Innovation Requires Strategic Direction and a Dedication to Achieve Meaningful Change

This past week I completed my second innovation workshop of 2024 at a Louisiana community bank. Working with a cross section of employees from all areas of this institution, I was able to help them realize the importance of bankers being truly open to the way that financial services should transform in order to meet the headwinds and challenges that bankers face. Headwinds specifically addressed in the workshop included how to attract and keep younger customers, how to hire and keep quality employees and how to transform retail branches from transactions to engagement.  I was greatly encouraged by the positive reaction from these bankers; they genuinely seemed to be on the same page and understanding that innovation will absolutely be required for continued success.

The next day, I read a timely article titled “Why Intentional Process Improvement Matters” from our friends at Profit Resources, Inc. (PRI) highlighting this very issue. The article focuses on comments from PRI Project Consultant Jen Megee, who opined that many FIs have an “if it’s not broke, don’t fix it” approach but observed that FIs that follow that axiom are not fully thinking through the issues related to customer acquisition and retention. Yet, process improvement goes far beyond this single just addressing loyalty and its relationship to account retention. It touches every part of the organization, including employee recruitment and retention, and it should be tightly incorporated into the FI’s long-term vision and strategic planning. Since the banking landscape is constantly changing at a rapid pace, process improvement is not a “one and done” event.

I especially like that the article highlights not just “process improvement” but adds the important element of being “intentional.”  This means that a financial institution is strategically thinking about what may need to be “broken”, such as outdated account opening procedures, having tired digital banking technology that offers only the basic features and a debit card program negotiated ten years ago. It’s about performing customer journeys to identify unneeded steps, poor communication and unnecessary friction then enabling your team to be innovative in remediating those issues. Rather than let market competition force an FI to make changes, banking future customers will require a more proactive, intentional approach. This will yield truly innovative approaches that will allow for differentiation in the financial services vertical that is often thought of as generic.

Ms. Megee highlights four specific areas that will benefit the most from intentional process improvement. They are:

  • Better Use of Data – I have written extensively about this topic but consider this quote from Megee, “Get your data in a format that will tell a story for you, giving you a full picture. It’s typical for FIs to have data in several places with no clear owners, so it becomes difficult or unusable in making decisions.” Love the tie-in to effective storytelling, another element that I believe is not fully utilized in most community financial institutions.
  • Improve the Client Experience – Megee hits another hot button of mine here. How can we accept deploying technology and processes that do not take into account the usability of our customers? Need a good example? Open your mobile phone app and tell me where the hamburger is (three horizontal lines that represents opening a menu of choices)?  If it’s in the upper left or upper right, then your vendor is not thinking about the customer experience who have big phones and average size fingers.
  • Employee Retention and Experience – Intentional innovation can be focused on eliminating unnecessary procedural steps and improving internal communication / workflows. Eliminating a “step 4” that no longer is relevant frees up team members to focus on improving the customer experience. And while we are at it, we should be focused on hiring and training younger employees that will look and talk like the future customers we need to convince to bank with us.
  • Overall Financial Institution Performance – I am a big proponent of focusing innovation on positive outcomes. In addition to internal efficiencies and strengthening the customer experience, I direct my workshop participants to focus on improving gross margin. That is, increasing revenue or decreasing costs, either of which positively affects overall profitability. If you think about it, decreasing a $1 of cost is worth more than increasing $1 of revenue due to taxes.

At the end of the day, when you have intentional process improvement that leads to innovations in internal efficiencies, advancing the customer experience and improving the gross margin, the institution will flourish from both an account growth and profitability perspective.  This is not the time to passively sit on the sidelines. As older customers leave the account rolls, we must aggressively fill the top of the marketing funnel with Young Millennials and Gen Zs.  Attracting and keeping these younger customers requires innovative processes in marketing, advocacy and technology.  All of which is absolutely achievable…if you get intentional about it starting right now!




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