In my last blog I discussed the critical
importance of keeping up with technologies. I have a technology associate who
recently wrote on how to utilize technology to control the costs of running
your bank or credit union branch. Of
particular interest is the recognition of the opportunity to not only save
money but make some money by getting customers to use their debit cards. Here are some excerpts from “Trent's
Comments” in January – February 2013
As you invest in new technologies, much of the
focus is on the “sign-up” phase – getting customers to sign up for mobile banking, e-statements, or Internet Banking.
Clearly, it is important to get folks signed up as the first step. This is not the desired
result though . . . the intent is to get folks to adopt behaviors that reduce
your operating costs, and improve customer satisfaction. Effective employee
education and targeted marketing campaigns can help you to achieve your goals.
Let's look at four currently popular technologies
as examples:
Mobile Banking
While you certainly need to have mobile banking from a competitive standpoint,
it is not until a substantial percentage of your customer base begin to actively use
mobile banking that you will see cost benefits from the technology. Measuring unit
costs is difficult. However, as customers become more comfortable with using their
mobile phones to perform increasingly complex banking functions, visits to your
branches and calls to your call center should decline. This will lower the cost of serving
customers, and increase customer satisfaction, as they are able to quickly and easily
handle many of their banking needs with no outside help. Our society is increasingly reliant
on mobile devices, so it is important that you reserve your “place” on these devices. You
will then be poised to offer additional mobile-based services.
E-Statements
E-statements offer you a significant cost savings, every month, over paper
statements. Thus, getting customers to accept electronic statement delivery is a worthy
goal. Think about the number of times companies that you do business with (utilities,
delivery companies, etc.) encourage you to accept electronic statement delivery. Your customers are getting this pressure from all sides, and most are willing
to go along with it, for everything from cost to privacy reasons. As a bonus, e-statement
delivery paves the way for delivering other notices electronically, reducing costs and
improving customer service (same day notification of returned items, for example.) In
general, you should be able to reduce the costs of statement production by at least 50-75
cents per account, per month. Do the math. You want to save this money, and your
customers want electronic statements. In addition to straightforward promotion
of e-statements, you should include e-statements as the standard offering for
new accounts, and use them as an incentive to customers who may be seeking a
free account, by including accepting electronic statement delivery as one of
the required terms for a free account.
Internet Banking
Internet Banking, properly deployed, should greatly reduce your costs of
customer service by allowing customers to handle more of their banking activities on
their own. In particular, the ability to transfer funds, and see images of paid items will
mean that, like mobile banking above, your customers require much less call center contact to
address their banking needs. This reduces your costs and improves customer
satisfaction. Another key part of Internet Banking is bill pay. Many banks have had poor
experience, penetration wise, with bill pay, as their initial offerings were cumbersome,
required advanced payment, and may have even cost extra to use. The reality is this... many of your customers have been driven to on-line payments through the biller's sites,
and won't change their habits unless you find a way to make it easier ( I think
aggregation of bills on a hand held device might have a shot) For now,
concentrate on those of your customers who are still check writers, and promote the ease of bill pay to
them. Each time you convert a check to an electronic form of payment your transaction
costs go down significantly.
Debit Cards
Debit cards are immensely popular with customers. Generally, when banks promote
debit card utilization, it goes up in response. When promotions cease, it then
levels off - it does not go back to prior levels. Thus, we can acquaint usage with adoption.
Even the most expensive debit card transaction (customer enters their PIN) is
significantly less expensive than processing a check. Signature based debit card transactions
actually generate revenue, via interchange fees. Efforts to convert check writers to
debit card users will, at a minimum, reduce your transaction processing costs, and may
even increase your interchange income. Continuous promotion of debit cards is always
productive. Don't overlook debit cards for your businesses, as well. Most
ATM/EFT
providers offer you a better interchange fee on such cards, and transactions
are usually larger, so there is good revenue to be had.
Still learning,
Honey
www.interaction-training.com
