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Who Needs To Know About Banking Technology

I recently wrapped up teaching an Effective Use of Technology course at the Graduate School of Banking at Colorado (GSBC).  This is my 8th year teaching this class and it is one of the highlights of my year. In particular, I get to interact with approximately 160 students, who have been tapped by their institutions to attend the graduate banking school. I heartily approve that GSBC mandates that all 1st year students take this class.  These 1st year students represent future C-Suite members, some of them CEOs. Future banking leaders all.

Each year, I send all students a pre-class survey that asks questions about technology and innovation at their institution. One of the questions I ask is what their role is.  This year, I got 144 responses, of which, 13 self-identified as Operations.  I suspect these 13 already had some knowledge of the topics I was covering, but what about the rest?  Separating out the 13 examiners in my class, this left 118 attendees representing future bank leaders who are not in Operations. Unsurprisingly, the vast majority of those 118 were lenders or otherwise involved in the credit function at their institutions. I joked with these attendees that they could catch up on email or watch videos during class if they wanted, but if they paid attention, they might learn some valuable information.  Like what?

First, I believe that the vast majority of the C-Suite of most institutions did not come up through the Operations area of their bank.  While many CEOs have worked diligently to acquire knowledge on financial services technology, they still greatly rely on their Operations staff to assist in understanding the complexity of technology decisions. . When a vendor comes in to do a dog and pony show, it would be super helpful if all bank participants:

  • Have some background on what technologies exist in the marketplace today;
  •  Have an idea of what future technologies might be emerging;
  • Have some understanding as to what type of technology the customers they need to add 8 years from now would need;
  • Have confidence to ask specific questions of any technology vendor and not just let the vendor do their “dog and pony” show;
  • Be able to articulate specific outcomes that the bank needs and challenge vendors to show how their solutions will achieve those outcomes;
  • Have future technologies identified in their strategic plan and commit to spend appropriate funds to achieve those goals.

By no means is the above an exhaustive list but I really challenged the whole class to think not about who their customer were but about who their customers were going to be. And to further think about what those future customer’s experiences were across the vast range of non-financial interactions they had with all the other companies and what digital expectations they were forming, then ask “Why would this young millennial or Gen Z want to bank with us?” This recurring theme came back day after day as we explored the range of technologies that I felt the attendees needed to understand. I told them that I understood that some of them were in major markets, some were near colleges or universities but many were in rural areas.  I stressed that not all of the options I was advocating for were appropriate for every financial institution. And, I told them that some of the ideas I would present were downright crazy.  But the crazy ideas are important. One, they force you to think “outside of the box”, at least enough to categorize an idea as crazy. But more importantly, I admonished my students that every time they thought “that is a crazy idea, my bank would NEVER do that …” to think further, “what would we do instead?” You see, as I have written before, we need crazy ideas, ideas that stretch us into thinking about alternative modes of providing banking services that we would otherwise fail to achieve.

So, what was I advocating to these eager (well some were eager …) mostly young bankers?  Here is a high-level overview of my class topics:

  • How your core works today and why that model is broken
  • How to go about choosing your next core (hint: Start with customer-facing applications and work backwards …)
  • Why a digital focus is critical to future success for consumer prospects
  • Why it’s important to have a true virtual branch and how it must be treated inside the institution
  • The 10 elements your virtual branch must have
  • How digital / mobility is affecting Business Banking
  • What makes a bank strategic to their business customers
  • The difference between loyal and repeat customers (Hint, most of your business customers are not loyal, they are just repeat customers …)
  • How to properly address the issue of “Big Data” and why bankers really need to address data mining
  • The importance of fraud / risk mitigation in online systems / transactions
  • How to re-imagine the physical branch away from transactions towards engagement
  • How to empower front-line staff to get more transactions performed away from the branch
  • The role of payments (hint: it’s the only thing you have as a franchise that no other entity gets to do)
  • Understanding faster payments and how fast is fast enough (hint – is real time posting really a requirement?)
  • How other form factors like smart watches, Google Glass and Virtual Reality will impact banking in the coming years
  • How banks need to pay closer attention to social media and digital advertising and readjust where they allocate their budgets
  • How Online Account Opening should really work (hint – it should include getting the form data, executing a funding transaction AND an eSignature)
  • How bank sponsored Crowdfunding could be the answer to assist locals who want to start businesses that would not qualify for traditional credit
  • How FIs need to change their thinking on what it means to be innovative …
  • … and how to avoid the barriers that will stop innovation.

Does that sound like a comprehensive overview of how technology will be examined, procured and deployed in the future for these bankers?  How many of you non-operations C-Suite members wished you had access to that kind of technology and decision making information earlier in your career?

Over the coming weeks, I’ll tackle a number of the specific elements I have listed above in individual blog posts. I won’t give it all away, if you want the full download you’ll have to sign up for GSBC so you can take my class.  But these elements are too important to leave unreferenced.  So stay tuned for more detailed information on the key elements all banking leaders need to understand. Regardless of your current position, I guarantee that you will learn something, even if it’s just to get you to say, “That idea is crazy … but you know what would work is __________________ .”