Why are Banks Scrambling to Video Banking?

Why are Banks Scrambling to Video Banking?

Why are Banks Scrambling to Video Banking? 

Welcome to this week’s healthcare Knowledge Knugget! As a part of “The Executive Innovation Show” podcast, we are bringing you the hot topics, including answering questions that we receive each week, game-changing ideas, best telehealth practices, and tips. During today’s topic, Carrie Chitsey talks about why banks and credit unions are scrambling to video banking. 

As we are aware, with COVID and with shutdowns, a lot of branches have been either completely closed in certain states or have started to open back up but with limited hours or drive-thru only. This has shaken up the banking industry on how to do normal business, and how to have employees work virtually in a secure manner. Banks typically never had employees working from home. 

There have been a lot of challenges, both on the operational side, as well as the marketing side of how do you acquire customers in the middle of a pandemic. How do you get them to come into a branch to open up an account? We’re going to walk through some of those things today and talk about how you solve them. 

“What’s the future of the physical branch?”

Banks right now are scrambling on how to put that playbook in place of this new normal. The first thing to talk about is “What’s the future of the physical branch?”. That’s a big question that we get, and there’s a lot of banks that have spent a significant amount of money on creating these open branch pods, taking down the glass, taking down the walls, really trying to have more intimate conversations with customers and make them feel more at home. 

Some of your biggest banks spent millions and millions of dollars on TV ads on “come have coffee with us”, “come to our cafe”, “come to our Wi-Fi”. Those ads are no longer playing. The average cost of a small regional branch is like two to three million. These aren’t small investments and the need to have a physical presence is not there anymore. 

There’s going to be a portion of customers that want to go in and physically talk to a person. But if you look at branch volume, it’s down. People tend to think, “Oh, it’s just the older people coming into the branch.” If you go to our website, look at some infographics. That’s not the case with real data. And we’ve done podcasts on them before, the people who come into the branches are millennials. First time buying a home, getting loans, things like that, seniors on average are only coming one to three times a year. 

As we look at this new world where banks have had to on a dime, adapt to this new world of how do we get computers in people’s homes for our employees to work? How do we hire remotely? There are all these challenges going on, we have a virtual playbook on “Banking Beyond Four Walls” where we cover a lot of this. 

 

Hybrid Banking Model – Acquiring Customers

What does the new normal look like? It’s a hybrid model. There’s going to be people that come in. Most banks are holding off on branch expansion for physical locations and rethinking that. A lot of banks with the new designs have had to put up the plexiglass back. 

How do you acquire customers in a pandemic? You do digital marketing. As you look at acquiring customers, if you’re doing digital marketing, the biggest issue has been the conversion rate. Getting people to look at an ad, go to your website, and then making them fill out a physical application in a location in a branch, or bringing you a physical driver’s license. 

Well, now that video banking is affordable down to a one, two branch location. You can do that virtually. You can video with your prospective customers. You can build that face-to-face relationship. You can send them a link to their online application, have them stay on the video, call, answer any questions, and increase that conversion rate by three to five X instantly.

Also, you can have them show your driver’s license front and back, take all the authentications, and not have to come to that physical branch. That’s where your marketing dollars should be going to, increasing that conversion rate. Hold a competitive advantage in your area, the banks that can’t do that on the servicing side, there’s a huge opportunity that’s being missed. 

We’re in the behavior pre-COVID of we didn’t want to be in the branches. You’ve got kids in the car, business, busy business people that don’t have time, or blue-collar business people. Even your tech companies don’t have time for an hour and a half to go into a branch. If they want to talk to somebody, they are happy to do a video. COVID did make people adapt way more to using video than pre-COVID.

If you look at implementing a video banking solution, you’re able to still service customers. You have your relationship managers, your business bankers, private clients, wealth management, those types of folks still having that face-to-face conversation through video with customers. This allows you to increase that wallet share with those customers because they’re not just banking with you, they’re banking with others. You must be proactively reaching out to your customer base and sending them to your website to have a conversation through a video banking platform. Or they could be increasing their business with somebody else or remembering who reached out during that pandemic. 

Video banking allows the opportunity to grow in so many different areas for banks that are struggling. Revenue across banks is down dramatically. Through video banking, you can switch some of these levers and move that needle on the servicing and acquisition side. 

Download the playbook and stay tuned to our weekly episodes of the Knowledge Knugget to learn more best practices and tips on how to incorporate video banking and digital transformation into your bank or credit union.
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