Community banks have long differentiated themselves based on the “personal touch” they offer. Yet bankers’ consensus opinion is that the ongoing pandemic is accelerating customers’ embrace of digital banking. One regional bank recently touted the ease of using its new electronic mortgage loan application software. The innovation’s limitation, in my opinion, is its erosion of the “personal touch” the same bank claims is its special sauce.

Five years ago, Jamie Dimon warned, “Silicon Valley is coming.” JP Morgan in recent years has spent $10 billion per year on technology, 1/3 of which is devoted to “new initiatives.” JP Morgan is engaged in an arms race with Apple, Amazon and their peers. They must reinvest or risk irrelevance.

Regional and community institutions must find different ways to win and hold business. The value of “personal touch” must be made real and fresh for customers in ways that touch them at their core. The pandemic has put a spotlight on gaps in our social fabric. Why not help fill the gaps in ways that create durable customer loyalty? Consider a few examples.

1. Child Care. High quality child care is a scarce and expensive social good. It is also a need that most mortgage borrowers must fill. Suppose a group of community banks in a metropolitan area pool their CRA grants and loans to support quality non-profit agencies’ child care programs. The agencies in turn offer group discounts to those banks’ customers. Advertising the mutual assistance effort creates good will for the banks and reminds customer prospects of the “personal touch” the bank brings to serving its clientele.

Hurdles to such a reimagining of the “personal touch” are real. “Solving social problems is not why I went into banking as a career.” “Child care is the government’s problem to solve.” “My customers and prospects don’t have difficulty finding and paying for quality child care.” Yet economists from all perspectives acknowledge the drag on the nation’s economy recovery is significant and growing as 1/3 of the U.S. workforce struggles to balance work and childcare duties.[1] And what matters more to banks and bankers than having a healthy U.S. economy?

2. Senior Care. Same model, except the featured products would be savings accounts and trust services. Senior citizens need liquidity to pay for medical and social services not covered by Medicare. Their children need a place to park mom and dad’s money, usually for medium and long duration. For the busy children—in the prime of their lives—good service for mom and dad’s benefit is of greater value than the last 50 bps of deposit pricing. The children need the help; so do mom and dad; the bank reaps multi-generational loyalty, which it can advertise to remind people the “personal touch” has not been lost despite the march of technology.

3. 529 Accounts. Customers attracted by child care benefits are well positioned to shift that spending into savings accounts when their children are in K-12 school years. The economic disruptions of the pandemic and the financial crisis a decade ago are part of Millenial Generation’s life experience. They should find attractive the opportunity to save some portion of the cost of their children’s higher education in FDIC insured accounts.

4. Buy Fresh/Buy Local. Community bankers know the deposits they gather are put to work as loans in the communities they serve. Customers and prospective customers take that aspect of banks’ work for granted. Why not make a bigger push to remind them? The “buy fresh/buy local” theme has been effective in agriculture. Even Wal-Mart now features local and regional products as a way to appear more connected to communities. In our bank consulting practice, we have stemmed deposit outflows by framing campaigns that remind communities of the tangible benefits they receive from their local financial institutions. The campaigns need to speak in clear and direct terms, like the Lee Iacocca line about Chrysler products, “If you can find a better car, buy it!”

Digital financial services is a means not an end. It does not belong on a pedestal, however much dedicated personnel do to make it real and effective. Survival will require improving the customer experience in ways people value. Better technology is part of the value equation; but is the lesser part compared to preserving and extending the “personal touch.”

[1] https://www.washingtonpost.com/business/2020/07/03/big-factor-holding-back-us-economic-recovery-child-care/