Back to Normal? Thoughts on Digital Platforms

During the spring, I’ve been publishing my newsletter much more frequently than normal, in order to provide you with some ideas and guidance during the quarantine period.  Depending on the situation in your region of the company, you are likely in various stages of reopening, and I think we’ve covered that in good detail so far.    I’m available if you want to talk about specific situations.

This issue, however, will be a bit more “normal” to help you begin addressing your digital strategy in more detail.  I’m focused on two things: 
1) embrace and reinforce customer behavior that has changed. Because your lobbies have been closed, at least some of your customers have begun using your digital channels more consistently.  We want to preserve that behavior, and benefit from it.  Remember, anytime a customer uses self-service, they are happier, and you save money versus an in-person visit or a phone call.

2) Apply lessons learned to be better prepared for future events that might also result in temporary reductions of service and identify gaps in the services you offer now in order to provide a more attractive and complete digital offering.

Here are the key digital platform tools that I feel you must have:

Online account opening - a lot of the reaction I get here is either driven by compliance concerns (we can’t legally do this) or by misconceptions about control over applications.  My main focus with on-line account opening is to allow your existing customers to easily do more business with you.  If you choose to open it up to new customers, you will find that most vendors can easily help you limit the area (zip codes, counties, states) that you will even accept applications from.  As to compliance, there are plenty of good ways to address KYC, Patriot Act, and funding questions to ensure that you are legal.  Hundreds of thousands of new bank and brokerage accounts are opened on-line each year.  You can do it too.

Online loan applications (as a start, later you should consider approvals and funding for certain simple loans) Customer expectations are high in this area, fueled by offers of “30 second decisions” on credit cards.  In order to remain competitive with both consumer and small business lending opportunities, some level of automation is needed.

Esign technology for any and all customer documents.  Here again, the industry may have passed you by.  Customers are used to such technology on insurance documents, mortgages, and many other financially focused matters. Time to catch up.

Remote deposit, both mobile and desktop

Contactless Payments

    a. Cards

    b. Smart Wallets

Once a customer has successfully used a technology for the first time, you are well on your way to converting them to a primarily digital user.

A key to success in driving customer use of your digital platform is employee use of those same platforms.   Employees should be “endorsing users” of the technology: confident and enthusiastic.  For example, if a customer approaches a teller to make a check deposit with a smart phone in their hand, we would expect that teller to engage the customer in a discussion of how quick and easy mobile deposit is - along with a personal story.  

You also need your employees to use all available payment services in your community, as a way of identifying and improving the merchant experience.  Offering Apple Pay, Google Pay, or contactless debit card technology is meaningless if local merchants aren’t set up for it - or clerks aren’t trained in how to use it.  You’ve no doubt experienced a situation where you’ve tried to use Apple Pay, and have been told by a clerk “oh, that never works” or “I don’t know how you do that.”  Contactless payments are especially important with all the fears for contact transmission of disease - and I really had a disappointing experience of trying to use such a method and finding it didn’t work at that particular register, complete with the clerk announcing that my card was declined!  I put away my smart phone, inserted my chip card, (the same card tied to Apple Pay) and completed the transaction.  As a consumer, what is my incentive to keep trying in these situations?

Sending your employees into the community with the mission of using new bank payment capabilities will help pave the way for your customers to use them without incident.  While the above described scenario was not embarrassing to me, it understandably would be to your average consumer.

Basically, you have two tasks here.  First, get to work to ensure that you have no gaps in your digital offerings, and second, take this opportunity to capitalize on the increased use by customers and solidify their use of digital channels.  Your costs will go down, and customer satisfaction will go up!

As always, let me know how I can help you achieve these goals.

About Trent Fleming

I’ve had a number of new subscribers in recent weeks as a result of my regular COVID-19 updates, so I thought I’d take a minute to let you know more about me.  For more than 35 years, I have helped community banks make good decisions about technology, strategy, and management.  I speak extensively at state banking association events and teach at graduate banking schools at Penn State and Wisconsin.  My consulting work includes significant experience with core vendor evaluation, selection, and negotiations, as well as strategic planning and director education, and of course, “other duties as assigned.”  More information at www.trentfleming.com 

Upcoming Speaking Engagements

June 2 - Mississippi Bankers Web Conference “Integrating Technology into your Enterprise Strategy”

June 3 - Mississippi Bankers Web Conference “Managing a Distributed Workforce”

June 11 - Western Bankers Web Conference 

                > Integrating Technology into your Enterprise Strategy

                > Managing your Core Vendor Relationship

Please call, text, or email if I can help you in any way.

Trent Fleming

901-896-4007

trent@trentfleming.com

Thoughts on Reopening and Lessons Learned

Here’s my latest thinking on the COVID-19 situation.  I’ve been considering two particular issues and wanted to share some thoughts with you on each.

First - what will it look like to “reopen”? Most of you have closed your branches for walk in traffic, sending all teller activity to the drive-thru, and meeting in person only with those customers who need that level of attention during this time.  Some of you have also entirely closed selected branches.  

 I applaud those of you who offered innovative solutions like curbside pickup and drop off of documents and transactions.  Depending on the exact situation in your part of the world, you may stay in this operating environment for several more weeks, or you may be considering following your state’s guidelines to begin re-opening your lobbies sooner.

So let’s talk about what re-opening looks like.  Before you announce that your lobbies are again open, consider what you can do to ensure employee and customer safety.  Certainly, limiting lobby traffic will be a part of that.  While there are varied levels of what “open” means, virtually all of them include maintaining “social distancing” and limiting crowds to 10 people or less.  You will need some employee training on how to man the door and effectively control crowds.  

You’ll also want to consider what measures you can and should take to keep everyone safe.  As a PR move, you may want to take the temperature of each employee when they arrive to work.  Make that widely known, and ask anyone who registers a temperature, or otherwise doesn’t feel well, to stay at home.  That’s just good advice, any time.  But let’s make a practice out of it.  Now, the issue of masks.  I’m pretty firm about this: either every employee wears a mask or no one does.  The risk of having selected employees with masks is that someone interprets that they are sick.  

Can you take the temperature of customers before you let them in a facility?  This is more difficult.  Disney says they plan to do that when they reopen their parks.  Our children’s summer camp has been doing this for several years.  Again, kind of a common sense thing but not everyone will see it that way.  You’ll have to consider the number of cases in your area, and overall public sentiment, to decide what to do.

Regardless of these measures, continue maintaining a clean environment. Access to cleaning wipes, hand sanitizer, and gloves will continue to be important for the foreseeable future.  Ask your janitorial company about enhanced cleaning measures, including fogging, that they provide, and make sure you publicize these measures to let customers and employees know how serious you are about their safety.  

Finally, a word about branch opening.  If you closed selected branches, what were the key decision factors?  Are those long term issues and if so, can you get along without that branch going forward?  Such events are a good time to consider those matters.

Second,  I want to talk about what we are learning from distributed work.  There are important lessons here that can make you a more productive and profitable organization over the long run.  Put together a small team to start capturing pros and cons of the current environment.  Think about what has worked well, and what has not.  There are certainly challenges to address, ranging from the quality of Internet access employees have, to the strength and resiliency of your network in supporting remote workers.  Some tasks can easily be done at home, while others require office presence, and those have to be clearly identified.

Many banks find themselves outgrowing office space.  If you find that selected employees work as well - or better - from home, this is one way to address that problem.  You employee a wide range of individuals.  Some require close supervision, others do not.  Effective management will assess employee skills and abilities, and assign duties accordingly.  In addition, it must be said that you should be evaluating your overall work force requirements.  It may be that you simply have too many employees. Situations like the one we are in will often make that more visible to you.  Your ability to grow without a corresponding increase in head count is critical to your long term success.

What are you learning about effective meetings? Have your virtual meetings been shorter or longer than normal,  and more or less decisive? Has the use of video enhanced or hindered your meetings? Again, don’t make this just about crisis situations - consider what you have learned that may be applied to the long term.

Just a few thoughts.  Remember to keep an eye out for fraud,  work to ensure that employees are properly trained and educated for any operational changes you implement, and remember to communicate well to employees, customers, and the media.

Call, email, or text if I can help in any way.

Trent Fleming

trent@trentfleming.com

901-896-4007

Preparing for Cash Hoarding

I’ve purposely waited an extra week to send an update.  I know that many of you are involved with SBA lending and other matters. But I thought it was time to revisit and expand on my comments about about cash and the possibility for a run on an institution or across the industry.  

First, it is important to note that there is not a shortage of cash.  However, we’ve already seen irrational hoarding of other things, which seems to be continuing.   In particular, consider how fast via social media both right and wrong information can travel.  So let’s start with the basics:  

First, as I said recently to you, don’t let your ATMs run out of cash.  It may see like only an operational issue, but I guarantee you it will create a PR problem for you and perhaps your competitors.

Second, take time to do some employee training and education about the matter.  Employees need to realize that offhanded or joking remarks about running out of cash are never appropriate.  Especially now.  For example, a teller who says “I’m out of 20s” means that he or she needs to buy some from the vault, not that the bank physically doesn’t have any 20s.  But customers don’t know this.  Further, while the public doesn’t understand our fractional reserve system, your employees should understand and appreciate it, and know that we do not have 1 to 1 cash on hand for all demand deposit accounts.  As with ALL PR situations, employees should be reminded that (unless they are the corporate spokesperson) that they should not casually or officially attempt to speak on behalf of the bank.  This includes their own social media accounts.  There’s just too much room for interpretation.

Third, especially now, be alert to fraud being perpetrated on your customers. Any requests for large withdrawals that seem unusual should be gently investigated.  This will be a bit more challenging as it may be through the drive up, but you still need to be alert to unusual activity.  Perhaps you will intervene in a fraud situation, or if the person feels the need to hoard cash, you can engage with them to alleviate their fears. For most people, the additional risk of large sums of cash on their person or in their homes is more of a liability than a benefit - risk of loss, theft, or destruction in the case of fire or storm damage. You know the drill, but don’t assume that customers do.

Fourth, talk openly with your staff about what a run looks like, and how to respond.  You will know something is wrong through customer activity (the drive in lanes are full, and around the building) or you are seeing posts on social media encouraging hoarding, etc.  Again, gently inquire about the requests for large sums.  SLOW DOWN.  Count and recount, slowly and purposefully.    Immediately begin limiting the dollar amount of cash withdrawals to ensure that all customers have access to reasonable sums.  Have a plan now for acquiring more cash if you see that you will need it.  Be prepared to support other local institutions if you can.  In today’s environment, again because of social media and rumors, this is likely to be a widespread event, not limited to a particular institution.

Finally, try to extrapolate short term and long term education points from this particular component of today’s environment.  Nothing you do here will be wasted when the current situation is resolved, so take the time to document your efforts, and update your policies, procedures, training and employee manuals to reflect best practices.

My best to you and your staff as you work to serve customers and maintain your business.

I’m here to help.  Call, text or email, day or night.  

Trent Fleming

trent@trentfleming.com

901-896-4007

I've Closed My Lobbies: Now What?

This is my third weekly update to you during the COVID-19 situation.  I’m simply trying to help by keeping you focused on managing your bank as well as you can.  Your employees, your customers, and your communities need you.

First, as I’ve said before, keep doing what community banks do – meeting the unique needs of customers.  In today’s environment, it means closing lobbies to protect the health of employees and customers, while making yourself available via phone, email, and even in-person meetings to be sure your customers’ needs are met.

Maybe I should have said “first, communicate well” but I’ll address that now.  Even if you are doing the right things, all around, it won’t matter much if customers don’t know.  Make sure you are communicating information about hours and methods of operation, how to contact you if in-person appointments are necessary (ranging from business discussions to safe deposit access), using the optimum communications methods in your markets.  Remind them that the authorities consider banking an “essential” service and that you will remain open.  This starts with good signage (hopefully your communities are relaxing any signage rules during this time) at your locations, updating your web site (a stale web site communicates the wrong message, so update it often) traditional media outlets, and various social media channels including Facebook and Twitter.  Messages need to be simple and concise.  Make sure you are answering the phones promptly, in a positive, reassuring manner.

I’m operating on the assumption (based on a lot of discussions) that most of you are not as busy as normal.  Make sure you take advantage of these slow periods to address important projects.

Here are three areas that you may want to consider.

Ø  Lending: make sure you have a plan to renew and extend operating loans, including (for many of you) ag loans to help farmers prepare for planting.  Stay in touch with your farmers, as many areas are also dealing with way too much rain, which may delay planting and impact crop choices, or require farmers to file insurance claims.

Ø  Source of funds: we love small businesses, because they are a good source of low-cost funds.  Make sure you stay in touch with your most reliable depositors, and find ways to help them.  If they are burning through cash, struggling to make payroll, etc., look for creative ways to keep them afloat.  They need you, and you need them.   Of course, if you see that commonly available deposits are dwindling, you’ll also need to consider alternate funding sources, so now is the time to assess your current borrowing capabilities, as well as considering CD promotions to gather additional funds.

Ø  Projects: Let’s get a handle on projects that you have underway: acquisitions, developing new products and services, renewing or renegotiating vendor agreements, or opening new facilities.  While some of these efforts may slow down a bit, there may be deadlines for deals to get done that you want to honor.  Don’t let a temporary situation prevent you from making good long-term decisions.  Dust off that strategy and let’s talk about how to keep you focused on the future while you manage the present.

Odds and Ends

Ø  Remind your employees to look for fraud.  If it doesn’t “feel” right, ask for help before you cash that check, or wire those funds.  Sadly, there are many looking to exploit the difficult times we are operating in.

Ø  Keep your ATMs full.  There’s plenty of cash.  But the last thing you need is for an ATM to run out of money and someone post that on Facebook!  Look at how irrationally people are shopping.  They will fall for a “cash shortage” situation without fact checking, and you may have a run on your hands.  Keeping that ATM full is a good way to protect yourself . . . but you also want to review with your employees your plans for responding to a run on cash. (thanks to alert reader DF for the ATM tip)

Ø  Work to keep up morale.  As a manager, stay visible, stay positive, and LEAD.  Don’t be paralyzed by the situation.

Ø  Finally – feel free to share any tips with me about what’s working for you – I will include them in my next letter.

As always, I’m here if you need me.  Call, email, or whatever works.  Day or night.

Trent Fleming

trent@trentfleming.com

(901)896-4007

Controlling the Message

Since my last update a week ago, I’ve had the privilege of speaking with several of you as you consider how to respond to the COVID-19 situation.  There’s of course the need to assess CDC recommendations and local government issuances, in order to determine what your operations should look like.  There’s the possibility of closing lobbies, closing branches, changing working hours, or reducing staff.  Among other things.

Here’s my key advice – focus on communication.  You can either tell your own story, or let rumors tell it for you.  Guess which is better?

A part of your response plan has to be keeping employees and customers up to date on your efforts, and how you will provide service.  We talked last week about evaluating current activity, leaning toward drive-thru service and promoting remote delivery channels that you already offer.  These are the basics.

Please also consider offering home/office pickup for deposits or the return of signed documents, if customers are concerned about coming into the bank.  Even curb side pickup of documents and deposits (park outside and let us know you are here) may be needed to alleviate customer fears.  The bottom line is this: make sure you are doing what community banks always do well – meeting the needs of your customers, however unique.  Of course, make sure you can do this efficiently and safely.

Internally, extra precautions to keep exposed surfaces clean are certainly important, and you want to advertise that you are doing this, as well as instructing employees who don’t feel well to stay at home.  Remember too that money is always dirty.  Extra treatment with disinfectant is probably a good idea (all the time), and make sure to emphasize handwashing after handling cash.

Closing the lobby will be seen as a big deal, so do this thoughtfully and with plenty of notice.  Limiting lobby traffic (some of you already have experience with this in high crime areas) is another consideration, but some combination of reduced lobby hours, and limiting the number of customers in the bank at one time, may be the right course of action, depending on the situation in your area.

Again – communicate. Use customer email addresses if you have them, leverage your Facebook or Twitter presence for one to many communications, and issue press releases to local media so that you are controlling the message.

Finally, a word about your ongoing projects, whether you are considering acquisitions, adding new products or services, or replacing existing systems.  Now is not the time to shelve those projects.  When business returns to a normal pace, you will be behind if you haven’t kept abreast of new things.  So let’s leverage technology to keep these projects moving forward, so that you don’t fall behind.  Consider devoting employees who are working remotely to the task of addressing data quality and integrity in your files, working to improve the overall value of your customer data.  Employees in the bank might have enough free time to help you catch up with the scanning and indexing of documents.  I’m sure you can find other examples.  A proper response to the current situation will not consume all your time unless you allow it to.

I remain ready and able to advise you in these matters.

Trent Fleming

trent@trentfleming.com

901-896-4007

Are You Prepared?

I am sure you are hearing from many fronts about concerns and preparations over the Corona virus issue.  My favorite hardware store even sent me a note about how concerned they are.  It is important to heed advice from your governmental and health care authorities.  I will not speak to the medical side of the issue, primarily because - in spite of being a regular at the Holiday Inn Express - I am in fact not a doctor.  I am someone with extensive experience in disaster recovery, contingency planning, crisis management and PR.  So I’ll take that approach.

What I want to provide are some common-sense steps you should consider relative to your bank and branch operations.  Let’s remember that the goal is to maintain an adequate level of service for your customers, while ensuring a safe working environment for your staff.  Most of the suggested measures below will serve to improve your overall readiness for any kind of business disruption, so there’s a silver lining in the current cloud for you.

Take some time now to understand actual traffic counts in your lobbies.   I suggest you attempt to identify the volume of traffic, and the type of encounter or transaction being conducted on each visit. This will give you an important picture of actual activity.   Simply put: transactions of any sort (financial, address change, new accounts, loan applications, etc.) by hour by day in each location.

It is important to segregate drive-up teller activity from walk-in activity, as one consideration would be to move to drive-in only traffic for all teller activity.  

As a way of assessing overall activity, go ahead and bring remote delivery channel transactions into your reporting, so that you have a complete picture.  This would include balance inquiry, funds transfer, bill payment, on-line applications, and mobile or remote deposit.  The purpose of gathering this data in the short term is to help you assess just how much activity you have, and plan for ways of accommodating these transactions if you have to reduce services.   In the long run, measuring in-person vs virtual activity is a solid management tool.

Prepare for one or more of your locations to be in a quarantined area, and make sure you are prepared to communicate to customers that a particular location is closed, and where they can find the next closest location that is open for business.  Note that this is good advice for any number of scenarios that might impact branch operations, ranging from severe weather to robbery aftermath, so think broadly when developing these communication plans.

Aggressively remind customers about your remote delivery channel options, including Internet, mobile, remote deposit, and on-line account opening or applications.  You may want to loosen current deposit restrictions (only for existing customers) to ensure that they can use those channels for all of their standard deposit activity.  Of course, you must consider the risks involved with any changes in these parameters, but in general terms, (as I’ve told you for years) allowing existing customers to make their normal deposits through an alternate channel does not really introduce additional risk. 

What’s the best way to communicate with your customers?  Ideally, you have good email addresses for all those who use your remote delivery channels.  You will also find that social media like FaceBook or Twitter can provide excellent “one to many” communications for notifying customers and the public in general about your operations.

Let’s talk about your staffing needs.  We often see references to “non-essential” employees when operations are limited during severe weather, or other situations.  No one wants to be considered non-essential, so let’s avoid using that term.  Let’s do however determine what a minimal staffing scenario looks like, so that you can reduce person to person contact, account for those who are ill and may need to be out for an extended time, etc.  Take a close look at your overall operations across all applications: loan, deposits, accounting, etc., and make sure you have good coverage if staff has to be reduced.  

Evaluate work at home scenarios, realizing that some of the steps we’ve discussed above may reduce branch traffic and allow you to handle daily work with a limited staff.  One key best practice is to encourage employees who are sick to stay at home.  The old work ethic of “come to work at any cost” has to be replaced by common sense, and managerial understanding, especially during flu season, and in light of any situation like the current virus outbreak.

It is wise to communicate with your primary regulator about any significant changes in your operations – reducing hours, staff, or changing service levels (such as moving to drive-in only for teller transactions).  They may provide additional guidance for you, but I think mainly they will want to be sure you have a plan in place are are managing to this plan.

Finally, as in any crisis management situation, employees need to understand that ONLY a designated spokesman is allowed to speak for the bank.  Employees should not provide any information on behalf of the bank to anyone, including friends, family, strangers or news media but should instead refer any questions to the bank’s designated spokesperson.  Here again, this applies broadly to any situation, not just the current virus outbreak concerns.

I hope I’ve given you some constructive ideas for dealing with the present environment, while making sure your existing plans are updated to provide the best chance of success.  Working on these matters is a far better exercise than watching endless news coverage or fretting over possible outcomes.  In addition, if you do not have some of the tools mentioned above, like on-line account opening, or remote access for traveling employees, it might be time to add those to your technology planning wish list so that you are better prepared in the future.

As always, I stand ready to help.  Email, text, or call me anytime if you would like to discuss these or other matters.  I remain hopeful, and intend to do everything I can to help community banks thrive.

Trent Fleming

trent@trentfleming.com

901-896-4007  

Managing your Image Archive - Fall 2019 Newsletter Text

When’s the last time you thought about your image archive?  Since the advent of COLD storage in the 1980s, (Computer Output to Laser Disc) banks have held some information as electronic images.  Over time, standard documents ranging from loans to photo ID's to general correspondence were added to these systems. Later, with the advent of check imaging there were then check images available.

Your image archive has grown in both stature and importance, and needs to be better managed so that your organization benefits from it, manages the risks associated with it, and prepares for migration from one solution to another.

Let’s address each of these areas:

The basic benefits of an image archive include reduced physical storage space, easier access to documents, and superior backup and archiving based on proven electronic archiving and redundant storage.  Additional benefits include enhanced workflows by incorporating imaging into your day to day activities, and improved compliance by allowing the system to manage your regulatory retention efforts, ensuring compliance and avoiding unnecessary liabilities from having too much retention.

Too often, document retention is an afterthought.  Your image archive solution allows you to develop and codify rules for document usage, retention, and disposal.  There are often state and federal regulations that impact the retention requirements for a particular document.  A properly implemented image archive solution will allow you to plan for, and manage to those regulations. 

Finally, if you are to change your core solution, or just your image archive solution, careful thought must be given to moving your image archive from one system to another.  While technically your image archive is just another set of data that must be converted, there is often complexity associated with it.  

Here are some key steps in successfully managing your image archive:

Clearly identify whom is in charge of the archive.  Your CIO is my suggestion, and absent a CIO, your COO.  This is an important application, with critical data, and deserves to be intentionally managed, and managed well.

Prepare for regulatory and audit requests for real time access to image data.  Increasingly, internal and external auditors, as well as your regulators, are implementing more remote audit efforts.  Access to your image archive will greatly enhance their efforts, and reduce the impact on your staff.

Focus on regulatory requirements for retention, and don’t exceed those guidelines.  You will save valuable space, as well as limit your liability and exposure for maintaining information that neither you or your customers really need.

As always, I’m available to assist you in developing strategy and the appropriate polices and procedures to oversee this important application, including migration to another system if needed. Message me trent@trentfleming.com