The Digital Divide - The Difference Between Banking Opportunity and Failure

I was reading an article today in Credit Union Management written by Lisa Hochgraf, subtitled, Seven steps to success with your largest 'branch'. The article does a good job

identifying a problem all credit unions and community/regional banks face. "Bank of America has 6,000 branches, Wells Fargo has 3,000 and TD Bank has 1,300." You can’t out-branch them. How is your credit union or bank going to compete?" It is a great question. Unlike many articles of its kind, it goes on to offer seven steps credit unions and banks can follow to make the most of e-delivery. 

Here is the problem. The subheading, Seven steps to success with your largest 'branch' implies that digital channels are another form of a branch. In fact, the largest branch. That is the approach most credit unions and banks take today. They consider digital banking as another branch or an extension of the branch network. That perspective will result in digital banking channel failure.   

The financial services industry is undergoing a transformational change as a result of technology and the emergence of non-traditional financial service providers. Credit Unions and Banks are struggling to understand the impact of this new environment, and how to succeed in it. Combine these factors with increased margin pressure and consolidation and you have a recipe for credit union and bank opportunity ......... or failure.

I have identified how the failure will occur; follow the path most credit unions and banks

are currently on regarding digital banking. Do you remember the story of the Pied Piper of Hamelin? How many times have the companies that break away from the pack gone on to great results? Apple, e-Bay, Amazon to name a few. 

Digital banking cannot be simply a collection of disparate e-solutions that a credit union or bank test and then march out to the members/customers. A piecemeal of solutions that may or may not interface with each other. If your credit union or bank has multiple digital solutions (mobile banking, online banking, new loan origination, new mortgage origination, existing member/customer new account opening, new member/customer new account opening and on-boarding) have you gone to the website and tried to use it. Can your members/customers get immediate approval, do they have to submit information to the branch or administration office, can they log-in once and get access to all digital services, are there workflow rules, is there a decision engine, and are documents available and able to be signed electronically? If the answer to "any one" of these questions is no, then you have created a poor member experience that someone else has solved or is about to solve. 

Digital banking and the ultimate result, omnichannel banking is a huge undertaking. It requires a well thought-out and defined digital strategy that has the executive team and board buy-in. The leader needs to be part of the executive team because digital and omnichannel banking is the new future.

Digital banking is not another branch. It is a completely different channel that needs to be self-supporting and fastest growing channel in your bank or credit union. Digital banking needs to be its own P&L center and not be a channel to direct members/customers to a branch. Don't force members/customers to go where they do not want to go! Don't blame it on "Know Your Customer" or other regulatory issues or constraints.   

So the next time you talk or hear about your bank or credit union refer to digital banking as another branch or branch extension cringe and do something about it. Credit unions and banks face a great opportunity or failure. Where do you want to be when the music stops and you want to find an open chair?