4 Real-World Lessons from Banks Wrestling with Digital Transformation

Updating technology is tough even for large banks. For community and regional institutions it's a real challenge to keep business running as normal while building up their digital game. Two bank executives reveal how they modernized their systems without negatively impacting customers.

The competition between megabanks, community institutions and neobanks has been intensified by digital transformation. Midsize and smaller banks and credit unions in particular struggle to provide consumers the digital products and services they need while maintaining the community feel.

As a result, digital transformation may feel like a bigger obstacle to these institutions. Yet, it can be done.

Jim Marous — Co-Publisher of The Financial Brand, CEO of the Digital Banking Report and host of the Banking Transformed podcast — spoke with two executives of large community institutions to explore how they overcame the challenges they face in innovating at scale. The two have plenty to impart: Ross Creasy is Chief Innovation Officer at Ameris Bank, a Moultrie, Ga-based bank with $21.9 billion in assets. Stuart Cook is the Chief Digital Product Officer of New Jersey-based Valley Bank, with almost $41 billion in assets.

Here are four key lessons they’ve learned on the road to digital transformation.

Lesson One: Recognize the Obstacles

Both banks were chipping away at digital banking strategies prior to 2020. Ameris was already functioning 30% remotely and quickly shifted to 80% within four weeks of the Covid-19 pandemic hitting the U.S.

“Without something like PPP and the pandemic, I think that cultural transformation would have taken longer,” Creasy states.

Cook says the flood of neobanks into the market may have also stimulated some rapid changes.

“There was a lot of noise around what some of the challenger banks were doing in retail banking,” he notes. “For me, it was a question of ‘How can we take the ways of working and the tools and techniques that those guys are using and rethink that for the small business and mid-market?'”

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Yet, that doesn’t mean that it has been easy. Creasy compares the shift to a complete makeover on a plane — while it’s in mid-flight.

“We’re trying to change the engine and change the paint and change the seats, while the plane is in the air,” he maintains, adding that his teams at Ameris have “to be smart around how we make that change, not only to our customers, but also to our teammates.”

And the thorny problem facing smaller financial institutions is they are held in many ways to the same digital standards as larger banks, which have far greater resources to make these changes without impacting the customer journey. Small and even regional institutions don’t have that luxury.

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Upgrading technology is crucial for any financial institution in the modern banking world, but the backend teams must also be equipped to work with — and service — the technology so customers don’t feel a disturbance.

Creasy says this has been one of the biggest challenges for Ameris Bank, adding while they’ve been trying to be smart about the sequencing of new digital feature rollouts, his teams must “recognize that our company still has to run the bank.”

The solution? Creasy says that as Ameris deploys new services, executives “make sure our people are trained, they know how to use it, and know how to continue to service and sell.”

Lesson Two: Keep Customers Engaged Digitally

Creasy used to work at Capital One in a variety of roles. He jokes that the big credit card bank used “to mail everybody everything.”

“There are massive opportunities to automate operations and back office. That is the area that I get really excited about.”
— Ross Creasy, Ameris Bank

Obviously, that can’t be done anymore. People rely on their phones for just about every facet of their lives, including banking. That’s why Creasy maintains it’s crucial that financial institutions keep customers engaged in a mobile app that provides a great experience.

“That’s the way to know where they are in their journey to grow financial wealth and security,” he continues. “It’s all about engaging your customer, in knowing and understanding their transactions so you can make the right offers to them at the right time.”

( Dig Deeper: People Use Bank Accounts Differently Now: How Marketers Must Adapt )

However, if the frontward facing mobile technology isn’t working efficiently, it’s that much more difficult for banks and credit unions to engage with people, Creasy maintains.

This requires the back-end technology to be equally addressed in true transformation. Creasy refers to this as “integrating automation technology into the banking experience,” which he says plays a major role in Ameris Bank’s strategy.

“We use robotics today,” he says. “It has really accelerated our ability to weather the volume in mortgages this year. There are massive opportunities to automate operations and back office. That is the area that I get really excited about.”

Lesson Three: Partner Up With Fintechs

Jim Marous observes that while financial institutions may have technology that supports digital onboarding, it may not be as streamlined as it could be. He asked the two bankers how they sped up these processes without losing the empathy and personalization factors.

( Learn More: How Banks Can Ensure Fintech Partnerships Don’t Fail )

Cook says it’s been important for Valley Bank to sustain a multichannel approach. Don’t try to merge all the data, he continues, because most of the existing banking systems (while they are digitalized) are still organized the same way they were a decade ago.

“To get the very best out of your bank, you need to know how a bank works,” he explains, adding people can’t expect their information from a mortgage to carry over to the opening of another account. “Good luck, because those two things are on separate systems, and you wouldn’t share the data across that.”

 

“We started to think more broadly about the fintech opportunity — to not just help solve the challenges we had, but also to find where they might have some challenges.”
— Stuart Cook, Valley Bank

On the other hand, Creasy references Ameris’ partnership with NCR’s software-as-a-service company Terafina. Such fintech partnerships, he thinks, are key to upgrading systems without losing out on the essential banking customer experience.

“The partnership has really allowed us to accelerate the speed of consumer online account opening, ” Creasy says. “It’s got to be fast, it’s got to be intuitive, and we’ve got to make it easy for them.”

Cook says it’s a two-way street and, in addition to partnering with fintechs, he has spent time observing what the competitive neobanks are doing in the retail banking space.

“We started to think more broadly about the opportunity in the fintech ecosystem — to not just help solve the challenges that we had, but also to find where they might have some challenges.”

Lesson Four: Don’t Forget Your Roots

At the end of the day, no matter when and how much banks and credit unions build out their digital transformation, they can’t forget the core of their services.

“As you grow, you don’t want to lose your community roots and the relationships and the service you provide, even though you know digital is absolutely a channel you have to offer and you have to be great at it,” Creasy maintains. “You don’t want to lose those roots as you get bigger.”

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