In late January, we attended Bank Director’s Acquire or Be Acquired Conference (AOBA), a gathering of more than 1400 conference attendees in Phoenix, AZ. This is one of the industry's best attended conferences, and the topics are wide-ranging from M&As to interest rate environments, succession planning, and economic conditions.
However, in our corner of the world that focuses on technology and commercial lending, these are the things that jumped out at us from the presentations and one-on-one discussion we had with bankers.
1. Digital banking is table stakes now.
If you attended a banking conference just five years ago, the conversations around technology were much different than they are today. Before, gathering a group of bankers to talk about technology was a difficult feat. It was a topic that addressed the future, not what was top of mind to those working tirelessly to close deals, create efficiencies within the bank, and make sure the books were where they needed to be.
The industry has shifted - big time. Nobody is fighting technology anymore. Bankers know it’s needed and needed now. This came to life during Sunday’s panel discussion. Banks need technology to better serve their customers in this highly competitive market, to stay relevant, and to compete with the fintechs.
We even heard banks begin to talk about open architecture, open APIs, and the ability to link various types of software together to create seamless data flows and workflows - a big step in the right direction.
2. Implementing technology should be smooth and painless.
Banks are making great strides to get the tech they need in their banks, and they want it up and running as quickly as possible. Because much of the technology is online or cloud-based, ramp-up and onboarding times should be seamless.
Unfortunately, that’s not always the case. We heard from banks that have run into painful roadblocks as they add new technologies. Implementation times have taken much longer than expected, banks have been over-promised and then underserved, and morale has dropped, while frustrations have risen. It’s a good reminder that not all technology is created equal. Well-built technology should be easy and quick to implement.
3. Banks want more technology that drives growth and revenue.
Previously banks invested a great deal in technology that streamlined processes and reduced costs. Now we are seeing a strong desire for technology that drives balance sheet and revenue growth. Bankers at AOBA told us they’re reaching the limit on the amount of benefit their banks can get from efficiencies. Meanwhile, balance sheet and revenue growth is limitless. A crucial question banks must ask themselves is, “How much of our tech budget is allocated to top line growth?”
4. Deposits and cross-selling are top of mind.
As banks fight to keep their place at the table in a rising rate environment, deposits and cross-selling are more important than ever before. Low-cost deposits have an incredible premium placed on them due to the margin pressure that all banks are feeling. This combination is creating an extremely competitive environment. The best way for banks to get ahead is to seek out more of these opportunities.
5. Digital banking is rapidly moving into the commercial lending space.
Since the digital banking trend has begun, we’ve seen it dominate the consumer banking space. At AOBA this year, we learned that digital strategy is now a key focus in the commercial banking space. Business owners who do their consumer banking at the same bank aren’t getting the same personalized, digital experiences on the commercial side as they are on the consumer side. It’s two completely different experiences instead of one seamless, efficient, and personalized experience. Banks are now thinking about how they can make commercial banking personalized and as customer-focused as possible.
6. Banks are highly profitable.
And that profitability is helping to fund previously unseen levels of technology investment. Most excitingly, this gives banks the space they need to create purpose-driven organizations and build strategies that put the customer first.
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