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Novantas Review | Spring 2021

NOW WHAT?

NOW WHAT?

IN THIS ISSUE

This edition of the Novantas Review explores the myriad opportunities that banks can embrace as they plan for a new post-COVID-19 era. In retail banking, we look at how recent changes in customer behavior can drive new strategies for customer acquisition, the workforce and branch locations. We examine the impact that surge deposits are having on the balance sheet and encourage banks to consider deposit behavior when assessing creditworthiness. And we remind fintechs that they can’t rest on their laurels.

IN THIS ISSUE

This edition of the Novantas Review explores the myriad opportunities that banks can embrace as they plan for a new post-COVID-19 era. In retail banking, we look at how recent changes in customer behavior can drive new strategies for customer acquisition, the workforce and branch locations. We examine the impact that surge deposits are having on the balance sheet and encourage banks to consider deposit behavior when assessing creditworthiness. And we remind fintechs that they can’t rest on their laurels.

COVER STORY

The Dos and Don'ts of Banking in a Post-COVID-19 World

The vaccine roll-out is under way, states are loosening restrictions and life for some people is getting a little closer to normal. What has your bank learned from 2020 and what are the dos and don’ts for 2021?

Digital

Cracking the Code on Digital Empathy

Banks that use personalization to establish a connection with their digital customers can enjoy benefits at every stage of the customer lifecycle.

Deposits

Consumer Credit Conundrum: The Benefit of New Deposit Metrics in Assessing Credit Risk

The analysis of deposit behavior and cash flow can be a valuable tool in determining consumer creditworthiness.

Balance Sheet

Funding Optimization is Crucial as Surge Deposits Linger

The flood of deposits into the banking system highlights the need for funding optimization that uses scoring to value and manage deposit customers on a granular basis.

Branches

The Hidden Costs in Your Distribution Network

You just closed a bunch of branches. How do you get even more costs out of your network? The branch workforce and specialty salesforce are two areas that are often overlooked.

Branches

The Road Forward

The need to understand traffic patterns can’t be underestimated for banks as post-pandemic life gets closer. Traffic patterns will have enormous implications for banks as consumers and employers make important decisions about lifestyle, real estate and work-from-home policies.

Fintech

New Year, New Challenges for Fintechs

Fintechs have drawn a lot of attention for their ability to acquire customers with creative tactics, but now  they must ensure those relationships are sticky and profitable.

Cover Story

The Dos and Don'ts of Banking in a Post-COVID-19 World

The vaccine roll-out is under way, states are loosening restrictions and life for some people is getting a little closer to normal. What has your bank learned from 2020 and what are the dos and don’ts for 2021?

Digital

Cracking the Code on Digital Empathy

Banks that use personalization to establish a connection with their digital customers can enjoy benefits at every stage of the customer lifecycle.

Deposits

Consumer Credit Conundrum: The Benefit of New Deposit Metrics in Assessing Credit Risk

The analysis of deposit behavior and cash flow can be a valuable tool in determining consumer creditworthiness.

Balance Sheet

Funding Optimization is Crucial as Surge Deposits Linger

The flood of deposits into the banking system highlights the need for funding optimization that uses scoring to value and manage deposit customers on a granular basis.

Branches

The Hidden Costs in Your Distribution Network

You just closed a bunch of branches. How do you get even more costs out of your network? The branch workforce and specialty salesforce are two areas that are often overlooked.

Branches

The Road Forward

The need to understand traffic patterns can’t be underestimated for banks as post-pandemic life gets closer. Traffic patterns will have enormous implications for banks as consumers and employers make important decisions about lifestyle, real estate and work-from-home policies.

Fintech

New Year, New Challenges for Fintechs

Fintechs have drawn a lot of attention for their ability to acquire customers with creative tactics, but now they must ensure those relationships are sticky and profitable.

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

    Director Adam Stockton spoke with BankRate about savings rates.


    Executive Vice President Pete Gilchrist spoke with S&P Global Market Intelligence about commercial deposit growth.


    Director Andrew Hovet spoke with Forbes Advisor about digital banking.


    Executive Vice President Kevin Travis spoke with NerdWallet about neobanks.


    Paul LaRock, director at Treasury Strategies (a division of Novantas), spoke with PYMNTS.com about the slow move toward digital adoption in the treasury departments of many corporations.

  • March

    Walmart poached two senior executives from Goldman Sachs’ Marcus consumer unit for its new fintech venture with Ribbit Capital.


    Square launched its banking operations called Square Financial Services after winning a charter from the FDIC and Utah Department of Financial Institutions. The new bank will offer business loan and deposit products.


    Americans paid off a record $82.9 million in credit-card debt last year, but still owe a combined $1 trillion to card issuers, according to a study from WalletHub.


    SoFi announced plans to buy Golden Pacific Bancorp Inc. as part of its strategy to obtain a national bank charter.

  • February

    The cryptocurrency exchange launched by Tyler and Cameron Winklevoss launched an interest-bearing account for clients. Gemini said its Earn service will pay up to 7.4% on balances.


    Greenwood Financial, a digital bank created to serve Black and Latino communities, said it has 500,000 signups on its waiting list. The platform plans to launch this spring.


    More than 90% of small businesses that participated in a Federal Reserve survey said they applied for emergency funding during the pandemic.


    NBA star Russell Westbrook led a $63 million investment round for Varo and joined the digital bank as an advisor.


    Fintech payments provider Brex filed an industrial bank application with the FDIC and the Utah Department of Financial Institutions.

  • January

    The Office of the Comptroller of the Currency said that federally-chartered banks and thrifts are permitted to use blockchain and other so-called independent node verification networks. The move also allows banks to use stablecoin payments on behalf of customers.


    In a related move, the OCC granted a conditional charter to Anchorage, a cryptocurrency platform that had been chartered in South Dakota. (See February for a similar OCC charter.)


    Green Dot Corp. launched GO2bank, a mobile bank aimed at Americans who live paycheck-to-paycheck. Feature include up to $200 of overdraft protection and early access to paychecks or government benefits.


    SoFi announced plans to go public with the backing of venture capital investor Chamath Palihapitiya’s blank-check acquisition vehicle called Social Capital Hedosophia Holdings Corp V. The transaction values SoFi at $8.65 billion.


    The average U.S. credit score reached a record high of 710 last year, according to Experian.

  • March

    Director Sarah Welch participated in an ADARA webinar on March 11 titled “Keys to Success for Effective Personalization.


    Jeff Diorio, a director at Treasury Strategies (a unit of Novantas), participated in a GTreasury podcast that explored cross-border treasury payment trends amid the COVID-19 pandemic.

  • February

    Directors Hank Israel and Don Kumka hosted a Feb. 24 webinar titled “How Consumer Deposit Data Can Help Assess Credit Risk.” They were joined in the session by Anurag Puranik, senior vice president and head of credit analytics at KeyBank and credit expert Alan Schiffres, president and CEO of Avalon Group Advisors, LLC.


    Also on Feb. 24, Executive Vice President Pete Gilchrist and Director Bob Warnock spoke about the implications of surge liquidity at the FFIEC Capital Markets Specialist Conference.

  • The Value of Effective Personalization

    Novantas Director Sarah Welch recently discussed the importance of personalization in retail banking during an ADARA webinar called “Keys to Success for Effective Personalization.” The session was hosted by Bernie Yu, senior vice president of corporate strategy at ADARA.

    Here are some of Sarah’s comments from the March 11 conversation in which she and Bernie were also joined by Paul Kadin, managing partner at Resonance LLC in a webinar.

    What is Personalization Banking?

    It is a massive topic that spans the entirety of the value chain. Think about it in three different compartments. There’s acquisition-related activities and marketing that include relevant messages all the way down the funnel and the shifting and changing of those messages based on how you’re interacting. There is product, which can be everything from personalized pricing schemas to the way in which the core transactions you have with a particular product are reflected back to you and tied to your participation and objective. And there are relationship interactions, such as seamless hand-offs between channels and relevant communications and interactions that drive deeper engagement.

    Why It Matters

    We’re in a universe that is shifting away from physical-based intermediated interactions that drive relationship value to digital channels and digital relationship-building. In financial services, digital sales benchmarks show between a differential of between 7 and 10 times in the value of deposits that are brought to institutions from a branch to those that come from digital. That gulf points to the severity of the challenge and the height of opportunity. It’s not just deposits. Digitally-acquired accounts are faster to run off and attrite and have shallower relationships.

    Figuring out the personalization that drives relationship value in a way that replicates what exists in human channels is important across the board.

    The COVID-19 Impact

    What we definitely saw in the past year was a consumer shift to digital channels. In that shift, we have seen banks and financial institutions get more savvy about the acquisition of customers digitally and doing it efficiently. But in terms of deep personalization, we may be beginning to scratch the surface, but we have a long way to go.

    A New Era for Test-and-Learn

    The approach to test design and the volume of test design is a critical component of driving the personalization agenda productively. Amazon has mastered and demonstrated its constant test-and-learn cycles. And the speed with which you can drive smart test-and-learn cycles, the more effective your personalization will be over time.

    We’re at a point in time where AI and machine learning is starting to disrupt and bring new modes that enable companies to move much more quickly to rapidly test and learn.

    The Road to a Better Customer Journey

    There are big opportunities in each of these journey segments for the financial- services industry. In onboarding, early interactions are very critical. In a digital-first world, consumers are in the driver’s seat. Being able to be responsive to the tens of thousands of different paths n early relationships is increasingly important.

    Personalization Hurdles

    When you are operating in silos and everyone is incentivized to meet their own unit volume number, often the thing you do is send more communications. But you are training the customer that your communications are not necessarily relevant and they are more inclined in the future to ignore interactions from you.

News You May Have Missed

A snapshot of relevant developments in recent months.

  • Novantas in the News

    Director Adam Stockton spoke with BankRate about savings rates.


    Executive Vice President Pete Gilchrist spoke with S&P Global Market Intelligence about commercial deposit growth.


    Director Andrew Hovet spoke with Forbes Advisor about digital banking.


    Executive Vice President Kevin Travis spoke with NerdWallet about neobanks.


    Paul LaRock, director at Treasury Strategies (a division of Novantas), spoke with PYMNTS.com about the slow move toward digital adoption in the treasury departments of many corporations.

  • March

    Walmart poached two senior executives from Goldman Sachs’ Marcus consumer unit for its new fintech venture with Ribbit Capital.


    Square launched its banking operations called Square Financial Services after winning a charter from the FDIC and Utah Department of Financial Institutions. The new bank will offer business loan and deposit products.


    Americans paid off a record $82.9 million in credit-card debt last year, but still owe a combined $1 trillion to card issuers, according to a study from WalletHub.


    SoFi announced plans to buy Golden Pacific Bancorp Inc. as part of its strategy to obtain a national bank charter.

  • February

    The cryptocurrency exchange launched by Tyler and Cameron Winklevoss launched an interest-bearing account for clients. Gemini said its Earn service will pay up to 7.4% on balances.


    Greenwood Financial, a digital bank created to serve Black and Latino communities, said it has 500,000 signups on its waiting list. The platform plans to launch this spring.


    More than 90% of small businesses that participated in a Federal Reserve survey said they applied for emergency funding during the pandemic.


    NBA star Russell Westbrook led a $63 million investment round for Varo and joined the digital bank as an advisor.


    Fintech payments provider Brex filed an industrial bank application with the FDIC and the Utah Department of Financial Institutions.

  • January

    The Office of the Comptroller of the Currency said that federally-chartered banks and thrifts are permitted to use blockchain and other so-called independent node verification networks. The move also allows banks to use stablecoin payments on behalf of customers.


    In a related move, the OCC granted a conditional charter to Anchorage, a cryptocurrency platform that had been chartered in South Dakota. (See February for a similar OCC charter.)


    Green Dot Corp. launched GO2bank, a mobile bank aimed at Americans who live paycheck-to-paycheck. Feature include up to $200 of overdraft protection and early access to paychecks or government benefits.


    SoFi announced plans to go public with the backing of venture capital investor Chamath Palihapitiya’s blank-check acquisition vehicle called Social Capital Hedosophia Holdings Corp V. The transaction values SoFi at $8.65 billion.


    The average U.S. credit score reached a record high of 710 last year, according to Experian.

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.

  • March

    Director Sarah Welch participated in an ADARA webinar on March 11 titled “Keys to Success for Effective Personalization.


    Jeff Diorio, a director at Treasury Strategies (a unit of Novantas), participated in a GTreasury podcast that explored cross-border treasury payment trends amid the COVID-19 pandemic.

  • February

    Directors Hank Israel and Don Kumka hosted a Feb. 24 webinar titled “How Consumer Deposit Data Can Help Assess Credit Risk.” They were joined in the session by Anurag Puranik, senior vice president and head of credit analytics at KeyBank and credit expert Alan Schiffres, president and CEO of Avalon Group Advisors, LLC.


    Also on Feb. 24, Executive Vice President Pete Gilchrist and Director Bob Warnock spoke about the implications of surge liquidity at the FFIEC Capital Markets Specialist Conference.

  • The Value of Effective Personalization

    Novantas Director Sarah Welch recently discussed the importance of personalization in retail banking during an ADARA webinar called “Keys to Success for Effective Personalization.” The session was hosted by Bernie Yu, senior vice president of corporate strategy at ADARA.

    Here are some of Sarah’s comments from the March 11 conversation in which she and Bernie were also joined by Paul Kadin, managing partner at Resonance LLC in a webinar.

    What is Personalization Banking?

    It is a massive topic that spans the entirety of the value chain. Think about it in three different compartments. There’s acquisition-related activities and marketing that include relevant messages all the way down the funnel and the shifting and changing of those messages based on how you’re interacting. There is product, which can be everything from personalized pricing schemas to the way in which the core transactions you have with a particular product are reflected back to you and tied to your participation and objective. And there are relationship interactions, such as seamless hand-offs between channels and relevant communications and interactions that drive deeper engagement.

    Why It Matters

    We’re in a universe that is shifting away from physical-based intermediated interactions that drive relationship value to digital channels and digital relationship-building. In financial services, digital sales benchmarks show between a differential of between 7 and 10 times in the value of deposits that are brought to institutions from a branch to those that come from digital. That gulf points to the severity of the challenge and the height of opportunity. It’s not just deposits. Digitally-acquired accounts are faster to run off and attrite and have shallower relationships.

    Figuring out the personalization that drives relationship value in a way that replicates what exists in human channels is important across the board.

    The COVID-19 Impact

    What we definitely saw in the past year was a consumer shift to digital channels. In that shift, we have seen banks and financial institutions get more savvy about the acquisition of customers digitally and doing it efficiently. But in terms of deep personalization, we may be beginning to scratch the surface, but we have a long way to go.

    A New Era for Test-and-Learn

    The approach to test design and the volume of test design is a critical component of driving the personalization agenda productively. Amazon has mastered and demonstrated its constant test-and-learn cycles. And the speed with which you can drive smart test-and-learn cycles, the more effective your personalization will be over time.

    We’re at a point in time where AI and machine learning is starting to disrupt and bring new modes that enable companies to move much more quickly to rapidly test and learn.

    The Road to a Better Customer Journey

    There are big opportunities in each of these journey segments for the financial- services industry. In onboarding, early interactions are very critical. In a digital-first world, consumers are in the driver’s seat. Being able to be responsive to the tens of thousands of different paths n early relationships is increasingly important.

    Personalization Hurdles

    When you are operating in silos and everyone is incentivized to meet their own unit volume number, often the thing you do is send more communications. But you are training the customer that your communications are not necessarily relevant and they are more inclined in the future to ignore interactions from you.

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