Independent Banker - September 2018 - 20

PORTFOLIO
versus what today's customers want. "
Yet, even as the bank/fintech paradigm has seen a shift
from competition to targeted collaboration, experts say a
community bank's knowledge of its customer base is critical
to the success of any partnership.
" Start with designing what you know your customers
want, and focus on their experience, " Gill counsels. " Don't
just follow what your core provider offers. "
Smarter: Use data to get personal. To that point,
knowing what customers want has also become a
more concrete, data-centered solution. Community banks
have information at their fingertips that supports the
deeper dive into a customer's preferences.
Having this information means that you can better
support your customers. Does data show that customers
prefer mobile interactions? Make sure your mobile payment
solutions integrate automatically into your bank's
mobile app. Do many of your customers make purchases
at the same places? Sync up rewards programs with those
businesses. The personalization possibilities abound.
Community banks can take things one step further
by identifying partners who can help them use machine
learning and artificial intelligence. These solutions get
to the heart of the data, targeting customers where they
are at and personalizing their experiences in a way that
makes for smooth payments.
Consider risks
It's not enough to just be faster, smarter and better. Banks
also have to be safer.
" There's one constant in banking: risk, " cautions
3
Rayleen M.Pirnie, president and CEO of RP Payments Risk
Consulting Services in Orrick, Mo. " The increased availability
of technology and consumer demands are driving
new and exciting developments, but these advances can
increase a bank's risk profile. Throw in increased regulations,
guidance, state laws and fraud, and a bank can
easily find itself going from innovative to high-risk fast. "
So, what's a community bank to do to ensure it innovates
and evolves but also mitigates risk and stays
in compliance?
Pirnie suggests banks consider not only the current
regulatory environment but also trends in other states,
guidance and other factors. You should also include a
compliance officer throughout the life cycle of a new solution,
from inception to implementation.
Bottom line? Align innovative solutions with your
bank's risk tolerance.
Cash in
A payments strategy must remain focused on the individualized
needs of the institution. For many banks, this
means creating a payments business case that leads to
revenue and profitability-a point that proves elusive for
some institutions.
" When I talk with community banks about emerging
payment solutions, and they tell me they are not
moving forward because they cannot come up with a
profitable return on investment, I ask them to flip their
perspective, " says Tina Giorgio, president and CEO,
ICBA Bancard. " While banks can't charge a fee for every
payment transaction, the revenue opportunities stem
from the total client relationship that the payment creates.
When the customer needs a loan, who will they turn
to? If they're looking for a new credit card, perhaps with
better rewards, who will they consider? "
Statistics support this potential for revenue growth.
According to an October 2017 McKinsey & Company
report, payments are expected to grow to a $2 trillion
industry and make up 36 percent of all banking revenues
by 2020. Clearly, there is opportunity for community
banks to make money in payments.
" As trusted providers of payments services, community
banks need to look at how to convert a payment transaction
into something more, " Giorgio says. " This is where
your payments strategy comes into play and supports
your profitability.
" Odds are if you don't offer new solutions, your customers
will turn to someone who does. "
Colleen Morrison is a writer in Virginia.
20 Q ICBA Independent Banker Q September 2018
Independent Banker - September 2018

Table of Contents for the Digital Edition of Independent Banker - September 2018
