With the coronavirus pandemic forcing more and more banking services online, lenders are starting to think about how they will build loyalty among digital-first customers.

Before the coronavirus pandemic, community banks and credit unions had recognized that customers wanted and expected the kind of online and mobile banking tools available at large banks. But even while making ongoing investments in technology, these institutions still touted their personal relationships with customers as an advantage over big banks.  

Having a personal connection with a community bank or credit union often proved critical for consumers and small business customers during the pandemic, including for those needing loan modifications or applying for the Paycheck Protection Program. 

But with customers relying on technology even more while most branch lobbies were shut down for months, banks are faced with the challenge of how to continue to build relationships in a digital world.   

“Especially for community banks, our success has been built on our ability to establish those personal relationships with our consumers and our small businesses,” said Rob Cozzone, chief operating officer at Rockland Trust. “Now that consumers are less and less likely – not just because of COVID but obviously this was change that had been gradually happening – to bank face–to–face, we need to figure out ways to establish that personal relationship or at least make consumers’ relationships with the bank feel personalized.” 

Advantage for Big Banks 

With Rockland Trust recently ranking second in New England for customer satisfaction in a J.D. Power survey, Cozzone said a key to the bank’s success is having staff members who enjoy their jobs, which affects customers on a daily basis. 

“Engaged colleagues lead to engaged customers and, ultimately, to strong performance, both financially and otherwise,” Cozzone said. “Our number–one priority is to make sure we do everything we can to get our employees engaged while at the bank.” 

This hallmark of community banking does show in J.D. Power rankings. The 2020 U.S. Retail Banking Satisfaction Study, which analyzes survey responses for more than 90,000 customers of the largest 182 U.S. banks, had two other community banks, Maine-based Bangor Savings Bank and Boston-based Eastern Bank, taking the first and third spots in New England, respectively. 

But the survey results also suggest that large banks have starting to gain on community banks, driven in part by customer satisfaction with digital services.  

Conducted before the pandemic, the study showed that 49 percent of big bank customers had high levels of digital engagement compared with 41 percent of regional bank customers and 36 percent of customers at midsize banks.  

Digging into the results, Cozzone could see that Rockland had made its greatest gains compared to past studies in digital services. Before the pandemic, branch personnel had already started focusing on promoting digital services when meeting with customers, including with new accounts, Cozzone said, but the advantages big banks have with technology still pose a challenge for community banks. 

With face-to-face interactions reduced during the pandemic, community banks face another challenge to the relationship building typically considered their strength. Even before the pandemic, banks were already aware of this type of challenge, with younger generations already relying more on technology. Cozzone said Rockland Trust – and the industry – have historically rated lowest on the J.D. Power survey with consumers under 40.  

“If you don’t think you have a relationship with an individual, you’re likely to be less loyal to that institution, whether that institution is a bank or retailer or something else, if you don’t have a person to connect to, your loyalty is unlikely to be as great as if it were when you have a person to connect to,” Cozzone said. 

Shifting Strategies 

One solution for community banks could involve a shift in banking strategy. Tiffani Montez, a senior analyst with Aite Group, said that instead of the traditional banking model where a branch relationship extends to a call center and then to digital experiences, banks could take a digital-first strategy. This would shift the customer’s primary interaction to the digital relationship, with branches and call centers serving as extensions to the digital tools. 

Personal relationships would still exist using this strategy, Montez said. One approach would be for banks to gather data using artificial intelligence software that would allow interactions to be tailored to the customer.  

A concern Montez has heard from community banks and credit unions is that customers trust face-to-face interactions more than digital. Montez said this trust is often about accountability and the customer’s ability to see an escalation path, if needed, which is often more difficult to recognize in a digital setting.  

“To the degree that financial institutions can help demonstrate to customers that they can get just as good advice and guidance in a digital environment that they can get in a branch, then that’s where you’ll start to shift consumer’s sentiment around trust and what trust really means,” Montez said. 

Depending on the type of activity, the branch experience could also be made virtual, with staff videoconferencing or texting with customers. The pandemic has already pushed financial institutions to start thinking about how to integrate human help into digital channels, Montez said. Interactive teller machines (ITMs) offer another option for blending digital services and a human presence. 

Rockland Trust used videoconferencing with customers during the pandemic, sessions that Cozzone said felt personalized. He added that both bank staff and customers have become more comfortable with using the technology in recent months. 

Diane McLauglin

Rockland has also started looking at developing digital tools to gather information and offer tailored messages, information, products and services that are relevant to the customer, including for life events such as getting married or sending a child to college. 

Even while developing these tools, Cozzone said employees will still have a role in building relationships. 

“Our opinion is that our colleagues will continue to be central to the customer relationship,” Cozzone said. “Ensuring that we continue to invest in our colleagues and prepare them to build lasting relationships – whatever medium where that may need to exist – is what we’re focused on.”