Early in the pandemic, the unbanked faced a crucial problem: How to receive and deposit stimulus or unemployment funds received under the CARES Act.
For the challenger bank Current, this created a flood of new customers who chose it simply because they saw few alternatives. As a result, Current added 100,000 users in April and May last year, reaching 1 million users in June — a number that doubled by November. More than half of these customers were previously unbanked.
But those customers can just as quickly abandon Current if it doesn't give them a strong reason to stay.
"It's not just about giving them access to their stimulus check; it's actually about onboarding them into the financial system," said Josh Stephens, vice president of product at Current, who spoke on a panel Tuesday at
Larger banks like Wells Fargo faced a different problem. The bank's less tech-savvy customers who chose it for easier branch and ATM access had to adapt to a newly contactless experience. Adam Vancini, head of channel delivery and operations at Wells Fargo, discussed this challenge at Card Forum: Contactless.
From unbanked to digitally banked
New customers who came to Current solely to deposit unemployment funds will eventually return to the workforce, creating a retention problem. This audience may return to its habit of visiting check-cashing stores, even if Current is a cheaper alternative.
Current couldn't present itself as just a bank. "These are not people who are necessarily coming in and saying, 'Hey I'm going to switch over from ... Wells Fargo'; these are people who are actually saying, 'I haven't had a way to handle this type of interaction before,'" Stephens said.
The challenger bank built features of its app to address the specific needs of the consumer who opened an account primarily to receive stimulus funds. "We built dedicated sections in our app for people to get access to information on how to get their stimulus payment information, on how they can update their information with the IRS, etc., and that's resulted in exponential growth," Stephens said.
Its loyalty program also comes into play. Current launched its merchant-funded rewards program during the pandemic, enabling it to incentivize certain digital behaviors while also adapting the program based on the spending data it saw coming in.
For example, many of its customers began spending at auto supply stores, since they were stuck at home with the time to work on their cars. Current focused on this data to provide rewards on the purchases its customers were most inclined to make. Since Current serves customers who typically live paycheck-to-paycheck, they may not have had access to cards with targeted loyalty programs before.
A reason to visit the branch
For a large bank like Wells Fargo, the challenge was somewhat different. It had a sizable customer base that still prefers the branch and ATM, despite the digital shift that happened over the past year.
"Even though we're sitting here in 2021 and we've had digital banking at Wells Fargo since 1995, there are still people out there that are not adopting the full spectrum of digital capabilities [and] not adopting the full spectrum of digital payments, so there's still an education and awareness process," Vancini said.
People didn't want to stop using branches, but they had to change the way they did. One example is using NFC and mobile wallets to access the ATM. Education played an important role in this process, as branch personnel often had to teach customers how to perform these tasks.
Over the course of 2020, mobile check deposit volume rose 108% and dollar volume for Zelle P2P payments rose 62%, Vancini said. Digital logins for online banking rose 11%, and mobile app logins rose 13%.
For many customers, the first step is the biggest, Vancini said. Even if a customer was reluctant to adopt digital banking or contactless payments, that customer is likely to continue after trying it for the first time — "a snowball effect," he said.
The bank can no longer assume its digital customers are the most tech-savvy, since the barrier to entry has been lowered so much and health concerns have motivated people to try contactless options.
"This no-touch environment that we're now working in has really [motivated] a lot of people to think this is a safer way of doing it," Vancini said.
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