As countries, states, cities and towns begin to open for business again, banks and credit unions are looking to find ways forward that meet existing challenges and prepare for a future that will change in uncertain ways. Understanding which changes are temporary and which are likely to be part of the “new normal” will be critical for financial institutions looking to engage customers, empower employees, and increase competitiveness over the long term.
In any case, it’s likely that the ways people interact with each other and their financial institutions have changed permanently. Recent research by Temenos suggests those who had a growth mindset and a “don’t rest” view of the future are most likely to thrive in a post-pandemic world.
How Financial Institutions Can Find a New Path Forward
In February 2020, Temenos published the report A New Path Forward. Based on a survey of 195 U.S. banks and credit unions, the report identified four different growth stages and strategic paths forward based on the current state of each entity’s organizational mindset and technology maturity.
Banks in what is referred to as the “Customer-Centered Growth Stage” (19% of those surveyed) invest heavily in culture and innovation. They focus on digital transformation initiatives that help them become more agile and responsive to change. With the ability to quickly get new apps, experiences and products to market, as well as modern, personalized approaches to marketing and communications, they are well-positioned to weather the dramatic shifts wrought by COVID-19.
This thesis is borne out by further research, conducted by Metia in April 2020, which asked 500 financial institutions across the U.S. and Europe to place themselves in the Temenos Growth Matrix both six months before COVID-19 and at its apex in April 2020.
That research shows that organizations in a Customer-Centered Growth Stage utilizing a “don’t rest” growth path before the coming of COVID-19 were still following that strategy during the crisis.
Unfortunately, the banks and credit unions in the Efficiency Growth Stage represent those struggling most during the COVID-19 pandemic, and many were forced back to the Survival Growth Stage. Predictably, organizations that were in survival mode were largely forced to stay there during the crisis.
The takeaway here is that organizations focused on internal limitations and requirements had a harder time keeping or gaining ground compared to those who were focused on customer needs.
“Don’t Rest” is the Right Path Forward
Why are institutions with a growth mindset more robust in a crisis and more likely to succeed in the future? Why do they keep their positions as leaders while others are slipping behind? Because they have built organizations that are not only connected to their customers, their markets and their employees, but can detect and respond to changes rapidly.
Probably the most prominent characteristic of Customer-Centered organizations is that they don’t rest on the success they have achieved so far.
No one could have predicted the 2020 pandemic precisely, but change is constant. Focusing on a “don’t rest” growth path has served Customer-Centered institutions well in that they have always been anticipating market changes and building an agile foundation to support them.
Although financial institutions in other growth stages may have additional steps to take before they can become fully Customer-Centered, there are important lessons to be learned from those on a “don’t rest” growth path.
1. Future-proof investments so you don’t always have to chase the latest thing.
Customer-Centered organizations were ready for contactless banking. They had already evolved their digital experiences to fit growing customer demand for digital services and had the scalability and agility built into their platforms to handle surges in demand. Their customers were already familiar with digital tools and the banks and credit unions encouraged and incentivized their customers to transact and interact digitally. By the time a crisis hits, it’s typically too late to develop and roll out such solutions.
2. Balance rapid growth with the human side of the business, ensuring core values are not compromised.
Leaders of Customer-Centered organizations focus on constantly upskilling of staff and aligning their culture with strategic priorities. This means their people are ready to adapt and are motivated to stay engaged and committed during significant operational changes. Cultural investment drives loyalty and a sense of purpose — and ensures that people have relevant, up-to-date skills. The mechanisms used to manage cultural change such as effective training and communications help disseminate information, regulatory changes and new best practices quickly.
3. Continue to invest in customer, partner, and market feedback.
Being data-driven facilitates a “don’t rest” mentality. It helps financial institutions know their customers and markets, as well as anticipate change. It creates awareness of when to pivot while their competitors are in wait-and-see mode. These organizations go beyond basic transactional and demographic data, incorporating operational, behavioral and market data into their analytics so they have a 360-degree view.
Unified data, intelligent analytics and end-to-end visibility gave them the information they needed to decide where to invest, where to cut, and how to maximize efficiency for the short and long term.
4. Pursue a strategic human and digital agenda to ensure that the customer experience remains personalized, authentic and valuable.
Organizations on a “don’t rest” growth path understand that this means deploying and modernizing marketing.
Effective, highly automated marketing platforms with built-in intelligence enabled these organizations to reach out quickly and with empathy to customers. They were able to use their deep understanding of customer needs to deliver personalized, targeted, and authentic support without becoming overwhelmed. They could be proactive and get ahead of customer needs and challenges before their call centers were flooded, and they used intelligent automation to handle request volumes and provide customers the information they needed fast.
Responding effectively in a time of crisis builds confidence and loyalty that will last far beyond today’s needs.
5. Stay abreast of contemporary possibilities by embracing a growth mindset every day, no matter what the world throws at you.
The banks and credit unions that are set to help redefine the future of banking are those that understand the significance of retaining a growth mindset through every issue, including economic downturns. With efficient cost structures, agile technology, and healthy, committed cultures, these companies are poised to capture market share — while others are simply trying to keep themselves afloat.
Customer-Centric Thinking Helps in All Potential Environments
Whatever the next 12 to 24 months hold, one thing is certain: Customer-Centered digital transformation must be on the top of the agenda for every bank and credit union.
Those who have already embarked on a Customer-Centered growth initiative need to continue to maintain a “don’t rest” mentality. The advantages of such a mindset will continue to accrue, and the imperative is not to lose focus.
For those who need to accelerate their own journey, times of disruption often prove instrumental in breaking through old organizational mindsets of “That’s not how we do it here.”
By learning from those who were best prepared, you can move more quickly to the Customer-Centered phase and support greater resiliency going forward.
The Temenos A New Path Forward study helps you quickly identify where you are in the Temenos Growth Matrix, benchmark your bank or credit union against peers, and identify actionable ways to prepare for success in the future of retail banking.