3 Ways Any Financial Institution Can Move with Fintech Speed

In banking, the most defensible product or the biggest balance sheet are only momentary positions of strength. Those advantages get whittled away as the competitive landscape changes and then your growth will stall unless you constantly — and quickly — evolve. Fortunately you don't have to be a start-up to think and act like one.

Strategy, technology and product features are short-term advantages in banking — speed and innovation are long-term success factors. Speed is the biggest competitive advantage any financial institution can have in the rapidly changing landscape of today.

Speed is what creates a culture of innovation and motivates employees as they see decisions made and things get done. Speed is what finds and achieves product/market fit by quickly and constantly iterating with feedback from real customers. Speed drives growth, and the lack of it eventually leads to decline.

And yet so much of what is talked about in banking, so much of what leaders focus on, doesn’t address why speed is so important and how to develop a culture of speed within banks and credit unions. Often times it seems like the assumption is that speed is a fixed trait — you either have it or you don’t.

Bankers see how quickly neobanks move and chalk it up to them being small. Yes, being small makes it easier to move and change quickly, but just because you’re big doesn’t mean you can’t work on moving faster.

Here are three ways to adopt a challenger mindset and push your team and financial institution to move faster:

1. The Root Challenge: Make Decisions Faster

When bankers talk about speed as an industry, it’s usually about product launches — how quickly something got to market, how many updates were shipped in a period of time. We’ll talk about those factors below, but they are the outputs of speed. The inputs of speed are the thousands of decisions that were made to allow that product to get to market or that update to go live so quickly.

Read More: Digital Banking CX Boils Down to One Word: Speed )

Making decisions faster is a big, hairy audacious challenge, but it is at the root of most wins (or losses). If you can speed up decision making in your team or institution, it will make everything you do move faster.

Key Step:

To move faster you need small teams, unhindered by process, seeking progress, not perfection.

Small teams (eight to ten people max) can make decisions faster than large ones. Jeff Bezos got this right from the beginning at Amazon with his “two-pizza team” rule. It happens more naturally in start-ups as there are just less people to pull in, but there’s no reason a larger company can’t create a two-pizza rule or at least aggressively audit whether their working teams need to be larger than ten people each.

Some process is needed, most isn’t. Process should be used sparingly and mostly to make sure nothing catastrophic happens, not to make sure everyone does everything the same way. The less process, the faster a team can move.

“Progress not perfection” is a hard, fundamental shift for most incumbent institutions to make. Many have created a culture to avoid risk-taking, to make sure that everything is “measured twice and cut once,” that it’s all perfect before it moves forward. This risk-avoidance mindset should be replaced by a risk-management mindset.

Some things do need to be perfect, but most don’t. Manage the right risks, don’t avoid all of them entirely, and then focus relentlessly on moving things forward at pace.

Read More: Lessons from a Bank Chief Transformation Officer )

2. Go-to-Market Speed Is Crucial

Getting to market faster is a huge competitive advantage in itself. Expectations and opportunities for product development are changing so quickly, it’s essential to be out in front of the curve as much as possible.

But the other advantage of getting to market faster that’s less discussed but potentially even more valuable is getting real feedback from real customers earlier on. The best products are built with the market, not just for the market.

Why it Matters:

Even a few months difference in getting to market can make a huge difference in the success of a product.

To speed up your go-to-market you need iterative innovation shaped by market feedback.

Iterative innovation means focusing on constant improvement. If you’re working in any kind of agile methodology already, this will be familiar territory for you, but agile is as much a mindset as a methodology.

You don’t need to wait for the full digital transformation project to be completed to start moving faster.

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The impact of speed in go-to-market when applied at scale can be massive. Take the example of Wells Fargo compared to WeBank. Wells announced their new consumer banking platform that will be rolled out (slowly) in 2022 and has been in development for a year. WeBank moves from idea to deployment in 14 days on average, using four integrated cloud platforms to introduce tests to the real marketplace.

Market feedback guides you to make better products (and more effective marketing). To use the above example, WeBank not only gets their new products to new customers faster, they also get so much more feedback along the way to know whether they’re making the right or wrong decisions.

Market feedback is one of the major raw materials needed for growth and speed is what churns out more of it.

Read More:

3. Speed in Adjusting and Adapting

Speed powers a flywheel of opportunity if you approach it right. Making decisions quicker allows you to go-to-market faster, which then lets you adjust and adapt (with fast decisions), fueling an accelerating viral loop of progress and opportunity.

To adjust and adapt quickly, you need relentless customer-centricity driven by data in a state of constant evolution.

“Customer-centricity” is one of those buzz words that everyone talks about but few actually do well. Really it simply means an understanding and prioritization of your customers’ needs over your own. That’s where it comes from, and most financial institutions (especially larger ones) aren’t willing to do it consistently enough to be truly customer-centric.

Telltale Sign:

You can always tell how customer-centric a company is when you use their product. The experience is just better.

It’s hard to pinpoint exactly where customer-centricity comes from — it’s not encoded in a process or playbook, it’s more embedded in the culture. It almost always comes from some research or product team somewhere in the company asking for and paying attention to the data that customers create when they use the product.

 

Data-driven customer-centricity is what creates strong products, and the faster you can collect that data the faster you can showcase your customer-centricity to the wider world.

Read More: Can Traditional Banks Digital-Only Divisions Beat Out Neobanks? )

Constant evolution is the state all financial institutions exist in now, whether they like it or not. The pace of change is only speeding up and the disruption in banking is only increasing. Challengers (small or large) recognize that and create cultures that feel comfortable in that state.

Go read a few articles on the “Building Brex” section of the Brex website, and you’ll see how constant evolution is core to this fintech’s culture. As soon as you embrace instead of oppose change, you’ll be able to take advantage of the opportunity it creates much faster.

If you’re a small bank or credit union, recognize that speed is one of the biggest competitive advantages you have against the big banks you compete with — find ways to maximize that advantage.

If you’re a big institution, recognize that lack of speed is one of the biggest vulnerabilities you have in a constant and fast-changing landscape — find ways to think and move faster. Start small if you need to, but move fast in whatever you do.

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