Banking on Digital Growth
Banking on Digital Growth

Episode · 1 year ago

34) #InsideDigitalGrowth: Challenges and Opportunities for Growth and Profitability


On this episode of the Banking on Digital podcast, I answer a question from Monica, the chief operating officer at a financial brand in the southwest. 

Monica asked, "What are the biggest challenges to growth, profitability and even future existence faced by community financial institutions? And what are the opportunities you see when it comes to potential?"

Here's what I discussed in my answer:

  • How to position your brand digitally beyond promoting commoditized products
  • The digital lead generation gap
  • The democratization of financial services
  • The value of a personalized financial coaching program

You can find this interview, and many more, by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

Monica Askd, what are the biggestchallenges to growth profitability and even the future existence faced bycommunity financial institutions and what are the opportunities you see whenit comes to potential new revenue streams in a digital world? That's agreat question Monica and one that I look forward to answering for you on today's episode of banking on Digital Growth, you're listening to banking, on digitalgrowth, with James Robert Lay a podcast that empowers financial brand marketingsales and leadership teams to maximize their digital growth potential bygenerating ten times more loans and deposits. Today's episode is part ofthe inside digital growth series, where James Robert Chares answers to some ofthe biggest digital marketing and sales questions he gets from the digitalgrowth community have a question you want to get answers to on a futureepisode visit, www dot, go ask jrcom to submit your question today. Now, let'sgo inside, digital growth greetings an hello! Thank you for tuning into thethirty fourth episode of the banking on digintal growth podcast, where I JamesRobert Lay your digital anthropologists commit to continue to guide you andyour financial brand along your digital growth journey. The journey thatempowers you to grow from good to great a journey that elevates you and yourfinancial brand beyond the commoditized promotion of the same great rates, theamazing service in those lookalike laundry list of product features andthose services that every other banking credit uniune promotes so that you cando one thing you can generate ten times more loans and deposits by guidingpeople in the communities that you serve beyond their financial stresstowards a bigger, better brighter future. Today's episode is part of the insidedigital growth series and I'll be answering a question from Monica who isthe chief operating officer for a financial brand in the southwest onceagain, Monica ask what are the biggest challenges to growth, profitability andeven the future existence faced by community financial institutions andwhat are the opportunities you see when it comes to new potential revenue,stram streams in a digital world? What's Gon? Thank you for the questionMonica and today I'm going to answer this question for you framed aroundthree key areas of focus: number one: we're going to look at what I call thedigital positioning problem from there, we'll move it to point number two,which is addressing the Digital Legen gap and then we'll wrap up with pointnumber three. Where will unlock? What I see is the secret to digital growthrevenue, particularly over the next two to three five years. So, let's start with point number oneand discuss the digital positioning problem as digital positioning and alsopoint number two digital Leed Gin they're the biggest threats that I seefacing financial brands in this digital first world. When it comes to growth,profitability and to your point Monica their future existence. You know a bank or Credit Union. Theycan have the best technology on the fulfilment side or the service side ofthe business model. The online banking, the mobile banking, the PFM and that'swhere a lot of time has been spent. The...

...vast majority of time of effort ofenergy of investment over really the last ten years- and this is a very goodthing- it's good to see that side of the business becoming much more digital,but good is not enough, because if a financial brand can't positionthemselves digitally above the commodities, great rates, amazingservices and those look like laundry list of features that every other financial brandpromotes their amazing mobile banking at their PFM or whatever digital toolthat they bring to bear in the marketplace will never get used becausethere will be no new account holders coming in to use it and that's because they'll be whatthere'll be no one that knows about that particular product or even thefinancial brand. For that matter, digitally speaking. So, where is the opportunity toposition your financial brand beyond the promotion of commoditized products? It all starts with one thing: it allstarts with a purpose that puts people at the center of all of your thinkingand all of your doing, a purpose that focuses on transforming the lives ofpeople in the communities that you serve over. The traditional focus ofreally the commoditized tranaction of dollars and sente. This is about a purpose that I see asas the excelerant factor, and also the differentiating factor for financialbrands in a digital world, and I do provide some additional insight,clarity and perspective on how financial brands who are competing andthat even just financial brands, other brands for that matter, because I thinkthere's so much that we can learn by looking outside of this industry.Looking at how other brands competing in commoditize market places arebanking on purpose, and I discuss that in episode. Number thirty, along withepisode number thirty three, so moving on and really closely tangledup with the digital positioning problem that I mentioned previously, is alsothe digital lead generation gap, which is the second point that I'd like todiscuss here now from the thousand plus digital secret shopping studies thatwe've culd conducted for financial brands and when we conduct these secretshopping studies. We're looking at to two key areas were looking at theemotional experience of their digital positioning Ben, more specificallytheir website, and then we're also looking at the leadexperience. A Perspective accountholder our perspective member travels through, and what we found in these studies isthat ninety three percent of consumer shared that they start their journeywhen shopping for a financial product or service alone, a checking count etca.They start that journey online and that digital journey very veryquickly ends up on a bank or Crediti newn website and here's the problemmost bank and Creditin inte websites. Even today, in two thousand and twentygoing to two thousand and twenty one are still nothing more than glorifiedonline brocheres, that's a problem. They are not... lead generation. Engines arewhat we call websites that sell here at the Digital Growth Institute and awebsite that sell is just one gear, one component and a larger digital growthengine. And so when we look at the opportunity here, the opportunity is totransform the glorified online brochire into a website that sells, and when youdo so, you begin to close the Digital Legion gap on the note of building and optimizinga website that sells and coming back to this idea of digital secret shoppingstudies. One study that we conducted in theindustry we found that more than three hundred financial brands surveyed.Ninety four per cent have never undergone any type of digital secretshopping study. Now let that sink in for a moment. Ninety four percent ofbanks and credit unions, out of the three hundred that were surveyed, havenever undergone any type of secret shopping study. Digitally speaking,could you imagine for a moment if Amazon never did any secret shoppingstudies to improve their digital shopping experience or, if target orany major digital retailer that you know never optimized the digitalexperience, they only updated their website once every five, six or sevenyears, which is the typical industry average we see when it comes tofinancial brand websites, updates and optimization. On the flip side, seventy two percentof those three hundred financial brands perform and that granted this wasconducted, Pre covid. Seventy two percent of those financial brandsperform ongoing secret shopping studies for their physical branch locations and the lack of focus around thedigital secret shopping study is troubling. Considering that ninety three percent of consumers haveshared that they start their digital buying journey online, regardless ofwhere they apply doesn't matter. If they apply online, it doesn't matter ifthey apply over the phone or if they would come into a branch, pre covid. So when we think about these challengesof the Digital Legion gap really closely aligned with a lack ofawareness and understanding of how consumers are shopping and buyingfinancial products digitally through the digital buying journeys. Anotherthing to think about a consider is that eighty four percent of financial brandshave not mapped out digital journeys. It's good that we're seeing moreconversation and more activity around quote: Unquote: Consumer JourneyMapping and CX- and you know customer experience, but that's only through oneparticular lins of the entire buying journey, and if you don't have digitalconsumer journeys, mapped out for all of your key product lines. Just think about what this means forthe person on the other and trying to navigate the complex world of buying afinancial product. It's like asking them to walk through the woods alone atnight, without a flashlight sooner or later, they're going to run into a treeand they're going to trip over a rock someone's going to get hurt. Furthermore, when we look at this ideaof the Digital Legion gap, eighty three percent of financialbrands do not have a strategy to follow up with abandoned applications. This,from the perspective of digital retail, is like having a leaky, shopping, cartand so the opportunity here when we're talking about bridging the DigitalLegion gap,...

...its for financial brands, to not justthink about themselves as banks or credit unions, and and don't evenreally think about yourself as a technology company for that matter,because I know that's been a big conversation of latest you know we needto start thinking about ourselves as technology companies. I want to takethat thinking a step further begin thinking of your bank or Credit Unionas a digital retailer, with a strong digital marketing and selvesmethodology, and when you do so, this will help to fix the most importantpart of the consumer buying journey when it comes to conversions and once your financial brand diagnosesand addresses the digital conversion problem for all of your key productlines on your website, then an only even can you begin to move further upinto the buying journey to fix and optimize challenges within theconsideration stage of the buying journey and from there now you havepermission to begin to focus on the opportunities that are available to beeither created or captured in the awareness stage of the consumer buyingjourney through targeted content that is communicated, distributed, promotedthrough channels like emails and ads that are informed through the insightsthat you gain from data and analytics technology has transformed our worldand digital has changed the way consumer shop for and by financialservices forever. Now consumers make purchase decisions long before theywalk into a branch if they walk into a branch. At all, but your financialbrand still wants to grow loans and deposits. We get it. Digital growth canfeel confusing, frustrating and overwhelming for any financial brandmarketing and sales leader, but it doesn't have to because James Robertwrote the book that guides you every step of the way along your digitalgrowth journey visit, www, dot, digital growthcom to get a preview of his bestselling book banking on digital growth, or order a copy right now for you, andyour team from Amazon inside you'll find a strategic marketing manifestothat was written to transform financial brands and it is packed full ofpractical andprovent insight. You can start using today to confidentlygenerate ten times more loans and deposits. Now, back to the show on the note of digital ads, I did avery deep podcast on the future of digital ads. Answering a question fromMichael in episode. Number thirty one as the future of digital ads does notlook very bright at this time, and- and I was predicting the demise of digitalads starting three years ago, thanks to the rise of AD blockers and ad buts.But now what we're? Starting to see is an UNGOING AD policy change, that'sreally impacting the financial services space and these AD policy changes fromfacebook, and now Google are being driven by data privacy demands fromboth consumer complaints as well as government regulations. So I want totake this thinking even further and move on to the third point now toaddress for Monica the opportunities that I see. Four new revenue growth,which is really a secret income stream for financial brands, a secret end,income stream. That is currently an untapped opportunity, just waiting tobe created ar captured by you before others in your community take advantageof it. So digital has transformed everything,as once, traditional products have become dematerialized and, for example,the checking account should no longer be called a checking account becausethe checking account has been dematerialized, and we see this also onthe note of branch, banking, physical branch, banking, giving way to mobilebanking. In addition to the...

Dematerialization, we also see thedemocratization of financial services, and we see this with the rise ofFintech. FINTECH is growing at an expinential pace. Well legacy financialbrands and incumbents continue to shrink and consolidate year over year,and the third point is the demonetization of financialservices, which is where the cobotitization of any product leadstowards a downward trend in both revenue, as well as profitability.Andto. The point of these three Ds, the Dematerialization, the democratizationand the Dema demonitization of financial services. These three DSE areactually further expanded upon in a larger model that is shared by PeterDeamandis and Stephen Culter in their book bold. So I provide further insightfor how just t e this. These three DS specifically have been applied to themusic industry in episode, number eighteen and how they can be furtherapplied to your bank or Credit Union. I also get a little bit personal with youand episode Abereah Team, because it is about the music industry, where I sharemy my own personal passion about music, in which a lot of people don't knowthis. I played the viola growing up in the orchestra before I started a punkruck band after graduating high school, and that led me down to the path of ofstarting what has become today. The digital growth institute that you knowso coming back into new revenue streams in a digital first world, I'd likeFreou to toss out everything you know about financial products and, let'sstart from scratch. Let's build this thing from the ground up because too often are thinking our futurethinking of where we could go next, it's constrained by our experiences,our success and also the feilures that we've had in the past, all of whichhave led us to arrive at the point to where we are today in this presentmoment. In short, we often carry a curse of knowledge and that's why, forthis exercise, let's start with a blank slate and consider three key truths. People want three things in their life:they want to feel healthy, they want to feel wealthy and they want to feelhappy. Money is the thread that connects allthree of these points together, and it has been proven in multiple studiesthat a persons financial well being is closely tied and directly correlatedwith their physical well being along with their mental well being. But weknow that money is stressful. More so now than before. Thanks to Covid andthes stress is taking a toll in people's health and happiness, andthat's why they're looking for someone? They can trust to guide them beyondthis stress towards a bigger, better brighter future and here's exactlywhere I see the secret to digital growth and the secret to future revenuein the and future income, because this can be found by focusing your product,product, positioning financial brand positioning as the cure as theprescription to people's biggest painpoints, and so your financialbrands. Future revenue streams will be created by what I see the bundling of financialcoaching programs, bundled them up with a spinning account and not a checkingaccount. Let's just call this a spinning account for this exercise and here's. Why, when we think aboutthe future at a countholder, wants to create what standing in their way moreoften than that is money,...

...and most people don't have a savingsproblem. Instead, they have a spending problem and they have a spendingproblem, because their spinning behaviors are deeply rooted in theirown upbringing, an and just their environment at large, and so coachingguidance, Accountability and Really Coaching Guidance andaccountability. That is informed by data and insights that you have on youraccountholders gleam through automation, gleand through AI. This is what will help people get beyond their financial stress andget to a bigger, better brighter feature that is framed around their ownpersonal goals for growth, not your financial brand and so to do this. This is reallycultural transformation I see is putting and committing to put thetransformation of people over the transaction of dollars and sense.That's why coming back to start this conversation point number one purpose and that's why we put purposeat the center of our digital growth blueprint people will pay for coaching when they want toexperience real transformation in their lives. Think about this. For a moment,if you want to transform your fitness level, you pay a fitness coach, notonly to show you how to do it, but to hold you accountable to make sure thatyou actually do it. You want to transform your Diet, youpay a Dietitian, not just to show you how to do it, but to also hold youaccountable to make sure you change your eating. Behaviors, you want totransform your leadership skills. You pay a business coach, not just to showyou how to be a better leader, but to hold youraccountable as you personally grow from good to great, and people will do thesame thing when it comes to their financial situation. If Coaching Financial Coaching is positioncorrectly through our research, we're already starting to see some brands dothis, and not through the traditional lins of an incumbent banker creditingIOM. One of these brands in particularly, is called the financialgym. The financial gym is based out of New York City and now, in fact, areport that they shared found that that members who pay to be in their programthey save around six thousanddollars per year, while increasing their creditscore. An average of fifty points so think about this. How much wouldsomeone pay you pay your Financial Brand for financial, coaching guidance,advice, accountability? Well, let's just use these numbers from thefinancial gym and if you were able to save the average person in yourfinancial coaching program, six thousand dollar per year through not only dect consolidation,but also spending behavior modification, a membership of a hundred dollar permonth, or, let's just say, a thousand dollar per year. That gives them atremendous return, an investment they make in themselves and, moreimportantly, an investment that they make in their future. And it gives yourfinancial brand a tremendous opportunity to earn both interestincome through, for example, if you're repackging debt for them. But I thinkeven more the opportunity is bigger. Here is notjust through the interest income. It's through the noninterest income thatcomes through the value creation. By putting people at the center of all ofyour thinking and doing so think about this, if you ere able to start afinancial coaching pilot program, bulded up with a spinning account that includes anannual membership fee of a thousand...

...dollars or a hundred dollar per month,and you were able to get just a hundred people in this pilot program. You'venow opened up an extra hundred thousand dollars per year in annual noninterestincome, and once you work out the Kings in thispilot program and you begin to scale it even further. This is where you add,not a hundred people, but you Gow a hundred to a thousand now you've added an additional onemillion dollars and annual noninterest income through a repeatable programfocused on guiding people in the communities. You serve beyond theirbiggest questions beyond their concerns and really helping them to overcome andbreak free of the problems that are keeping them up at night. The problemsthat are stressing them out the problems that are taking the toll intheir health, their relationship, their sense of well being, and when you dothis, they will get to a bigger better brighter future, not because of yourproducts, but because of your coaching, your guidance, your insight, youraccountability, and I promise you. When you do this,for them, they will tell their friends. They will tell their family about allthe good that you've done for them beyond just providing them with anothercommoditized checking account that they could get anywhere, and that's because you gave them somuch more. You gave them help. You gave them hope and, as they tell theirfriends, they tell their family about your personalized Financial CoachingProgram, Your coaching program that has the potential to Skale even further toempow you to generate even more annual, not interest income. You know, if youget tenosand people in a program like this. Well, now you you have thepotential to generate ten million dollars and non interest income, and sothis is the future of growth for financial brands in a digital world,where we have all of this insight. All of this data into people's spendingbehaviors, to provide them with guidance, to provide them withrecommendations and, most importantly, to provide them with accountability, totransform their own mindset to transform their spinningbehaviors that keep them stuck in their current present reality. So, as I wrap up, there are three keyopportunities that I want to come back to as we consider Monica's originalquestion when she asked what are the biggest challenges to growthprofitability and even the future existence face by community financialstitutions. And what are the opportunities you see when it comes topotential new streams of revenue in a digital world? So three things to tie everything up nicely. Threepoints: Number one: Let's eliminate the digital positioningproblem by committing to bank on purpose,putting people at the Centr of all of your thinking. All of your doing, let's close the Digital Legion gap byFirst Fixing your digital conversion problem for all of your key productlines on your website and while you're at it. Let's just commit t to transformthat website beyond a a glorified online Broshire into a website thatsells and then number three. Let's capture new revenue through noninterestincome that can be created by building ascalable financial coaching program, bundling up an optimize spending product thatprovides accountholders with guidance with insight and, most importantly,accountability,... transform their thinking totransform their mindset to transform their behaviors. And We framed thiscoaching program not around your financial brand. We Frame this coachingprogram around answering their biggestquestions, addressing their biggest concerns so that you can help guidethem to get to a bigger, better brighter future has always if you have a question likeMonica. I want to hear from you, because I want to help you I want tohelp. You continue to grow from good to great to maximize your financial brands.Future digital growth potential just got O wwwtgo ask jrcom, submit aquestion there and I will answer it for you on a future podcast episode andremember. The only bad question is the question that goes unasked until nexttime be well, do good and wash your hands. Thank you for listening to anotherepisode of banking on Digital Growth, with James Robert Lay like will youhear, tell a friend about the podcast and leave us a review on apple podcast,Google, podcast or spotify, and subscribe, while you're there to geteven more practical, improven insights, vis, it www don digital growthcom tograb a preview of James Robert's, best selling book banking on digital growth,or order a copy right now for you and your team from Amazon inside you'llfind a strategic marketing and sales blueprint framed around twelve keyareas of focus that empower you to confidently generate ten times moreloans and deposits until next time be well and do good.

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