Investing in Innovation [Podcast]

July 4, 2016 Iris Maslow

 

Innovation at Eastern LabsImagine what happens when innovation is embraced at a bank. While some banks fear FinTech, Eastern Bank dedicates entire teams to exploring it.

In this episode, Dallas Wells interviews Trish North, SVP of Digital Sales and Implementation in the second part of a look at Eastern Bank’s innovation. (Listen to part 1)


   

 

 

Podcast Transcript

Dallas: Welcome to another episode of The Purposeful Banker, the podcast brought to you by PrecisionLender, where we discuss the big topics on the minds of today’s best bankers. I am your host, Dallas Wells, and thank you for joining us. Today is part two of our look at one of the most innovative banks around, Eastern Bank. In case you missed part one, our talk with Joe Bartalotta of Eastern Bank about customer loyalty, I highly recommend that you give that a listen. We’ll provide links to that in the show notes in case you missed it the first time around, but for now stay right here and enjoy our conversation with our next Eastern Bank guest, Trish North. Trish is the SVP of Digital Sales and Implementations for Eastern Labs. Trish, thank you for joining us.

Trish: Thanks for having me, Dallas.

Dallas: Trish, why don’t you start just by explaining to us what exactly Eastern Labs is, and then tell us about what you do there.

Trish: Sure, happy to. Eastern Labs is an innovation center that’s housed within Eastern Bank, the oldest and largest mutually owned bank in the US, and we basically create new technologies from the banking’s rich data and the digital assets. While we are a distinct division and wholly a part of Eastern, we do maintain the flexibility to adapt to the rapidly changing FinTech market. Our dual purpose is really to drive new products into the marketplace, and to make a fundamental impact on the core business of Eastern Bank. In my role here, I basically head up the sales and implementations processes for labs. As we move to spin out our technologies into the marketplace, I’m going to be the liaison for the sales process for the other financial institutions, and helping them implement the solutions that we provide.

Dallas: Okay, so you guys are very much not necessarily creating things just for Eastern, but also finding things that you can go to market with as well.

Trish: That’s right. That’s right, and I think that’s what makes our purpose a little more unique than some of the other innovation labs that you may be aware of today.

Dallas: Yeah, absolutely. Trish, you’ve held a few different jobs in the industry. You’ve worked at some traditional banks, a credit union, you worked at a financial startup, Park Street, and at Fiserv. From that background, what drew you to Eastern Labs?

Trish: Super question. Really two factors drew me to the role. The first was really the opportunity to work with some of my former colleagues from Park Street Financial who are actually here with me at Eastern Labs, which was as you know, my first venture into the world of startups, and it was something that I really, really enjoyed. The second factor that really drew me to it, to Eastern Labs, was really simply the notion of the best of both worlds for me. Being able to work on a team that has the speed of development of a FinTech company, and the resources of the bank, really complimented by professional experience perfectly. It was an opportunity that was too good to pass up.

Dallas: What sort of things have you been working on there lately, the things that you can share of course?

Trish: Yeah. Happy to share. I’m sure as you know, last year we rolled out our Express Loan product, which basically provides our small business customers with the opportunity to obtain a loan in as little as five minutes from application to funding, completely digitally, which represents the easiest, fastest, and most transparent borrowing experience offered by any bank in the US that we’re aware of today. We continue to enhance and expand that particular Express Loan product. We started with an existing customer product. We are now phasing out the new customer aspect of the product itself. It is a term loan product, and we’re now moving into the line of credit functionality. As we continue to grow the product, we’re also looking to, as I stated before, license the software that we’ve created for other financial institutions.

Dallas: You know what I really like about that is you guys always seem to focus on the customer experience part of it, and making that part useful, rather than just being so internally focused on how does this benefit the bank?

Trish: Exactly. Customer experience, as you know, Dallas, is really the buzzword and what it’s all about today in the fast-changing marketplace of what consumers expect. They want what they want when they want it. We need to keep pace.

Dallas: Yeah. Absolutely. We saw, at a conference last year at some point, the CEO of Eastern Bank, Rich Holbrook, give a talk, and one of the things that he said that was really interesting was banks used to always pride themselves on being fast followers, and we don’t think that’s good enough anymore. That’s kind of the message from the top, but what’s the environment really like there? Does it feel more like a tech company than a bank, or is it still very much a banking type environment?

Trish: Yeah, interesting question. You know, when you have the best of both worlds, as I said before, it is kind of one of those what are you going to get when you mix it all together? We are a really diverse group of people, as I’m sure you probably have read or are aware in speaking or seeing things from Rich. About half of our team is developers and designers, and a quarter of us are bankers, and a quarter of us are data scientists. We have an open plan floor space, which is really similar to what you find in a FinTech or a startup shop, and really depending on the role that you play in Labs really determines the answer to the question of what is it more like, a tech company or a bank.

For instance, if you’re a developer or a data scientist, Labs is really more like a startup for you, because we try to shelter our developers on our data science team because we want to make sure that they don’t get distracted or caught up in the daily operational minutiae of banking, frankly. We want to make sure that they pound the pavement and keep coding. We shelter them. Then in a role like mine, where I really straddle both realms, startup and banking, I often act as a liaison for information between the Labs team and the bank in the role that I play, so a lot of the bank type meetings would be something that I would attend and maybe kind of translate that information while they’re staying busy.

Dallas: That’s actually the exact word I use for my job function. We do software for banks, and so we’ve got developers who, same thing, we try to shelter them from all the regulatory stuff and the all-day, every day meetings and committee type stuff that banks just have to do. I end up having to be the translator between the two, and it’s interesting what comes out of that is a lot of the developers, they try to understand the banks that we’re working with, so the bankers become this mysterious creature of, “Well, what are the bankers going to think about this?” And “How do they like to see this thing?” Anyway, that’s an interesting daily conversation for us.

Trish: It is. It is indeed, and I’m sure probably we have similar conversations on our side as well.

Dallas: There’s been a lot of talk in the marketplace, and we’ve had the conversation on this podcast about banks and FinTech collaboration. Do you see other banks following your lead with this, and is FinTech kind of unfairly characterized as something that banks should fear? You guys seem to be embracing it, whereas a lot of banks consider it kind of a four-letter word. Do you see that changing, and what do you think the trend looks like?

Trish: Well, as you know, several banks really already have their own innovation labs. I think the difference between those other labs and Eastern Labs is really, as I stated before, really our mandate and our purpose, which, yeah, we want to want to drive the bottom line for the core business of the bank, but we also want to drive new products into the marketplace. In terms of should banks fear FinTech, I don’t think fear is the right word.

I do believe that banks need to pay serious attention to what’s going on in the space, and really start looking at themselves as a technology company, and innovate where necessary to really retain their customers and attract new ones. We all know that speed and ease are really the two main components that most times really attract consumers to FinTech. With today’s fast-paced society, it really dictates that speed, and the banking industry needs to embrace this concept to really remain relevant. It’s really a cultural shift that will require banks to get comfortable with that real-time decision making.

Dallas: Yeah, and I think that that’s a good point, that a lot of banks are viewing the bank and FinTech as an us against them kind of thing, and really those lines have already gotten really blurred. The way we deliver services in the banking industry has, for quite awhile, been very technology based, and it’s just getting more-so, so to try to draw that line between them just doesn’t make sense, I don’t think.

Trish: Right, exactly. Couldn’t agree more.

Dallas: If a bank was interested in going down this path, and in mirroring a little bit of what you guys have done at Eastern Labs, what kind of things do they need to have in place, and what kind of thought process do they need to go through?

Trish: Ah, so you’re looking for the playbook, right? You want the …

Dallas: Yeah. We want the secret sauce.

Trish: All right, well, definitely have … Doing some learnings along the way in terms of philosophy, and I would say develop a fundamental level of trust across the bank. Having that mandate from the top down, from the executive management down, stating that, “You know what? We need to innovate, we need to make an impact on how we’re currently operating our business,” and shift towards the trending times. That trust is ultimately vital, and knowing that everyone is on the same ship. I think you also need to consider nurturing innovation separately, while ensuring that the group maintains strong ties to the core business.

Really, as we kind of talked loosely about that already in other questions, nurturing the innovation and keeping it separate, and not getting caught up in the daily minutiae, not putting it on pause, and working on the daily functionality, but having that separate team dedicated to innovating. Really running concurrent paths is the key to copying what we have been able to achieve, and I would say maybe two other components for philosophy, maybe manage the process as carefully as the products that you’re developing. As you go to find your learnings and create digital technologies, it’s all about how you get there.

It’s about the journey and the destination, the journey being you need to make sure that you capture what’s happening and don’t let it get too far south or too far north directionally, and it gets out of hand or maybe doesn’t go quick enough. Then lastly, really involve the appropriate areas of the bank early in the process. One of our great successes, we take great pride in the fact that everybody was onboard from day one. Giving everybody an opportunity to participate and keeping them involved in the various departments of the bank from compliance to operations, to policy makers for credit across the board, is key to being successful.

Dallas: Okay, that’s good.

Trish: That’s a lot. I know that’s a lot. I hope everybody wrote that down.

Dallas: Yeah, that’s all you have to do, right?

Trish: It’s easy. It’s easy. I think you had another question in there, and it was with reference to the infrastructure. I think if the intention is to really develop products that can be sold to other banks, you really need to think about the standards that you as a banker would hold your third party vendors to, and really emulate what you’d expect their infrastructure to be, as if you were the customer. You know, kind of reversing the roles to say, “Well, I would expect them to have A through Z components to be considered a standard package for acceptability to work with this particular vendor.” Well, you better hold yourself to the same standards if you’re wearing the other person’s shoes.

Dallas: Yeah, and the good news is there’s a pretty well-defined path for vendor management there, so the expectations are fairly clear at this point.

Trish: Exactly. Exactly.

Dallas: I think one of the keys you mentioned there in putting together the foundation, and Ray Grace, who’s the banking commissioner for North Carolina, we talked to him a couple weeks ago, and he framed it a similar way, which is banks should think of this as an experiment, so that they can run these little experiments kind of off to the side. You don’t have to make this … I think what’s scary to banks is making this wholesale business change where you feel like you’re getting away from the fundamentals.

Ray’s point was you don’t have to do that. You can try these little things as long as you have a well-defined little environment to go do that in, and it doesn’t have to derail anything else that you’re working on. I like the way you put it of working on those things concurrently. It’s not a project that you put everything else aside and work on that exclusively, and you can’t just start and stop. It has to be an ongoing thing that you do alongside the traditional banking business.

Trish: Yeah. Exactly. Well said. Yeah.

Dallas: Trish, that’s good stuff, and I think that’ll wrap it up for this episode. Thanks again for taking the time, and giving us a glimpse into what you guys are doing at Eastern Labs.

Trish: Absolutely, Dallas. Again, thanks for the time, and I’m sure we’ll see you around.

Dallas: All right. Also thanks to everyone for listening. We’ll provide links to a few resources, including some contact info for Trish and Eastern Labs, in the show notes for this episode. You can always find those at precisionlender.com/podcast. If you like what you’ve been hearing, make sure to subscribe to the feed in iTunes, SoundCloud, or Stitcher, and we’d love to get ratings and feedback on any of those platforms. Thanks for tuning in. Until next time, this has been Dallas Wells, and you’ve been listening to The Purposeful Banker.

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