Why Small Banks Must Upgrade Tech to Keep Customers Happy

Customer Experience in Banking

Surveys show that bank customers are increasingly frustrated with their customer experience. Many banks are turning to technology as a solution to expand services and enhance convenience.

Declining Opinions on Banking

A recent report from Forrester Research highlights a downward trend in customer satisfaction within U.S. banks over the past three years. The report indicates that without continued investment in better technology, customer opinions will continue to decline.

The Push for Upgrades

Smaller banks, in particular, view technology upgrades as essential. For instance, Bankwell, a community bank in Connecticut, faced lengthy loan approval processes. To address this, they partnered with a tech company to implement artificial intelligence in their loan application process, allowing applicants to receive decisions within minutes.

Competitive Pricing with AI

AI tools can also assist banks in pricing loans more competitively, helping convert applicants into borrowers. David Schiff, a senior managing director with FTI Consulting, emphasizes the importance of competitive rates in customer retention.

Challenges from Larger Competitors

As larger banks invest in customer service technology, smaller banks are finding it harder to compete. Christian Ruppe, chief innovation officer at Colony Bank, notes that traditional advantages of community banks, such as personal relationships, are being challenged by improved technology at larger institutions.

The Urgency for Change

Robert James II, CEO of Carver Financial Corp., stresses that without technological upgrades, smaller banks risk becoming irrelevant. His bank is currently overhauling its digital platform to better serve an aging customer base and to attract younger clients.

Social Responsibility

James highlights the responsibility of banks to remain relevant, especially as they serve historically underserved communities. He believes that embracing new technology is key to expanding access to critical financial services.

Future Aspirations

The hope is that technological improvements will enable smaller banks to grow, allowing for further investments in innovations that enhance the customer experience.