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Novantas Review | Winter 2020

THE SEARCH FOR THE BEST CUSTOMERS

THE SEARCH FOR THE BEST CUSTOMERS

IN THIS ISSUE

There are good reasons why this edition focuses on how banks can target, acquire and retain the best customers. With interest rates staying low for the foreseeable future and banks wrestling with the impact of COVID-19, these customers are more important than ever. The Novantas Review explores ways that banks can use primacy, personalization and scoring to deepen existing customer relationships and form new ones. The issue also tackles how banks can build awareness and visibility even as they shutter branches. We also provide proprietary research that reveals how banks are trying to improve their interactions with customers during the pandemic.

IN THIS ISSUE

There are good reasons why this edition focuses on how banks can target, acquire and retain the best customers. With interest rates staying low for the foreseeable future and banks wrestling with the impact of COVID-19, these customers are more important than ever. The Novantas Review explores ways that banks can use primacy, personalization and scoring to deepen existing customer relationships and form new ones. The issue also tackles how banks can build awareness and visibility even as they shutter branches. We also provide proprietary research that reveals how banks are trying to improve their interactions with customers during the pandemic.

COVER STORY

Race to Quality: Rethinking Digital Onboarding

The quality of customers originated through digital channels is of growing concern to traditional banks, particularly as the COVID-19 pandemic has accelerated the shift to digital.

Executive Interview

Sitting Down with Novantas | Ken LaRoe

Ken LaRoe is at it again.

This bank founder sat down with Novantas to talk about why it’s a good time to start a bank and how Climate First will, as the bank’s website says, “support customers, communities and our planet by operating as a vehicle for positive change.”

Retail Banking

The Art of Saying “No” in Retail Deposit Rate Negotiations

After years of towing the line on rate negotiations for retail deposits, many bankers have resumed the uneconomic and inefficient practice.

Commercial Banking

A New Focus on Primacy in Commercial Banking

Banks can deepen relationships and drive new revenue opportunities by taking a fresh approach to identifying the characteristics of primacy for commercial clients.

Customer Knowledge

Older Americans Warm Up to Branchless Banking

New research from Novantas finds that consumers who are 55 and older and shopping for checking accounts are increasingly willing to consider a bank without branches.

Retail Banking

The New Math of Distribution Planning

The race to consolidate branches has taken on additional urgency during the pandemic due to earnings pressure and shifts in customer behavior toward digital banking.

Technology

Pandemic Pushes Banks to Improve Operations

Banks are continuing to adjust their operations amid growing evidence that it will still be months before life returns to a pre-pandemic state.

Deposits

Taking Time to Focus on the Relationships You Care About

This is a rare time in which banks can zero in on their portfolios of deposit and loan customers by analyzing persistence, rate sensitivity and shopping behavior.

Cover Story

Race to Quality: Rethinking Digital Onboarding

The quality of customers originated through digital channels is of growing concern to traditional banks, particularly as the COVID-19 pandemic has accelerated the shift to digital.

Executive Interview

Sitting Down with Novantas | Ken LaRoe

Ken LaRoe is at it again.

This bank founder sat down with Novantas to talk about why it’s a good time to start a bank and how Climate First will, as the bank’s website says, “support customers, communities and our planet by operating as a vehicle for positive change.”

Retail Banking

The Art of Saying “No” in Retail Deposit Rate Negotiations

After years of towing the line on rate negotiations for retail deposits, many bankers have resumed the uneconomic and inefficient practice that often delivers premium rates to customers who aren’t loyal to the bank.

Commercial Banking

A New Focus on Primacy in Commercial Banking

Banks can deepen relationships and drive new revenue opportunities by taking a fresh approach to identifying the characteristics of primacy for commercial clients.

Customer Knowledge

Older Americans Warm Up to Branchless Banking

New research from Novantas finds that consumers who are 55 and older and are shopping for checking accounts are increasingly willing to consider a bank without branches.

Retail Banking

The New Math of Distribution Planning

The race to consolidate branches has taken on additional urgency during the pandemic due to earnings pressure and shifts in customer behavior toward digital banking.

Technology

Pandemic Pushes Banks to Improve Operations

Banks are continuing to adjust their operations amid growing evidence that it will still be months before life returns to a pre-pandemic state.

Deposits

Taking Time to Focus on the Relationships You Care About

This is a rare time in which banks can zero in on their portfolios of deposit and loan customers by analyzing persistence, rate sensitivity and shopping behavior.

News You May Have Missed

A snapshot of relevant developments in recent months.

At the Podium with Novantas

Although in-person events aren’t on many calendars right now, Novantas experts have been busy hosting and participating in virtual events. Please reach out to the session leaders or Novantas Review Editor Robin Sidel if you missed any of these online events and would like to know more about the content that was presented.

  • Novantas in the News

    The FDIC announced Novantas is one of 14 technology companies selected to compete in the next phase of its effort to develop a new approach to financial reporting for the nation’s banks. The FDIC has said that a new system will better equip regulators to detect signs of risk and take early action to protect consumers, banks, the financial system and the economy.


    Novantas notched the #84 position on the 2020 IDC FinTech Rankings, marking the 10th consecutive year that company has appeared on the list. The 17th annual vendor ranking represents the leading hardware, software and service providers to the financial services industry from around the world.

  • November

    Nebraska residents voted to cap interest rates from payday lenders at 36%, down from levels as high as 400%.


    San Francisco-based Affirm, a provider of online installment loans, filed an IPO with the SEC. The company plans to public on Nasdaq under the symbol AFRM.


    Google said 11 banks and credit unions, including Citi, Green Dot and BMO, will offer its Plex online checking account when it is launched next year. The account will be integrated into the Google Pay app.

  • October

    CNBC reported that European digital bank Revolut is close to applying for a U.S. banking license. The London-based company plans to apply for a charter with the Federal Reserve Bank of San Francisco and California’s Division of Financial Institutions, CNBC said.


    Varo launched a small-dollar loan product that gives customers up to $100 for a $5 fee. The loan must be repaid within 30 days.


    Nearly two-thirds of business owners and business leaders surveyed by Principal Financial Group anticipate it will take a year for their companies to fully recover from the pandemic. In the meantime, they are focused on increasing their revenues and customers, improving customer satisfaction and offering new products or services. More than half of the respondents said their employees seem stressed due to additional family or caregiving responsibilities.


    Financial-services app Acorns launched a job portal powered by Zip Recruiter that lets customers search for and apply for jobs within the app.


    Amazon joined a growing number of other big companies that will allow certain employees work remotely until next summer.


    PayPal began allowing customers to buy, sell and hold cryptocurrencies in their accounts. The payments company also said customers will be able to use cryptocurrencies for payments on its network starting next year.


    The average American has fewer credit cards and a smaller credit-card balance in 2020 than in 2019, according to Experian’s annual State of Credit report.

  • September

    The Department of Justice charged 57 people with fraud tied to the Paycheck Protection Program. Those charged are accused of trying to steal $175 million from the program that was aimed at helping small businesses during the pandemic.


    Square launched a feature that allows companies that use the payments provider for payroll to give employees up to $200 of their paycheck ahead of time.


    Azlo, which provides banking and business services for small businesses, introduced a service to help entrepreneurs automate tasks related to budgeting and invoicing. BBVA provides Azlo’s banking services.

  • November

    Executive Vice President Brandon Larson and Director Sarah Welch presented
    a Consumer Bankers Association webinar on Nov. 17 titled “Building Quality and Quantity of Customers in Digital Channels.” The session explored how to build customer relationships in a digital environment and identified programs that can help banks drive
    higher quality.

  • October

    Director Andrew Hovet and Brian Wallace of Reflexis hosted a joint webinar on Oct. 22 that explored the challenges facing branch banking and strategies to improve returns from the branch network.


    Jeff Diorio, director, participated in an Oct. 6 webinar called “Proactive Measures to Tackle Cybersecurity Risks in Treasury Operation” at the annual conference of the National Association of Corporate Treasurers.


    Pete Gilchrist, executive vice president, and Greg Muenzen, director, delivered a presentation about deposit trends during the pandemic at the 2020 NeuGroup Bank Treasurers’ Peer Group on Oct. 6. The members-only network includes treasurers and senior treasury and finance personnel from banks in the U.S. and Canada.


    Brad Resnick, principal, joined experts from S&P Global Market Intelligence and the University of Chicago in a S&P-sponsored webinar on Oct. 1 called “COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations.”

  • September

    Novantas experts participated in the Consumer Bankers Association’s annual CBA Live virtual conference. Managing Director Brandon Larson and Director Sarah Welch hosted a session on Sept. 29 called “Examining COVID-19 Effect on Digital Banking and Customer Experience” and joined Chris Kay and Mary Kate Loftus from M&T for a “Debriefing on COVID-19 and Digital.”


    Also that day at CBA Live, Executive Vice President Andrew Frisbie and Director Hank Israel hosted a conference session called “How to Find the Best Deposit Customers When Rates Are Low.

News You May Have Missed

A snapshot of relevant developments in recent months.

  • Novantas in the News

    The FDIC announced Novantas is one of 14 technology companies selected to compete in the next phase of its effort to develop a new approach to financial reporting for the nation’s banks. The FDIC has said that a new system will better equip regulators to detect signs of risk and take early action to protect consumers, banks, the financial system and the economy.


    Novantas notched the #84 position on the 2020 IDC FinTech Rankings, marking the 10th consecutive year that company has appeared on the list. The 17th annual vendor ranking represents the leading hardware, software and service providers to the financial services industry from around the world.

  • November

    Nebraska residents voted to cap interest rates from payday lenders at 36%, down from levels as high as 400%.


    San Francisco-based Affirm, a provider of online installment loans, filed an IPO with the SEC. The company plans to public on Nasdaq under the symbol AFRM.


    Google said 11 banks and credit unions, including Citi, Green Dot and BMO, will offer its Plex online checking account when it is launched next year. The account will be integrated into the Google Pay app.

  • October

    CNBC reported that European digital bank Revolut is close to applying for a U.S. banking license. The London-based company plans to apply for a charter with the Federal Reserve Bank of San Francisco and California’s Division of Financial Institutions, CNBC said.


    Varo launched a small-dollar loan product that gives customers up to $100 for a $5 fee. The loan must be repaid within 30 days.


    Nearly two-thirds of business owners and business leaders surveyed by Principal Financial Group anticipate it will take a year for their companies to fully recover from the pandemic. In the meantime, they are focused on increasing their revenues and customers, improving customer satisfaction and offering new products or services. More than half of the respondents said their employees seem stressed due to additional family or caregiving responsibilities.


    Financial-services app Acorns launched a job portal powered by Zip Recruiter that lets customers search for and apply for jobs within the app.


    Amazon joined a growing number of other big companies that will allow certain employees work remotely until next summer.


    PayPal began allowing customers to buy, sell and hold cryptocurrencies in their accounts. The payments company also said customers will be able to use cryptocurrencies for payments on its network starting next year.


    The average American has fewer credit cards and a smaller credit-card balance in 2020 than in 2019, according to Experian’s annual State of Credit report.

  • September

    The Department of Justice charged 57 people with fraud tied to the Paycheck Protection Program. Those charged are accused of trying to steal $175 million from the program that was aimed at helping small businesses during the pandemic.


    Square launched a feature that allows companies that use the payments provider for payroll to give employees up to $200 of their paycheck ahead of time.


    Azlo, which provides banking and business services for small businesses, introduced a service to help entrepreneurs automate tasks related to budgeting and invoicing. BBVA provides Azlo’s banking services.

At the Podium with Novantas

Although in-person events aren’t on many calendars right now, Novantas experts have been busy hosting and participating in virtual events. Please reach out to the session leaders or Novantas Review Editor Robin Sidel if you missed any of these online events and would like to know more about the content that was presented.

  • November

    Executive Vice President Brandon Larson and Director Sarah Welch presented
    a Consumer Bankers Association webinar on Nov. 17 titled “Building Quality and Quantity of Customers in Digital Channels.” The session explored how to build customer relationships in a digital environment and identified programs that can help banks drive
    higher quality.

  • October

    Director Andrew Hovet and Brian Wallace of Reflexis hosted a joint webinar on Oct. 22 that explored the challenges facing branch banking and strategies to improve returns from the branch network.


    Jeff Diorio, director, participated in an Oct. 6 webinar called “Proactive Measures to Tackle Cybersecurity Risks in Treasury Operation” at the annual conference of the National Association of Corporate Treasurers.


    Pete Gilchrist, executive vice president, and Greg Muenzen, director, delivered a presentation about deposit trends during the pandemic at the 2020 NeuGroup Bank Treasurers’ Peer Group on Oct. 6. The members-only network includes treasurers and senior treasury and finance personnel from banks in the U.S. and Canada.


    Brad Resnick, principal, joined experts from S&P Global Market Intelligence and the University of Chicago in a S&P-sponsored webinar on Oct. 1 called “COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations.”

  • September

    Novantas experts participated in the Consumer Bankers Association’s annual CBA Live virtual conference. Managing Director Brandon Larson and Director Sarah Welch hosted a session on Sept. 29 called “Examining COVID-19 Effect on Digital Banking and Customer Experience” and joined Chris Kay and Mary Kate Loftus from M&T for a “Debriefing on COVID-19 and Digital.”


    Also that day at CBA Live, Executive Vice President Andrew Frisbie and Director Hank Israel hosted a conference session called “How to Find the Best Deposit Customers When Rates Are Low.

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