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Digital-First Banking Doesn’t Mean Chasing Every Fintech Innovation

Alliant Credit Union has closed its last branches and aims for a completely digital experience. Input from a cadre of tech-savvy consumers helped guide it. Marketing changes have proved to be as essential as tech upgrades. Close attention to the voice of the customer rather than trendiness kept it out of a Google partnership, for now.

Alliant Credit Union began moving towards a branchless, digital-first model in 2014, when it had about a dozen offices that were seeing less and less use. The credit union’s reach had been increasing as it continued adding additional employee groups to its membership, which had started with employees of United Airlines. Two branches remained as COVID-19 hit the U.S., one open only to members of a single employee group and the other Alliant’s HQ branch in Chicago. Both closed temporarily for COVID isolation.

Those two branches had been slated for closure at the end of 2020. But as the pandemic continued, management advanced its game plan to be completely branchless. It bit the last bullet.

“We decided that we were not going to reopen those two branches after all,” says Phil Salis, SVP for Member Engagement and Chief Banking Officer at Alliant, which has nearly $13 billion in assets and over 500,000 members nationwide.

“We are now completely, fully digital,” says Salis.

Alliant’s Road to Branchless Banking

Closing the last two branches was a comparative nonevent, says Salis. Out of half a million customers, roughly 16,000 — about 3% — used the offices, on average once every 18 months. So Alliant had substantially made the transition to branchlessness already.

“When we started closing all the other branches, that was the ‘big gulp’ moment,” says Salis. The executive’s roots go back to branch banking in New York City, where he ran Manhattan branches for Chemical Bank, so there was a bit of a transition for him too. But the time had come.

“I’ve been here for eight years,” says Salis. “We would go out and do branch visits. At any time during the day, you could shoot a cannon through a branch and not hit anyone. In fact, 96% of the transactions that were occurring in the branches could have been done digitally.”

The remaining 4%, Salis continues, weren’t happening in offices because members preferred to bank that way, but because Alliant policy forced the choice. He explains that many transactions were check deposits over $25,000, which at the time Alliant wouldn’t take remotely.

We decided to raise our threshold for mobile deposits to $50,000 per check,” he explains, “and that basically got us up to about 99% of the transactions that were done in person.” Now most members could do almost everything they needed via mobile app.

The transition to branchless banking required simultaneously beefing up its technology, according to Salis. For example, it went from branding a white-label mobile app to developing its own proprietary one.

But the tech journey is ongoing because going branchless means committing to constant innovations and continual upgrades, says Salis. Going digital-first means accepting a rate of digital change that moves at a geometric rate, versus a branch experience that changed glacially by comparison.

“We had to develop everything from the ground up,” says Salis, “hiring new people with new skill sets to build core competencies that now serve us well. Now we’ve got a cadence, especially on mobile, that we just didn’t have four or five years ago.”

Making this transition demanded building a strong tech foundation with redundancy. “You have to be able to get things up and running again really fast if there is an outage, and in a way that is imperceptible to the customer,” says Salis. There’s no physical network to fall back on anymore.

Serve the Consumer, No Matter How Long It Takes

The other side of branchlessness is the criticality of the call center, one of the executive’s key areas of oversight. In ordinary times the ability to reach a human when there are no branches is essential, and the COVID-19 era has been a testing time. Salis says calls for loan deferrals, as well as for new mortgages and for refinancings, has been quite high and many other COVID-related questions keep things hopping.

So, it’s no surprise that he says one of the qualities Alliant seeks when hiring call center staff isn’t sales ability — it ditched sales quotas some time ago.

Salis says the credit union works to find people who have patience.

“The relationship we had with people when they came into the offices — the camaraderie and the knowing-your-customer aspect was very intimate,” says Salis. “In the digital-first world, it’s very different.”

Salis isn’t convinced anyone has completely nailed this intimacy yet. However, he has huge respect for USAA, which given its membership and approach is somewhat in a league of its own. Likewise, he has been very impressed with Ally Bank, which he considers the originator of today’s direct banking model and adept at improving as it gains more and more experience.

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