Issues : Strategy

The Year that Changed Banking

When I open this year’s Bank Compensation & Talent Conference, I intend to ask our attendees, including over 220 bankers, to think back to 2011.

Why 2011? In my opinion, 2011 was the year that fundamentally altered expectations around teamwork, culture and performance.

You see, 2011 was the year that IBM’s Watson won Jeopardy, and artificial intelligence went mainstream.

Regular readers of Bank Director know that financial institution that adhere stubbornly to the status quo risk being left behind, as new generations of consumers and employees embrace the digital revolution in financial services.

Indeed, the evolution of the banking world since Watson’s victory includes the rise of fintech disruptors, the advance of challenger banks and the continued consolidation of the industry. There have been adaptations in business models, new leadership mindsets and venture capitalists pouring money into startups offering basic banking services — all of which materially impact team and compensation structures that were once taken for granted.

Since 2011, digital channels have transformed the way consumers interact with their bank. More than three-quarters of deposits are made over digital channels at some of the nation’s biggest banks, and a quarter of total consumer sales at those banks are made digitally.

Digital payments are expanding at a blistering pace as well. In the third quarter of this year, 196 million transactions were completed on Zelle, the person-to-person payments system backed by a consortium of major banks. That is a 73% increase in transaction volume compared to the same period last year.

Changes have been underway in the back offices of banks, too. The proliferation of machine learning and digital account opening, for instance, makes it possible for banks to serve more customers with fewer employees.

But the changes since 2011 haven’t been limited to technology: There’s a new generation of customers and employees starting relationships with banks. They expect more from their employers than just a paycheck, more from their banks than just products and services. They also want purpose and autonomy.

But even with the changes that have reshaped the industry since 2011, some things remain the same. John Maxfield, who wrote Bank Director’s third-quarter cover story on banking’s most accomplished turnaround artist reminded me of two examples: recruiting and retaining new generations of employees and appropriately compensating them without incentivizing imprudent risks.

These subjects are the focal points of Bank Director’s 2019 Bank Compensation and Talent Conference, taking place at The Ritz-Carlton in Amelia Island, Florida, from Nov. 6-8. Nearly 300 attendees are joining us for wide-ranging presentations and conversations focused on enabling future-ready workforces, sharing best practices for board compensation committees and exploring the future of executive incentive plans, among other things.

Technology has fundamentally altered expectations around teamwork, culture and performance since 2011. But it hasn’t altered the need for banks to cultivate and compensate the best talent in the industry – talent that will steer it through the next era of transformation.

Bankers are constantly thinking about what the future holds; in many ways, industry innovations since 2011 show we already work in it.