A while back, Dallas Wells sat down with Bryan Lee, Director of Financial Services at Salesforce, and Pam Hannett, Banking Practice Director at Silverline, on the Purposeful Banker podcast to discuss how banks buy technology – what they’re doing right, what they’re doing wrong, and how they’re handling technology overhauls as a whole. Their conversation is full of insight and practical tips for banks as they venture into a buying process. You can listen to that conversation here.
Next week, Pam Hannett will join us for our BankOnPurpose Webinar series. She’ll share how banks can use their CRM systems to maximize their customer relationships.
Before the webinar, we wanted to recap the conversation we had with Pam and Bryan to offer some insight into Silverline and reintroduce Pam. In this post, you’ll find three mistakes banks make when buying technology, which has been condensed into an easily digestible Q&A featuring highlights from the podcast.
1. Poor Prioritization – Starting at the Core
Dallas Wells: Some banks are too cautious in their tech purchasing, some are way too ambitious, and others seem to get it just right. Pam, can you share your thoughts on that too timid side of things?
Pam Hannett: Banks have a yearly strategic planning period where they determine which projects will be worked on. Those projects span across different divisions and can consist of hundreds of projects. Probably eighty percent of those require some sort of technology decision, which is a challenge because prioritizing that many projects with the amount of equivalent full-time people they have is virtually impossible.
When they get to the point of agreeing on a project and doing the due diligence for that project, the cautious banks look to the core for a bolt-on solution so that they can be provided with something they feel good and already know about. Then they get sucked into using solutions that aren’t necessarily what they need, but are okay for now. They don’t seek the time to step outside of the box for the more innovative solution.
2. Taking the Path of Least Resistance
Dallas Wells: When starting at the core, some of the due diligence is already done – you’re halfway through the homework. It feels like the path of least resistance, but then it ends up being painful. Bryan, is that something you run into on a regular basis?
Bryan Lee: A lot of our customers have strong core relationships. I think the challenge I see with banks now is the marketplace is changing a lot. The type of experience customers really want can be lost when a bank is in the process of prioritizing projects. They need to have a new approach when thinking about how to serve customers well. I think it’s not just a question of cautiousness, but it’s also a question of having the right goal in mind and having the right priority set.
We certainly hear from a number of customers that seventy to eighty percent of their budget is spent on maintaining something in the legacy transaction systems. And there’s been a huge increase in the budgets for regulatory and compliance. What’s left for innovation? What’s left for customer experience? I think that’s the question we should be asking.
Pam Hannett: I think sometimes banks have a tendency to go with what’s comfortable and less about what’s new and can differentiate themselves from other competitors. I think that’s where they can have an opportunity to step up and change the customer experience by stepping out of the box and trying something different.
3. No Champion Leading the Charge
Dallas Wells: When working inside of a large organization, there are always multiple people who have to be involved in the decision process.
The pain enters when it’s about moving the decision from one step to the next when you’ve got a big group versus when you have someone who is a champion and is helping you navigate through that process. Bryan, what are your thoughts?
Bryan Lee: The reality is that you’ll always have committees involved in making the decisions. It’s important to do because if you’re going to change the culture at your bank to be more customer-focused, you need leaders within your business to champion that. And you need champions at multiple levels within the organization to certainly feel good about what that decision is going to be and the type of change you’re trying to make, because it’s a business change, not just a technology change.
On the other hand, helping that champion paint the vision they can carry forward internally is also really important. You want to have success for the individual business lines, but when you’re dealing with customers, you also need many parts of the bank to operate efficiently and effectively together. You could certainly have an individual who wants to drive a big piece of change in their particular piece of the business, but in order for the firm to have success with its customers, there has to be multiple business lines working together in synchronization.
Pam Hannett: To add to that, I think it’s a misconception in banks that one person owns the customer, whether it be in commercial lending or retail banking. Every single division of a bank has an opportunity to be a part of a customer’s experience. Take that into technology and understand that the customer experience is seamless across the entire organization and all of those people need to be involved.
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Content Manager at PrecisionLenderMore Content by Maria Abbe