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When StonehamBank started exploring how to adopt a video banking tool before the pandemic, the bank wanted to find an alternative way to meet with customers outside of branch visits. Then the pandemic hit, keeping customers away from branches anyway.
“The transition of the customer and how they conduct their banking services has drastically changed since March,” said StonehamBank CEO Edward Doherty. “But the one thing that people didn’t have was, sometimes they didn’t have the ability to go in and sit and talk to a banker.”
Even before the pandemic saw customers increase their use of online banking tools, community banks and credit unions had started to invest in new technology to compete with larger banks and meet the needs of consumers accustomed to the ease of using online and mobile tools. For financial institutions accustomed to providing personalized service, technology like video banking can bring a human touch to digital experiences, while helping them compete.
“[Community banks] have got to be able to win on the value [proposition] of great service and great people, and they’ve got to be able to deliver great service and great people economically,” said Jed Taylor, president and chief operating officer of financial technology firm POPi/o, which created the video banking service StonehamBank now uses. “I think video banking is an absolute perfect tool to help community banks win and thrive in this environment of increasing competition.”
Digital adoption has accelerated even more since the pandemic started. A survey conducted in August by the nonprofit research and consulting organization BAI found that 52 percent of respondents had used digital banking more compared to before the pandemic.
Daily usage of banking tools increased as well. During a January survey before the pandemic, BAI found that 17 percent of respondents looked at their bank account online daily, while 36 percent accessed their bank’s mobile app every day. By August, 29 percent were looking at their account online daily, while 40 percent accessed their bank’s mobile app every day.
When in-person banking returns to normal, 87 percent said they planned to continue using digital banking services at the same level they currently do.
StonehamBank hopes its new video banking software tool can win more of its customers’ wallet-share.
A Helping Hand for Customers
While in-person banking might become less important post-COVID, customers can struggle with online banking. Before the pandemic, banks faced challenges getting customers to adopt online and app-based banking tools because users could not always find the self-service capabilities that they needed, said Tiffani Montez, senior retail banking analyst at Aite Group, a Boston think tank.
One solution to this challenge, Montez said, has been conversational banking, including chatbots, mobile app digital assistants and voice-activated assistants. These software programs use natural language processing through text or voice to interact with the customer, responding to and predicting their needs.
Financial institutions are also looking at other ways to infuse human help in digital experiences, Montez said, including video conferencing and text messaging.
Community banks and credit unions often saw their physical, brick-and-mortar presence in the community as what differentiated them from other financial institutions. But even before the pandemic, Montez said, those communities were becoming increasingly virtual.
“In our own lives we’ve got lots of different virtual communities and given everything that’s happened, we now are relying on virtual communities much more than we were before,” Montez said. “Institutions that have relied solely on brick–and–mortar locations to build that sense of community are going to have to make a shift and build a sense of community now in a virtual environment, and part of that could be using video conferencing to keep more of the face-to-face in a virtual environment.”
Competing on Service
This shift in consumer behavior, however, is forcing the smallest financial institutions into a potentially unwinnable arms race with better-funded rivals, from big fintechs and megabanks down to larger community banks. And video banking could let staff at small lenders offer the same level of personalized service over the internet which they pride themselves on being able to deliver in person and which has formed their traditional competitive edge.
StonehamBank’s Doherty said the $678.85 million-asset bank already went beyond typical branch service before the pandemic, sending employees to customers’ homes and businesses with an iPad to complete transactions.
“It’s very difficult for a bank of our size with only two branches to actually gain traction with accumulating new customers, new business and consumer relationships,” Doherty said. “We try to pride ourselves on the mentality of bringing the bank to people.”
Utah-based POPi/o’s video banking tool, which StonehamBank is calling Face2Face Banking allows customers to use a computer or mobile app to reach a bank employee, especially when the bank’s call center can’t help. Customers can do transactions through video banking that might typically require a visit to a branch, including renewing CDs, opening accounts and completing signature cards.
Diane McLauglin
While the bank didn’t adopt the software with COVID health concerns in mind, Doherty said that the timing of the launch gave customers an alternative to in-person visits at a critical time.
StonehamBank is betting Face2Face Banking will encourage existing retail customers who might have multiple banking relationships to consider the service they receive at the bank and open additional products as a result, Doherty said. It may also help commercial loan officers build relationships with potential customers in the current environment. Other future opportunities include residential lending and wealth management.
“I think by adding on this service, it does allow the bank to be able to cultivate a deeper relationship with someone,” Doherty said. “It’s all about penetrating customer relationships and gathering as much of the wallet–share as you can.”
Updated 5 p.m. Dec. 10, 2020: This story has been updated to correct Edward Doherty’s title – he is CEO of Stoneham Bank – and the total size of StonehamBank’s assets. It has $678.85 million in assets.
