Bank Priorities are COVID Proof
Bank Priorities from 2017 to 2020 have barely moved
We all love a good parable, simple stories that pack a punch because they are easy to understand. Aesop’s Fables’ “The Tortoise and the Hare” is a classic and is often used to tell the story of Legacy Banks and Fintech startups.
Now I arrive at a different metaphor for the Legacy vs Fintech startup.
The Fastest Turtle
We can stop pretending that banks are going to become rabbits (hares), they are not. The best they can and should hope for is to be the Fastest Turtle. As I often tell my teenage kids,
“play to your strength, ignore your weakness”
No bank will ever match Apple or Google for agility let alone a Fintech startup. So should banks stop trying to become agile?
No, but they should accept they will only get so good at it. There is often sited research that states you reach excellence by doing something for 10,000 hours. The research has been rightfully debunked as what it should say is YOU will reach YOUR maximum excellence from 10,000 hours of practice. But I assure you if Lebron James and I had practiced the same number of hours of basketball, he would be the far superior player.
How did I arrive at this conclusion of a bank reaching its’ own best potential outcome other than my 18+ years of bank and Fintech experience.
Research from The Financial Brand is one of the greatest resources for us in Fintech-Bank land thanks to Jim Marous and his team.
Today they came out with a great article, “Pandemic Reveals Digital Banking Transformation Paradoxes” as usual The Financial Brand delivers the goods, well written and researched. Here is one of The Financial Brand’s iconic charts on the priorities of bankers due to COVID. As the chart shows bankers are prioritizing the following top 5 important issues at this time:
- Digital Banking Transformation — 75%
- Improving Customer Experience — 51%
- Cost Management — 47%
- Risk Management — 32%
- Driving Growth — 30%
No argument here, these are great 2020 to 2021 priorities. Really focused on the things that need to be done.
I was curious since The Financial Brand has been at this a while, what would a banker’s priorities chart show if I went in the ‘Way Back” machine and looked at a previous survey. I chose to go all the way back to the year of our Lord 2017.
- 2017:
- Redesign/enhance the Digital Experience — 71%
- Enhance Data Capabilities to Identify Customer Needs — 50%
- Cost Management — 47%
As compared to:
- 2020:
- Digital Banking Transformation — 75%
- Improving Customer Experience — 51%
- Find Ways to Reduce Operating Costs — 41%
Sorry to do this to you but I have to, yes a Will Ferrell Meme in a banking article, forgive me.
So from 2017 to 2020 with a Pandemic, some pretty crazy US and Global politics in addition to a huge amount of social unrest and the top 3 bank priorities stayed the same.
I know The Financial Brand does great research, I trust them completely.
The list made sense in 2017 and it certainly makes sense in 2020.
Sadly, we must conclude it is simply a lack of progress by banks.
Before you presume I am writing this as the usual blog fodder of “banks are run by cotton headed ninny muggins and Fintechs are run by geniuses.” I AM NOT.
Banks make billions in profit per year, employ millions of good people and move trillions in value across borders around the world every day. That is impressive and awesome ! It is also limiting in what they can or should do.
My issue with banks is two fold:
Play to your strength
First, banks are large and have reach and scale. That is an asset that a Fintech would be hard pressed to match quickly. PayPal is now close to a global bank’s reach and scale but it took PayPal 22+ years to reach this point.
Banks should stop trying to be as agile as a Fintech but should work to be the most agile bank. (aka Fastest Turtle)
Fund What Your Prioritize
It seems obvious but banks struggle to really put their money where their mouth is. I believe this disconnect starts at the Bank Board. I have written previously about the disconnect between bank board’s makeup (Male, Pale & Stale) and an actual banks’ priorities. PLUS, few if any bank board members have a tech background, so how could they understand a $5M Digital Transformation let alone fund it.
Of course it will take time for a bank board to not look like this (random search for a Community Bank Board on Google) Morton Community Bank Board of Directors.
Let me be clear, I am not picking on Morton Community Bank, they are probably a fantastic bank. But does this board look like they would execute on a request for $5 million to digitally transform Morton Community Bank?
I think we know the answer.
I accept that it will be years, decades even before a bank board does not resemble a retirement home’s holiday party.
What I recommend while we wait is banks of all sizes push the Digital and UX budgets down 1–2 levels. If a VP decides that budget today, make it an AVP or director or even a manager. Let the budget flow closer to the front lines. These people are likely to be younger and more tech savvy. PLUS, they see every day what slows the bank down or hurts their ability to service a customer.
Not to make this political but many bank board members would rightfully ridicule the Soviet Union for centralized budgeting and planning because how could Moscow know what crops to grow in the Ukraine and yet…….
Banks are capable of their best but not a Fintech’s best
Banks need to fund what they prioritize and that means pushing budgets down in the organization
