Community financial institutions are at the heart of our society and have been known to lend a helping hand, but because of the economic hit from COVID-19, they may be struggling to keep up, or uncertain of specific ways they can help. Although times are difficult, these institutions are in a great position to help their small business and retail customers — these are the times when customers need them most.
Financial institutions can best provide relief to Americans by leveraging their data to help their community. We want to better enable community banks and credit unions to solve problems for their customers — now is the time to really focus on customer data. In this post we will explore the proactive steps being taken by financial institutions along with some tips and data-driven advice to inspire and guide you moving forward.
Our customers have shared with us the ways they have been tackling these problems, like deferring loan payments and waiving service charges and fees. We are so glad to see these institutions serve their communities in this way. In addition, FI Works has identified opportunities on behalf of community institutions that will alleviate the challenges that local businesses and retail customers are currently facing and help prepare your institution in the future.
Digital Channels
Customers that are already using digital channels are going to have a much easier time getting access to financial services during this crisis. It’s clear that financial institutions and their customers will need to continue to adopt more modern digital platforms. But in most typical financial institutions, only 20-30% of customers use digital services today. Now may be a good opportunity to encourage non-digital customers to consider the digital services you already provide. You can do things like:
- Convert customers to online & mobile banking by targeting the ones that are likely to need these services
- Move customers that use paper deposits to remote deposit capture
- Transition customers with paper statements to e-statements
Tip: Be selective in which kinds of customers you target and how you reach out to them — everyone is being bombarded with emails and other messaging right now.
Tip: Keep in mind that you will still have customers that do not want or need digital services. For example, a single-service customer with one CD is unlikely to need online/mobile banking — don’t push it on them.
Lending
Loan modification programs are clearly at the top of the list for many institutions right now. Some of the common ideas include:
- Deferring loan payments
- Reducing or waiving late fees
- Reviewing existing lines of credit
Of course, it is up to your institution to know when and how this kind of aid ends.
Tip: Consider using your deposit transaction data to monitor the financial health of these loan customers.
Deposit Customers
Financial institutions have been creative in helping their deposit customers through:
- Reducing or waiving OD/NSF fees
- Lessening overdraft fees and service charges
- Waiving early withdrawal fees for CDs
But again, the question is who needs this help and how do you find them?
Small Business Lending
According to the last census, small businesses account for almost 50% of jobs in the US. The $2 trillion stimulus package that just passed Congress will allocate roughly $350 billion to guarantee loans for small businesses. If your bank already provides SBA loans, this could have the biggest impact on your community. Then you can look for other small businesses in your market that need SBA loans as well.
Tip: You can use business prospect lists to find small businesses that may have been impacted by the crisis by using industry codes and revenue ranges.
Tip: When it comes to small business customers you already have, you can use targeting and data to see which ones do not have existing loans and offer them.
Tip: If you want to help your retail customers, sometimes that means helping the small businesses who aren’t your current customers that employ them.
Our Advice
We wanted to take this opportunity to guide you in using data to be more efficient at reaching your customers. Whether you’re an institution that has quickly mobilized by using your data and marketing team to help out or are still wondering what financial institutions can do, here’s a few essential ways to go above and beyond:
Utilize Your Data
Your institution has lots of data, and you can leverage it to effectively help customers out. Using analytics, you can determine which customers your institution should reach out to and why.
Tip: Use customer segmentation to identify groups of customers (like small businesses) that are likely to need help.
Tip: You can use third-party demographic data to identify your small business customers by revenue range or number of employees.
Tip: Go one step further by using industry codes like NAICS to find those that are in hard-hit industries.
You can also target restaurants and retail businesses to pinpoint customers that need help by analyzing their deposit trends. Targeting can also help decide the kinds of customers to extend certain courtesies to, like waiving service charges for those that need it (and minimizing lost fee income at the same time). Wouldn’t it be great to know that a certain percentage of your customers are small businesses that have annual revenue under 1 million? Understanding your data gives you the knowledge you need to better serve them when they need it most.
Tip: Target the people who actually need your help. Use historical data that you already have to make the decision of who may need aid.
Consider your channels
Your customers are being bombarded with emails concerning the virus — carefully consider what meaning your email has to them, and if it’s just noise. Sending them a very generalized email may not be the best way to stand out. Using targeting creates a more personalized, relevant message because you know what kind of help they need.
Yet, the average community financial institution has less than half of their customer email addresses. How can you connect with them?
Tip: Use email addresses from multiple applications, not just your core system. The most accurate email addresses are those that are required to be valid in order to have certain services, like e-statements, mobile, and online banking apps.
Don’t forget that direct mail still works — and now that many people are at home, what better way to reach them? It will stand out, it can be more effective then email, and it doesn’t have to be too expensive.
Tip: Use targeting to discover the right people to mail to — this will scale down your mailing list and therefore save you money and time!
Remember that you can still utilize your retail staff! You can use data to drive new conversations because data can show who needs your help, and an added bonus if you’re able to track which of your staff has spoken with certain customers about different topics in the past.
Be Proactive
Proactively reach out to your customers, don’t wait for them to call on you. Other institutions are reaching out to your customers — do they know that you could help them too? Using the data and targeting practices we mentioned before, you can stand out to your customers by fulfilling their needs without them having to ask.
Be Prepared
If you don’t currently have the data or capabilities to leverage your data now, then consider getting to that point before the next crisis arises. The end of the current pandemic is not the end of your customer’s financial problems. Decide the course of action you will take when this type of issue happens again.
Tip: What can you do for your customers to help them be prepared for their next financial crisis? You can plan out ways to educate and prepare your customers for the future. Preventative measures will help assure them that you have their back.
What Relationship Banking is All About
Taking these steps will show your community that you stand by it through everything. Additionally, it will improve retention, you’ll acquire new business relationships, increase usage of sticky services, promote your brand, and give aid to the local workforce by helping local businesses stay afloat. Using data, community financial institutions can use this opportunity to show customers, businesses, and their community what relationship banking is all about. When all is said and done, the people you were there for will remember.
To empower banks, credit unions, and communities in this crisis, we are waiving our implementation fee for community institutions so they can access their data and swiftly utilize it to reach the struggling small businesses and consumers.
FI Works is a complete sales and marketing platform designed for community financial institutions. We help harness data and make it accessible, driving smarter and more effective marketing campaigns that result in growth, efficiency, and better relationships. If you need help using your data to aid your customers, contact us. We are here for you!