Consumer Banking Looks Ahead

by Madeleine Maccar | Mar 9, 2023
Consumer Banking Looks Ahead
Just a few years ago, it was almost unthinkable to envision that an industry as interwoven into everyday life as banking would become less of a physical presence and gravitate to more of a digital operational model.

But being such a crucial component of a community’s fabric, as well as an economic engine for both personal and commercial commerce, means changing to fit the times and going where the customers are, since serving its community is still a bank’s primary purpose.

“You have to provide the most amount of products and services to customers, and create the best customer experience because the market is really, really competitive,” says Michael Affuso, president and CEO of the New Jersey Bankers Association. “Service to your customers is key. You can’t have your customers leave because they could very easily go to someone else.”

The pandemic’s lockdown days certainly hastened along the operational overhaul of an integral service that still needed to forge ahead despite the world seemingly screeching to a halt. With people getting so accustomed to managing their daily tasks at home and on their own time rather than running a series of errands, or simply realizing the efficiency of on-the-go banking, it’s only natural that such a people-centric business would rise to meet clients’ evolving needs.

That includes a consolidation of communities’ brick-and-mortar branches, which will further change both the ways in-person banking is done and what’s expected from public-facing professionals.

“I remember the days when you would come to a traffic light at a busy intersection and there’d be a different bank on each of the four corners,” Affuso recalls. “Those days have disappeared because branch traffic is way down and the cost of maintaining a branch, it just doesn’t make a whole lot of sense. … You’ll probably hear a term called ‘universal banker,’ where folks who work in [the remaining] branches are expected—and are trained—to not just take deposits: They are trained to inquire what a customer needs, and what a customer might need that they don’t know that they need, and provide a customer with access to the bank’s menu of products and services.”

Banks aren’t just competing with their traditional peers, though, with nascent fintechs disrupting the industry, competing with it and providing partnership opportunities all at once. At its worst, the young industry is an unregulated one that might offer the flashy, high-tech services a modern client base is clamoring for but lacks the strictly regimented customer protections financial institutions are bound by; at its best, though, it encourages banks to stay competitive while helping their customers bank the way they want to.

“Watching the evolution of banking underscores the mentality of this fast-paced world we live in,” notes TD Bank’s SVP–Southern New Jersey and Coastal Market President Greg Carlisle. “When I started to see banks … pop up in grocery stores, it was a very interesting concept that, to me, said clients want a one-stop shop. Life is moving at an incredibly hectic pace, so if you can knock out your grocery shopping and banking in one fell swoop, there’s a win.”

Of course, banking clients’ needs are as diverse as their demographics and financial positions, so the community banks they rely on need to adapt responsively to those array of unique needs. Fortunately, Affuso explains that, at the most simplified level, customers typically fall into three categories—W-2 workers, small businesses and 1099 customers—which helps banks determine how to best serve them today while anticipating their needs for tomorrow.

He explains that W-2 clients, or those whose paychecks come from an employer that withholds payroll taxes from their earnings, tend to rely on remote or direct deposits and other banking technology since their financial information and position tends to be the most straightforward on both the depositing and lending sides of banking.

Small-business owners, independent contractors covering their own employment taxes, rental-property owners and other individuals with more complicated incomes that might even come to them in cash are a bit more complex, and are typically those customers who rely on ATMs and physical branch locations to handle their banking, especially with the rise of the gig economy.

“It may behoove them to sit with somebody at a bank, at a branch, and get a full understanding of who that customer is and what it is that they’re trying to do because their income is not like a W-2 income, it may be kind of lumpy, it may come in from different sources,” Affuso says. “You have to look at what the economic trends are. As the gig economy is growing, are you going to need more of a person-to-person touch? Yes—but the reality is that most people are W-2s.”

Keeping up with trends, taking client feedback into consideration and adopting tried-and-true technological innovations will all shape the path community banks take as they take their services deeper into the future. No matter how much the banking industry changes with the times, though, one thing will always remain certain: It’s an industry built on relationships and trust.

“At the end of the day, we as banking executives, we’re consumers, too, and I know when I need to speak with somebody, I don’t want to sit in a phone queue or get pushed to the ‘Go visit our website’—that drives me insane as a consumer!” Carlisle says. “We can’t lose sight of that, because we’re in the people business. We, as bankers, are here for a greater good than just going in and collecting some deposits and making money for our shareholders. We’re part of the fabric of our community, we need to be here for them, supporting local charities, supporting local nonprofits, being visible at events. Our main goal is to support the healthy economic outlook of the community we’re in.”

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Author: Madeleine Maccar

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