The Intersection of Trust and Technology in Banking

In this episode, Sean and Gina discuss the intersection of trust and technology. The acceleration of consumer use of digital through COVID has made commoditization and lack of trust dual risks for financial institutions, but new data shows that business overall has become the primary trusted institution for consumers in the pandemic era, providing a real opportunity for banks to build on a trusting relationship. They address practical solutions where the value of community institutions in real trust-building can be balanced with just enough technological sophistication for servicing customer needs conveniently and efficiently.

Text Transcript

Intro: This is Believe in Banking, a podcast series for decision makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your belief in banking hosts, Sean Keathley and Gina Bleedorn.

Sean Keathley: Welcome, this is our podcast for Believe in Banking. I am Sean Keathley, president and CEO of Adrenaline.

Gina Bleedorn: And I’m Gina Bleedorn, Chief Experience Officer at Adrenaline.

Sean Keathley: Gina, last time we talked about the erosion of trust, and how it’s at a really a scary low for financial institutions. And a lot of that has to do with what’s happening as these trends, acceleration through COVID of digitization. I think what we’d like to talk about this episode is underscoring the need and best practice around the ideas of trust.

Gina Bleedorn: More specifically, even, the intersection of trust and technology. Recounting the digitization acceleration, making both commoditization and lack of trust, dual risks for banks and credit unions. How do we find a place where the value of community institutions and real trust building can be married with technological sophistication that you have to have to service customer needs conveniently and efficiently?

Sean Keathley: We’ve been talking a lot about the importance of trust, and we’ve been talking previously about the idea of complacency as well. Pre-COVID people weren’t that happy, but they weren’t that encouraged to switch. Boy, COVID has sure changed that. And we know is now one of the top reasons people are changing accounts. It’s not just because they moved. But it’s interesting. We’ve been tracking maybe 12 or 13 years, Edelman does their trust barometer. And, Gina, they just came out with their latest results and it’s not all bad news.

Gina Bleedorn: Yeah, well, the interesting part was business versus nonprofits, government and media emerged as the most trusted category in trust index from last year to this year. So, that’s good, as financial institutions fall into business.

Gina Bleedorn: One of the things though I think is worth digging into, there are different levels of trust. Most customers, especially through COVID, you could say trusted in their financial institutions to meet their needs. They felt satisfied, and they felt serviced. But the step that concerned us was trust dropping 20% in the last two years of financial institutions to really care about my financial well-being. And therein lies the opportunity.

Gina Bleedorn: I will reiterate, there is a table stakes expectation of being able to service customer needs digitally, physically, and otherwise. However, the customer wants to interact with you there is a table stakes expectation that you will be able to do that. The opportunity lies in how well you can make them believe and trust that you can help their financial well-being. And especially for community institutions that are built on relationships and, theoretically, trust therein lies the business opportunity.

Sean Keathley: Perfectly stated, and I have the exact right example to talk about, Gina. I had the good pleasure of meeting the CEO of Ulster Savings Bank, a true community bank, 170 years old, talked to their CEO for a while last week.

Sean Keathley: Very interesting what’s gone on in Kingston, New York. A lot of different markets have actually seen an influx of people as these big urban centers were not the place to be at the peak of COVID. So, Kingston, New York is one of the places people have retreated to. It’s a beautiful part of New York. You’re right on the river, just above the city. A lot of people had second homes there. It’s become the first home for a lot of people.

Sean Keathley: But when you start talking about what Ulster did, Bill and the team there, won ICBA’s Community Service Award for the Year. So, of the hundreds and hundreds of community banks, these guys won the service award, which is a remarkable accomplishment, so inspiring. And we’re going to get Bill on this podcast. But thinking about what they did, and the idea of trust being at the heart of everything they thought about, they waived over $1 million in fees.

Sean Keathley: People were in a tough time. Think about that greater New York market, how much of the businesses were shut down to try to stem the flow of the virus. Small businesses were impacted and people were overdrawing their accounts are missing loan payments. They were waiving these fees. They truly became a part of the community. They ended up doing some really unique things to help people just relieve stress. They created a movie theater with sheets in the back of one of their parking lots and did a drive up movie theater sponsored by Ulster Savings. They’ve helped hundreds of people.

Sean Keathley: And so, it was more than just servicing, they had their financial interest at heart. And this notion of not being fee driven, allowed them to actually quadruple in size. We talk about that a lot, where living your brand moment, being a true community bank or helping others, working with trust, not penalizing people, making money off of their tough environment can lead to growth and profitability.

Gina Bleedorn: Yeah, as evident with Ulster, consumer preferences continue to shift. They were already shifting pre-COVID. They’re shifting even more post COVID. And some recent stats from KPMG, Pricewaterhouse, and Accenture, 75% of consumers are expecting great customer experiences. And that tone has been set from some of the leaders in retail that had to elevate their customer experience digitally and virtually in order to differentiate. And is now extending to all sectors inclusive of banking, especially in banking in a primary financial relationship, 63% are seeking value for the money. That has been a major uptick since COVID, is increasing anxiety and pressure on consumers throughout the nation to make sure they are getting as much value from their financial institution as possible. And they are fleeing existing relationships, or switching rather because of fees and rates. And we haven’t seen that much migration because of fees and rates in many, many years. So, really there is an opportunity here by having a real value proposition combined with a customer experience proposition that we know the top five, top six are going to struggle to deliver.

Gina Bleedorn: 4 out of 10 people must trust, must trust in the brand of primary financial provider that they choose. They must trust. And about 2 out of 10, actually choose financial brands that have values they perceive to be matching their own. And then, 31% they want to manage their account, however, they want to manage it. These are not surprising. But they are just reiterating what we already know. And the numbers keep going up as far as expectations and what people want now.

Gina Bleedorn: As FinTech starts to further and further encroach in the traditional banking arena that starts to become a little bit daunting since, FinTechs were born out of trying to create frictionless customer experiences in various areas. What’s happening now, as they start to get bank charters, and have the ability to provide more full service solutions, they become a customer experience threat.

Gina Bleedorn: Sean, you just had a rare opportunity to meet with in-person, even, a lot of community bank CEOs. And, as I understand it, FinTech was much of the talk and fears about FinTech. What are some of the themes the bank CEOs are talking about?

Sean Keathley: Well, for sure, Gina, and even in the middle of that, you get the announcement that you mentioned. And SoFi, now, is looking to acquire Golden Pacific. They’re not buying Bank of America, it means a $150 million community bank, but it is a march forward in their plan to become a national bank with a real bank charter.

Sean Keathley: I know when SoFi, I started doing lending, this may not have been as daunting and scary as it is to people today. And you think about one of the problems with the community banks and credit unions, even competing within their own space, is the large five have so many more resources, and the technology spend, the people, the talent. And so, it’s another kind of face of fierce competition coming from the digital angle. Digital is a big word and most of the time should really be properly unpacked. But, here, we’re talking about, as they say it, it’s a digital play nationally. They may take approach like Capital One cafes, or others with a limited physical presence in places. We know they have branded the new billion dollar stadium and right there above the USC campus in Los Angeles for the Rams. So, these people have deep pockets and they want to compete with banks. And so, that is absolutely on the mind of community bankers.

Gina Bleedorn: I think Vero was the first one of note, about a year ago, that got a national bank charter. And there’s been several ever since recently, Square just opened a new bank lending club, just acquired Radius Bancorp. So, after the flood gates opened, you’ve got a lot of flood of non-traditional players into the traditional space. So, while it’s important to be aware of what’s happening, because that is what your very customers are looking at and seeing, we will reiterate that what you have that the other players don’t is trust. Or we hope you do.

Gina Bleedorn: As a community institution, your mere presence in the local communities of the people you serve is, at least, a certain level of trust. And then, the relationships that you have with them and that you have the potential to have because of that physical presence that makes you real. And when it comes to money and finances, certainly, there are different preferences among different generations, and different demographic and psychographic types. Most people want to be able to talk to someone about their money, and have a lot of fears about making someone they can’t see in-person, a primary financial institution. However, those fears are going to wane little by little by these FinTechs that are really doing a good job of personalizing digital experiences as much as they can.

Gina Bleedorn: When it comes to what you need to do, it’s really exactly the same thing. How can you create personalization with channels that are not inherently personal?

Sean Keathley: Well, it’s true, Gina. And the rest of the story is, ended up being a reminder for the CEOs in the room that they need to double down on being true to who they are. These are organizations that are serving communities, being truly part of the neighborhoods, and communities, and cities they serve with staff members that are from those areas. Forward thinking to take on education as a mantra. To make sure people are better informed, make better decisions. Do we let people get in debt, have high interest loans? Or do we educate people on money management, personal finance tools, the meaning of credit, how to save? There are endless amounts of things community banks and credit unions can do to add real value, build trust and, ultimately, will result in net new households and more business by just doing good. I think that’s where most people are going to survive and thrive, despite the influx of national competitors, digital competitors, big bank competitors.

Sean Keathley: And one of the things that did come up, and there was a lot of conversation, a lot of questions around, I think the notion of maybe balance is a good word. Balance between serving people through channels of convenience. And also, in creating the network effect, being really strategic with their overall branch infrastructure, reducing costs, but increasing touch points in the hub and spoke manner. And the question came is, if I think about my digital delivery and my physical delivery how do I know where to spend my money? What’s the peer line of good enough? What is best practice? And it is an interesting discussion because there is a balance and you have to do both, but as we’ve been talking about with community bankers, we’re not asking them to become the best digital experience in the space.

Gina Bleedorn: I think the key in what you just said is, good enough. The way to think about this is in expectation thresholds, you cannot be best in class at digital. But you have to be good enough, and be planning for the next level as the threshold will rise. And when it comes to digital or physical, but especially digital, think of everything through the lens of the customer. Those decisioning factors that are unique to you are going to help you establish that barometer. But if you do it from the lens of the customer, especially focusing on the ideal customer, the customers you want to serve, the customers, you want to reach more of, how can you make their experience as value added as possible from the trust in just servicing and making them feel satisfied to the trust that you actually care about, and can help them with their financial well-being?

Sean Keathley: And Gina, this gets me excited about our next guest, Luvleen Sidhu, the CEO of BankMobile, who is really a true expert in creating digital and doing it at scale. And what her company is doing, to think about partnerships to provide it to the masses, it’s going to be a fascinating discussion and could, very well, be a true opportunity for community organizations partnering with FinTech to take on balancing, servicing, convenience with advice. Luvleen Sidhu, the youngest current female CEO of a public company. That’s going to be really an exciting discussion we have next time.

Gina Bleedorn: Can’t wait.

Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site,