Bank, credit union executives share how they built virtual branches

June 27, 2024 2:26 PM

Photo of panelists in front of a white paneled background at American Banker's Digital Banking conference this week in Boca Raton, Florida. — Erik Schwink (left), assistant vice president and virtual engagement leader for State Employees Credit Union of Maryland, and Stacy Suggs (middle), executive vice president and chief operations officer for Bank Independent, speaking on a panel at American Banker's Digital Banking conference hosted in Boca Raton this week.

Bank Independent and State Employees Credit Union of Maryland shared their experiences with offering virtual branches at American Banker's Digital Banking conference this week.

There's not a unified template for what products or services make up a digital branch, but most offer standard functions like account opening, deposit transfers and meetings with customer support staffers through an online consumer-facing portal.

Research released by Cornerstone Advisors found that 27% of bank respondents said they planned to select a new or replacement application for consumer digital account opening this year. A greater share of credit union executives surveyed, roughly 36%, also named digital account opening tech as their top pick.

Some institutions, such as the $4.2 billion-asset PeoplesBank in Holyoke, Massachusetts, have spun up separate digital brands to better reach specific market segments.

The $5.5 billion-asset State Employees Credit Union of Maryland in Linthicum launched its virtual financial center in October 2020. The goal was to provide members with a platform that combines mobile banking tools and video conferencing software. The initiative proved successful as the world shifted to digital during the COVID-19 pandemic, according to credit union executives.

Services offered include debit card issuance, virtual meetings with advisors, loan applications and more — all with hours that extend beyond physical branch operations.

Since its debut, the platform has recorded more than 15,000 appointments per year and is the credit union's top performing financial center for membership applications, home equity line of credit loans, auto loans and more.

Executives at Bank Independent, located in Sheffield, Alabama, with $2.7 billion of assets, began exploring the prospect of a digital sales office in 2017. The campaign combined the bank's suite of interactive teller machines and mobile banking products with an online customer platform for connecting to virtual relationship banking representatives.

The digital sales office has recorded an increase of 6,500 monthly mobile deposits when compared to 2017, and has seen similar growth in ATM deposits and online account applications.

Some efforts are not solely digital, but rather a blend of technology and "personalized" human touches.

At American Banker's Digital Banking conference in Boca Raton this week, Erik Schwink, assistant vice president and virtual engagement leader for SECU of Maryland, and Stacy Suggs, executive vice president and chief operations officer for Bank Independent, both dove into their strategies for launching a digital branch.

Responses are edited for clarity.

When you each began your respective journeys toward building a digital branch presence, what were some of the friction points that you sought to address through this initiative?

Stacy Suggs: One of our main friction points at the time was we had an inconsistent customer experience when it came to servicing our digital products.

What I mean by that is for mobile deposits, we had a cutoff at 5:00 p.m. whereas any of our customers could go to any of our branch drive-throughs to make a deposit up until 8:00 p.m., which has always been a key selling point for our branches for many years.

There was also an inconsistent online account opening experience, so we wanted to improve that as well, especially when it came to preventing digital deposit problems.

We wanted to make sure that we had the technology the customer needs, but also provide that personal service and that personal touch like we do with the in-person branch experience as much as possible.

Erik Schwink: I think we had the same friction point that everybody in this room had, which was the COVID-19 pandemic.

If you think of our members on a bell curve, on the one end of the curve, there are members that are only going to use digital and never going to do anything in the branches. On the other end of that curve, we have members that are going to come to the branch for everything and never do anything digital.

But the main part of the curve are members who are comfortable with multiple ways of interacting with us, going digital for some things and to the branch for others.

What we were trying to do with the virtual center was give them an opportunity to follow those opportunities across both channels.

Was this an idea that came from within your institutions, or did you see other real-life examples that spurred the thought?

Suggs: We began every effort with the customer's experience in mind, and we knew it was not what it needed to be.

We also had two strategic initiatives in place at the time where we had identified some gaps. One was to create an engaging digital experience, which we really wanted to focus on making the digital experience as seamless and exceptional as our in-person branch experience.

The other strategic initiative we had in place at the time was optimizing existing delivery, and this really was about making the most of the systems we had in place and delivering a more consistent, holistic approach.

Schwink: We were really trying to stay ahead of the curve in the digital space. We've had interactive teller machines for over 10 years.

But for the virtual center, we were kind of borrowing from some other credit unions on the West coast with larger footprints than what we have in Maryland, to see how they use their digital branch concepts to service their entire fields of membership.

Being able to take some of those concepts that they were applying and combine them with some things that we were already doing, led us to establish the virtual center.

*The above comment was updated on 07/01/24*

How did you each navigate the discussions for adopting and implementing the new technology?

Suggs: For us, it was simple in that we just worked with our existing fintech partners.

We use Jack Henry for our core system, as well as for mobile deposits and online and mobile banking. MeridianLink handles our online account opening and our ATM and ITM deposits are handled by Conlan Financial Solutions.

Our executive team is very innovative, and we try to be at the leading edge of technology. One of the things that really helped us, though, was we already identified gaps with our customer experience when it came to digital products and services.

Since we identified those gaps, they were already in our strategic plan to be addressed and made it easier for us to convince them that this was the right thing to do.

Schwink: This is really all of our stakeholders coming together on determining what our vision was first.

Before we even got to the later conversation of which partners to select, it was critical for us to identify what our vision was with our data team, with our operations team and with our marketing team. After we had that vision, we looked at our vendors to see who would be the best to fulfill that vision.

It was really important in doing that, that we weren't trying to use duct tape and things like that to put it together.

Glia had the components that we were looking at for the video, the security, the chat features and the recording of the sessions, which were things we thought were important in delivering the member experience, which is really the key thing."

What concerns did you have going into the development process? What problems did you encounter that you were eventually able to overcome?

Suggs: Our concerns were a little philosophical and less technical. We were asking ourselves if it was possible to take a high-touch personal service that has made us successful into the digital space, and would it even matter to those customers?

We found that it does matter, and the channel matters a lot. So, for example, sometimes we were seeing incomplete account applications, and our digital sales team members would call those customers and would not get a great response. But when they started testing those customers through a system that is called Text Concierge, they got a much faster response.

We learned that channel does matter, but also old fashioned works well too. Just sending handwritten thank-you notes to our digital customers, like we do at our sales offices, really makes a big impression on those customers as well.

Schwink: For us, we were taking the crawl, walk, run approach. The walk approach was starting out the platform as an appointment-only model, where members had to schedule meetings with our staff in advance.

We really needed to make sure that the appointment model worked. There were some challenges to that, because sometimes all of our members aren't using technology that's consistent with what would work on the platform, but we were able to, through trial and error, identify where there's some maybe hiccups for our members, and we're really able to get out in front of them.

Since launching each solution, what has been the response from customers/members?

Suggs: It's expanded our footprint.

We open accounts across the U.S. and I think what's really been interesting is how we have customers that may relocate and through referrals, we get more business through their referrals in other states or parts of the country.

So there's a lot of value in having that digital sales office, as there are so many different ways they can interact with us now online.

Schwink: We're getting numbers that we would not have had three years ago.

An example of a member that signed up just to have a credit union account and they had a $10 savings account. That was about it.

We did an onboarding call for them where they said point blank, "I'm not going to be able to bank with you. I do need to get an auto loan but I'm not going to be able to bank with you. I work until 5:00 p.m., the branch is 45 minutes from my house. I just didn't have a credit union and you're it."

Our representative was savvy enough to say, "Well, I can get you an appointment at 6:30 p.m. tonight with our virtual financial center." They sent the member the link and from there, the member now has an auto loan, and they're banking with us.

So we've been able to expand our horizons and the members that are using it so much by having the virtual financial center.