COVID-19 has forced rapid change in pretty much every industry, from groceries to banks. The removal of personal interaction in people’s day-to-day lives has meant online grocery delivery has soared and the need for online banking capabilities has become a necessity. Only time will tell the full story of whether the habits forced upon us during the pandemic will stick once it’s over, or if a new model will emerge.
The key differentiator for consumers may likely be whether or not the self-serve channel is a value-add or a negative. For the online grocery delivery customer, that return to self-selection of the “best” tomato versus receipt of whatever tomato happens to be picked from the pile may send us back to personal shopping in droves. With banking, probably not so much. The ability to choose integrated products and services from the comfort and ease of our homes with no loss – and in fact a gain in personalized experience – could mean a fall-off in branch banking.
The reality, however, will probably be that banks will emerge from COVID-19 with branches more in-tune with the experiences customers demand, and with enhanced products and services that bridge the best of both the digital and the physical branch worlds.
Savvy banks realize the investments in omni-channel delivery methods are key to customer engagement and retention. What many may not realize is that self-service delivery can be a very profitable move, and it doesn’t mean eliminating the branch. According to Frederic Jacques, McKinsey & Company, brick-and-mortar facilities “actually help further the rise of digital.”
Checks are anything but void
A similar analogy could be made with that mainstay of small businesses – the check. Digital payment options have not heralded the end of the paper check. In fact, in today’s increasingly digital world, it may be tempting to think that the time for printed checks has come and gone. But research shows that checks still hold an important place in the payment ecosystem, both for consumers and small businesses.
The value of the checks business to banks remains. Check order and reorders can be quite profitable for banks, and moving to a self-serve model can serve bankers’ bottom line as well as consumers’ preferred delivery channel. At Deluxe Exchange 2020, Senior Vice President, Deluxe, Tracey Engelhardt and other Deluxe check specialists showed why checks still matter, offering insights and solutions for how today’s financial institutions can use check programs to improve customer satisfaction and retention.
“There’s so much opportunity in checks, so much more that we can do with our programs, including opportunities to generate fee income for you, our bank partners. We can have those conversations with your customers for you, strengthening those connections and freeing up your team to focus on building revenues through other products and solutions,” said Engelhardt.
So what does this mean for check and check re-orders, still a major force in the payments space? When it comes to businesses, especially smaller entities, checks are the financial lifeblood of their operations. A 2019 study by PYMNTS.com stated that as much as 80.8% of all business payments are made by check.
Deluxe partnered with a top banking client to conduct its own proprietary study of small businesses and check usage, finding that small businesses who buy checks are 40% more likely to be retained by that financial institution after 90 days. “Small businesses say that the financial institution that holds their checking account is the one they consider to be their ‘home’ bank,” said Engelhardt. “That’s where they do their business, where they’ll hopefully go when they need a credit card or a small business loan. You obviously want them to consider your financial institution as their ‘home.’ And checks help do that.”
16 billion checks written every year
The Federal Reserve published its triennial payment study in 2019, which revealed that, far from languishing, check payments are still very relevant – totaling 16 billion transactions in 2018 alone. In fact, check writing is still the #1 payment method for small businesses. These business owners are still attached to checks because they offer a variety of benefits, including:
- Remittance processing
Another way checks maintain their place in the payments ecosystem is checks fit into businesses accounting systems. “It's really hard to get small businesses to change what they're doing, and checks fit. They work and if it's not broken, they're not going to change it,” said Engelhardt. “So if they're using Quicken, QuickBooks or another accounting software, they can use that solution to write checks and it works really well.”
Engelhardt also noted that local small businesses – the nail and hair salons, mechanics, restaurant owners, landscapers and similar enterprises – especially prefer checks when receiving payments, because they can avoid the costly credit card fees that can cut into their profits.
Still a solution for all ages
Another payment study by the Federal Reserve Bank of Atlanta showed that consumers of all ages are writing checks – yes, even Millennials and Gen Zers. As expected, older consumers tend to write more checks per month, but even younger consumers average around one per month. And what are they writing checks for? A Federal Reserve Bank of San Francisco study revealed this breakdown:
- 36%: Government and non-profit – likely, property tax payments plus school expenses and charity donations
- 16%: Medical, educational and personal services such as those from local salons
- 7%: Gifts and transfers to people – money for birthdays, graduations and more
- 5%: Entertainment and transportation options
- 2%: General merchandise
- 1%: Auto-related, housing-related, and food/personal care expenses
“In addition,” said Engelhardt, “studies show that the larger the value of the payment, the more likely it is to be by check. People are using their debit card for the two, five or seven dollars to get a quick cup of coffee every day, but they're writing checks when they're buying a refrigerator or those kinds of larger items.”
Find a partner that helps you connect across the business lifecycle
By offering more of the solutions today’s businesses need, financial institutions can create deeper connections and help foster that “home bank” persona business owners are looking for. How? Leverage a check provider’s portfolio of tools that reach across every potential touch point in the lifecycle of a small business, such as:
- Start-up services: From incorporation services to help businesses generate an EIN number from the IRS, to licenses and IDs, and more; the right vendor help make it easier for you to get launched and open that checking account right away.
- Branding services: Including logo design, website development, and trademark filings.
- Marketing services: From print and digital marketing solutions to packaging design and promotional merchandise.
- Optimization solutions: Such as payroll, e-payments, database marketing and more.
“We are also working on updating our APIs,” said Engelhardt, “so that our banking clients can integrate our check ordering process within their application – whether that’s online banking or a mobile application or a kiosk. We're making it much easier for the development teams of financial institutions to integrate that check experience into their platforms and tools.”
Engelhardt also highlighted Deluxe’s unique partnership with Salesforce.com and how it is streamlining check ordering. “We're launching our Order Pro application integration – our banker-facing check ordering platform,” she added. “So imagine you're the banker and you’re a Salesforce bank…the customer walks in to open an account, and with this tool as part of the Salesforce app exchange, you can order checks right there on that same platform, without leaving that application. So the integration between Deluxe and your financial institution is now 100 times easier! And again, we want to make sure that the customer walks out of the bank with checks ordered, or even in their hands.”
Self-serve channels remove burdens while adding to the experience
Staying connected and creating positive experiences are keys to customer loyalty. Deluxe’s retention marketing solutions help ensure customers continue to order checks and keep getting their needs met. “We know how small businesses use checks, and approximately when it'll be time for them to reorder,” said Engelhardt. “So we send them reminders via email and direct mail of where they placed their check order…because a small business may not remember that. We'll make sure that we stay in front of them and that we're there at the right time.”
Deluxe marketing materials also encourage customers to place their orders through a self-serve channel, moving the burden of that check order off the bank’s branches and onto our call center or through a web solution. “Our call center experts know checks,” she said. “Believe it or not, small business checks are not all that simple. There are different accounting software packages. Maybe they need them reverse-ordered, or they want checks three per page. Maybe they want one laser check, or checks that can be run through their home printer. Maybe they need something with a stub. Our call center can help get them into the right product. And again, we're going to make sure that your customer feels like they're being taken care of…because that customer experience is really important.”
Companion products drive incremental revenues
Better yet, when a customer goes through a self-serve channel, they'll also be exposed to offers for companion products they’ll most likely need, generating incremental orders that can nearly double the profit per order. Those solutions include:
- Envelopes to complement their laser checks
- An endorsement stamper
- Deposit tickets
- The choice to expedite delivery, and more
“And we can do the same thing on the consumer side,” added Engelhardt. “We can take the processing and technology hassles of check ordering and move that into self-serve channels – and actually increase profits and efficiencies for the bank.” In fact, Deluxe conducted a case study with one of its financial institutions that had significantly increased its push to move transactions out of the branch and into self-serve. The results showed a marked increase, across the board, in:
- Customer satisfaction
- Bank profitability
- Process efficiencies
As a case in point, Deluxe had its highest percentage of self-serve check orders – ever – this past month, in April. “It’s just a win, win, win,” said Engelhardt. “customers, believe it or not, want to order their checks through self-serve channels…their satisfaction actually goes up when they get to place the order themselves because they're choosing what they want. We’ve got the data to prove it.”
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