During our daily conversations with bankers, they often tell us they feel overwhelmed by technology.
Management teams know that many of their systems are dated and cumbersome, but updating those is a daunting task. In this industry you can’t simply rip something out and try a trendy new solution. Data integrity, security, and integration to other systems have to be considered first. And the more integrations you do, the harder it seems to get to make a change anywhere in the stack.
Oh yeah, and it will be really expensive, too.
These circumstances often leave bankers with a deer in the headlights look. Paralysis by analysis sets in as the bank forms committees to evaluate new systems, and 12 months later, there’s been a lot of time, effort, and money spent but no real progress on improving the situation.
However, we have come across a few banks that seem to have figured it out. They know what they want the end result to look like, and they have built a process to quickly evaluate and implement new technology. Each bank’s path to taming technology differs, but they all ask some version of these three questions.
1: How quickly can it start delivering on the promised benefits?
High performing banks almost always start here. Systems change is always painful, but any banker that has gone through a core conversion carries a particularly memorable battle scar. They are not signing up for something like that EVER again.
That doesn’t mean they won’t swap out integral systems that touch lots of other parts of the bank. Rather, it means they won’t do it if they know it will take in the ballpark of a full year (or more) to get it up and running.
The “completely finished” state may be some distance down the road, but they look for vendors that use an agile approach. These vendors focus on time to value, and will get components of the system up and running so you can start achieving a positive ROI as soon as possible.
2: How “integration friendly” is the system?
This is where the high performing banks really start to distance themselves from the competition.
Most banks know what they want the future to look like. They envision a clean, end-to-end process that smoothly integrates multiple systems in a seamless platform. They then start with either 1) the front of the process or 2) the “backbone” system that carries the bulk of the load.
If this backbone system takes a lot of time and resources to implement (and it usually does), then everything else comes to a halt. We talk to banks that are more than two years into a CRM (or similar systems) implementation that is floundering badly, and because of that, they refuse to add anything new. “We have to get the CRM done first, because everything plugs into it.”
The faster banks know that the order of implementation should not be dictated by the architectural drawing. It should be dictated by ROI, and that includes return on both the dollars AND the time invested. They find integration-friendly systems that can easily connect to other systems at any point, before or after going live.
These tend to be cloud-based solutions with public APIs that know the real value of their solution is becoming deeply embedded in the institution’s processes, not in holding you hostage with impossible or outrageously expensive integrations. They get these systems up and running quickly (see #1) so the bank can begin accruing benefits.
In addition, it clarifies the integration process. If you do the “backbone” first, you rarely see all of the moving parts correctly, and the last thing you want is a do-over with one of these.
3: Does it improve the customer experience?
Finally, the high-performing banks know that while efficiency, risk management, and regulatory compliance are important, these areas should not continue trumping the customer experience.
Many banks have gone multiple years without investing in anything that impacts customers. Eventually, those customers will respond by leaving. It is okay to invest in efficiency, but the goal should be to figure out how to serve your customers faster and cheaper, not to figure out simply how to reduce headcount or fixed costs. The first two questions should lead you to good outcomes here as well, as your customers should see continuous improvement and a more consistent experience if you are implementing quickly and integrating as you go.
As you think about your technology investments in the coming years, ask these three questions about the systems and vendors you are evaluating. There is no one“right” answer, but the thought process will point you to better outcomes.