Engaged Banking

Four Basic Requirements for Client-First Engaged Banking

Engagement banking is all the rage. More than a few companies are spending budget dollars on positioning themselves as engagement banking wizards. However, engagement banking has been around for a decade (there is nothing new under the sun), as this article from a 2013 edition of American Banker indicates.

Some media and marketers have chosen customer engagement to describe the same basic attributes as engagement banking. On the one hand, customer engagement focuses on the customer rather than the act of banking. On the other hand, banking has uniquenesses that make customer engagement different than it might be for a retailer, lawyer, real estate maven, etc.

Marketers will end up overusing both engagement banking and customer engagement to the point of making them meaningless. But before they do, it’s worth exploring.

What is engagement banking or, if you prefer, customer engagement banking? What makes either of these different from the banking of that bygone era before we all had a smartphone welded to our bodies? What are the requirements that have to be in place for a bank or credit union to offer its customers and members “engaged banking?”

What is engagement banking?

Engagement banking is a strategy that creates a more personalized and dynamic experience for financial services customers. It uses technology to enhance the customer experience to offer customized financial products and services. The goal of engagement banking is to increase customer loyalty by building stronger digital relationships with customers.

There are four major requirements for engagement banking:

  1. Active Use of Data
  2. Embracing Machine Learning AI
  3. It’s Got To Be Real Time
  4. Simple, Quick, and Measurable

Active Use of Data

Big and Small. Engaged banking is about turning transactional into relational, selling something more than products and services. It is impossible to achieve these goals without harnessing the power of the data held by the financial institution and the mountains of information in the public domain about the individual. Most internal data (small data) are transactional and do not change the game. Much external data (big data) can help establish a relational portrait of the client. Combine the two and – “BOOM!”

Embracing Machine Learning Artificial Intelligence

There is no way to unlock the value of the big and small data a bank or credit union can access UNLESS AI is added into the equation. Machine learning pros know how to configure AI to process several data streams and then draw actionable information that is applied to interactions with customers and members. Further, machine learning – well – learns as it goes. The more data, analysis,  and actionable information, the better the outcome. And it all happens at the speed of light.

It’s Got To Be Real Time

Like old age, real-time is not for wimps, but without it, there is no chance that a bank or credit union can achieve the goal of engaged banking. Anyone in a relationship knows that showing up a day late for dinner or missing a birthday by a month is not acceptable. There will be blood. The same goes for customers and members interacting with their bank or credit union. Whatever their need, desire, or situation they are in when they reach out to their financial institution must be factored into the fabric of the interaction – dynamically and accurately.

Simple, Quick, and Measurable

The first three requirements for engaged banking are trivial compared to this one. But, unless this fourth requirement can be met, engaged banking will remain an abstraction for community banks and credit unions. Without this fourth requirement, engagement banking will be only within the grasp of financial institutions with tens of millions of dollars and years over which to spend it.

For engaged banking to be within reach of community banks and credit unions, it has to be achievable at a level of investment that offers a quick and demonstrable ROI. It must be done without hiring a host of people with special skills. It cannot manifest in a project that turns the bank or credit union on its head, distracting from regular business activities.

Customer engagement and engagement banking are words in the lexicon of very large consulting firms and software companies that need them to deliver their solution in a viable form.

That’s why we prefer “engaged banking.”  Engaged banking does not require a big consulting firm or complicated software. At least not the way we see it.