Breaking the Legacy Mindset

For banks, the status quo can often stymie innovation. Even if executives have the desire to try something new, their institution can be incumbered by entrenched legacy systems.

But taking a chance on something new can open up institutions to the possibility of achieving something bigger. The decision to choose a new path is usually very difficult; loyalty and security can feel hard coded in our DNA. But sometimes it comes to the point where you realize that the thing you are doing over and over is never going to produce a different, game-changing outcome.

The adage of “Nobody ever got fired for buying IBM” continues to ring true in many ways in the fintech space. It refers to the idea that making a safe bet never got anyone in trouble; choosing the industry’s standard company, product or service had little repercussions for the executives making the decisions — even if there were newer, cheaper or better options. It was safe, the company was reliable and little happened in the way of bucking the status quo.

The payments industry has a number of parallels from which we can draw. The electronic payment ecosystem is more than 40 years old; while there has been innovation, it has not been at the same pace as the rest of the technology industry. Some bankers may remember “knuckle busters” and the carbon paper of old. Although banking have since shed those physical devices, the core processing behind the electronic payments system largely remains the same.

These legacy systems mean the payments industry traditionally has had extremely high barriers to entry. This is due to a number of factors, including increasing risk and regulatory compliance needs, high capital investments, a technology environment that is difficult to penetrate and complex integration webs between multiple partners. This unique environment increases the stickiness of mature offerings and creates a complex set of products and long-standing relationships that make it difficult for new products or providers to break through.

The industry’s fragmentation is also a blessing and a curse. While fragmentation gives institutions and consumers choices in the market, it hinders new companies from emerging. This makes it challenging for companies to gain traction or disrupt existing solutions with new and creative ways to solve problems and address needs. Breaking into the market is still only step one. Convincing banks that you can simplify their processes and scale your solutions is an ongoing challenge that smaller fintechs must overcome to truly participate — and potentially disrupt — the industry. The combination of these factors fuels a deep resistance to change in the banking industry.

Fintechs aren’t legacy companies — and that is a good thing. Implementations don’t need to take months, they can be done in weeks. Customer service isn’t challenging when communication happens openly and quickly. Enhancements are affordable, and newer platforms offer nimbleness and openness.

In order to succeed, fintechs must find ways to innovate within the gray space. This could look like any number of things: taking advantage of mandates that create new opportunities, stretching systems and capability gaps to explore new norms, or venturing out into entirely uncharted territory. And banks do not have to fit into the same familiar patterns; changing one piece of the puzzle does not always have to be a massive undertaking.

What within your bank’s walls just “works”? What system or processes have been on autopilot that could chart a new path? What external services are your customers using that the bank could bring in-house if executives thought outside the box? Fintech can complement the bank, if you select the right partner that expands your ecosystem. Fintech can change user experiences — simplifying them to deliver a truly different outcome altogether.

Take a chance on fintech. It will be epic.

The Race to Perform

Last October, I journeyed to Austin, Texas, to watch my first Formula One race. Like many, Netflix’s wildly popular Formula 1: Drive to Survive drew me in. That docuseries dramatically increased the popularity of the sport in the United States, with plenty of drama on track and off. 

Inevitably, the show takes viewers inside a showdown between two cars jostling for points, separated by mere milliseconds. While being out front has its advantages, so too does drafting your competition, waiting for the chance to pull ahead. Indeed, the “push-to-pass” mechanism on a race car provides a temporary jolt of speed, allowing the hunter to quickly become the hunted. Speed, competition and risk-taking is on my mind as we prepare to host Bank Director’s Experience FinXTech event May 5 and 6 in the same city as the Circuit of The Americas.

Much like Formula One brings some of the most ambitious and creative teams together for a race, Experience FinXTech attracts some of the most inspiring minds from the deeply competitive financial services space.

Now in its seventh year, the event connects a hugely influential audience of U.S. bank leaders with technology partners at the forefront of growth and innovation. Today, as banks continue to transition towards virtual or digital strategies, fintechs become partners rather than just competitors in the race to succeed. 

We’ll look not only at fintechs offering efficiencies for banks, but at fintechs offering growth and improved performance as well. As fintech guru Chris Skinner recently noted, “If you only look at technology as a cost reduction process, you never get the market opportunities. If you look at technology as a market opportunity, you get the cost savings naturally as a by-product.”

We’ll consider investor appetites, debate the pros and cons of decentralized finance and share experiences in peer exchanges. 

Throughout, we’ll help participants gauge technology companies at a time when new competitors continue to target financial services.   

Most Formula One races are won on the margins, with dedicated teams working tirelessly to improve performance. So too are the banks that excel — many of them with dedicated teams working with exceptional partners.

Fintech Transactions

Global fintech investment hit $98 billion in the first half of 2021, promising a return to pre-pandemic levels, according to KPMG. So what can we expect for fintech M&A in 2022? Ritika Butani leads corporate development at the technology platform Toast, which provides payments and other services to the restaurant sector. She leverages her background to provide her expectations for fintech M&A, including cross-border transactions. Butani also shares her perspective on the traits of a great technology acquisition.

5 Key Factors for Fintech Partnerships

As banks explore ways to expand their products and services, many are choosing to partner with fintech companies to enhance their offerings. These partnerships are valuable opportunities for a bank that otherwise would not have the resources to develop the technology or expertise in-house to meet customer demand.

However, banks need to be cautious when partnering with fintech companies — they are subcontracting critical services and functions to a third-party provider. They should “dig in” when assessing their fintech partners to reduce the regulatory, operational and reputational risk exposure to the bank. There are a few things banks should consider to ensure they are partnering with third party that is safe and reputable to provide downstream services to their customers.

1. Look for fintech companies that have strong expertise and experience in complying with applicable banking regulations.

  • Consider the banking regulations that apply to support the product the fintech offers, and ask the provider how they meet these compliance standards.
  • Ask about the fintech’s policies, procedures, training and internal control that satisfy any legal and regulatory requirements.
  • Ensure contract terms clearly define legal and compliance duties, particularly for reporting, data privacy, customer complaints and recordkeeping requirements.

2. Data and cybersecurity should be a top priority.

  • Assess your provider’s information security controls to ensure they meet the bank’s standards.
  • Review the fintech’s policies and procedures to evaluate their incident management and response practices, compliance with applicable privacy laws and regulations and training requirements for staff.

3. Engage with fintechs that have customer focus in mind — even when the bank maintains the direct interaction with its customers.

  • Look for systems and providers that make recommendations for required agreements and disclosures for application use.
  • Select firms that can provide white-labeled services, allowing bank customer to use the product directly.
  • Work with fintechs that are open to tailoring and enhancing the end-user customer experience to further the continuity of the bank/customer relationship.

4. Look for a fintech that employs strong technology professionals who can provide a smooth integration process that allows information to easily flow into the bank’s systems and processes.

  • Using a company that employs talented technology staff can save time and money when solving technology issues or developing operational efficiencies.

5. Make sure your fintech has reliable operations with minimal risk of disruption.

  • Review your provider’s business continuity and disaster recovery plans to make sure there are appropriate incident response measures.
  • Make sure the provider’s service level agreements meet the needs of your banking operations; if you are providing a 24-hour service, make sure your fintech also supports those same hours.
  • Require insurance coverage from your provider, so the bank is covered if a serious incident occurs.

Establishing a relationship with a fintech can provide a bank with a faster go-to-market strategy for new product offerings while delivering a customer experience that would be challenging for a bank to recreate. However, the responsibility of choosing a reputable tech firm should not be taken lightly. By taking some of these factors into consideration, banks can continue to follow sound banking practices while providing a great customer experience and demonstrating a commitment to innovation.

Tailor Innovation With Fintech, Bank Collaborations

The Covid-19 pandemic reshaped the way that community banks think about their digital products and the expectations that consumers have for them. Digital transformation is no longer an option – it is a necessity.

In fact, 52% of consumers have used their financial institution’s digital banking services more since the start of the pandemic, according to BAI Banking Outlook. However, the research also found that only 61% of consumers feel their community bank understands their digital needs, compared to that 89% of direct bank consumers and 77% of large bank consumers.

As customers’ ever-growing expectations are not being met, banking teams are also concerned that their digital tools may be missing the mark. For many, the investments into digital solutions and tools are not having as wide as an impact as expected; on occasion, they do not hold any true benefit to their current and prospective account holders.

In addition, many community banks find themselves innovating for the sake of innovating, rather than solving real problems that exist within their target market. The communities that these banks serve are distinctive and can present unique challenges and opportunities, unlike those as little as a state away. Community banks must consider practical, powerful digital tools that benefit their one-of-a-kind customer base.

Rather than a product-driven approach to development, community banks must look to the niche needs within the market to discover areas to innovate. Identifying obstacles in the financial lives of existing customers and prospects ensures that community banks are working to solve a problem that will alleviate pain points for accountholders. But, with limited time and resources, how can this be accomplished?

Fintech-Bank Partnerships
Community banks can attract new customers, expand existing relationships and improve customer experience within the specific communities that they serve by implementing fintech solutions that are  specialized to the individual market or demographic.

It makes sense. Fintech-bank partnerships can pair a bank’s distinct market opportunities with technology that can effectively unlock niche verticals. We collaborated with five community banks who were searching for a responsive web app for digital commercial escrow and subaccounting that would eliminate the manual processes that limited their ability to handle commercial escrow and subaccounting accounts. Engaging with a fintech and leveraging extensive resources that are dedicated to developing and improving upon innovative technology gave these institutions a solution built with their companies in mind.

These partnerships between fintechs and banks are also more financially feasible — many community banks are unable to develop similar solutions in-house due to understaffing or lack of resources. With the help of a fintech, the institution can implement solutions faster and reach profitable clients sooner.

Fintech and bank collaborations are changing the way that community banks innovate. Together, they can expand the potential of a solution, both in its specialization and its capability, to better meet customer needs. Banking teams can provide the digital tools that their clients need and attract desirable clients that they hope to serve.

2020’s Growth All-Stars

Low interest rates pressured net interest margins in 2020, but they also produced outsized growth for banks with a strong focus on mortgage lending.

“From a nominal — that is, not inflation-adjusted perspective — [2020] was the biggest year in the history of the [mortgage] industry, and it was driven heavily by the fact that mortgage rates fell to 2.5%” for customers with good credit history, says Douglas Duncan, senior vice president and chief economist at Fannie Mae. Single-family mortgage originations totaled $4.54 trillion, he says. Almost two-thirds were mortgage refinancing loans; the remaining loans were used for purchases. His tally represents an estimate — the U.S. government doesn’t calculate total mortgage loan volume.

But Duncan’s estimation is reflected in the countless press releases I’ve read from banks boasting record mortgage volume — and revenues — over the past few months. And mortgages are a major factor that fueled 2020 growth for the fastest-growing banks.

Using data from S&P Global Market Intelligence, Bank Director analyzed year-over-year growth in pre-provision net revenue (PPNR) at public and private banks above $1 billion in assets to identify the banks that have grown most quickly during the pandemic. We also included return on average assets, calculated as a three-year average for 2018, 2019 and 2020, to reward consistent profitability in addition to growth. The analysis ranked both factors, and the numeric ranks were then averaged to create a final score. The banks with the highest growth and profitability had the lowest final scores, meaning they ranked among the best in the country.

Among the best was eighth-ranked $2.4 billion Leader Bank. President Jay Tuli credits low interest rates with driving outsized growth at the Arlington, Massachusetts-based bank. Its sizable mortgage operation helped it to take advantage of demand in its market, roughly doubling mortgage volume in 2020 compared to the previous year, says Tuli.

With rates coming down during Covid, there was a big surge in mortgage demand for refinances,” explains Tuli. Most of those mortgage loans were sold on the secondary market. “That produced a substantial increase in profitability.”

Mortgage lending also significantly lifted revenues at Kansas City, Missouri-based NBKC Bank, according to its chief financial officer, Eric Garretson.

The $1.2 billion bank topped our ranking, and it’s one of the two banks in this analysis that have become specialists of sorts in banking-as-a-service (BaaS). The other is Celtic Bank Corp., which is also a Small Business Administration lender that funded more than 99,000 Paycheck Protection Program loans.

NBKC’s BaaS program grew in 2020, says Garretson, though “this was dwarfed by the increase in revenue from mortgage lending.” Right now, NBKC focuses on deposit accounts, allowing partner fintechs to offer these accounts under their own brand, issue debit cards and deliver similar banking services. Lending products are being considered but aren’t currently offered, says Garretson.

As the financial technology space continues to grow, the opportunities should increase for banks seeking to partner with fintech companies, says Alex Johnson, director of fintech research at Cornerstone Advisors. Banks like NBKC and Celtic Bank Corp. have developed the expertise and skills needed to partner with these companies. They also have a technology infrastructure that’s fintech friendly, he explains, allowing for easy integration via standard, defined application programming interfaces (APIs) and a microservices architecture that’s more modular and decentralized. Put simply — a good BaaS bank will have the same tech capabilities as its fintech client.

“There’s a very clear model for how to do this, and there’s growing demand,” says Johnson. “One thing that tends to characterize banks that do well in the banking-as-a-service space are the ones that build a specialization in a particular area.” These banks have a track record for building these products, along with the requisite processes and contracts.

“When a company comes to them, it’s as easy [a process] as it could possibly be,” says Johnson. “The more of that work they do, the more that ripples back through the fintech ecosystem. So, when new fintech companies are founded, [and venture capitalists] are advising them on where to go — they tend to point to the banking-as-a-service partners that will work well.”

Top 10 Fastest-Growing Banks

Bank Name/Headquarters Total Assets (millions) ROAA
3-year avg.
PPNR growth YoY Score
NBKC Bank
Kansas City, MO
$1,207.5 7.93% 67.52% 14.67
Plains Commerce Bank
Hoven, SD
$1,129.9 3.97% 86.75% 15.33
The Federal Savings Bank
Chicago, IL
$1,076.2 7.66% 60.37% 19.67
Northpointe Bank
Grand Rapids, MI
$3,685.5 2.58% 73.24% 25.00
Celtic Bank Corp.
Salt Lake City, UT
$4,704.8 4.22% 55.87% 28.00
Union Savings Bank
Cincinnati, OH
$3,586.3 2.75% 56.76% 29.67
North American Savings Bank, F.S.B.
Kansas City, MO
$2,470.9 2.71% 58.57% 30.67
Leader Bank, N.A. $2,419.6 2.46% 61.63% 32.67
Waterstone Financial
Wauwatosa, WI
$2,198.0 2.41% 59.23% 38.00
BNC National Bank
Glendale, AZ
$1,225.7 2.13% 71.44% 39.33

Source: S&P Global Market Intelligence. Total assets reflect first quarter 2021 data. Average three-year return on average assets reflects year-end data for 2018, 2019 and 2020 for the largest reporting entity. Year-over-year pre-provision net revenue (PPNR) growth reflects year-end data for 2019 and 2020. Bank Director’s analysis of the fastest-growing banks ranked PPNR growth and average ROAA at banks above $1 billion in assets; scoring reflects an average of these ranks.

How Community Banks Compete on Digital Account Openings

In 2019, over half of all checking accounts were opened via digital channels. In 2020, this number rose to two-thirds.

In 2019, megabanks and digital banks were responsible for 55% all checking applications. In the first three months of 2020, this figure reached 63% — and climbed to 69% in the next three months.

Meanwhile, community banks and credit unions accounted for 15% of applications in 2019, and even fewer than that in the six months of 2020. What’s happening here?

It’s a trend: More accounts are being opened online. But digital account openings are only one piece of a steady shift in the financial services industry, one where consumers do more over online and mobile channels. Megabanks and digital banks are riding this wave, using powerful online offerings to draw consumers away from smaller institutions.

Moneycenter banks have strong digital operations that allow them to expand into communities where they may not have a single branch. Digital offerings have also opened the door for new players like online-only challenger banks, big tech companies and fintechs that are successfully luring in younger customers with payments, investing and even cryptocurrency services. Make no mistake: if community banks aren’t already in direct competition with these digital players now, it’s only a matter of time before they are.

Who Are The New Players?

In the past, community banks’ primary competitors were primarily each another or a nearby regional bank. Today, technology is redefining what it means to be a financial institution, and thereby reshaping the competitive landscape.

Big tech heavyweights like Facebook, Alphabet’s Google, Apple, and Amazon.com have become increasingly involved in financial services in recent years. Their efforts are growing in scope: Google, for example, launching Google Plex, which includes a checking account. Most likely, these firms believe that over time, their expertise in the areas of data and software development will yield a natural advantage over incumbent financial institutions.

Online-only startup banks (also known as challenger banks or neobanks) like Chime and Varo Money are also proving to be a legitimate concern. While Varo’s strategy included obtaining a full-fledged banking charter, which it received in July 2020, Chime relies on partner banks to manage their deposits. And just because they’re startups, doesn’t mean they’re small; Chime boasted 12 million users as of the end of 2020 — 4.3 million of whom identified it as their primary bank.

How Community Banks Compete

As the marketplace evolves, so do consumer expectations. With Amazon and other on-demand services at their fingertips, consumers have become accustomed to digital experiences that are fast, seamless, and personalized.

To compete with megabanks, tech companies and challenger banks for digitally-savvy customers, it’s essential that community banks consider the following strategies:

Invest in speed and reliability
Digital banking solutions need to be fast and reliable to satisfy the high standards that consumers have come to expect. This means efficient processes, minimal to no downtime and speedy customer service. Technology that integrates with your core in real time is key to accelerating customer onboarding and boosting overall user experience.

Play to key strengths
Community banks should lean into the areas where they shine by catering to customers’ personalized needs. Banks should also position their products according to market demand and digital best practices, and configure them for strong customer experience and institutional outcomes.

Seek out the right technology partners
The difference between a good and bad technology partnership is significant; banks often end up disappointed with the performance of a digital solution. To avoid this, it’s important to extensively reference-check technology providers and inquire about the actual delivered (and not theoretical) return on investment of a solution.

Building a Digital Transformation Strategy

As digital banking becomes the norm, it has prompted a massive shift in the competitive landscape. Yet with the daunting task of digital transformation ahead of them, what’s the best place for community banks to start?

One impactful area to focus on is digital account opening. In fact, 42% of banks and 35% of credit unions say they are very interested in fintech partnerships that prioritize digital account opening solutions. Partnering with an account opening provider can help small and mid-size financial institutions position themselves favorably as consumers continue to adopt digital banking.

Banks, Fintechs Uniting for Bottom-Line Wins

Banks have been losing consumer market share to fintechs for more than a decade. But in the middle of a pandemic, their focus has shifted to expediting consumer loan opportunities for balance sheet and bottom line wins. Why?

For one thing, deposit growth is well outpacing loan growth this year, according to the Federal Deposit Insurance Corp.’s Quarterly Banking Profile. At the same time, tech companies like Apple and Amazon.com are dipping their big toes into the consumer finance industry. With less of a need to focus on growing bank deposits and an ever-growing list of competitors entering the lending market, banks should take — and are taking — more-calculated risks to maintain their relevance with digitally savvy customers at their points of financial need. To connect with prospective customers where they want to be reached, banks will need to rely on partners that can help them scale their offerings in a fast, frictionless and secure manner.

The easiest way for banks to lower customer acquisition costs and reach more prospective customers with loan opportunities is to use relevant plug-and-play technologies from fintechs. It’s hardly a new concept at this point; most leading banks have already adopted this methodology as the way to unlock more revenue. Per the Global Fintech Report, 94% of financial services companies said they were confident that fintechs would help grow their company’s revenue over the next two years; 95% of technology companies said the same.

The banks struggling to justify the need to partner are missing the big picture: growth opportunities and low-hanging fruit. Take business clients as an example. Far too many banks wait for a business to become frustrated at competitors before competing to win their business. A fintech partnership can help banks go on the offensive and create a strategy that positions businesses as the face of financing by offering point-of-need lending to consumers, driving revenue for the business and improving the bottom line at the bank.

“Coming together is a beginning, staying together is progress, and working together is success.” – American industrial and business magnate Henry Ford

Being open-minded about fintech partnerships allows banks to offer valuable and attractive services to business clients and consumers, especially at a time when both are faced with a life-altering pandemic and natural disasters. Consumers need quick access to credit at reasonable rates; in the face of excess liquidity from deposits and a continued low-rate environment, banks should be look to provide better loans for their customers than their online finance competitors.

Banks that choose not to use fintechs partners may find themselves lacking the ability to get embedded into consumer loan deals and unable to offer consumers a frictionless experience during the process. They can’t leverage alternative data, machine learning and artificial intelligence to get a more-accurate portrayal of a consumer’s creditworthiness outside of their FICO credit scores. Accessing value-add technology and creative solutions allows banks to innovate rapidly to improve efficiencies and meet the future needs of businesses and consumers.

Fintechs have demonstrated their ability to meet banks’ third-party standards. Banks sitting on the partnership sidelines are cautioned to set aside their “sword and shield” mentality in favor of an approach that’s more inviting and open to collaborative innovation. Today’s current economic environment can act as a catalyst for this change.

Banks have proven they are capable of being highly responsive to meet business and consumer needs during recent challenges. This is an opportunity for them to think differently and invest in partnerships to quickly offer new experiences as demand for financial products and services increases.

Creating the Next Opportunity for Your Bank

Health, social, political and economic stressors around the world are bumping up business uncertainty for banks everywhere.

Some bankers may find a hunker-down posture fits the times. Others are taking a fresh look at opportunities to achieve their business objectives, albeit in a different-than-planned environment. What is your bank trying to accomplish right now? What are you uniquely positioned to achieve now that creates value for your institution, your shareholders and your customers?

The best opportunities on your bank’s list may be straightforward initiatives that may have been difficult to prioritize in a non-crisis environment. This can be a good time for banks to review their suppliers and vendors, their risk management, cybersecurity and compliance plans and protocols.

We’ve seen bank clients of ours with rock-solid foundations find themselves with the ability to leverage these times to pursue growth, to increase their technology offerings and explore niche markets, such as an all-digital delivery of banking services. These institutions are creating their own opportunities.

From straightforward to downright bold opportunities, BankOnIT and our client banks across the United States have observed that skillful execution requires one constant: a solid technology and systems foundation.

Here are a few examples of various objectives that we see our clients pursuing:

Embrace and Excel at Digital Banking
Digital banking, not to be confused with online banking, is more than a trend. Banks with user-friendly digital experiences are meeting the needs of millennials and Generation Z by offering activities that were once only accessible from the banking center. It removes geographical barriers and limitations of the traditional bank, such as operating hours and long lines.

Technological hurdles are grievances of both digital and traditional banks. The simple solution is unrestricted technology capabilities that improve reliability and increase security, especially when introducing features like artificial intelligence and digital banking.

A Growth Plan with The Ability To Compete
Customers’ expectations are shifting; banks need to be technologically nimble in response. With a high-growth plan in place, one BankOnIT client viewed outsourcing the network infrastructure to a partner with industry knowledge as the key to success. The result: opening four bank offices in seven months.

“We have all of the benefits of a large bank infrastructure, and all of the freedom that comes with that, without being a large bank,” said Kim Palmer, chief information officer at St. Louis Bank.

Partnering with Fintechs To Reach Niche Markets
The trick to accessing new markets will vary from bank to bank, but your strategy should start with the network infrastructure technology. This will be the foundation upon which all other technology in the institution is built upon. Cloud computing, for example, provides digital and traditional banks with resources needed to improve scalability, improve efficiency and achieve better results from all the other applications that rely upon the network foundation.   

Banks should look for partners that help them tailor their banking operations to benefit consumers who are conducting business in the virtual world. Technology at the forefront can keep business running smoothly during the global pandemic. Bloomfield Hills, Michigan-based Mi Bank, for example, is able to accommodate customers during the pandemic, just like before.

“We can leverage technology to allow our customers to function as normal as possible,” said Tom Dorr, chief operating officer and CFO. “BankOnIT gives us the flexibility to function remotely without any disruption to our services. Our structure allows us to compete with the bigger institutions without sacrificing our personal service.”

Is your technology reliable, scalable, and capable of sustaining your goals post-pandemic?

A Solid Foundation
Take the opportunity to review your institution’s goals. How do they line up with the opportunities to act in the midst of this unplanned business environment? This may be your opportunity to build a solid technology, systems and compliance foundation. Or, this may be your time to seize the opportunities that are created from turning technology into a source of strength for your institution.

A Pandemic-Proof Process Transformation Game Plan

Initiatives without execution are dreams that never become plans.

At MX, we’re helping banks use financial data to improve the financial lives of more than 30 million people. Banks need a secure foundation to build on at a time when profits have stalled, laying the groundwork for ways to increase revenue, offset losses and impact to your bottom line.

To get a better understanding of what financial institutions are focusing on, we recently surveyed more than 400 financial institution clients for their top initiatives this year and beyond. We believe these priorities will gain even more importance across the industry. The top five initiatives are:

  1. Enabling Emerging Technologies, Continued Innovation
  2. Improving Analytics, Insights
  3. Increasing Customer Engagement
  4. Leveraging Open Banking, API Partnerships
  5. Strategically Growing Customer Acquisition, Accounts

But identifying the initiatives to prioritize is merely the first step. Banks need to align their top initiatives throughout their organization to lay down the project’s foundation. Sustainable transformation is not accomplished by simply plugging in a new technology or process. True transformation requires a shift in the way the organization operates day to day. Without a commitment to changing the way you do business your efforts will be stunted and you will not achieve the outcomes promised in the initial business case.

The first thing banks need to do is ensure that their organizational goals translate top down, from executive leadership through department levels, all the way to individual contributors. If certain priorities don’t align from top to bottom, it’s important to address these outliers right away to ensure everyone is moving ahead in the same direction.

Banks will also want to make sure they’re effectively tracking their performance against the company strategy and organizational vision through Objectives and Key Results (OKRs) and department metrics. Look at the top initiatives in the industry and see how they align within your bank’s own organizational goals.

This practice might reveal that that not all initiatives work together. Three critical questions to ask during this process are: Are we focused on understanding and solving the needs of our customers? How do we shift priorities to align with where we should be going as an organization? Where is overlap or conflict of priorities between all stakeholders?

Here’s a brief overview of how banks can create a game plan to guide their process transformation:

1. Align OKRs With Vision
Break down your bank’s vision into objectives. This can be anything from helping employees develop the right skills to acquiring the right technologies and so on. From there, break those objectives down into quarterly Objectives and Key Results and translate them across each department and individual employee.

2. Specify Metrics
Ensure your bank has the right metrics in place for measuring your OKRs. The more clarity your bank can get around what you’re measuring and why, the easier it will be to understand if your efforts’ progress and success.

3. Find Champions
Identifying champions within your organization is a great way to move things forward. These critical stakeholders will be just as motivated as you to get certain things done. If you’re considering new technologies or new programs, work with them to translate the need and opportunity to the executive suite.

4. Identify Trusted Partners 
Now’s the time to lean on trusted partners for support. Your customers are actively looking to you for alternative digital solutions to manage their money. Instead of going at it alone and trying to build everything in-house, it may be faster to partner with financial technology firms and other third parties that can get your products to market more efficiently.  

At MX, we’re working closely with our partners and clients to ensure they have the tools they need to optimize their digital experiences and complete their top initiatives, even in these challenging times. Banks must create comprehensive strategies around their digital channels and offerings, so they can continue to lead during uncertainty and change. This is a valuable opportunity for all of us to be better to one another and to the communities we serve.