The Financial Brand Insights - Fall 2021

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

Fall 2021 VOLUME 2 - ISSUE 3

DIGITAL SOLUTIONS: INNOVATE OR PERISH PAGE 15 INDUSTRY-CHANGING CREDIT CARD TRENDS PAGE 09

BOOST PROFITSWITH BETTER DATAMANAGEMENT PAGE 23 CUSTOMER LIFETIME VALUE: BANKING'S CRITICAL KPI PAGE 19

FINTECH MARKETING STRATEGIES FOR TRADITIONAL BANKS PAGE 31 4 PRACTICES TO FUND LOANS FASTER PAGE 37

COVID-19: THE GREAT ACCELERATOR Chuck Fagan, CEO of PSCU , looks at how the pandemic accelerated digital banking trends and what people now expect. PAGE 13

Table Of Contents

From Applicant to Borrower: Improve Your Marketing Offers Year-End Action Plan: 4 Best Practices to Fund Loans Faster Using Data to Drive the Banking Digital Customer Experience

Three Trends That Are Redefining the Credit Card Industry A Time of Acceleration and Transition for Financial Services Automating Customer-Centricity with Journey Orchestration How To Transform Your Contact Center to the Center of Excellence

3 Ways to Keep Data Fraud From Sabotaging Digital Banking CX

How the Right Banking Vendor Strategy Can Speed Digital Transformation

Using Competitive Intelligence to Take Back Banking

Overdraft Fees: Will Big Banks Ditch Them for Good?

From “Wait and See” to “Build It Now”: Investing in Your Footprint

Axis Smashes Expectations with End-to-End Security Solution

How to Boost Customer Lifetime Value in Banking

Finance Transformation Unlocks Business Value with Data Preparation

The Top 11 Fintech Disruptors of 2021 26

Why Apples-to-Apples Comparisons are Less Fruitful in Today’s World

THE FINANCIAL BRAND INSIGHTS FALL 2021

” By 2025, 40% of customer service organizations will be profit centers , making them the leaders in digital customer commitment.

HowTo Transform Your Contact Center to the Center of Excellence

By Ailleron

Global Overview

Today, customers regularly contact banks using many different communication channels, sometimes alternating between them or using several simultaneously. Customers want consistency regardless of the type of communication, and so a well-integrated omnichannel system is needed to ensure that continuity is in place. The chain of events set in motion by Covid-19 has transformed the way clients relate to banks. The digitization of banking services and remote communication technologies has sped up. Customers who preferred face-to-face interactions with a bank employee were obliged to seek connection with customer care via a contact center due to the limited availability of physical communication channels, such as branches. The pandemic helped usher in new digital consumer behaviors such as online shopping and banking. A whole consumer segment is only now beginning to use digital channels as their primary —and frequently only—point of contact for

customer support. According to Forrester , clients who used digital channels for the first time during the pandemic will continue to do so, resulting in a 40% rise in digital interactions. Although the industry’s conventional contact channels are gradually re-opening, the use of digital channels will remain a permanent feature of the banking environment. As a result, it will be critical to utilize the current physical resources of facilities skillfully in this ‘new world’. According to Forrester Research, more than 30% of institutions with physical branches would rethink the role of branch staff, with one of their responsibilities being to manage digital consumer inquiries. Create a Center of Excellence That Supports Customer Experience Aggregated channel organizations can achieve significant diversity while enhancing customer satisfaction by 15 to 20%, lowering service costs by 20 to 40%, and increasing conversion rates and growth by 20%. By 2025, 40% of customer service organizations will be profit centers, making them the leaders in digital customer commitment. At the same time, proactive (outbound) interactions with customers will outnumber reactive (inbound) contacts. As a result, it will be critical to developing a new customer service model that combines proactivity, automation, and expert customer care.

” Clients who used digital channels for the first time during the pandemic will continue to do so, resulting in a 40% rise in digital interactions. - Forrester Research

THE FINANCIAL BRAND INSIGHTS FALL 2021

offered varies according to the channels. Most businesses use non-integrated communication channels such as phone, e-mail, chat, and social media. Many organizations may function in silos and fail to provide the same level of service in all channels. As a result, the consumer must have an omnichannel experience that includes all of the services. ● Maintain consistency in process and high standards. CC Agents frequently use numerous applications as sources of client information, which results in a longer period of service since they must use different systems. The application of appropriate standards will have an impact on the efficiency of service and training activities. ● Customers expect a service that is suited to their needs in terms of transaction history, interactions, and communication mode. As a result, technology must aid agents in gathering as much information about the consumer as possible in a straightforwardly to have a clear picture of their requirements. Good customer service necessitates a disciplined approach in terms of both technology and process. Therefore, to establish customer loyalty, it is vital to improve technology to be supportive and ergonomic successfully and procedures to be consistent and understandable for everyone in the contact center. ” Service leaders must rethink their approach to the client. Technology should be able to match customer expectations everywhere, through any channel, and at any time.

CC Technology Trends That Can Support CC in Achieving Exceptional CX As offering a wide range of services becomes more than just a competitive advantage, service leaders must rethink their approach to the client. Technology should be able to match customer expectations everywhere, through any channel, and at any time. Tools used to automate operations will relieve agents of repetitive work. However, when employing automation techniques, one should keep in mind the humanity of services - avoiding a robotic first impression is crucial in all channels. Automation and artificial intelligence will have an impact on all contact center tasks. When transitioning technology, it is also vital thinking how the role of CC personnel will change - they will have more time to help with sensitive queries, which will improve customer satisfaction and comprehensive service. Based on its Tech Tide report, Contact Center Technologies For Customer Service Q1 2021 , Forrester identifies several advanced CC technologies that can positively impact customer service. These include: ● Case management is an essential technology that enables organizations to provide various services and withstand cost pressures. It allows you to aggregate the history of individual clients’ cases so that the agent is familiar with previous issues. It also facilitates problem management. ● Messaging/Chat. Customers love text chat. An asynchronous visibility solution helps them seamlessly connect with the brand, stop and restart interactions, and shift context between interactions. ● Contact Center Interaction Management , or CCIM is the key to good traffic management in the contact center. It allows for the practical

Customer service has a direct impact on an organization’s financial outcomes. Therefore, the foundation of strong CX is to provide consumers with a service that is a blend of self-service and direct contact with a CC agent across the entire sales process. This is important to note because: ● Good customer service increases the likelihood of upselling and establishing long-term loyalty. Customer loyalty is a source of financial gain. Highly devoted audiences are more likely to make another purchase and are less inclined to use the competition’s services. They can also become brand ambassadors by referring their friends to the bank’s services. ● Customer service costs can rise as a result of poor CX. Due to bad service, 60% of customers in the United States ceased doing business with the brand. The main reason for the change was the agents’ lack of understanding of the client and their inability to propose a specific solution during the chat with CC. Costs may rise due to customers being redirected between agents or other channels, such as bank branches. ● Poor customer service can result in customer loss. Customer acquisition is a significant problem for marketing and support teams. Customers can now change banks in a matter of minutes, thanks to fast onboarding methods like eKYC, if they are dissatisfied with their existing service provider. Complex customer service tools and dispersed points of connection can undermine consistency, increasing the likelihood that different channels convey different levels of expertise. To provide great and consistent service to clients, CC leaders must: ● Implement consolidated customer service tools. Transaction data and client history are frequently inconsistent. The level of information

assignment of customer cases to the appropriate group of agents and the management of qualitative and quantitative indicators. ● Knowledge management , or KM, helps agents personalize interactions, increase customer satisfaction, reduce service time, ensure compliance and increase operational efficiency. ● Quality management consists of tools that analyze customer feedback, which is key to ensuring an appropriate level of satisfaction. Some other technologies currently in development are also worth investigating. These technologies include processes to improve automation, such as Conversational AI, which brings cost optimization and access to human service consultants. In addition, proactive messages in digital communication channels, which allow you to transfer the experience from the voice channel to the world of digital communication, are also worth noting. Covid-19 also showed a growing interest in video technologies that help establish an emotional bond with the customer in complex credit and investment products. HowModern Platforms Can Support Digital Customers Modern communication platforms such as LiveBank support the transformation of a contact center into a center of excellence by offering:

THE FINANCIAL BRAND INSIGHTS FALL 2021 ” In the context of scalability and implementation time, cloud-based solutions are the key to a quick transformation. Cloud is data, not an option.

THE FINANCIAL BRAND INSIGHTS FALL 2021

● Case-Based Communication: This allows the customer full access to the history and context of their conversation. Also, it enables the management of customer cases and the modeling of banking processes. ● Integrated omnichannel: Be available in the channels your customer uses already, ensuring frictionless customer journey and seamless switching between all banking channels. ● Optimization and automation: Reduce costs related to customer service by providing work support tools like canned responses, knowledge base, and remote workspace. ● Aggregation of new channels: Provide client support via the bank’s digital channels and move freely between them without disrupting engagements via chat, audio, video, or social media. ● End-to-end processes support: Providing additional tools to increase the range of supported customer service processes - eKYC, online documents signing, sharing files. In the context of scalability and implementation time, cloud-based solutions are the key to a quick transformation. Cloud is data, not an option. Enterprise concerns about the security, reliability, and scalability of cloud solutions are currently on the decline. McKinsey & Company reports a 24-fold increase in migration to cloud technologies. Also, according to Forrester experts report The Three Customer Service Megatrends In 2021: Post-Pandemic Customer Service Excellence , the migration of services to the cloud is the top priority (figure 1). Conclusion The pandemic has revealed a unique opportunity for customer service organizations. It has increased the importance of customer service in nurturing customers to maintain their loyalty and

Figure 1

Pandemic is accelerating initiatives to modernize customer service

“Which of the following technology initiatives is your IT organization prioritizing over the next 12 months?”

31%

Increase the use of cloud

54%

15%

27%

Improve the use of data and analytics technology

58%

15%

24%

Invest in digital experience technologies

57%

20%

Upgrade, replace, or consolidate legacy business applications/systems

22%

57%

20%

21%

Create a single view of the customer

55%

24%

NOTE: Percentages may not total 100 because of rounding SOURCE: Forrester Analytics Business Technographics

● High priority or critical priority ● Moderate priority ● Not on our agenda or low priority

the income they generate for banks. The need to adapt to consumer requirements and ensure consistent and personalized experiences across each channel has intensified. These factors are part of the digital banking transition, and they further increase the need for flexible, agile technology. Its role is to support the contact center’s work to build positive customer experiences that their finance partners will appreciate. Modern solutions such as LiveBank Communication Bus can effectively support customers in their customer journey. n

THE FINANCIAL BRAND INSIGHTS FALL 2021

1. Increasing Need for Enhanced Digital Capabilities Financial activities, along with many other categories, were already on a trajectory to be more frequently conducted via digital channels. However, the events of 2020 greatly accelerated the rate at which the digital transformation was occurring. Activities and processes transitioned out of necessity and in some cases, overnight.

As you can imagine, the increases in spend via digital channel are not going away anytime soon. The findings from the Elan and PYMNTS report discovered that a majority of people plan to maintain their digital shopping habits going forward. As shown below, 82.1% of grocery spenders indicated that they would stick with digital channels, followed by spending at restaurants at 81.4%, and retail shopping at 79.3% (figure 2).

Three Trends That Are Redefining the Credit Card Industry By Elan Financial Services The pandemic’s powerful impact on spending habits will have long-lasting effects on digital payment channels, loyalty and credit.

Increase in online shopping

Figure 2

Consumer plans to continue spending digitally

As people quarantined at home, one category of consumer behavior that experienced a notable rapid shift to online channels, was shopping. A recent report, “ Online Security and The Debit- Credit Divide ” by Elan and PYMNTS , found that 45% of people transitioned to digital shopping channels to purchase retail products, a fourfold increase since the start of the pandemic. The chart below details the increase in retail along with two other main spend categories: groceries and restaurants. Both groceries and restaurant purchases were on a steady incline to a peak of 21% by mid-November (figure 1).

Revert to previous spending behavior

17.9%

18.6%

20.7%

16.8%

Maintain some or all of shift to digital

82.1%

81.4%

79.3%

83.2%

Grocery

Restuarant

Shopping

Any

SOURCE: PYMNTS and Elan 2021 © August 2021 The Financial Brand

In addition to where and how consumers shopped, they also changed the manner in which they made their payments. When purchases via online channels increased, 41% of consumers reported a preference to pay with credit cards, versus 35% who opted to use debit and 15% preferring digital wallets. Key Point: As card users are more concerned about potential fraud when shopping online, banks and credit unions must build robust security features and fraud detection into the infrastructure of their credit card programs.

How consumers have shifted their spending to digital Figure 1

% increase, March 2020 to Nov. 2020

Shopping 32.7% Grocery 16.7% Eating 16.7%

47.6 48.8

45.8 45.0

The events of 2020 probably caused more upheaval in the credit card industry than had been experienced in quite some time. The payments industry had to quickly adapt, and banks and credit unions that were slow to respond found themselves losing share in a highly competitive market. The three new trends that are shaping the credit card industry in this time of rapid change are:

● The need for enhanced digital capabilities.

42.2

38.5

41.4 42.7 41.9

35.5

39.8

38.7

● A changing rewards environment.

28.8

24.4

● The uncertainty of future credit trends and losses.

21.9

20.9 21.4

19.1

18.6

19.0 18.4

17.6 17.7

16.6 17.2

15.3

21.4

15.1

It is imperative that banks and credit unions looking to offer a competitive credit card program be aware of these trends and implement any adjustments needed to remain relevant to card members. Here are details for each of these trends.

13.1

18.0

17.6

16.5

15.7 16.4

14.4

12.3

8.4

14.8 14.1 14.7

13.0

4.7

Shift to contactless payments

18.9

7.2

3.9

Mar 7

Mar 18

Mar 28

Apr 12

Apr 28

May 24

June 23

July 18

Aug 13

Sept 1

Sept 11

Sept 16

Oct 2

Nov 6

Nov 12

More than half of Americans report they are now using some form of contactless payment.

SOURCE: PYMNTS and Elan 2021 © August 2021 The Financial Brand

THE FINANCIAL BRAND INSIGHTS FALL 2021

This rising payment method exists in two main forms—e-wallets and contactless technology embedded into a card. E-wallets and contactless cards allow consumers to pay by hovering their phone or card over the payment terminal while their card information is passed to the terminal via near-field communication (NFC) technology. The use of contactless payments exploded exponentially in 2020 as people sought protection against possible transmission of the virus. The NewReality: It’s vital to offer contactless payment options to your cardholders. If you don’t you risk losing them to credit card programs with more robust digital offerings. 2. Changing Rewards Environment As a result of the change in where consumers spend their money, the pandemic also necessitated a critical look at credit card rewards. Since people were traveling less, if at all, and spending significantly more time online, the previous credit card rewards environment was upended. With travel nearly coming to a halt, travel rewards decreased in desirability and rewards focused on everyday essentials such as groceries, food delivery and streaming services, which consumed increasingly larger proportions of people’s monthly spend. Credit card products heavily focused on the travel sector were forced to reevaluate their rewards options to provide cardmembers with more flexibility for rewards. For example, some issuers allowed cardmembers to redeem travel points for nontravel purchases at the same value per point, while others launched products that provided cash back on pandemic-friendly spending categories. This set the stage for a competitive landscape in which banks and credit unions offering credit

cards must keep up with rewards trends, which shift with consumer demands and preferences. Keep in Mind: Banks and credit unions should be offering a full suite of rewards to reach the entire scope of cardmembers (consumer, business, young adult, elite, etc.) as these, along with a high level of service, are essential building blocks to score

beyond initial predictions, and is now expected to begin manifesting itself in the second half of 2021. Financial institutions should be mindful of the potential for varying levels of losses, as it can greatly affect the overall profitability of their credit card program (figure 3).

Elan also developed an array of new DIY servicing capabilities and implemented several fraud detection enhancements, which were critical as consumers increased their spending in the e-commerce sector. Additionally, Elan accelerated its overall emphasis on allowing cardmembers to seamlessly apply for credit such as: Text to apply, an area where Elan invested heavily. This functionality enables applicants to text a unique short code, visit a URL, or simply scan a QR code to apply for a credit product from their mobile device. This channel has seen an exponential growth since the onset of the pandemic. Elan’s investments will help its partners better serve their cardmembers through an improved user experience through modernized device optimization, improved data validation, and streamlined real-time acquisition, onboarding and servicing processes. Robust Credit Card Products and Rewards: Elan’s full suite of credit cards offer competitive rewards at no cost to the bank or credit union and includes cash back on frequently-used and pandemic-friendly spend categories. n Read the full whitepaper: Three Trends Shaping the Credit Card Industry As America’s most tenured agent credit card provider, Elan serves over 250 active credit union partners. For over 50 years, Elan has offered an outsourced partnership solution that provides credit unions the ability to market a competitive credit card program to their members and outsource most major functions such as marketing, servicing, compliance, underwriting, etc. For more information, visit www.cupartnership.com.

Figure 3

Trend of credit card losses over seven years

favorably with cardholders. 3. Uncertain Future Credit Environment

Net credit card chargeoffs/average credit card loans for credit unions

1.0% 1.5% 2.0% 2.5% 3.0%

Somewhat surprisingly, Americans paid off a record level of credit card debt in 2020, which amounted to almost $83 billion. This is likely due to several factors, including federal relief through the receipt of stimulus checks and other government assistance, and extended forbearance programs from issuers. Not so surprisingly, however, this situation is not expected to last. With spending predicted to surge in 2021 as more and more people become fully vaccinated and the nation continues to open more fully, the timeline for recognizing charge-offs (the amount of defaulted credit card balances) has extended

0% .5%

2014

2015

2016

2017

2018

2019

2020

Be Aware: Banks and credit unions running a credit card program may be experiencing low losses and delinquency rates today. They should consider this temporary given the predicted jump in consumer spending and inevitable expiration of federal benefits and forbearance programs. Elan Is Committed To Staying Competitive for Our Partners Having a partner like Elan provides banks and credit unions the opportunity to stay competitive and follow market trends. Digital Capabilities: At Elan, the severity and duration of the pandemic required a fundamental shift in strategy. Elan quickly enhanced digital tools for both self-servicing for existing cardmembers, launched new card products to capture new spend trends, and increased frictionless access to credit card applications for new cardmembers.

” With spending predicted to surge in 2021 as more people become fully vaccinated, the timeline for recognizing charge-offs has extended beyond initial predictions, and is now expected to begin manifesting itself in the second half of 2021.

THE FINANCIAL BRAND INSIGHTS FALL 2021

are. From mobile and digital banking to digital issuance, contactless payments options and more, consumers are not only accustomed to digital experiences but now expect them at every touchpoint—and these expectations are here to stay. Integration with core processing systems, mobile applications and more provides financial institutions with APIs needed to better deliver a seamless member experience across any and all channels. Personalization is Key Every day, consumers are becoming more reliant on digital channels, while simultaneously becoming accustomed to smarter and more personalized experiences. While these types of experiences are already the expectation in other areas—take Facebook or Netflix, for example— financial services is presented with an opportunity. Now is the time to shift the narrative and define how financial institutions can intelligently leverage the right tools and the right data to establish a different kind of engagement model —opti-channel—driven by analytics that will meet or ideally exceed customers’ digital expectations. The end goal? To reach a point where financial institutions are using data to truly create experiences that are specific to each customer and his or her individual needs based on the

value the customer represents to the financial institution. Personalized service, combined with cutting-edge technologies, enables financial institutions to provide the interactions customers want from their trusted financial partner. Maintain a Forward-Looking Approach The pandemic has shown that consumer preferences and habits can be impacted by a variety of factors. While financial institutions must clearly remain focused on the future of payments for their organizations and clients, it is also critical to keep a pulse on the future of our collective communities. Financial wellness has become an important initiative—and one in which the financial services industry is primed to provide support and assistance. In fact, more than three out of four consumers (78%) agree that they could benefit from advice and answers to everyday financial questions from a professional, according to the NFCC 2020 Consumer Financial Literacy Survey. Education, from how to utilize new tools and technologies to budgeting tips and more—can all play a pivotal role in the financial wellness of consumers across the U.S. In this year of acceleration and transition, we believe a square focus on the shifting preferences and expectations of consumers—from digital and personalization to financial wellness and more— will continue to position the financial industry for success. As we find ourselves at a distinct inflection point in the history of our country, our industry has a unique role to play. It is time to use our collective momentum to help fuel customers’ financial health and success in the next normal. n Chuck Fagan leads PSCU as its president and CEO, driving digitization of the cooperative to enable financial institutions’ growth and an unparalleled experience through service delivery, best-in-class payments solutions

A Time of Acceleration and Transition for Financial Services

As we look ahead, we anticipate a time of both continued acceleration and transition as consumers gravitate back to routine activities and prepare for a post-pandemic world. With this in mind, on what areas should financial institutions focus to most effectively provide the services and support consumers now expect?

and data security. ”

By Chuck Fagan President & CEO at PSCU

As we look ahead, we anticipate a time of both continued acceleration and transition as consumers gravitate back to routine activities and prepare for a post-pandemic world.

The financial services industry has experienced rapid change over the last 18 months, with COVID-19 acting as “The Great Accelerator.” Consumer preferences quickly gravitated toward digital channels in response to the global pandemic, fast-tracking financial institutions’ long-term innovation strategies into immediate needs.

Digital Continues to Reign Supreme

For many financial institutions, the accelerated shift to digital has made it more important than ever to meet accountholders where they

THE FINANCIAL BRAND INSIGHTS FALL 2021

her perspective on the move towards digital-only banking based on this recent study on customer satisfaction. “The nation’s largest banks and credit card issuers have been continually innovating new digital solutions that support increasingly complex tasks, such as problem resolution, personalized alerts and profile management. This is driving increased engagement and significantly higher levels of satisfaction as the world shifts to digital. That’s a challenge for regional banks that have traditionally taken a simpler design approach and are now starting to see customer satisfaction scores fall as many customers required more sophisticated digital offerings in 2020 than in previous years.” In the meantime, fintech firms like Chime have grown their customer base significantly in the past year. A study by Cornerstone Advisors and StrategyCorps “estimates that 12 million US consumers are now customers of online bank Chime.” Cornerstone Advisor’s Ron Shevlin writes in Forbes , “Not all challenger bank customers consider the fintechs they do business with their primary provider, but an alarmingly large—and increasing—number of people do. In January 2020, just 4% of Gen Zers and Millennials considered a checking account from a challenger bank their primary account. By December 2020, that percentage had grown to 15%.” The Solution For the last decade, community financial institutions have invested billions of dollars (maybe more) on technology to keep up with their large competitors and new industry entrants. The strategy has been to find the best third-party solution to address a specific technology. That strategy has been a fool’s errand. The error is focusing on technology instead of what makes fintech—and bigtech—special: a fanatical focus on the consumer’s experience. Technology has been an enabler of solutions, not the driver of change. For instance, Uber and Lyft took the

By Alex Jiménez Chief Strategy Officer at Finalytics.ai

Automating Customer-Centricity

There is little doubt that the COVID-19 pandemic has changed consumer behavior throughout the past year. The big question remains: which behaviors will permanently change? With the US beginning to open back up, we’re getting a glimpse of the possible future. For banks and credit unions, there had already been a trend of activities moving from the physical realm to digital, particularly mobile. In the era of COVID-19, we’ve seen that trend accelerate. According to an article by Steve Cocheo a BAI study found that “half of consumers are using digital products more since the pandemic’s arrival, and that 87% of them are planning to continue this increased usage after the pandemic.” Cocheo quotes BAI’s Karl Dahlgren, Managing Director: “Responses on learning how to use digital services were consistent across all generational cohorts. In fact, Boomers who found the digital banking experience intuitive came to 81%—suggesting that stereotypes about older consumers and technology simply are not true.” Community financial institutions are in a predicament. Their differentiation has been based on better customer experiences in branches and other physical spaces. Until recently, that edge ensured that they would have a position in the industry. However, as more and more people embrace digital experiences in their day to day lives, the bar for banking has been raised. For the most past, the organizations that have been able to meet the demand for engaging digital experiences have been large banks and fintech firms. Jennifer White, senior consultant for banking and payment intelligence at J.D. Power , offers

with Journey Orchestration

AUTOMATEWHAT COMMUNITY FINANCIAL INSTITUTIONS DO BEST: UNDERSTAND, LISTEN TO, AND ACT ON CUSTOMER NEEDS

THE FINANCIAL BRAND INSIGHTS FALL 2021

” simple process of hailing a cab and reimagined it, removing friction using mobile capabilities. Community financial institutions can step back and rethink their strategy. Instead of focusing on technology, which often isn’t one of their core capabilities, they can focus on their existing customer-centricity to fight back. Organizations already have knowledge about their customers to gain insights from. These insights can then be used to build digital experiences. Customer journey orchestration is one tool that can guide this process. It simply creates a way to automate what community financial institutions do best: understand, listen to, and act on customer needs. Instead of focusing on technology, which often isn’t a core capability, community financial institutions can focus on their existing customer-centricity. Organizations already have knowledge about their customers which can be used to build digital experiences.

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Forrester Research defines journey orchestration tools as those that “help fuse data across channels, touch points, and systems along the customer journey to design and plan current and future-state journeys, test and optimize journey hypotheses, and orchestrate tasks among stakeholders and with customers.” How It Works Community financial institutions have a vast amount of data about their customers. Every time a customer has an interaction with an organization, they produce more data. Journey orchestration tools can use data, and insights from it, to provide a better experience for the customer. The experience is presented in real- time and within the context of whatever activity the customer is pursuing. The tool can also enrich this experience by leveraging data from 2nd and 3rd parties, like credit scoring or digital footprints. As customers interact with the system, machine learning models build an understanding of which customer attributes and behaviors correlate with successful service and conversion activities. The machine learning models trained specifically within financial service journeys provide optimal solutions for community financial institutions and their customers. A journey orchestration platform

developed for financial service organizations can also be deployed without building complicated integrations to legacy core systems or outdated data warehouses. Functions such as cluster and factor analysis and classification systems allow organizations to create customer personas or segments for targeting in areas such as advertising and content strategy. The tool also gives the organization the ability to better understand their customer base, their predicted service needs, and the product they are most likely to buy next. For the customer, the tool presents them with an intuitive experience that helps them complete tasks easier and faster by presenting dynamic content. CEO of Finalytics.ai Craig McLaughlin says, “The overarching question should be ‘how can we use the data we already have to do good for our customers?’” Community financial institutions must capitalize on solutions, like journey orchestration, that leverage their customer- centricity to fight back against the large banks, fintech, and bigtech firms that are luring customers away. n

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” Research demonstrates that when lifetime value (LTV) is taken into account, digital customers can prove to be high-value investments.

By Raj Patel COO & Co-Founder at MANTL

Howto Boost Customer Lifetime Value in Banking

Digital channels allow banks and credit unions to acquire a much higher volume of customers than they would through branches alone. By enabling consumers to open accounts digitally, financial institutions can expect to originate 20% or more of all new accounts online. Yet the increased popularity of digital banking services has led many financial institutions to contemplate the value of their new, digitally- acquired customers. Banks and credit unions may be concerned that digital customers—though typically easier to acquire—may be less valuable when compared to customers onboarded through physical branches. However, research demonstrates that when lifetime value (LTV) is taken into account, digital customers can prove to be high-value investments. LTV is a measurement of how valuable a customer is to your institution across the length of the relationship. For banks and credit unions, it is a useful metric in circumstances where immediate profit margins are thin and it may take a while to break even on acquisition costs. Considering digital customers from an LTV perspective helps solidify the distinct advantages of growing your digital brand. Further, financial institutions that embrace this concept can work to effectively increase the LTV of their customers. Why Lifetime Value Matters LTV helps you determine how much time and resources to invest in acquiring a customer. Since it costs less to keep existing customers than it does to acquire new ones, increasing the value of your existing customers through cross-sells can be an efficient, ongoing way to drive growth.

LTV also helps uncover untapped opportunities for growth in different demographics. For instance, certain age groups may appear less profitable at the start, but provide a higher LTV over time. Typically, older customers have higher deposits and are the primary customers of bank products—but they also have a shorter life cycle with your financial institution. Younger customers, on the other hand, have a longer life cycle with their bank or credit union and more opportunities to invest in products as they go through different life stages like marriage or homeownership. While their initial deposits tend to be lower than those of older customers, focusing on the LTV of younger customers can help banks rethink their acquisition strategy and how they capture value over time. The Key Difference: Older customers have higher deposits, but younger consumers offer opportunities to build substantial LTV as they move through life stages. But you must have the right digital acquisition strategy to attract them. The personal finance company SoFi provides a compelling case study for fostering long-term relationships with digital customers. SoFi started by lending to high-potential college students whose educational backgrounds indicated that they would be more likely to pay off any loans —even though many of them did not have a

THE FINANCIAL BRAND INSIGHTS FALL 2021

According to the same study from J.D. Power, customers who rank highest for customer satisfaction use a mix of physical and digital banking services. Millennials, for instance, are the main users of digital services—but three quarters of Millennials and the emerging affluent also say they’ve visited a bank or credit union branch in the last three months. The importance of multichannel engagement tends to be an advantage for mid- sized financial institutions, as they outperform larger banks on branch-related satisfaction factors including courtesy, knowledge and a range of services. Going Digital To Increase Life Time Value Offering high-quality digital experiences is a crucial part of a long-term customer strategy. Throughout their (hopefully lengthy) relationship with your financial institution, consumers will likely require—and be willing to pay for— different financial products and services. Digital engagement can help to increase brand loyalty, improve financial outcomes for people and boost future sales of new products and services. As customers deepen their relationships with your financial institution, they create endless opportunities to cross-sell into other banking products. People who use digital tools are more likely to have interactions with their bank or credit union involving eliminating or paying down debt, budgeting and spending, managing their investments and preparing for retirement.

strong credit history yet. The company found a way to bet on the students’ future earning potential and their ability to become profitable (in other words, their LTV)—and it worked. Customer Satisfaction Boosts LTV

Beyond targeting underserved or niche demographics, maximizing LTV is about maintaining long-term relationships with

customers. A tried and true way to improve LTV is to invest in customer experience. In fact, “highly satisfied” customers are two and a half times more likely to open accounts or consume new products with their existing banking providers than those who are merely “satisfied.” Further, data from J.D. Power & Associates shows that offering relevant advice and guidance has a 17% positive impact on consumers’ willingness to use additional banking services. The advice offered could be as simple as helping people identify their needs before introducing a new product or carefully walking through the product’s features and benefits. As is the case in the retail industry, people who engage with a bank or credit union through multiple channels tend to bring higher LTV.

Turns out, celebrating 20 years of successful work is a great distiller of what is important, meaningful, and transforming. So this year at 360 View, we’ve got on our birthday suit, stripped down to our best basics, and are reveling in our Customer Relationship Management (CRM) roots. We developed our first CRM in 2001 specifically for banks and credit unions, and we’ve been tweaking and

perfecting ever since. Sure, you may have heard of bigger, Goliath-sized cloud-based solutions, but their focus is so broad and wide, we think it is a stretch to call it “focus.” If you are looking for a CRM partner who understands your financial institution’s unique needs and is invested in developing a long-term relationship with you, take a look at us. We are CRM, and we have been from the beginning.

Improving lifetime value begins with the basics—a superior online account-opening experience. Today, people expect opening an account to be a seamless process. They don’t want to deal with long wait times or multiple requests for the same information. MANTL’s real-time processing and simple, user-friendly interface can be the start to a lengthy, rewarding banking relationship. n ” People who use digital tools are more likely to have interactions with their bank or credit union involving eliminating or paying down debt, budgeting and spending, managing their investments and preparing for retirement

0 2001-2021 years celebrating

CRM | MARKETING AUTOMATION | ANALYTICS | GOALS & INCENTIVES

To learn more, visit 360VIEW.COM

THE FINANCIAL BRAND INSIGHTS FALL 2021

Over the years, we have found that accounting teams are often the first within an enterprise to adopt a data preparation strategy, which consists of people, process, and technology. They recognize the benefits of replacing error-prone manual processes dependent on spreadsheets with more robust and efficient solutions. Here are three examples of how organizations can transform their financial operations by implementing a data preparation strategy. 1. Daily Settlement for Card Services Consumers use debit cards and credit cards to purchase goods and services for their daily needs. It is a relatively simple concept for the consumer, and they are largely unaware of the complex ecosystem of issuers, networks, processors, acquirers, and others required to support these transactions. Card issuers perform daily settlement to ensure that all necessary transactions are successfully posted to each card account. This in turn requires that correct values be posted to their general ledgers that roll up to their balance sheets and income statement. This process is not often automated because it requires gathering data from many different sources in order to accurately report interchange (income), disputes, chargebacks, cash advances, and interest income. This data often resides in reports that originate with the card processor which makes them difficult to work with. This settlement process can take an accountant as much as 45 minutes per day to gather data from the reports, allocate them to general ledgers, and create the output for the Journal Entry. With a data preparation strategy, the process can be completed in approximately 5-10 minutes. 2. Investor Reporting for Mortgage Servicing Mortgage servicing begins once a homeowner starts to pay down their mortgage balance. At that time a homeowner’s primary point of contact is the mortgage servicer who is responsible for

obtaining mortgage payments and using them to pay homeowner’s insurance, taxes, and investor remittances. Mortgage investors like Fannie Mae and Freddie Mac have strict guidelines for investor reporting and due dates for remittances. For example, they require loan level reporting on principal and interest, the exclusion of paid-off loans, exclusion of foreclosures, and immediate resolution of errors identified from prior reporting periods. The data to facilitate these tasks often reside in multiple sources and can take an accountant as many as 5-10 hours at month end to generate accurate and complete investor reports. With a data preparation strategy, the process can be completed in approximately 1-3 hours. 3. Payroll – 401(k) Plan Census Employers providing 401(k) plans must complete detailed census reports for their third-party administrators for compliance purposes, like non- discrimination tests. Inaccurate or incomplete data can result in a disqualification of the plan and the loss of an organizations’ s tax-exempt status. Census data consists of personal information (name, address, date of birth, and the like), employment data (hire date, start date, base salary, etc.), and the contribution amount. The challenge is to efficiently gather this data from a variety of different sources and perform data validation and reconciliation. For example, an accounting team can spend up to 2 hours to gather data contained in 401(k) reports and compare them against year-end payroll data and resolve any discrepancies. They must also identify highly compensated employees for non- discrimination testing. With a data preparation strategy, the process can be completed in approximately 30 minutes. Altair's 30-year history means we understand how analytics can help you unlock your data potential for added business value. n

Finance Transformation Unlocks Business Value with Data Preparation

accounting teams to use spreadsheets to ‘bridge the gap’ between various systems and their final reports. These manual efforts impact timely reporting data quality, incur hidden costs in employee morale, and increase financial statement risk. Consider these statistics about World Class Finance Organizations vs their Peers from The Hackett Group : ● 60% reduction in costs ● 60% fewer invoicing errors from manual interventions ● 17% more time analyzing data vs gathering data ● 17% faster completion of budget cycle ● 7% more FTEs with business acumen to engage with business partners Key Point: Automating data preparation tasks in the accounting department not only results in substantial savings, it greatly reduces the potential for errors to creep into final reports.

By Baba Majekodunmi Senior Manager, Data Analytics Customer Success at Altair

Finance and accounting departments provide mission critical services in every business. They generate financial statements, file tax reports, and support back-office operations like payroll, along with a host of other responsibilities. The larger the organization, the greater the complexity of its financial reporting infrastructure. Public companies face higher degrees of scrutiny, stricter deadlines, and an expectation to hear from the CFO regularly about current performance and projections for the rest of the year. Given their importance, it may be surprising to learn that many finance teams still perform key reporting tasks using manual processes. While it is true that most enterprise resource planning (ERP), core banking application, and other systems support at least partially automated workflows, it is quite common for

THE FINANCIAL BRAND INSIGHTS FALL 2021

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With more than 30 years working with financial service organizations, we know how analytics can help with risk mitigation, regulatory oversights, new customer engagement channels, operational insight, and more.

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The Top 11 Fintech Disruptors of 2021

produce innovations and change the way people interact with their finances. With that in mind, here’s a look at the 11 companies that made it onto the CNBC list. Some are well established, some relative newcomers making a big splash that you may not know about. All are important for bank and credit union executives to watch closely. They point the way in which financial services is continuing to evolve and in several cases have built their businesses around working with traditional institutions.

By The Financial Brand's Editorial Team

Fintech has greatly changed everyday life for billions of consumers around the world over the last decade-plus. It’s changed the way we buy goods, pay other people, invest, bank, obtain mortgages and so much more. That’s why it was not very surprising to see so many fintech firms named among CNBC ’s annual Disruptor 50 list. Despite having reaching the status—by years— of a mature industry, fintech still continues to

THE FINANCIAL BRAND INSIGHTS FALL 2021

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