Our third Narmi Innovators Retreat marked an important milestone: 200 slices of pizza consumed this week. We’ve been privileged to welcome more than 100 innovators from 50 banks and credit unions to our three events in America’s pizza capital, and the shared learnings about digital banking grow as our industry continues to transform.
It was a year ago in March 2023 that we hosted our inaugural Innovators Retreat right as significant disruption affected banks and credit unions of all sizes. A great deal has happened since then, and we are glad to share with you these reflections from our latest and largest event this month.
This spring, Co-Founder Nikhil Lakhanpal kicked off our two-day summit with a view on how to thrive amidst uncertainty. Since the industry disruption that occurred in 2023 a lot has changed. Rates have risen putting pressure on deposit inflows, and customers are increasingly setting their expectations for managing their finances by what they see in all their favorite apps. But Nikhil made it clear that community banks are not going anywhere and play a critical role in America’s economy and communities.
Even in a time of uncertainty, there is a feeling of optimism that pervades our customers. They are seeing deposit growth challenges and regulatory pressure, coupled with an increase in mobile banking and generational change as only a fifth of lenders feel ready to serve Generation Z. As well, a full quarter of small and medium businesses are served by consumer accounts. These factors are why some 44% of FI leaders see digital as critical, up from 33% last year.
Service is at the heart of choosing the right investments for revenue generation, and focusing on enriching community engagement will lead to the necessary account growth in 2024 and 2025. Nikhil emphasized that crucial product value comes for differentiating based on customer experience, speed and security, and fraud protection. Innovative technologies around non-document approaches to account decisioning can make consumers’ lives easier and protect FIs while meeting compliance standards.
The focus is clear in this time of transition: Deposits rule the world, digital banking is driving growth and profits, it’s critical to empower business and commercial teams to service small and medium business customers, and timelines must balance with dependability to deliver on promises for FI customers.
Our first customer session dove right into the main topic of interest to today’s bankers. John Betts, Community Savings CFO, partnered with Brian Reilly from BankBound and our own SVP Jessica Vogol to explore how Community Savings more than doubled their portfolio. John explained, “we expanded our geographic footprint and tested different product rates. We were constantly learning and using data from Narmi to see our customers’ behavior. We used targeted marketing to tell our customers what we were offering, and they responded.”
Brian discussed how to use online tools to drive value with insights. “We got clarity on how customers move around in applications, so we could know where to message and see what’s working.” Those insights let them know which outreach campaigns drove awareness and deals. Brain said the key is using smart questions to analyze how customers would react to new ideas, testing them, and using those learnings to continuously improve their offerings. Brain said they worked to find out, “would consumers open accounts online with a new bank? Yes they will.” Now that they know it works, John and Brian said the next step is to scale their efforts to reach more customers.
It wasn’t surprising that when NeuroID SVP Mitul Parmar asked who in the room was focused on fraud, everyone raised their hands. What was compelling was how Mitul explained that observed behavior is key to combating it. “Gleaning information on how users are entering information into your applications is just as important as what information they enter – and sometimes more.”
A critical step in account decisioning is determining if the user is who they say they are, and Narmi partner NeuroID uses sophisticated methods to quickly identify if a user is a human or a bot. Major retailers are finding that 30% of their traffic is bots, so the savings are substantial to identify and prevent them from completing secure transactions. “We look at hundreds of interactions behind the scenes so we can send real users down a smooth path, and block suspicious users with checkpoints for further authentication.”
Mitul said banks see frequent short-lived attacks on their systems, and they monitor dozens of triggers to spot attacks. Studies show that 97% of companies can detect fraud but only 11% can take immediate action to mitigate it. Mitul noted there is seasonality to fraud, because of events like tax deadlines, holidays, and fiscal periods. “Through early fraud detection and pattern recognition, banks and credit unions can effectively head off attacks and respond before it’s too late.”
Adele Gardner, Meridian Trust Federal Credit Union COO, shared great life wisdom in her talk with Narmi General Manager Nick Cappy. Adele said, “Being able to be ok when we fail lets us pivot and start again, we learn those lessons and have better perspective.” She has used that guidance to help Meridian focus on its core customers effectively – “we have one checking account, not five, and it suits our customers well.”
Adele notes the varying geography of the three states where they operate reinforces that “it really matters to serve customers where and how they want to be served, whether via technology or talking to staff. The worst thing you could say is ‘I am just a number.’ You aren’t!”
It was that emphasis on the member experience that led Merdian to make the significant decision to parallel-path their loan origination and account opening systems, to ensure a consistent focus on service. By adopting a digital-first approach, “we changed the conversation with customers from logistics of where to send paper documents, to value-adding discussions about welcoming and service.” She added, “The partnership with Narmi is truly a partnership.” (Thanks Adele!)
After a delicious Innovators Lunch, Narmi Co-Founder Chris Griffin sat down with Paymentus VP Elizabeth Mansfield to review 2024’s payment trends. Chris noted the biggest are FedNow instant payments, artificial intelligence, fraud prevention, and peer-to-peer (P2P) payments.
“Fraud is becoming more sophisticated, so being prepared is key,” Elizabeth noted. “FIs launching P2P and instant payment products need to be proactive” in training both staff and customers to identify troubling signs. Account takeovers at small businesses, for example, can be devastating, but FIs can partner with customers to put the right controls in place to minimize risk and maximize the likelihood of attempted fraud detection before losses occur. She emphasized the need for FIs to learn from other industries on what to look out for and stay up to date on evolving fraud schemes.
Elizabeth shared that P2P is here to stay and 33% of consumers expect banks to offer real-time service. “Nobody wants 3-day ACH, they want instant transfers for dinner.” She noted that Zelle volume at a national bank exceeded checks in 2021 and has grown 225% since then. “There are now more Zelle transactions than checks, ATM and teller transactions combined” at that bank. FedNow is ramping up slowly with less than 20% of prospects set up for it yet. But it’s crucial to get set up as a receiver as adoption will continue to rise. Although the industry is going slower than expected, it will continue to go mainstream.
A big trend to be aware of is “walletizing” among bank and non-bank providers. Many consumers are storing significant amounts of money in uninsured retailer accounts through their stored value apps. “There will always be different players,” Elizabeth said, “from Venmo to Starbucks to Dunkin’ Donuts,” so she doesn’t see consolidation on one system happening.
Steve Hamilton, Ponce Bank SVP, took attendees on a visual and experiential journey across design considerations. He emphasized the importance of co-creative practices to engage the local community and truly leverage the power of design within banking. “Ensuring your customers’ pain points are directly leading your in-branch design strategy and ensuring they feel like they are part of the conversation is when design becomes truly powerful.”
Our attendees consistently tell us one of the greatest values they get during Narmi’s Innovators Retreats is the chance to talk with their peers in breakout sessions. James Bargsley at University Federal Credit Union and Chris Delamater at Northeast Bank hosted those workshops with Narmi’s General Managers Nick Cappy and William Chau.
The discussions were wide-ranging across the need to “be where the customer wants to be.” In 2024, customers expect seamless experiences across digital, branch and other channels, as well as real-time rails outside of traditional bank hours. These expectations are giving community banks and credit unions the opportunity to take their brands to the next level, finding ways to be higher-touch in non-traditional channels where customers need capital and service. It is also driven by generational differences across how Baby Boomers, Generation X, Millennials, and now Generation Z manage and move their money.
Attendees said they are investing resources to upskill their service representatives, to achieve 90%+ satisfaction rates. Chris Delamater explained it as “a comprehensive welcome for customers. We look calm on the surface but are paddling furiously underneath.” Attendees shared examples of creative ways they obtain customer insights and then put those to use to improve their service and customer experiences. One FI described how they educated first-time credit card customers that the statement date is when payments had to be posted, as some were interpreting it as the date when payment should be sent in. Taking the time to understand customer behavior is a winning recipe to forge strong and long-lasting relationships.
Can an event be comprised solely of highlights? That’s how it felt through the Innovators Retreat as our Narmi customers, partners and staff came together to explore the most critical topics facing our industry.
One of those was a roundtable discussion on business banking by Norm DeLuca, Co-Founder and Senior Partner of Jamestown Advisors, Steve Dow, Fonder and CEO of Monit, and Luther Liang, Director of Product at Grasshopper Bank. Norm kicked it off clearly: “Small and medium businesses are the most compelling opportunity for community banks to compete and win against national banks for durable deposit-centered franchise value. With the right digital partners and capabilities there is big opportunity to win.”
Luther agreed, noting, “Many small businesses are not listened to or well-served by big banks who are focusing on chasing big companies.” Steve added, “Banks think about bank terms, business customers don’t. Business owners don’t wake up thinking about how their transactions are sorted. They’re focusing on solving real business problems.”
Ron Shevlin, Chief Research Officer of Cornerstone Advisors, is one of the most insightful and astute observers of the financial services industry. Our attendees had the pleasure of getting his hot-off-the-press results from his 2024 Digital Banking Performance Metrics study.
Here are some of the highlights:
Nikhil brought us together to close our our spring 2024 Innovators Retreat: “We are all at the forefront of banking innovation. That’s what connects and fuels us all.”
The point of our Innovators Retreat is to provide our bank and credit union community with deep learning, impactful discussions, and valuable connections. We want knowledge to be exchanged, insights to be gained, and collaborations to flourish.
To that end, what’s next? We’re going west! Join us in September for our inaugural West Coast Innovators Retreat in sunny San Diego. Contact us for an invite and look for more details soon.
