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 ask what are the biggest challengesto growth, profitability and even the future existence faced by community financial institutions,and what are the opportunities you see when it comes to potential new revenue streamsin a digital world? Well, it's a great question, Monica, andone that I look forward to answering for you on today's episode of banking ondigital growth. You're listening to banking on digital growth with James Robert Lay,a podcast that empowers financial brand marketing, sales and leadership teams to maximize theirdigital growth potential by generating ten times more loans and deposits. Today's episode ispart of the inside digital growth series, where James Robert shares answers to someof the biggest digital marketing and sales questions he gets from the digital growth community. Have a question you want to get answers to on a future episode?visit www dot go ask jrcom to submit your question today. Now let's goinside digital growth. Greetings in hello, thank you for tuning in to thethirty four episode of the banking on Digital Growth Podcast, where I James RobertLay, your digital anthropologists, commit to continue to guide you and your financialbrand along your digital growth journey, a journey that empowers you to grow fromgood to great, a journey that elevates you and your financial brand beyond thecommoditized promotion of the same great rates, the amazing service and those look alikelaundry list of product features and those services that every other banking credit union promotes, so that you can do one thing, you can generate ten times more loansand deposits by guiding people in the communities that you serve beyond their financialstress towards a bigger, better, brighter future. Today's episode is part ofthe inside digital growth series and I'll be answering a question from Monica, whois the chief operating officer for a financial brand in the southwest. Once again, Monica asked what are the biggest challenges to growth, profitability and even thefuture existence faced by community financial institutions, and what are the opportunities you seewhen it comes to new potential revenue stream streams in a digital world? Onceagain, thank you for the question, Monica, and today I'm going toanswer this question for you framed around three key areas of focus. Number one, we're going to look at what I call the digital positioning problem. Fromthere we'll move into point number two, which is addressing the digital lead Jingap, and then we'll wrap up with point number three, more will unlockwhat I see is the secret to digital growth revenue, particularly over the nexttwo, two, three, five years. So let's start with point number oneand discuss the digital positioning problem. As digital positioning and also point numbertwo, digital lead GIN, they're the biggest threats that I see facing financialbrands in this digital first world when it comes to growth, profitability and,to your point, Monica, their future existence. You know a bank orCredit Union, they can have the best technology on the fulfillment side or theservice side of the business model, the online banking, the mobile banking,the PFM, and that's where a lot...

...of time has been spent, thevast majority of time, of effort, of energy, of investment over reallythe last ten years, and this is a very good thing. It's goodto see that side of the business becoming much more digital. But good isnot enough, because if I financial brand can't position themselves digitally above the commoditizegreat rates amazing services, and those look like laundry list of features that everyother financial brand promotes their amazing mobile banking APP, their PFM or whatever digitaltool that they bring to bear in the market place will never get used becausethere will be no new account holders coming in to use it, and that'sbecause they'll be what they'll be, no one that knows about that particular product, or even the financial brand for that matter, digitally speaking. So whereis the opportunity to position your financial brand beyond the promotion of commoditized products?It all starts with one thing. It all starts with a purpose that putspeople at the center of all of your thinking and all of your doing,a purpose that focuses on transforming the lives of people in the communities that youserve, over the traditional focus of really the commoditized transaction of dollars and sense. This is about a purpose that I see as as the accelerant factor andalso the differentiating factor for financial brands in a digital world, and I doprovide some additional insight, clarity and person spective on how financial brands who arecompeting, and not even just financial brands, other brands for that matter, becauseI think there's so much that we can learn by looking outside of thisindustry, looking at how other brands competing in commoditize market places are banking onpurpose, and I discussed that in episode number thirty along with episode number thirtythree. So moving on and really closely tangled up with the digital positioning problemthat I mentioned previously, is also the digital lead generation gap, which isthe second point that I'd like to discuss here now from the thousand plus digitalsecret shopping studies that we've could conducted for financial brands. And when we conductthese secret shopping studies were looking at two two key areas. We're looking atthe emotional experience of their digital positioning when, more specifically their website, and thenwe're also looking at the lead experience a perspective account holder, our perspectivemember travels through and what we found in these studies is that ninety three percentof consumers shared that they start their journey when shopping for a financial product orservice alone, a checking count, etc. They start that journey online and thatdigital journey very, very quickly ends up on a bank or credit ina website. And here's the problem. Most Bank and crediting in websites eventoday in two thousand and twenty, going to two thousand and twenty one arestill nothing more than glorified online brochures. That's a problem. They are notdigital lead generation engines. Are What we... websites that sell here at theDigital Growth Institute, and a website that sell is just one gear, onecomponent and a larger digital growth engine. And so when we look at theopportunity here, the opportunity is to transform the glorified online brochure into a websitethat sells, and when you do so you begin to close the Digital Legiongap. On the note of building an optimizing a website that sells. Incoming back to this idea of digital secret shopping studies, one study that weconducted in the industry we found that more than three hundred financial brands surveyed,ninety four percent have never undergone any type of digital secret shopping study. Nowlet that sink in for a moment. Ninety four percent of banks and creditunions out of the three hundred that were surveyed have never undergone any type ofsecret shopping study digitally speaking. Could you imagine for a moment if Amazon neverdid any secret shopping studies to improve their digital shopping experience, or if targetor any major digital retailer that you know never optimized the digital experience. Theyonly updated their website once every five, six or seven years, which thetypical industry average we see when it comes to financial brand websites updates and optimization. On the flip side, seventy two percent of those three hundred financial brandsperform, and the granted this was conducted pre covid. Seventy two percent ofthose financial brands perform ongoing secret shopping studies for their physical branch locations, andthe lack of focus around the digital secret shopping study is troubling, considering thatninety three percent of consumers have shared that they start their digital buying journey online, regardless of where they apply. Doesn't matter if they apply online, doesn'tmatter if they apply over the phone or if they would come into a branchpre covid. So when we think about the these challenges of the Digital Legion, gap really closely aligned with a lack of awareness and understanding of how consumersare shopping and buying financial products digitally through the digital buying journeys. Another thingto think about consider is that eighty four percent of financial brands have not mappedout digital journeys. It's good that we're seeing more conversation and more activity around, quote unquote, consumer journey mapping and CX and, you know, customerexperience, but that's only through one particular lens of the entire buying journey.And if you don't have digital consumer journeys mapped out for all of your keyproduct lines, just think about what this means for the person on the otherand trying to navigate the complex world of buying a financial product. It's likeasking them to walk through the woods alone at night without a flashlight. Sooneror later they're going to run into a tree and they're going to trip overa rock. Someone's going to get hurt. Furthermore, when we look at thisidea of the Digital Legion gap, eighty three percent of financial brands donot have a strategy to follow up with abandoned applications. This, from theperspective of digital retail, is like having a leaky shopping cart. And sothe opportunity here, when we're talking about up bridging the Digital Legion gap,is for financial brands to not just think...

...about themselves as banks or credit unionsand and don't even really think about yourself as a technology company for that matter, because I know that's been a big conversation of latest. You know,we need to start thinking about ourselves as technology companies. I want to takethat thinking a step further. Begin thinking of Your Bank or Credit Union asa digital retailer with a strong digital marketing and cells methodology. And when youdo so, this will help to fix the most important part of the consumerbuying journey when it comes to conversions. And once your financial brand diagnosis andaddresses the digital conversion problem for all of your key product lines on your website, then and only then, can you begin to move further up into thebuying journey to fix an optimized challenges within the consideration stage of the buying journey. And from there, now you have permission to begin to focus on theopportunities that are available to be either created or captured in the awareness stage ofthe consumer buying journey through targeted content and that is communicated, distributed promoted throughchannels like emails and ads that are informed through the insights that you gain fromdata and analytics. Technology has transformed our world and digital has changed the wayconsumer shop for and buy financial services forever. Now consumers make purchase decisions long beforethey walk into a branch, if they walk into a branch at all. But your financial brand still wants to grow loans and deposits. We getit. Digital growth can feel confusing, frustrating and overwhelming for any financial brandmarketing and sales leader. But it doesn't have to, because James Robert wrotethe book that guides you every step of the way along your digital growth journey. Visit www dot digital growthcom to get a preview of his best selling bookbanking on digital growth, or order a copy right now for you and yourteam from Amazon. Inside you'll find a strategic marketing manifesto that was written totransform financial brands, and it is packed full of practical and proven insights youcan start using today to confidently generate ten times more loans and deposits. Nowback to the show. On the note of digital ads, I did avery deep podcast on the future of digital ads, answering a question from Michaeland episode number thirty one. As the future of digital adds does not lookvery bright at this time and and I was predicting the demise of digital adsstarting three years ago, thanks to the rise of AD blockers and AD bots. But now what we're starting to see is an ongoing ad policy change that'sreally impacting the financial services space, and these add policy changes from facebook andnow Google are being driven by data privacy demands from both consumer complaints as wellas government regulations. So I want to take this thinking even further and moveon to the third point. Now to address for Monica, the opportunities andthat I see for new revenue growth, which is really a secret income streamfor financial brands, a secret income stream that is currently an untapped opportunity justwaiting to be created or captured by you before others in your community take advantageof it. So digital has transformed everything, as once traditional products have become dmaterialized, and, for example, the checking account should no longer becalled a checking account because the checking account has been d materialized, and wesee this also on on the note of branch banking, physical branch banking givingway to mobile banking. In addition to...

...the de Materialization, we also seethe democratization of financial services, and we see this with the rise of Fintech. FINTECH is growing at an exponential pace, while legacy financial brands and incumbents continueto shrink and consolidate year over year. And the third point is the demonetizationof financial services, which is where the commoditization of any product leads towardsa downward trend in both revenue as well as profitability. And to the pointof these three D's, the d materialization, the democratization and the dem up demonetizationof financial services. These three D's Are actually further expanded upon in alarger model that is shared by Peter Diamandis and Stephen Colter in their book bold. So I provide further insight for how just these this these D s specifically, have been applied to the music industry and episode number eighteen, and howthey can be further applied to your bank or Credit Union. I also geta little bit personal with you and episode number eighteen, because it is aboutthe music industry, where I share my my own personal passion about music,in which a lot of people don't know this. I played the viola growingup in the orchestra before I started a punk rock band after graduating high school, and that led me down to the path of starting what has become todaythe digital growth institute that you know. So, coming back into new revenuestreams in a digital first world, I'd like for you to toss out everythingyou know about financial products and let's start from scratch. Let's build this thingfrom the ground up, because too often are thinking our future, thinking ofwhere we could go next, is constrained by our experiences, our success andalso the fellures that we've had in the past, all of which have ledus to arrive at the point to where we are today, in this presentmoment. In short, we often carry a curse of knowledge, and that'swhy, for this exercise, let's start with a blank slate and consider threekey truths. People want three things in their life. They want to fillhealthy, they want to feel wealthy and they want to feel happy. Moneyis the thread that connects all three of these points together, and it hasbeen proven in multiple studies that a person's financial wellbeing is closely tied and directlycorrelated with their physical wellbeing, along with their mental wellbeing. But we knowthat money is stressful, more so now than before, thanks to Covid andthis stress is taking a toll on people's health and happiness, and that's whythey are looking for someone they can trust to guide them beyond this stress towardsa bigger, better, brighter future. And here's exactly where I see thesecret to digital growth and the secret to future revenue in the and future income, because this can be found by focusing your product, product positioning, financialbrand positioning, as the cure, as the prescription to people's biggest pain points. And so your financial brands future revenue streams will be created by what Isee, the bundling of financial coaching programs. Bundle them up with a spending accountand not a checking account. Let's just call this a spending account forthis exercise. And here's why, when we think about the future, anaccount holder wants to create what standing in their way more often than not,is money. And most people don't have...

...a savings problem. Instead, theyhave a spending problem, and they have a spending problem because they're spending behaviorsare deeply rooted in their own upbringing and and just their environment at large.And so coaching Guidance Accountability, and Really Coaching Guidance and accountability that is informedby data and insights that you have on your account holders. Glean through automation, GLEAN THROUGH AI. This is what will help people get beyond their financialstress and get to a bigger, better, brighter feature that is framed around theirown personal goals for growth, not your financial brand. And so todo this, this is really cultural transformation. I see is putting and committing toput the transformation of people over the transaction of dollars and sense. That'swhy, coming back to start this conversation, point number one, purpose, andthat's why we put purpose at the center of our digital growth blue print. People will pay for coaching when they want to experience real transformation in theirlives. Think about this for a moment. If you want to transform your fitnesslevel, you pay a fitness coach not only to show you how todo it, but to hold your accountable to make sure that you actually doit. You want to transform your Diet, you pay a Dietitian, not justto show you how to do it, but to also hold you accountable tomake sure you change your eating behaviors. You want to transform your leadership skills, you pay a business coach, not just to show you how tobe a better leader, but to hold your accountable as you personally grow fromgood to great. And people will do the same thing when it comes totheir financial situation, if coaching, financial coaching, is position correctly. Throughour research, were already starting to see some brands do this, and notthrough the traditional lens of an incumbent bank or crediting you. One of thesebrands in particularly is called the financial gym. The mencial gym is based out ofNew York City and now, in fact, a report that they sharedit found that that members who pay to be in their program they save aroundsix thousand dollars per year, while increasing their credit score an average of fiftypoints. So to think about this, how much would someone pay? YouPay Your Financial Brand for financial coaching, guidance, advice, accountability? Well, let's just use these numbers from the financial gym. And if you're ableto save the average person in your financial coaching program six thousand dollars per yearthrough not only debt consolidation but also spending behavior modification, a membership of ahundred dollars per month, or let's just say a thousand dollars per year,that gives them a tremendous return on an investment they make in themselves and,more importantly, an investment they make in their future. And it gives yourfinancial brand a tremendous opportunity to earn both interest income through, for example,if you're repackaging debt for them. But I think even more, the opportunityis bigger here is not just through the interest income, it's through the noninterest income that comes through the value creation by putting people at the center ofall of your thinking and doing so. Think about this. If you wereable to start a financial coaching pilot program bundled up with a spending account thatincludes an annual membership fee of a thousand...

...dollars or a hundred dollars per month, and you're able to get just a hundred people in this pilot program,you've now opened up an extra hundred thousand dollars per year in annual non interestincome. And once you work out the kinks in this pilot program and youbegin to scale it even further, this is where you add not a hundredpeople, but you grow a hundred to a thousand. Now you've added anadditional one million dollars in annual non interest income through a repeatable program focused onguiding people in the communities you serve beyond their biggest questions beyond their concerns andreally helping them to overcome and break free of the problems that are keeping themup at night, the problems that are stressing them out, the problems thatare takinging the toll in their health, their relationship, their sense of wellbeing. And when you do this, they will get to a bigger,better, brighter future, not because of your products, but because of yourcoaching, your guidance, your insight, your accountability. And I promise you, when you do this for them, they will tell their friends, theywill tell their family about all the good that you've done for them, beyondjust providing them with another commoditized checking account that they could get anywhere. Andthat's because you gave them so much more. You gave them help, you gavethem hope and as they tell their friends, they tell their family aboutyour personalized financial coaching program. You're coaching program that has the potential to skilleven further, to empower you to generate even more annual not interest income.You know, if you get tenzero people in a program like this will nowyou. You have the potential to generate ten million dollars and non interest income. And so this is the future of growth for financial brands in a digitalworld where we have all of this insight, all of this data into people's spendingbehaviors to provide them with guidance, to provide them with recommendations and,most importantly, to provide them with accountability to transform their own mindset, totransform their spending behaviors that keep them stuck in their current, present reality.So, as I wrap up, there are three key opportunities that I wantto come back to as we consider Monica's original question, when she asked whatare the biggest challenges to growth, profitability and even the future existence face bycommunity financial institutions, and we're of the opportunities you see when it comes topotential new streams of revenue in a digital world. So three things to tieeverything up nicely, three points. Number One, let's eliminate the digital positioningproblem by committing to bank on purpose, putting people at the center of allof your thinking, all of your doing. Let's close the Digital Legion gap byFirst Fixing your digital conversion problem for all of your key product lines onyour website and while you're at it, let's just commit to con to transformthat website beyond a glorified online brochure into a website that sells. And thennumber three, let's capture new revenue through non interest income that can be createdby building a scalable financial coaching program bundling up an optimized spending product that providesaccount holders with guidance, with insight and, most importantly, accountability to transform theirthinking, to transform their mindset,... transform their behaviors. And Weframe this coaching program not around your financial brand. We Frame this coaching programaround answering their biggest questions, addressing their biggest concerns so that you can helpguide them to get to a bigger, better, brighter future. As always, if you have a question, like Monica, I want to hear fromyou because I want to help you. I want to help you continue togrow from good to great to maximize your financial brand's future digital growth potential.Just go to wwwgo ask jrcom, submit a question there and I will answerit for you on a future podcast episode. And Remember, the only bad questionis the question that goes unasked. Until next time, be well,do good and wash your hands. Thank you for listening to another episode ofbanking on Digital Growth with James Robert Laigh. Like what you hear, tell afriend about the podcast and leave us a review on apple podcast, Googlepodcast or spotify, and subscribe while you're there. To get even more practical, improven insights, visit wwwagit growthcom to grab a preview of James Roberts bestselling book banking on digital growth, or order a copy right now for youand your team from Amazon. Inside you'll find a strategic marketing and sales blueprintframed around twelve key areas of focus that empower you to confidently generate ten timesmore loans and deposits. Until next time, be well and do good.

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