Digitally transforming your commercial bank is anything but easy. It's an area that's fraught with uncertainty. That's why we put together the e-book: "Innovation in Banking: Frequently Asked Questions."
We recently posed a few of those questions to Tim Shanahan, SVP and Head of Enterprise Solutions at PrecisionLender. Prior to coming to PrecisionLender, Tim worked at large U.S. and international banks, so he's been on both sides of the bank technology equation.
Here are some of his thoughts. Again though, for the full list of questions and answers, check out the e-book.
Q: Where's the best place to start with digital innovation?
Shanahan: Historically, banks have sought to innovate wherever they could reduce cost and reduce FTE - overall, reduce expense - as well as to optimize workflow. However, where we still see banks under-invested is in the area of revenue growth.
That means leveraging AI, machine learning, and various aspects of digitization, to create and drive revenue growth and return growth, profitability growth. That includes areas such as:
- Increasing deposits;
- Increasing loan volumes, spreads, and fees
- Cross-selling treasury management, foreign exchange, derivatives, and capital markets.
Until this point, banks have been improving the customer experience as a result of their focus on efficiency. Now they need to focus on improving the customer experience via innovation as a means to generate more revenue.
For the full list of queries, check out "Innovation in Banking, Frequently Asked Questions."
Q: Since innovation involves technology, shouldn't IT lead those efforts?
Shanahan: They should be involved on the due diligence side, but ultimately there's a difference in the technology of the "heart" of the bank and the "brain" of the bank.
Brain of the bank technology has an impact on work flow, on customer experience, on revenue, on everything that is used actively by the people who are building and maintaining and servicing commercial client relationships. Innovation with these types of technologies really should be owned by the people who are doing that work.
There's a role for IT to help research and guide and bring ideas to the business, but ultimately the business needs to evaluate what will create value for the bank and its clients. Then IT serves as the Julie McCoy of it, kind of guiding the cruise along the way. But ultimately they're not the buyer, or the champion, necessarily.
Q: What will digital innovation mean for my relationship manager? Should they be concerned about becoming obsolete?
Shanahan: Digital innovation in commercial banking means computers should do what they do well, so that bankers can spend more time doing what they do well.
A computer can't deliver insight through the context of what it actually means strategically for the client - for their particular situation and what their goals are relative to the market and their competition. A banker can.
A banker can interpret those insights, deliver them with empathy, and leverage the trust they've built with that client over time. A computer can't do that.
Will the roles of relationship managers change? Yes. They'll spend less time researching and developing insight on behalf of bank clients and prospects, and more time delivering insight to clients and prospects. Everybody wins.
Q: Why should I make this a priority?
Shanahan: Because this is about what every commercial banking leader is striving for - revenue growth. This isn't about working out a few basis points of cost, other inefficiencies - this is about building top line revenue.
There's no better place in the sales cycle to impact revenue than at the very beginning, when you're working with a client to structure the initial transaction. That's when you can ask about the client's other needs. You can understand what it means for the revenue and the profitability of the bank. That's when you can develop winning transactions for both the client and the bank.
