., Credit Unions), live/work/worship/learn/organization/family membership eligibility should be established immediately to avoid hurdles in a 100% digital process. 4. Data pre-fill for your existing customers. Given indirect lending is a significant source of membership acquisition, the odds of your existing customer coming back to you for a checking account are real. Account opening solutions should seamlessly integrate with your customer

THE FINANCIAL BRAND INSIGHTS SUMMER 2021

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