What you'll learn
- Tips for making it easier for customers to open an account at your FI.
- Banks focused on delivering value-adding customer experiences are growing deposits faster.
- Technology is integral to customer experience and deposits growth.
Law Helie (00:09):
So, hey, good afternoon everyone. My name is Law Helie. I'm the General Manager for Consumer Banking here at nCino. I guess not really here at nCino, but at nCino, and super excited to talk to you, the post-lunch spot because everyone is always the most energy after lunch. Today, we're going to do a couple fun things. We've got a presentation we'll go through really quickly just talking about deposit trends, some strategies that we see in the market. Then we have a partner with us today, Ian from Arrow Financial. So we're going to do some quick Q&A and then potentially some questions for y'all after that. There are some forward looking things in here. So there's some really sweet legal leads here. If you want to screenshot it, read it on the flight home, kind get some sleep or anything like that. So my name is Law Helie.
(00:53):
This is Ian Williams, and we're going to roll into deposits. So for about the 400th quarter in a row, according to Mr. Tom Brown, one of the challenges financial institutions have are continuing to drive deposits and grow deposits with inside their four walls, right? Very no surprise there. And it's still the number one issue for 2024. So something that's important to keep in mind is you continue to grow, and we've talked to a lot of our customers and partners where they have a small relationship. Maybe it's a car loan, maybe it's a credit card. You have a 60 to 70% chance of selling within your own four walls as opposed to a net new acquisition of customers. So when you think about that, you have to look at additionally, some of these numbers. There's a pretty saturated market out there for deposits. About 94% of households in the United States have a checking account, deposit account relationship today, which is fantastic.
(01:45):
But post COVID, post high-yield savings accounts, there's a lot of money sitting out there. You've got about $6 trillion sitting in money markets today as the rates continue to adjust. How are we approaching that? What strategies are you guys putting in place with your existing customers to attract new money to bring into your financial institutions? There's $20 trillion sitting on deposit today in the US, and 83% of that is held by traditional financial institutions. The other 17% is held by Alt fives, one-offs, and then by 2028, you're looking at an additional $5 trillion in deposits. But the non-traditional banking channel loses another 13 16% of that deposit base. So why are customers choosing alternate lanes to store their money, right? A problem is your consumers are fragmented, they're all over the place. So you have relationships with vendors, you've got relationships with payments, you've got relationships with store cards that you use across all these, sorry, I hit that across all these different lines of business here and where are they? You've got wealth management, you've got emerging wealth. There's a variety of services out there that are catering to those customers and everyone's buying for the same amount of money.
(03:06):
Starbucks in particular is an interesting case. Probably everybody here has a Starbucks card on their phone or if not everybody, most people Starbucks is sitting on 1.7 billion of cash just in their Starbucks app. They're not a bank. I mean, that's a tremendous amount of money. And when you think about some of the institutions that are out there, that's more money on hand at a coffee chain than a lot of institutions have. So something to note, but why though? It's primarily driven because of the relationship. You use it every day, you're in and out. So we talk about with our customers, really we get into what are the challenges around deposits, pain points, it takes too long. You don't have an effective digital channel. It's more than three screens and go, it's six, seven minutes to get an account open. And for a lot of customers today, that's just frankly too long, really under five minutes, three to four is really where you want to be in the consumer space, and there's a lot of competition out there.
(04:00):
So other than just offering a good digital experience, what else are you offering to your customers? Are you invested in the community? Are you hitting those notes that are important to the customers in your area when you go to attract them, right? Lack of visibility in the data and reporting is additional topic for financial institutions that you need to get into. So as you look to onboard customers, where are you losing them? Where are you picking 'em up? Where's the friction in your process? Do you have an effective marketing strategy? So all these things, when you think about acquiring deposit accounts out there, especially from net new customers, you have to weigh into your strategy for how you're going to address them. Multiple products is another good one. So when you have a customer come in and they just have that single product with you, how sticky is that one product?
(04:48):
Typically, we're looking for what, three, four checking savings. You want a debit card, you want online banking, and ultimately the anchor is your direct deposit. So how do you get that direct deposit over, not just set up auto pay because once you have the direct deposit, you've got their mortgage deposit or their mortgage payment, they're pretty hooked, right? They're not going very far. Okay, so your solutions here are on the right hand side is you have to make sure from a partner standpoint, from an organizational standpoint, you're ready to jump in and start to address some of these issues. So how quickly is your deposit account opening running today? Are you doing a cross lines of business? Are you saturating it with your lending as well? Not just deposits are you offering benefits to? If you do not just autopay with us because some folks will go in and just deposit the money for autopay once a month.
(05:36):
They do deposit and they're out, but are you attracting a rate discount with the direct deposit? So there's a lot of strategies that you can leverage to make that a more attractive offering for those customers, right? So the other part of this is as you get into some of these customer interactions is that there's also a massive service gap. So at the bottom there, it's about 40% of consumers have received very generic advice from their financial institution that they do not feel is targeted towards them. So if we're going to be proactive and reach out to customers, whether it's digital, whether it's by a phone, welcome letters, emails, however you do it, and you're going to start offering advice or cross-selling products, you need to have a process in place that whatever you're offering them makes sense. It's pertinent to what they're looking for. It's an inbound.
(06:26):
They've talked to you about it. You have some data within your four walls that says this is something that this customer is interested in. So one of the things we always talk about, KYC, KYB, know your customer, know your business. The other part of this is KYD, know your data. You guys are sitting on a tremendous amount of customer information. You have their spending, you have their patterns. If not, you can infer it by similarly situated customers. So how are you executing against that to continue to grow? And just over half of them say they want more help than they're getting. We've heard a lot at this conference over the last day or so about making sure that you're targeting the right customers, you're using the tools, whether it's AI or notes or customer outreach, to understand exactly what it is that your customers want from you and you're helping to give them that advice, all important stuff.
(07:16):
So when we think about a relationship focused strategy, you got to be people first. It's not just the customers coming in, but it's also your bankers within inside your four walls. It's your customer service associates, it's your member associates. It's whoever's reaching out and being proactive with a customer. You want to make sure that they are engaged, they understand what's going on. You have your data, turn it into actionable knowledge, whether you're using a CRM, whether you're using some sort of off board Excel sheet or whatever you have, there's partners out there, there's services out there that can help you guys maintain, retain, and gain additional customers out in the market based on the data that you have. And then you have to execute across the entire relationship life cycle. So it's not just when they come in, it's great when you get them, but how do you follow up after that?
(08:02):
Is there a welcome letter? Are you reaching out? Are you making sure they did that first direct deposit? Are they assigned to a branch? Do you stick 'em in a digital branch and you help? They come in and do the rest of it? Or are you actually being proactive with follow-up and continuing conversations with that customer? And then the one experience for many is really leveraging that entire relationship. If we're talking about multiple products and services, how do you offer all of them? How do you position them and how do you activate them in a timely manner, right? We all see huge attrition rates. As soon as you get over about six, seven minutes in an online transaction, your attrition rate or your abandonment rate jumps up to about 70% in those transactions. So when you start thinking about are we still asking knowledge based assessments like you owned a house 27 years ago, what street was it on? The people who generally really know those things are only the fraudsters that have gotten the files these days. At least that's a lot of what the industry says back to us. So how are you making sure you're doing your best due diligence to make sure the customer is who they say they are, offering them quick service, and then also getting their account opened really quickly.
(09:07):
And I have a slide out of place. So the other part of this is making sure that the customer is at the center of everything that you do. So when you have a customer that comes in and you want to meet them where they can bank, is it online, is it in branch? Is it a call center? Do you want to enable them to do self-service transactions where they can handle most of their stuff online? Do you want to make sure there's an extra layer of security? We heard about wire transfers yesterday and being on vacation where they come in, there's services out there you can leverage to do that. My kid is off in Denmark studying for the summer how to get him money the other day. He is stuck in Denmark without his debit card because he is 16 and they don't think about those things.
(09:47):
So you got to get his friends some money so he can buy his train tickets. And where is the customer within this lifecycle with your financial institution? And then how can you continue to expand upon that relationship and making sure that when you are making tech decisions, you're making partnership decisions, that you have a platform that lets you execute across this whole life cycle? So when I was in branches and in banking, it was always difficult to pivot from system to system. So from a engagement standpoint, from a partnership standpoint, making sure you don't only have the customer at the center of everything that you do, but your associates and then how are you leveraging across lines of business? A majority of your personal banker folks are doing your consumer banking, they're also doing your small business banking. So how do you keep that experience similar and also grow those relationships? Like 99.96% of small businesses in the US or businesses in the US are considered small business. So I mean, chances are that if your customers coming in doesn't work for a small business, potentially they own one. So how are you leveraging all this data to continue to grow that relationship? It's a huge thing.
(11:01):
So today we're going to talk about Ian here from Arrow. We're going to do some questions and potentially answer some questions from you guys. So Arrow Financial is a customer of ours, a good partner of ours. They implemented the nCino platform and over the last 12 months, 12 months or so, they've grown their digital account opening by 280%, which is a great success story. I thought we'd share that with you guys today. You can tell everyone's super pumped after lunch. I think this is the quietest I've heard everybody. So all right, so I'm going to transition over this one. Cool, Stefan. So thanks for being here today. Why don't you tell everyone a little bit about Arrow and what you guys do?
Ian Williams (11:40):
So Arrow Financial, we're a $4.2 billion two bank holding company. We are in upstate New York. We run from Albany to the Canadian border in Plattsburgh. Our two banks, Glens Falls National Bank around 170 years. And then from Saratoga Springs south to Albany, Saratoga National has been about 35 years now.
Law Helie (12:06):
Awesome. So when you think about your guys' deposit journey over the last year or so, 280% growth is huge. What does that mean in actual numbers for everybody?
Ian Williams (12:16):
So we intentionally did a softer rollout on it to market it monitor results, which when we had this increased, caught us by surprise. We've in the first year opened 1100 deposit accounts currently when those 1100 deposit accounts is sitting about $18 million. Wow,
Law Helie (12:38):
That's great. And now you guys didn't have a channel before, right? Correct. Right. Yeah. So it was net new digital channel for you. Yes. Great. Then so where have you guys seen the most being in upstate New York, where have you guys seen the most traffic coming in from? Is it local within within the sort of more top areas?
Ian Williams (12:56):
Yeah, local, interestingly. So our Glens Falls national brand is more of a rural area. I think the pandemic put a lot of friction or a lot of focus on digital and even just within our company, but customers as well. When we were going through PPP, we had areas that had no internet service or people that didn't even have internet. They may have had service but just didn't have it in the farmlands that we have out there. But since we went with the digital account opening, the majority of our business has come from those rural areas that we didn't think was going to be a big hit. But it may be a 25 minute, a half hour drive for some of these people to get to a branch to be able to do everything remotely and online has been a great success.
Law Helie (13:49):
Wow, that's awesome then. So how's the customer feedback been around a digital channel for, especially if it's a population that hasn't had access to one in the past?
Ian Williams (13:59):
So their feedback, having an online tool like this, we from feedback from before we went with this, the need to have it was really what pushed us over with the competition that's out there. Every bank should have this tool in their tool belt. We haven't really had a lot of feedback on the experience itself of opening the accounts because it's seamless, it's quick, it's smooth, but we do a follow-up call to every consumer to onboard them. So we welcome them, we do a welcome call and a lot of times the customers are like, I didn't even expect to get a call. This is great, but it allows us to have that conversation with the consumer on other products that we offer, mobile banking, debit cards, all that. So the feedback really has been more on that follow-up. But internally for us it's also been great to be able to mitigate risk from fraud, touching each and one of those customers to make sure that it's a real person.
Law Helie (15:06):
Yeah, that makes sense. So it sounds like I'm hearing a lot of personal touch, making sure you understand where the customer is going from there. So when you think about when you guys launched that and you were headed out into a new market, what was your digital strategy? I mean, did you guys put a marketing plan together? How'd you go about?
Ian Williams (15:21):
We did and it actually lined up perfect with our goals that we had put out for ourselves marketing wise. So we just went out into the social media market and Facebook, Instagram to be able to offer this product and push it out there with that advertisement. But the metrics that we have behind it to watch how it's working for a hundred years we've been advertising in newspapers and it's hard to tell you ask the question on all of our applications, where did you hear from us? And their customers are usually going to check that first box that just says from a friend or current customer might not get the true idea of where they came from. But with this digital marketing and push for it, we can actually tie back to clicks through the ad on Facebook to the click to our homepage, and then from that a click to the application and then we can follow up with, we have reporting that'll show us how many clicks came through for that week and then that following week we'll get the deposit opened accounts and can kind of correlate that back to what that is.
(16:31):
So measuring is great.
Law Helie (16:32):
So analytics is key to measure efficacy. Okay, that's great. So what do you guys see as far as future state in the market where you're at? What are you hearing around deposits? I mean, what do you guys see happening in the industry in your space?
Ian Williams (16:46):
So I mean we're all looking at the technology that's out there, AI driven everything. The marketing piece for the future of what we're doing is we we're really trying to go digital everywhere that we can. Next. We'll look at HSA accounts, business accounts. Right now in this first year we did just consumer. So checking, savings, money, market, CDs.
Law Helie (17:13):
Yeah. Yeah, that makes sense. So for anyone who's here, who is thinking about going on this journey, what advice would you give people about if they start thinking of putting together a digital strategy, whether it's an existing reinvigorating, what they have today or out in a new one,
Ian Williams (17:32):
Have a strategic plan, measure your results, and most importantly is pick the right partner. That's been key for us.
Law Helie (17:43):
Okay, cool. Certainly appreciate that. So just a quick kind of tieback, so have a strategy, know your market, pick the right partner, put your customer at the center of what you're doing. Any other sort of advice or tips you'd lend to folks? Lessons learned.
Ian Williams (17:58):
Lessons learned, no, but be open to change. I think that's a lot of the stuff that we had to overcome being in our markets as long as we have is the change to these digital channels versus we are very big in the community. We support a lot of all of our local businesses, but the newspaper brand was one of the biggest and advertising in those newspapers and the weekly ones that would come out that you'd get at the Steward's shops up where we are, the convenience stores, but being open to change and accepting that this is the way the market's going to go and adapt to it.
Law Helie (18:41):
Was it a lot hard to get a lot of buy-in to move into a digital process?
Ian Williams (18:48):
It took a few years for our bank to get it on board with it. Like I said, it was a very big change for what we did. We're not a market leader in any way in our area with our competitors, but we've had over the last couple of years with the pandemic being forced into it really set everything off for us. So that's where we shifted our focus and not only on the deposit side, but knowing that in order we saw those slides with the deposits going to the online banks or these other corporations knowing that we have to diversify that. So our non-interest, non-interest income is something that we look to focus on to move forward.
Law Helie (19:42):
Cool. So if you're here now, we'd kind of open it up if you guys have any questions, anything on your mind. If not, you can go digest lunch for a few more minutes before your next session. Kind up to you all. You guys are way too quiet. Yes ma'am.
Audience Member 1 (20:01):
What about fraud? What have you encountered in terms of is it all identity on the money movement side? Just share a little bit about the experiences.
Ian Williams (20:12):
So for us on the fraud side, we haven't really had much, especially since they won't get past that barrier of the account opening when the funding piece comes. So with that onboarding where we're making that phone call to that individual, we're verifying everything with them. And that personal touch is making sure it's actual person that we're dealing with. I mean, we do get a lot of out of market people that we wouldn't open deposit accounts for that we can kind of stop in those beginning stages before it makes it through.
Law Helie (20:50):
And we tend to see a lot with customers. So one, they look to pick a right partner there, so someone like Alloy that gives 'em a lot of flexibility and tools depending on what markets they operate in, especially if they're not federally chartered little geofence where those customers come in from. They have the ability to track addresses certain qualification criteria that you're able to stop upfront. You might end up at some extent opening some of those accounts for those people, but what it allows you to do is create an exception rule. Then now someone has to go up and follow up with them if they don't meet your criteria right away. You also have the ability with some integrations to do a step up authentication. Like we're not a hundred percent sure this is who you are who say you are. So let's go ahead do additional step up. Let's run you through a product like vouch. Let's capture the driver's license and then do additional follow up from there. So we hear a lot of our partners saying the other questions. Yes sir.
Audience Member 2 (21:46):
So you talked a little bit recently about how you were having some difficulty getting buy-in from some of the other position. I was curious when you're talking about the difficulty in that aspect, was it an educational difficulty? They weren't aware of the technology being used or was more hesitancy to change from what they've always thought was tried or true
Ian Williams (22:05):
Kind of a mix. So we had some areas of not trusting the cloud banking and the digital, the piece of it, but the majority of it is all just education based. I mean, once you can actually put something on paper and look at the results and see where it is, that's where you really get the buy-in. And that's why we intentionally did a soft rollout with it. Kind of just dip our toes in it and make sure that it's something that we want to support and move forward and the results that you get from that is enough to make a difference, a big difference.
Law Helie (22:45):
Cool. Yes sir.
Audience Member 3 (22:47):
You talked about picking the right partner, just we'd love some context as to why it's the right partner and there are others out there decision.
Ian Williams (22:55):
Yeah, so I mean we looked at a couple of different partners. We had gone live with nCino for our commercial product and then as they had these other additional offerings come out, we always look at who our current vendor is first. Not to say that that's why we chose to go there. And we do have on our consumer side and residential side, we use a different product for that. And in the process of picking a new provider for that residential market at the time, we go out to everybody. But it's not only cost, but it's ease of use of the system. It's the people that you work with with, it's what really drove to pick that right partner. You don't want to get into a product or somewhere where there's no customization, there's no way to do things the way that you're used to doing. You have to adapt to some change, especially in the digital market. But that's really why we made the choice where we did is the trust and the history that we had going into it. And in our eyes it was advanced further than what we had seen.
Law Helie (24:23):
Yeah, I don't think I can answer that one, so I'll just kind of that one.
Audience Member 2 (24:26):
Yeah. You mentioned that, I forget the number of accounts, but you said it was roughly 15 million or 18 million in deposit since when did you officially do the rollout of,
Ian Williams (24:39):
So it's been 13 months, maybe 13 months or so. And then, yeah, so that's 13 months ago. We did the soft rollout and slowly put in the other products and have been exploring options of out of market cd. So we have an indirect portfolio that not only the north south where our footprint is, but we go west out to Buffalo and into Vermont where we want to try and pick up some of those depositors out there with CDs so we can offer out of market CD specials and do different types of rates and things out there to gather that. So that's going into it slowly like that rather than just flipping everything on and putting everything out on our website and driving all of the traffic through there. We wanted to make sure for our customers that we did it in a way that that was beneficial, tossing them. So
Audience Member 2 (25:35):
Started with just a localized in market. Yep.
Law Helie (25:39):
Yeah, we'll see. A lot of folks do generally like a friends and family offering just to run through the tech, do additional qa, make sure the integrations work where it's my mom's mad because something didn't work, whatever, it's fine. And you can handle that via links or text messaging out for those communications. And then we will see some customers roll it out sort of segment by segment depending on where they're in, if there's a particular product or a particular market or if there's a challenge that they're overcoming. We've had customers go live with, Hey, we're moving into a new state. We're still trying to figure out the marketing there. So we want to do digital push in South Carolina for instance. Try and get as many folks in, get some feedback and then they'll roll it out. Good test markets are another way to do it. It really depends on the strategy that you're trying to partake there for sure. Cool. Anything else? Okay, well with that a whole three minutes back, I appreciate everybody's time. If you guys have questions, if anybody's shy, I'll be here for a couple of minutes if anyone wants to say anything. But thank you all very much for your time. I appreciate it. Ian, thank you very much. Thank you. Appreciate you being here.