Humanized Digital Engagement Propels Growth in Banking

Jim Marous:
Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, Founder and CEO of The Digital Bank Report, and co-publisher of The Financial Brand. The demand for fast, humanized digital engagement has reached new heights and is changing the financial services landscape. More than ever, customers have switched from wanting to visit a branch to connecting with a human representative on a digital channel. Financial institutions that are unprepared to adapt to these new paradigms are at the greatest risk of losing both market share, and the growth that these new channel engagements can provide.

Jim Marous:
I'm excited to have Katherine Regnier, CEO of Coconut Software on the Banking Transformed podcast. Katherine shares how banks and credit unions can bridge the gap between digital, and physical client interactions, and create seamless experiences. As digital becomes the channel of choice for more consumers, financial institutions need to focus on making customers feel more valued, appreciated, and respected as opposed to simply being a digital transaction. Their question becomes, how can financial institutions balance between low value digital transactions, and high value human interactions? So Katherine, can you share a little bit about your background and how you came into being as a company, and the solutions offered by Coconut Software?

Katherine Regnier:
Yeah, absolutely. And first off, Jim, thank you so much for having me. I'm delighted to be here. Coconut, we fully launched back in 2011, so we've been doing this for a while. And we really said, "Okay, we're going to focus on banks and credit unions." And so we say that we are a relationship banking platform. That's what really counts is building these relationships. And we really help bridge the physical and digital worlds together, because I think when digital came out we forgot about all the physical pieces, but it's about both of those and bringing those together. And so we help increase customer loyalty and really focusing on making the workforce more efficient and effective for banks and credit unions. And we do that through our product offering, which is appointment scheduling, queuing, video banking, and advanced analytics.

Jim Marous:
So it's interesting, you came into business a ways back, but over the last three years things have certainly changed quite a bit around the engagement level that financial institutions have with consumers. Not only have more consumers gone to digital channels and expect almost the same level of service they would've had in person, but even more than ever before, consumers want to engage the way they want to engage, when they want to engage. From your company's perspective, how has your delivery of services changed or what you really are emphasizing, compared to just three years ago?

Katherine Regnier:
Well, what's really fascinating Jim, is when I think about Coconut, the whole purpose, the whole reason we even created the company was about that I knew what I wanted as a consumer, and I wanted that anytime, anywhere, anyhow. That was the whole point. You even think about this tree, right? You think about as a customer I'm at the beach, and I wanted, my husband and I were talking about, I don't know, financial planning, buying our dream house, whatever that might be. And I always thought, why is it so hard and so complicated to get in and meet with the right person? And so we have this philosophy of, as a consumer, I'd like to meet with anyone, anytime, anywhere. And that was three years ago we were saying that. What's really hard, that's really easy as a consumer to say that. Where I feel super empathetic is the actual people that have to implement this at the banks and credit unions.

Katherine Regnier:
Because it disrupted all of their pieces that they had in place. And so, that's where the transformation started to come where we had to say, we really had to put the consumer before they even walked into the door. And now that is what's changed everything. And I think it's a super fascinating time to watch all of this. And then we saw a lot of, you mentioned earlier like the lots of transactions at low volume. And then we started to see digital banks coming through. So opening a checking account was super easy. And so, everyone's competing for that customer loyalty.

Katherine Regnier:
So we have this ease of use of technology, but where I see it is, those are the check marks we can get. We can do that. But where it gets more complicated is when it is your workforce and it is your advisors, or we're seeing people rebrand tellers as universal bankers. That's the big transformation. That is taking, I think I have it said here, McKinsey said this, "Digitally enabling the human experience." And I think we've just relied so heavily on the term digital, but for me, that's just like the vehicle, not the end game.

Jim Marous:
It's interesting, I've been in banking for more than four decades. And every stage of banking from ATMs, to online banking, to mobile banking have all really been to reduce cost. We talk about wanting to improve the customer experience, but the reality is, we keep on trying to reduce costs. The consumer sees that. But what's interesting about it is, almost because of Covid and the whole complete shift to digital made it so consumers said, "I get it, I like it, I want the speed and simplicity. But there are times that I want the humanized functionality, the humanized factor."

Jim Marous:
And it may not include a face, it may simply be a new way to communicate in a human way. So, what do you see as the biggest barrier to creating the level of engagement customers and members expect in banking, and how can organizations deal with these dual objectives of reducing costs, and improving customer experiences through human interactions?

Katherine Regnier:
I think that's so fascinating. And I don't think it's picking... Jim, I think you actually can't have one without the other if you do it smart. And so, I love that you said even though we talk about the customer experience, we're always talking about efficiency and how do we save money? And I laugh, because I was at a conference the other day and I said, "We always talk about the customer, but do we really care?" And the room kind of laughed, because we do have to have this operational efficiency. And so if you can map out, if you can take your workforce and make them more effective, and by that I don't mean cutting corners, I mean being able to map them to the right person at the right time. You are now optimizing your workforce. You are able to do better... What am I trying to say here?

Katherine Regnier:
You are better to do better capacity planning. What do I need? Where do I need it? How do I staff these branches that are now being repurposed? I think Forbes, there was a comment about banking is shifting to an appointment based system in branches. And so I think it's just being more thoughtful. And if we can do that, we're obviously going to see them saving more money, because they're optimizing it. They have no, I remember when we started Coconut and we said, "You are going to reduce your no-shows by 25%. What is your no show rate?" "We actually don't know."

Jim Marous:
Right. Yeah, that's a challenge. And what's interesting is, when we look at these interactions, when we look at the way a consumer wants to interact, let's say they're trying to open an account digitally and stumble, we want a human to get interacting with us quickly before the person completely turns off the interaction. So we need that. We need the ability now with people opening accounts digitally, we've seen in the industry that the rate of cross sell, the expansion of relationship at account opening is way down. And that, that's understandable, because most financial institutions haven't figured out how to do this.

Jim Marous:
But this is another opportunity where the involvement of humans, as part of that process, keeps the value proposition while still the efficiencies. It's interesting because you talk about, if I'm not mistaken, a lot of your business has been built around the credit union space, if I'm not mistaken. And what's interesting is that really talks to the correlation between your company's emphasis on the customer experience. And what credit unions have thrived on, and community banks have thrived on forever is that they really say, "You know what? We're going to bring a better experience, because we have better people." Whatever that means. Well you enable this better people aspect of the business to come together with the digital components of what a customer's looking for today. I am making a leap of faith, or is that really what's made it work really well at Coconut?

Katherine Regnier:
What's really interesting, because we look at the different segments. So we do sell to credit unions, we also sell to some tier one banks that are fabulous partners. But I think the story that they care about the most is what we need to lead with. So is it the customer engagement? People may care about that. We might have some larger banks that care about the bottom dollar. You better tell me how we're going to do it. But the truth is, is it's going to affect both. And that has actually been one of the hardest parts about me at Coconut. It's like, we can talk about the customer engagement, but that can sometimes feel a little bit light. But what you see, what we drive in terms of cutting appointment time down 70, like 75% of coconut appointments are tighter and more efficient. And having a transaction happen sooner.

Katherine Regnier:
And how much time. That's really the value of it. Getting them to you, okay, we needed to solve that without a doubt, but I think we're getting there. But now it's all the pieces inside of that that really matter that can have you staff better, help you train people better. Understand what's happening. There's just nothing. And then I think where we go to next is, you provide all this data, but what do you do with it? And I think Jim, the next step of digital and physical, I've heard phigital, is that the right?

Jim Marous:
Phigital. Yeah, yeah.

Katherine Regnier:
Phigital, hybrid, whatever it might be. The next term is going to be predictive.

Jim Marous:
I was talking to a gentleman earlier today and I said, "You know what's interesting is, we're not driving the ship anymore in the financial services industry. The customer's driving it." And not just that, but the engagements they have in relationships outside of financial institutions is driving what the expectations are. So, we have a small place down in Florida, and we also have our house in Cleveland. And in Cleveland we have Direct TV. In Florida, we have Hulu and Netflix. And the engagement differences are vastly different.

Jim Marous:
In one case, down in Florida where we have the streaming services, they predict what I want to watch next and they do it on an ongoing basis. So if I watch the nightly news every night at six o'clock, they've got that queued up. But if I'm watching specials on a specific subject matter, if I like crime mysteries, let's say, they're going to put other ones up on the screen that I may want, as opposed to me having to push, I want to record this one show every week throughout time. And you end up having to delete half of what you have there, because they do the replays, they do the regular ones. The consumer gets used to that predictive modeling, and they want it everywhere. They want you to know-

Katherine Regnier:
And guess what? It feels personalized.

Jim Marous:
... Yes.

Katherine Regnier:
You know I love reality trash TV. You're telling me what the next best one is. I totally agree and back to your comment earlier Jim, about the barrier. I think to better answer that, and again I feel a lot of empathy for banks and credit unions who have to implement this and get this done, because it's not an easy thing. Is we see that there's so many different service offerings for the customer. You may have a chat bot here, you might have scheduling there, you might have this there. That's one of the things we're focusing on is an all in one centralized solution. Because if you want to be personalized, you want to give that best experience, you want your staff to understand better, you have to be able to weave those all together into one story, because I am a customer with a story. And how do we make that accessible? I think it's going to be, I think it's huge. I think we're seeing it now.

Jim Marous:
Well and it's interesting, because again, the Hulus and Netflix of the world realize that you may be one household but you're going to probably be multiple people. So they have it programmed so that each person when they log into the system say, who is this tonight? Because we have different desires in what we want to watch. My son, my wife and I have vastly different things that appeal to us. Yet a financial institution, if you have a joint account, they treat it as one person. And we may want to interact differently, we may want to get our statements differently, we may do different types of transactions. So using data and measurement tools to monitor how customers engage is not new. And in fact, I think 30 years ago I was doing some form of tracking of engagement and how peoples want to interact. But why should financial institutions prioritize better tracking and measurement for in-person touchpoints?

Katherine Regnier:
Well like I said, I don't think it's just for in-person. I think it's seeing the whole story merging the two together, the digital experience and then the... I'm not even going to say in-person, I'm going to say human experience. So there's a digital experience and a human, because it could be the branch, it could be video, it could be whatever it is. Because it all tells one story, you can't take a chapter out of a book and understand the whole book. And so I think tracking that can also see where they're fumbling. You made a really good point about there's trying to open an account and they fall apart. We've worked with customers where there's actually people who get to that point. So imagine you have a big lobby, you have all these leads, because at the end of the day we're selling stuff, right?

Katherine Regnier:
As banks, we're selling things. And then the next step they have to do is actually verify something. And then it will just say, "Come to a branch." There was no commitment, there was no easy access to a human in that point to finish the transaction. So now we have 75% of these leads just dissipate and go somewhere where they can do that quicker. And I think that's the value. If we can understand the whole funnel of what channel they're coming through and where they're falling off, we can make better decisions that will definitely save us more money, make us more profitable, and the customer's going to be... they're going to have loyalty there.

Jim Marous:
So on that same theme, where do you see the greatest opportunity for financial institutions to optimize that customer journey? What is the difference between a great customer experience, which I really consider to be just satisfaction, and building better customer engagement?

Katherine Regnier:
I absolutely love this question, Jim. I think customer experience can be very much a razzle-dazzle. You walk in, can be very, I think about probably the difference when you have a Disney, that's a whole customer engagement piece. That's from the moment you step in to all the way through to till you leave at the end of the day. And I think some people could look at customer experience as like, "Oh, is the lobby nice, or how do we treat people, or how do we call their name?" But I think when you go to engagement, again it's about the multiple touch points, not just that first razzle-dazzle. It has to carry all the way through or we're losing people. And I think that is really the key. And making it accessible. And that sounds silly, but traditionally, if I said to you, even if I talk about appointment scheduling, which is where I started a million years ago. If I say to you, Jim, "You have to call your bank today and set up an appointment," what are your first thoughts?

Jim Marous:
Oh yeah, I mean it's basically, yeah, exactly.

Katherine Regnier:
"Oh God, do I have to do this?" And this is actually strategically why we named our company Coconut, because it feels effortless. You should be able to do it from anywhere. You should have this sense of ease, enjoyment. And I think we can bring that to the space, because that's what people want. They want that. They want it to be easy, they want on demand, or they want scheduling, whatever it might be. But it shouldn't be so exhausting. We're trying to make them more friendly, and accessible, and approachable.

Jim Marous:
Well, I mean that's all key. I mean at the end of the day, we want it to be the way the customer wants it, but more importantly, we want the process to be as simple as possible and to make it so there's a value transfer. And value transfer for Amazon is they know me so well that they're going to engage and they're going to provide me easy tools to find what I've been looking for before I even know I need it.

Jim Marous:
In addition, if I have that terrible experience where something comes back, it comes to me and it's the wrong size, wrong color or anything else, there's probably be a pretty good chance that when I'm trying to return it, they're going to go, "You know what? Tell you what. You keep that, we're going to send you something else out instead." They've already determined the value proposition. But for me? You've just made my life that much easier. So where am I going to go next time? It may cost a little bit more than me getting in the car, going to the local drugstore and picking up regular daily things for my medicine cabinet. But on the reality, I want it now. I don't want to get out of my house to do it. I have other things I'd rather do if I'm going to go out of my house. So, how does Coconut tie together the in-person, and the digital experiences?

Katherine Regnier:
Absolutely. So I think it's giving the customer the choice. If they're in person, it's all going into... And I talked a little bit earlier about this earlier is that it all has to be centralized so we can tell that one unique story. So as an advisor, I can tell that they joined the line online digitally, but when we're sitting face to face, I'll be able to actually see all of that in one area. I don't have to log into 400 different, get app fatigue from all these different systems. So I think it's about that. I think the other thing, I heard this great quote at Web Summit from a designer, and he said, "It's time that we stop working on the technology, and have the technology work for us."

Jim Marous:
That's pretty good.

Katherine Regnier:
It's super good, and it's totally different. It's totally different. So we spend a lot of time thinking about the UX, and does this person need to push this button or can we serve this up? How do we make it so that the technology is working for the humans? And that's a totally different, we see it in software lots where it's all about, okay, you do this, this, and this and you have to work on the technology. But how do we serve it up? What is mortgages? I think mortgages are really likely to churn. We don't have much loyalty there. But what if I knew that you came in three years ago, Jim, to do a mortgage, and I know it's up for renewal. And the technology told me, as the advisor, maybe you as a customer, depending on how we set it up, that it's time for you to come in to renew it. That I'm first, that I'm first to you versus you knowing it's coming up and then shopping and then I lose that. And I think that's the other thing. I think that's the key to engagement.

Jim Marous:
And you mentioned in the past, earlier these self serve solutions where they can be both digital, and in person, that the customer actually is doing some of the work to set these things up. Now, how does this ability for a consumer to actually self-serve themself impact the overall customer journey?

Katherine Regnier:
I think that's a really key thing. So we saw probably, or I guess we still see it. We see... Let's define self-serve. Some people will say that is a form, that could be a voicemail. The difference here for me and how I see it is you need to have the customer commit to something. And don't tell them what they can't have, tell them what they can have. So if I want to book a meeting with an advisor, let me commit to a time and a date. And even if I want it video wise, if I want to be in branch, or you're going to come to me, let me determine that and I can know that by the way and commit to it.

Katherine Regnier:
Now I can put that aside, not the web form where I'm wondering if someone's going to get back to me, or I called in and now I'm hot potato and I have to repeat myself. I think that's the other thing that we're really focused on is how do we not make the customer tell the story 5,000 times?

Jim Marous:
Right.

Katherine Regnier:
We've all been there. I've explained it to you, Jim, you're like, "Oh, I don't really do that. You need to go over here." So it's the right person at the right time, the way the customer wants.

Jim Marous:
So providing the customer a choice of how to engage.

Katherine Regnier:
Mm-hmm.

Jim Marous:
What seem to me to maybe cause chaos and maybe even more work for my staff at a time when I'm struggling to maybe downsize my workforce. Where's the value proposition? Where's the balancing of trying to meet the efficiency needs, but at the same time, providing customers' choice without making it so it's overwhelming on the branch level?

Katherine Regnier:
I think this is where the technology piece comes in, Jim is, and I think it's been so separated. So you have to take the front of the house and the back of the house and marry it in a piece of technology, because that is the piece that's going to make it more efficient and less overwhelming to the staff. We can't work off of keeping it separate. That was something that was really surprising to me when we started back in the day working with banks. And someone would walk in and be like, "I'd like to speak about X, Y, and Z service." And they told me that they literally would go, walk down the hall and look under the glass to see if they had a customer or not. What? What?

Katherine Regnier:
No, no. So again, I think it's having the accessibility to get to the right person. And this scares people. And I'm going to tell you why it scares people. Because if I as a advisor, universal banker, let open my calendar, it's going to be bad, right? There's this fear of, "Oh shit, right now my boss knows what I'm doing exactly." But you still have control. This is still a human-to-human event. If something happens, you can reschedule, you can adjust. This is no different than it being written down, but they're now opening themselves up. And I think it's critical. Cause that's the only way you can have the two married and take away some of that workload. This just makes it easier for everybody.

Jim Marous:
It's interesting, I have a lot of guests on this podcast, and many of them are solution providers that provide solutions that honestly, I never knew existed. But when I'm done with the podcast, I go, "Oh my gosh, this so much meets the need in the marketplace." So you're selling mom an apple pie, but nothing ever goes as smoothly as we'd like. And we run into challenges. We go out there and hit the streets and try to sell our services. So from the perspective of your organization, when you go out and meet with a financial institution, and they initially think, "This is great." What gets in the way of actually buying your service? What hesitations have you seen? And maybe they've changed a little bit over time, but what are the hesitations you're seeing today of organizations not buying a solution such as yours?

Katherine Regnier:
I think that's a great question, Jim. I think it is the prioritization of what the transformation journey, what part of the journey they're in. So are they replacing their core banking platform? That's pretty substantial. So if that's what they're doing that year, we probably might not make the cut that year. I can tell you when Covid came, there was a lot of things that were dropped and like, "No, we need a digital way to connect with our customers like yesterday." And so we really hustled for them to make sure they had what they needed outside of what we were already offering.

Katherine Regnier:
And then there is the lower transactional piece. So opening an account and doing these things. But I think where we're falling into the journey now is one, Coconut is no longer a nice-to-have. That was probably five years ago, the early adopters. And there's going to be a competitive point where having something like Coconut is going to be a competitive advantage, but we're going to find out that that is just going to be the way people expect it to be, right? It's like what Netflix did, it's like all of a sudden I don't want to watch commercials. So the barriers are usually where they are in their digital transformation journey. And where does Coconut fit into that? I don't think it's a, "Oh, do we need this?" I think it's like, "When can we do it?" We can't take it away.

Jim Marous:
Oh, you're right. And what's interesting is, let's say you make a sale. What are the challenges you have with finance institutions that get in the way of you actually being able to implement what you've built in the way it's meant to be implemented? The reason I ask this is a lot of the solution providers we have on the show have a tremendous solution, and then they sell it and they're really happy. And then an organization says, "Well, I like everything you said, but I don't want you to change X or Y." And all of a sudden you're sitting back going, "Okay, we're still going to provide a value. But they just took away a major part of the value proposition we have, because they aren't willing to change an old process, an old procedure, an old way of delivering services." Whatever it may be. What gets in the way once a person says yes to delivering what you can offer at Coconut at the highest level?

Katherine Regnier:
Awesome. Okay, so that's a great question, Jim. Usually there's obviously buy in, that they're going to do this, we can move super fast. And when people say, "Oh, what about this timeline?" I'm like, "This is up to you. We could have this all done in a week, but these are the things I know that you're going to have trouble with." And those could be things like, do you have a workforce management solution that we can tie into? What reps are you going to allow to be perhaps accessible online to customers? Or there's some maybe new people and we don't necessarily want the public booking with them yet. So I think those are all the pieces. Usually it's the, where are the list of your people, locations, who are they going to be, and what services do they offer? And then it's, we have to take that data, because this is realtime, Jim, this is the real deal.

Katherine Regnier:
So that usually is the biggest lift. And then the other thing we've done this for a really long time is we can help them say, "Okay, this is the change management plan, or this is how we're going to educate the staff." And people have a lot of fun with it. We get some really great launch stories in banks, people are all dressed up with their lays and palm trees. And we try to make it enjoyable. We want to be your best meeting of the day that's fun. And we've done this before. So I think that's the key. And of course, you run into hiccups where they want to change a few things, but we're pretty configurable and can usually adjust, or at least provide insights as to why that's not a good idea.

Jim Marous:
Right.

Katherine Regnier:
We've done this 10 times, I know you want to do it, that's great, up to you. But here are the three reasons why we don't think that'll work well.

Jim Marous:
Oh, that level of honesty is important, because you mentioned it, you can deliver a solution at speed and scale. It can be scaled up, scaled down, it can be delivered extraordinarily fast. And traditional financial institutions need to have the mindset that I'm going to be willing to hand... We could use an American football analogy here. I'm going to be willing to hand off the ball to somebody who's going to run down the field on my behalf, do things that I need to have done, and I'm not going to get in the way. There's nothing worse than tripping over your own player.

Jim Marous:
But in banking, we continue to have those types of relationships where somebody comes in with a tremendous solution that the financial institution buys completely. Loves the way it's going to be, loves the end result, and then they're not happy with the end result, only because they got in the way. They said, "Well, we can do this and this, but we don't want you to change the way we do this," which completely messes up the process. It's great to have you on the show today. And I wondered, could any size organization implement the strategy you've been talking about?

Katherine Regnier:
I would say yes. Yes. We usually target, we kind of have three different service offerings. So we do look at the one billion to 10 billion, and we kind of tier it that way so it can be scaled and grow with your organization. I think there's some that maybe it's a bit small and you know everybody in your small town and they know you, and chances of them, they're probably going to text on their personal devices. We might not be a great fit there. But there's so much you can learn about your organization by using Coconut. And to your point earlier, Jim, I think that's the key. We have walked away from customers where we know you can be committed to the project, but there is a piece of it that you have to partner together and work on it.

Jim Marous:
Right.

Katherine Regnier:
And we have this saying at Coconut, and it really matters to me, which is, we get it done and we do it. And I think those values and those partnerships with our customers really go the long haul and we take it to heart. And our goal is to make them look like rock stars and we'll do all the work in the background. But we want it to be successful and we're going to work day and night to get that done.

Jim Marous:
It's very interesting you should say that. I don't think I've had a guest on who alluded to the fact that we're willing to walk away from sales.

Katherine Regnier:
We've done it.

Jim Marous:
And to me, when I was in sales, which was more than half of my career overall, selling to banks, the sales I walked away from became the best customers in the long run, because if the fit wasn't there, we could do it, but nobody would end up happy. And I had a boss that said, "You can't put spoiled milk in the refrigerator and expect to get good again." And you get the idea that can't put spoiled coconut milk in the refrigerator and expect to get-

Katherine Regnier:
Go for that [inaudible 00:32:44].

Jim Marous:
... good over the time, because the reality is, if it's broken at the beginning, it doesn't fix itself. There may be a better time to engage. So as you look forward, and you've been looking at the whole prospect of phigital banking and bringing together the digital and the human experience, what excites you, the marketplace, maybe not just in financial services, but what excites you about what's going on today that really opens your mind into what Coconut's going to become in the future?

Katherine Regnier:
I hope, there is so much that excites me. And I sometimes laugh, I'm like, for doing this this long, you would think I would be like, "Oh, exhausted." But I get so rejuvenated because there is so much that's coming down the... We started with a little appointment scheduler, now we're doing video banking. And I love just being a part of this massive transformation that's happening. And I believe that everyone deserves to feel like they matter, no matter the size of their pocketbook. I know that probably plays a thing. But people need to feel valued. They need to know that they matter. And we play a part in that.

Katherine Regnier:
And that doesn't just go for the customer, but this goes for the advisor. If I can close more business and I can do a better job, I'm going to feel more accomplished in life. And so for me, I get really excited probably more about the impact we have with individuals and how they feel about what they do every day. And then also where technology's going. I think the whole predictive thing is, I think that, I've been saying that for 10 years, so I'm really excited to see that come to light.

Jim Marous:
Yeah, that'd be great. Katherine, thank you so much for being on this show today. I really enjoyed my time with you.

Katherine Regnier:
Thanks so much, Jim. I appreciate it. Thank you.

Jim Marous:
Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoyed today's interview, please give our show a five star rating on your preferred podcast platform. Also, be sure to catch my recent articles on The Financial Brand, and the research we're doing for The Digital Banking Report. This has been a production of Evergreen Podcasts. A special thank you to our producer, Leah Haslage, audio engineer Sean Rule-Hoffman, and video producer Will Pritts. I'm your host, Jim Marous. Until next time, remember, a digital customer often wants to engage with the human from their home or business, as opposed to only a phone or computer.