With increasingly volatile and uncertain markets, financial institutions must look internally and assess their blindspots. More regulations are already expected that banks and credit unions must prepare to enact. No matter the outcome, institutions must look at how they continue to build stronger to handle future challenges.
Within any market headwinds, it is imperative to be proactive. At Zennify, we encourage financial institutions to focus on three critical objectives for success:
- Increase Growth: balanced growth that is not just focused on driving revenue and assets.
- Improve Efficiency: meet market demands with employee and customer simplicity, using automation where possible
- Manage Risk: have diligence to ensure a safe and sound balance sheet
Key Focus Areas for Banks and Credit Unions
Given current market conditions, opportunities exist to build stronger to be well-positioned into the future. The following are recommended areas of focus:
1. Get your data in order to be proactive
It is critical that financial institutions have clear visibility into all areas of the bank, including real-time data on current interest rate margin, investment portfolios, deposit balances, deposit concentrations, loan concentrations, compliance and audit metrics. Each of these categories provide important information that institutions need at their fingertips to be proactive. Most banks and credit unions do not have a well-defined data strategy or a fully built data infrastructure. To stay ahead of these challenges, financial institutions must continue to invest in building infrastructure that facilitates real-time data, giving leadership the right insights to keep their clients safe.
2. Create sticky relationships with business deposits
Deposits are critical for banking institutions to facilitate the lending of money. No better example than the recent situations with Silicon Valley Bank and Signature. Having a diversified portfolio of deposits is critical to reduce risk. A key method to diversify is by targeting businesses for deposits. This client type brings in good average balance deposits that typically need treasury services and business loans.
A significant opportunity to attract business deposits is by offering online deposit account opening (DAO) for businesses. At the beginning of 2022, only 4% of financial institutions offered digital business account opening1. 5.4 million Americans started their own small businesses in 20212. Having a digital account opening process provides a smooth onboarding experience for the business customer to easily open the accounts they need, without needing to visit a branch. This enables an institution to expand their deposit diversification.
1 Cornerstone Advisors Report
2 White House Report
3. Proactively engage the customer
During uncertain times, from a customer perspective, it is important to ensure the client is well-informed. Financial Institutions should have integrated communication tools that make it easy to quickly send any necessary messages to customers. These tools should include ability to track level of engagement from the client, bounce back emails, email engagement, and other behaviors. Here are additional capabilities banks and credit unions should have in their marketing toolkit:
- Automate customer prompts and updates on customer’s preferred channel
- Provide dynamic content with interactive links to expedite follow-up (create agent task, open case)
- Get quicker actionable insights across products
Being able to engage customers efficiently, no matter the circumstance, is a critical ability for financial institutions that are building a stronger client base and market presence.
Building strong is a state of mind that incorporates organizational alignment and good culture. Taking action on these areas will equip financial institutions to manage through challenging times and thrive in good times.
