Miles of words have been written about how the coronavirus accelerated digital change for the traditional banking industry. While that progression is critically important, often forgotten is how bank and credit union employees have changed too. What they’ve learned in the course of coping with the pandemic and all of its ripple effects is equally if not more important than the technology side.
Before COVID arrived, banking leaders insisted that their institutions’ competitive speed and adaptability was hobbled by their employees, says Accenture’s Paula O’Reilly. A common refrain she heard when proposing new steps to make organizations more competitive was “Our employees can’t handle that much change.”
Even as the coronavirus passed the one-year mark, some leaders still make that excuse for not changing their approaches to better match competition from megabanks, big techs, fintechs and others. O’Reilly, Managing Director in the Accenture Financial Services practice, challenges them because they are denying what happened, and keeps happening, as COVID’s impact continues.
No generation in banking has had to adapt and overcome so quickly as the people currently working in banks and credit unions.
Everyone working in financial institutions has had to deal with major change both on the business front as well as the home front, O’Reilly states.
“We live in a different world than we used to,” she says, “and it has made staff more understanding and accepting of change.”
Employees of banks and credit unions have had to adapt to Zoom meetings and all the rest that people in other businesses have had to, but they’ve had to adapt to more than many others because of the essential nature of banking services.
Add on top of that special situations, which keep on coming, such as the Paycheck Protection Program and the federal stimulus payments, and banking employees have had a hard lesson in adaptability.
But it’s been a valuable lesson at the same time, a positive to be seen in the midst of all of the pandemic’s angst.
What Staffers Learn When Failure Is Not An Option
Beyond this, the curve for adopting new technology has changed drastically. In her early days as a consultant, O’Reilly says, she worked on assignments to put in new systems. “It never went well, she says. “There were always issues and problems and outages.” Improved ways of introducing new tech on the fly, such as automated testing, have helped hasten adaptability, but the people factor is critical, she emphasizes.
“I tell banking executives that their people can handle more than they give them credit for.”
— Paula O’Reilly, Accenture
“So I tell banking executives that their people can handle more than they give them credit for,” says O’Reilly. This is especially important because she believes that the future of the industry depends on putting the best of both sides of institutions together — digital and human.
“Leaders have to think about how they will intertwine the human component that people often crave from banking institutions with the simplicity of digital that continues to drive costs down,” says O’Reilly.
The consultant says that reskilling employees is a key part of this human/digital transformation. In part this will reflect the gradual absorption of repetitive tasks by artificial intelligence, freeing employees for the roles best suited to humans.
She says employees themselves who are career-oriented should be proactive about obtaining reskilling from their employers. A key focus should be data — which will increasingly impact every employee’s role.
“Let’s say I am a call center worker or a branch worker,” says O’Reilly. “I should want to have a better understanding of data and how data is presented to me and how I can use it to do my job better and to serve my customers better.”
As for banking leaders, she says, they should be working to show staff that they won’t be adapting themselves out of their jobs — that the combination of AI and people for greater agility and productivity is a real thing.
Why This Matters:
What will help both financial institutions and employees is that institutions can break the continuing cycle of “slash and burn” cost-cutting, and all the turmoil that connotes, and instead approach costs strategically.
Institutions that cultivate their employees in the context of strategy will find it easier to recruit the types of talent needed just over the horizon as well, says O’Reilly. Word of mouth still plays a strong role in recruitment.
Innovation Is Table Stakes — But Much Misunderstood
O’Reilly spends a good deal of her time working with regional banks, but much of what she has to say applies at some level to every institution.
A challenge facing midsized and regional players is the need to stretch beyond their roots as they grow larger, either organically or through mergers and acquisitions.
“These institutions are going to have a harder time building on their classic branding of ‘We have great customer service and strong relationships’,” says O’Reilly, “if they’re not very purposeful about innovation.”
She says that to do so they can take advantage of new technologies and the opportunity to use them to leapfrog to where the megabanks are. “And they can do it at a lower cost point because the technology has advanced so much over the last few years,” says O’Reilly.
At the same time, it’s important to remember that the technology is the tool, not the goal of the effort. What, then, is the aim of innovation? Is it invention, creation of completely new thing? Or is that a mistaken view?
“People tend to think of ‘innovation’ as this huge, big word, and they think, ‘We have to do something huge’,” says O’Reilly. “But it doesn’t have to be huge to work. It can be a simple idea, one which technology can make possible.” Asked for an example, she points to Huntington Bank’s “24-Hour Grace” overdraft fee relief. The concept is simple: People have a day to make a deposit to cover an overdraft. Simple in concept, but very handy to many consumers.
“It was a new way to engage with consumers, and it was innovative,” says O’Reilly. Banking institutions remain full of small friction points that can be smoothed. Indeed, such opportunities can even be found in the latest digital products.
Mergers Can’t Be Allowed To Distract From Transformation
The time compression introduced by COVID, and the concurrent and growing list of priorities every institution faces, puts a new imperative on institutions that decide to grow more quickly through mergers.
“In the ‘olden days’ — you know, like two years ago — a bank would make a deal to merge or to acquire another institution and that’s what the two institutions would do over the next couple of years,” says O’Reilly. “But going forward institutions can’t let that type of focused integration distract them from all the other work that needs to be done.”
The consultant says there will be no pausing anymore, to achieve the ideal marriage of systems and cultures. Leaders will need to continue looking for innovations when carrying out the hard work of devising and carrying out strategy and tactics.
“You will have to keep driving forward,” says O’Reilly, even though there will be the temptation to regroup. This is not to say that mergers won’t breed issues that have to be solved and advantages that will take some work to realize. O’Reilly simply means that the world isn’t going to wait for you to catch up.