The economy is in a state of constant fluctuations. The Federal Reserve is raising interest rates, which are driving inflation down. The Consumer Price Index (CPI) is declining to 6% year-over-year, which may not seem like great news, but it peaked at 9.2% around June of last year. 

Add in that the wage growth rate is declining to 3.6%, we have the lowest savings rate in 15 years, and credit card debt has the fastest growth rate in 24 years… it’s no surprise that half of Americans feel worse financially compared to where they were last year. 

Serious financial health issues impact us as an economy and as a country. Customers are concerned about their financial well-being, whereas many financial services companies focus on profitability. According to the Salesforce Future of Financial Services report, fewer than 20% of customers feel that their financial services organizations are meeting their needs. This view presents an opportunity for community banks and credit unions to leverage Salesforce to improve customer experiences during this time of economic uncertainty.

Trends in the community banking and credit union industry

There are three key industry trends that Silverline is seeing in the community banking and credit union space as a result of the inflation and interest rate environment.

1. Economic uncertainty: Inflationary pressure has significantly impacted the interest rate environment, and an inverted yield curve indicates a near-term recession. Fed funds continue to rise as a defensive mechanism. This trend has led to pressure on banks’ revenue growth, operational efficiency, and net interest margin (NIM) expansion.
2. Organization optimization: The digital divide is growing, and organizations are feeling the inflationary pressure on operating and labor costs while dealing with a shrinking talent pool. Banks are focusing on workflow automation, real-time data flow, and customer insights, coupled with AI capabilities, to drive operational efficiency.
3. Evolving customer expectations: The rise of personalization, real-time engagement, and the desire for proactive service and guidance is driving the development of digital engagement capabilities. Customers want an omnichannel experience focusing on financial health and wellness to create connected experiences.

Because of these industry trends, the critical strategic areas of focus that executive teams are talking about include:

• Profitable growth: The rise of interest rates has increased interest income for banks, but deposits are trending downwards while the cost of deposits and funding is trending upwards. NIM is contracting instead of expanding and negatively impacting overall profitability.
• Economic downturn: There is a looming recession because of inflationary pressure. Loan demand will diminish, and asset quality issues may become prevalent, leading to a stronger focus on risk mitigation. 
• Infrastructure investment: Banks continue investing in technology and will spend more in 2023 versus 2022. The purpose is to unlock the value of automation and create scalability for their organizations. They will look to replace point solutions by investing in enterprise platform solutions that optimize their technology stack. 

Industry imperatives: Operations, experiences, and talent

Silverline sees several industry imperatives that our clients at community banks and credit unions focus on within their organizations.

Community banks want operational efficiency and are looking for ways to digitize processes and achieve specialization at scale. Community banks are often challenged by needing a full view of member relationships across LOBs and needing more systems and processes to create E2E digitization. These challenges are limited to the banks’ ability to deepen customer relationships and drive profitability.

Another imperative is enhancing the connected experience with data-driven decisions. Banks want improving growth, attrition rates, and revenue per household. But with limited reporting and pipeline management, they are seeing losses from revenue and cross-sell opportunities.

From a labor perspective, unemployment is at an all-time low, so attracting, retaining, and developing top talent is a critical priority. Leveraging technology to provide activity optimizations is one way banks and credit unions are closing the gaps and creating a more productive workforce. This initiative will help improve retention and give frontline bankers timely insights for member outreach.

Service transformation drives growth and efficiency

Community banks and credit unions have moved away from limited branch hours and in-person advice to an all-digital customer. The future of financial services is on delivering connected, real-time experiences while lowering the cost to serve. The emphasis is on connected engagement, 24/7 financial wellness management, hybrid engagement, relevant and personalized experiences, and embedded finance.  

According to the Salesforce State of the Connected Customer report, 85% of customers expect consistent interactions across all departments and an organization’s business lines. That is the expectation from the front office to the back office and what community banks will have to deliver. 

To create better experiences for customers, community banks and credit unions must concentrate on a service transformation effort that drives efficiency and growth and reduces the cost to serve across the front, middle, and back-office operations. This is done by delivering intuitive, omnichannel service that personalizes every customer engagement and empowers customers and employees with automation so you can scale faster with actionable insights. 

Your community bank or credit union must anticipate needs and deliver effortless, connected experiences whether the journey begins online, on the phone, or in a branch. You’ll be able to resolve issues faster with intelligent and empathetic engagement, real-time collaboration, and guided banking flows, all in a unified CSR experience. This effort will delight customers and employees with AI-powered automation that unifies data and rules from systems across the bank and streamlines complex regulatory processes.

Salesforce looked at the industry trends and imperatives and created Customer 360 solutions that align with the challenges of community banks and credit unions. These solutions are for service excellence, compliant onboarding, and personalized finance.

Retail banking centers on contact center modernization, member onboarding and servicing, back-office process automation, and unlocking cross-sell opportunities. For commercial banking, it is member onboarding and origination, portfolio analytics and loan servicing, back-office process automation, and treasury and cash management workflow. For mortgage and lending, it is to unlock cross-sell opportunities through 1003 data collection, middle and back-office process automation, and mortgage servicing automation.

Silverline helps banks and credit unions use Salesforce to automate solutions that meet the challenges of today’s economic uncertainty. We make your customers and members feel their needs are being met with connected experiences across all departments. Find out how we can help your organization with its Salesforce journey.