Getting the Digital Banking Upgrade Right

If you are a typical community bank, there is a good chance that your digital banking suite needs an upgrade. Your website, online banking, mobile banking, all need to be brought forward, perhaps at least to the current level of expectation by your retail and business customers. One way to determine if your institution needs this level of digital banking attention is to examine the experience of your online and mobile banking systems and compare that to the type of online and mobile apps you frequently use personally.  If your online and mobile banking looks … dated, well then it is.  Trust me, I get it. These legacy systems enable the basics of account info, balances, transfers and bill pay. Also, that system was likely bundled into a bigger package offered by the core, so it is relatively cheap to stick with these older virtual banking models.  The problem is what worked just fine a decade ago is not going to cut it going forward.

Young millennials and Gen Zs, and even your more mature customers, have a specific idea of what online access and customer experience should entail for an online / mobile app.  And as I have written extensively, we must acquire and keep these younger customers if we are to maintain customer counts in the coming years.  But as a baby boomer, I have chaffed at the lack of virtual banking features offered by my own financial institutions.  I know what is available in our industry, what my digital banking experience “could” be, yet I rarely get access to even a few of the cool features that make some online experiences so engaging.  It’s frustrating, but to be fair, it is expensive and difficult to upgrade the virtual branch, so many FIs just … don’t.

What makes upgrading the virtual branch expensive?  If you look for advanced online / mobile banking, you are likely not going to find it as the option offered by your core.  It is the independent virtual banking vendors that are innovating and once you stray from the option your core offers, the fees you will pay go dramatically up.  Not only will you pay more per user for the actual service but since you are now integrating a third-party service into your core, the fees to get that done also represent a significant expense.  What makes matters worse is that since few banks represent the virtual branch accurately on their G/L, the C-Suite cannot see the true profitability of the online banking channel, and it makes authorizing this additional spend all the more difficult.

What makes upgrading the virtual branch difficult?  Well, for starters, you have thousands, perhaps tens of thousands of online / mobile users. Every one of them will be affected by the change. Some may push back on getting a new app, “Hey, I liked the way the old one worked!”, others may be unhappy that they have to re-enter dozens of online bill pay instructions (don’t get me started on the conversion of online bill pay, it is a classic example of how Company X makes it nearly impossible for you leave their service to go to Company Y …).  Then there is the issue of how well the actual conversion goes. There are hundreds of technical landmines that can cause a well-intentioned conversion to go awry; trust me I have worked with a number of banks who have been through conversions that impact their customer facing products. Regardless of the additional expense and the potential for conversion issues and customers having to change over to a new online / mobile experience, it is well worth committing to a digital banking upgrade.  All it takes is the following:

  • Choose a system that really is an upgrade;
  • Understand that what you spend on this is EXACTLY equivalent to what you spend on a branch;
  • Negotiate with your vendor to get as good a pricing as you can without sacrificing feature / function;
  • Take the time to spell out with your new vendor how the conversion will be executed and the support you will receive during this process.

A couple of thoughts on each of these 4 key elements:

Choose a system that is really an upgrade – if you have a basic online / mobile banking suite and you upgrade to a different one that is prettier, maybe has an extra bell or whistle but is essentially a basic online banking suite, then don’t waste your time and money.  Look for a system that has the features that your grandkids would love to use more than once and make sure that vendor has a commitment to continuous innovation.

The virtual branch is a branch – I have written extensively on the virtual branch topic, so I won’t belabor it here.  Stop treating online / mobile banking like an expense and start treating it like the most profitable branch you have (which it demonstratively is).  You would drop $350k on a paint and powder makeover for a small branch in a heartbeat, so why would spending $350k on a world-class online / mobile banking suite be any cause for pause?

Negotiate to get good pricing – Do your best to get the best price for a bundle of features that will thrill and delight your future customers but don’t leave out a critical virtual banking component just to save a couple of bucks.

Spell out how the conversion will be supported – this one is really critical to get right. You are going to change the main access that thousands of current and future customers use for their everyday financial activity.  Getting the data converted properly, providing support throughout the process, accessing training and educational tools to assist customers with transition are just a few of the conversion elements that need to be codified in the agreement. Don’t assume anything you saw or heard in the sales presentation is documented as such in the agreement.  There needs to be careful attention paid to the Service Level Agreement (SLA) and the activities of what the vendor is providing specific to conversion from your existing platform to their platform.

Clio Silman and Chris Miller provide a wealth of info on the issue of getting a virtual branch conversion right in their Cornerstone article. Read full article here.  Their 3 must do elements include:

  • Negotiate the conversion support:
    • Don’t assume, get it in writing
      • e.: If they offer “enhanced” support, how is enhanced defined?
    • Set a realistic timeframe for when the conversion would take place. 9 to 12 months is reasonable.
  • Communicate to users
    • Start the communication on what’s coming early and often.
      • Communicate across many channels, not just email
    • Ramp up your support options
      • Call center
      • Chat
      • Other?
    • Monitor social media … a lot
      • If there are any red flags across your user base, that’s where it will show up first …
    • TEST… and then test some more
      • Test in the environment that your customers are likely using
        • Including older versions of operating systems and browser types
      • Don’t just test to make sure it’s working, try to break it!
      • You likely have a group of advanced users that are ready to pilot test your systems
        • Take advantage of your own customer’s ability to test and break things

The more you invest in your virtual branch, the better prepared you will be to thrill and delight future customers.  Don’t let the effort and expense of upgrading deter you from examining the strategic nature of a forward-looking digital banking service.  I would love to hear from you on how you embark on this journey or provide any assistance I can in pulling it off (or just helping you frame the cost justification for it). Reach out to me at and let’s talk.