Pub. 3 2014 Issue 9

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 10 LEADERSHIP IN A DIGITAL ERA By Jackson Hataway, Ph.D. B ANKS ACROSS THE COUNTRY ARE struggling with a massive, daunting challenge: remaining relevant, secure and profitable in an era of digital expectations. As consumers have moved more and more of their lives into the digital space, everything from banking to purchasing to media consumption is being increasingly driven by demands for digital accessibility. Products and services have to be available and deliverable to consumers in faster, more seamless and more intuitive forms, and across delivery channels. The services we recommend have to be directly relevant to consumers who are sending out more data about themselves than ever before (so no more Visa card promotions being sent to customers who are already Visa card users). The data we provide customers has to be contextualized so they can actually make sense of it and use it — in other words, fewer spreadsheets, more graphs. At the same time, we have to do all of this while maintaining se. As an industry, we’ve largely acknowledged the irreversible nature of these trends and begun the arduous process of shifting the customer-facing elements of our businesses to take advantage of them. However, despite our best efforts, the majority of banks have moved much slower than the pace of change demanded by a digitally integrated world. Instead of leveraging digital tools to develop live pipelines of information integrating the online and offline worlds, we rely on tools that showcase static, single-view information. Moving at the pace of digital requires banks to understand that consumer expectations are being shaped by the incredible digital experiences they receive in industries outside of finance. And the longer we lag behind, the larger the gap that we create in which new innovators and competitors will insert themselves. The Data Problem The most difficult problem we face is, ironically, the same thing that creates so much opportunity: data. Every transaction can be analyzed from endless angles. Aggregated across the entire customer base, the power of that data mining capability grows exponentially. But, instead of becoming a catalyst for strong leadership, intelligent decision making and engaging customer experiences, the potential of that data remains largely untapped by most financial institutions. Imagine Amazon (www.amazon.com) without algorithms. Because of its predictive algorithms, Amazon is able to filter out the noise (random product data) that makes shopping at other “online warehouses” so comparatively painful. Instead of a page filled with random items, you get a personalized shopping experience. Without those algorithms, Amazon would just be swinging wildly with big data in the dark, hoping some product flashing across your screen would stick. In the same light, many banks are hampered by data because they have no lens–no agreed upon set of algorithms–through which to filter that data and no succinct way to visualize it. Instead of increasing the bank’s strategic intelligence, data actually becomes a point of drag felt throughout the institution. Creating the Lens Ironically, building the right kind of lens for digital isn’t a technology problem – it’s a leadership problem. There has to be a fundamental shift in the way we perceive our customers, communicate with them and design our operational models around their needs and expectations. Customers are consumer first (as are, for that matter, board members, managers and staff). They can like, share, tag, tap or swipe in a second to engage the services they care about. Anything that isn’t easy and seamless is becoming less and less acceptable in the consumer marketplace. That’s why third party competitors like coin and Mint.com have gained footholds in markets traditionally dominated by banks; they’ve made “easy” and “seamless” applicable to financial services. To remain relevant in a digital era, we have to perceive our customers as consumers first, with relationships and expectations that extend well beyond our institution. At the same time, banks have to begin operating more like software companies and less like traditional financial institutions. Software companies fundamentally understand how critical it is to prototype a product, test it, gather feedback, make changes and then release that product at scale. That same discipline needs to be applied to our operational models, both internally and externally facing. We need to develop an appetite for rapid prototyping. Products, services and processes need to be developed, tested and evaluated based upon focused data. Bringing our banks up to speed to match the pace of digital is not a simple task. It requires entirely new ways of perceiving our customers and new operational models that leverage the capabilities of that perception. We have to be committed to bringing the bank online. Jackson Hataway will be a featured presenter at KBA’s 2015 Bank Technology Conference and Showcase to be held February 10-11 in Topeka. Please visit ksbankers.com for details and registration information.