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Creating a Digitally Native Organization to Unleash the Power of Mobile Banking

By Thomas P. Novak, AVP of Digital Banking, Visions Federal Credit Union

Thomas P. Novak, AVP of Digital Banking, Visions Federal Credit Union

Mobile device usage has risen to prominence over the past ten years across many industries; retail, healthcare, banking, and more, to make seemingly mundane tasks now considered the mobile moments that win and retain customers. In banking, mobile transaction volume surpassed branch transaction volume nationally in 2015 and hasn’t looked back. It is safe to say that society is in love with mobile interactions to the point a mobile device is our trusty digital partner. Knowing this, even just anecdotally, warrants a business plan focused on exceeding expectations via mobile banking.

Mobile banking is a mainstay part of consumer interactions, our business success, and a vital connection pointin a larger digital ecosystem. The question is, how do we effectively engage with customers digitallywhile the competitive landscape is more daunting than ever before?

Go Native, Digital Native

Balancing the demand for new platforms, consumer expectations, competition, and more, we must constantly assess our delivery of best-in-class digital experiences, which now includes wearables and voice banking. However, roadblocks in several areas tend to limit success in achieving that goal; failure aversion, talent shortcomings, a rigid culture, and anunwieldy tech stack are just a few. Even if some of those challenges don’t exist, the necessity to increase mobile iteration velocity, innovation, and benefit to your organization beyond providing a convenient transaction channel are immense.

To help curtail that pressure, a digital start-up that is separate, but affiliated with your main organization can be the solution. A new lease on digital life to help harness the power of mobile banking and deliver on consumer expectations commensurate with the largest and most forward-thinking tech titans. Some of the benefits of this approach are:

• A mobile-first culture built from the ground up

• Support of nascent technology with an open platform

• Allure of a start-up environment for new talent recruitment

• A new tech stack with robust analytics

• Room to iterate and fail

• Speed to market – mobile velocity

• A mutually beneficial relationship with the main organization

• An effective measure against the encroachment of challenger banks and technology entities

"Balancing the demand for new platforms, consumer expectations, competition, and more, we must constantly assess our delivery of best-in-class digital experiences"

This proposition is meant to open minds and relies on leadership, conviction, and perseverance, but it is not a small endeavor. If you are already at the peak of digital banking success or your organization is resigned to a steadyjourney of small wins, perhaps this strategy is not for you. However, take solace that it exists today in various forms; you might not be a pioneer, but you would be amongst trailblazers. Standing up a digital version of an organization can be found with:

• Finn by Chase

• IncredibleBank, a division of River Valley Bank

• Simple, now owned by BBVA Compass

• Civic Federal Credit Union

Three Keys to Success

For the proposition to work, it requires three essential ingredients;vision and strategy, executive buy-in, and discipline. Having a vision for the digital banking future you seek is the first step; what overarching goal are you trying to achieve? At my organization, such a vision is advocacy banking – emulating what a healthcare advocate does, but for financial services via digital. The strategy for that success is built upon four key pillars; online banking, mobile banking, accounts opening, and lending. The foundation for digital banking success starts with those core components and builds from there – it’s a “back to basics” approach before you dive into emerging technology such as blockchain or robot process automation. For examples of a similar approach, one can look to Chime or N26 – challenger banks that do exceedingly well on several key items; UI/UX, account opening, and mobile banking.

After vision and strategy, executive buy-in comprises the people aspect of your success. This is an initiative that must be supported by the CEO and executive team and communicated throughout the main organization. This goes beyond general awareness and permeates into the culture that the main organization can reap benefits from its digitally native brethren.

And finally, the leadership team over the digital organization must have the discipline to persevere; challenge conventional wisdom and build for the future, not just present-day problems. In many ways, the digital organization’s leadership team must embody multiple distinct disciplines blended into a new mentality. In one instance, the traditional business thinking of strong accounting practices and sound processes along with the more technology-forward mindset of creating ecosystems that are ever more self-sustaining with each iteration – i.e. Apple and Amazon. A digitally native organization can potentially present itself as more adept regarding modern-day topics such as providing digital identity management or engaging in conversational commerce.

A Practical Use Case

Creating a digitally native organizationis done most effectively one step at a time. Consider your financial institution’s need for deposits in today’s economic climate. While traditional strategies such as rate promotions have their place, itsutility is often finite in duration. And consider that if you are gaining deposits on price alone, you are subject to outflows of funds just as quickly as you gained them.

Additionally, since the cost structure for a digital organization can be very different from your main organization as well as the value proposition and brand, a high interest rate savings or certificate offering that is completed digitally end-to-end, with support only offered through chatbots, secure messaging, and a contact center is feasible. Those deposits can help to fund loans in the main organization and keep liquidity ratios in balance, all at a lower cost.

One needs only to look at the success of some other digitally native entities to see the potential such as Marcus by Goldman Sachs that now supports loans and deposit accounts. While it is possible for an organization to effectively go through a digital transformation to yield digital banking success, at times it is most prudent to navigate turbulent waters when steering a speed boat instead of an oil tanker. The main point of digital banking is that it is the way business is conducted now; the digital journey never ends. Be sure to equip yourself and your organization with the tools to thrive.

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