Years ago we discovered that most bank customers don’t specifically need a physical branch they just want the comfort of knowing they CAN go to a branch. The difference is subtle but important for banks looking to evolve their channel delivery. Over the past eight months, we have learned from focus groups and experiments that what customers want above all else, is a private banker. Mobile, online, the branch, call center, chat, email and other channels are all important, but the average bank customer wants to know that if they have an issue, they can get a human easily, in any capacity. This is why we think that Umpqua’s new BFF product is on track to be the future of banking.
Virgo, Musician, Hiker, and Banker
Rolled out a couple of months ago in beta to the Portland, OR area, this new banking product is experiencing overwhelmingly positive reviews, and we can understand why. The Bank’s “Best Financial Friend” or BFF, is a companion application that is separate from their mobile banking app and allows customers to obtain a personal banker and communicate with them via text or video in a safe and secure format. Customers can ask questions, submit travel notifications, report lost cards, change their address, stop payment, conduct balance inquiries, research transactions, get product education and even apply for a loan all via text with an assigned personal banker. There is no additional cost or minimum balance.
A key feature is that customers can choose from a host of available bankers that are all located in the customer’s area. Banking that would have taken a 60-minute round trip to the branch now takes seconds to get connected. Customers can use the BFF functionality 24/7 but response time is stated to be 7 am to 8 pm Monday through Friday, and 10 am to 6 pm on Saturday.
Why BFF Is Revolutionary
Like branches, customers don’t always need a personal banker, but they always want to know they have a personal banker available. What BFF does is to provide the perfect transition from the branch to mobile and solves the delivery problem by utilizing one inexpensive app. Through text, Umpqua can now deliver superior service at a fraction of the cost and do so in such a manner that the customer will quickly forget the word “omni-channel.” With BFF, the customer is no longer anxious about needing a branch, an ATM, chat functionality or an email contact because they know that their BFF has their back.
Part of the brilliance here is that Umpqua deliberately plays up each BFF’s background information to assist with an emotional connection. The Bank smartly allows the customer choose their BFF as opposed to assigning a banker as is commonly done in traditional banking. The act of choosing your BFF allows the customer to have more control which in turn reduces anxiety for those that feel uncomfortable communicating over digital channels. According to the Bank, this connection works so well that it is rare that the customer ever wants to come in to meet the BFF.
Load Balancing In the Age of Artificial Intelligence (AI)
A strategic advantage that BFF imparts is the granularity at which the Bank can load balance its customers. That is, the bank can bring new bankers online to BFF with great precision to match the demand and banker availability at any given time. Load balancing is notably challenging at a call center and extremely difficult within a branch. With BFF, bankers can be located anywhere in the area which results in a quantum leap in efficiency. What was a $15 cost of service in the branch now drops to less than $2 for the Bank.
In some of our testing, it appears that customers would use an app such as BFF at the same frequency that they have problems. Give the customer the power to communicate and the initial indications are they will be judicious in their use of that channel. Just because it is easier to access a banker doesn’t mean they will bombard them with a million questions. For the most part, customers will want to communicate with their banker only when they have a question or a problem which means that an application like BFF can leverage a ratio of about one banker for every 600 or more customers. Add some artificial intelligence in, and our testing with a chatbot indicates that you could scale to close to a one to 3,000 banker per customer ratio.
Over time, the Bank will likely include artificial intelligent support to help assist with questions further leveraging the banker’s time. Artificial intelligence will likely start after-hours first with BFF but then be used around the clock alerting the human banker when to get involved. Part of the poetry of the BFF application is that it is the perfect medium to test and bridge to a bank’s use of AI. Machine learning can start slow and ramp up with no one feeling awkward. Both the banker and the customer will help teach the machine learning algorithms to get the app to the point where discernment of AI will be difficult.
Already several banks have built a similar app that prebuilds a “predictive profile” that allows both the banker and the app to narrow down the range of potential questions. If you don’t have a mortgage, you are not contacting your BFF for your payment balance. In addition, these apps learn when you are most likely to contact the bank further helping with staff availability. Having this resident understanding will help better manage the questions, the banker’s time and help with setting a priority in which a customer might need a response.
The Future of Banking
BFF is a great way to boost customer intimacy and achieve both better engagement and satisfaction at a level greater than what you might experience in person. As branch traffic drops, the cost of service per customer will continue to increase. Many banks are already finding that they cannot sustain their current branch network and more will likely come to that conclusion.
The future of banking looks like you will soon need a branch that is $140mm in deposits or greater to remain competitive. To achieve that branch size, banks will have to find new ways to deliver their products and services. Mobile banking and interactive tellers can only go so far. A banking app similar to BFF is easy enough to build or purchase and come at a fraction of the cost of maintaining a single branch for just a year. Applications like BFF, we feel, are not only the future but are the near-term future.
Submitted by Chris Nichols on January 18, 2018