Change has always been a constant for financial institutions and consumers, but there is no denying the rate of change has accelerated considerably over the last decade, and even more so in the last few months.
Industry disruptions, new markets, shifting customer demographics and trends associated with COVID-19 have all had considerable impact on how financial institutions grow, both in the short and long term.
Banking has proven to be a resilient industry, adapting as social developments spark new consumer behavior and growing to be accessible everywhere at any time. The level to which financial institutions can grow, however, is impacted by two main factors: their strategic mindset and their capacity for change.
In the age of artificial intelligence, fintech apps and online banking, technology is inextricably linked to an organization’s ability to change. To fully reap the benefits of technology investment, banks and credit unions must cultivate a culture that embraces and facilitates widespread technology adoption and implements the right technology.
A Tech-Forward Tomorrow Starts With a Mind Shift Today
Before spending a dime on new tools, financial institutions must take a serious look at their strategic relationship to technology. Building a successful, nimble whole requires getting the entire organization, from executive leadership to front-line employees, to fully recognize the value in building a digital future.
Multiple internal barriers may arise, however, as organizations move from a survivalist mindset that follows the status quo and largely ignores the growing importance of technology to an expansionist, tech-forward mindset.
Leadership may be overwhelmed by the sheer possibilities — and potentially large investment — required to bring a comprehensive, flexible digital strategy to life. It is no wonder many banks and credit unions feel intimidated by the prospect of rethinking and rebuilding their digital strategy. Legacy systems can account for as much as 80% of their IT infrastructure.
At one point, these legacy systems were cutting edge and represented a huge amount of effort, time and resources to implement and maintain. But now the idea of unwinding them is daunting, from both a cultural and technological perspective. Projects of this scope need to be managed correctly and effectively to see a return. Leadership teams may hesitate to make major technology investments if the organization is getting by with the status quo.
Change is possible, however, even if there appears to be a deeply ingrained resistance to new ways of thinking and envisioning customer experiences.
A digital mindset does not always come from a top-down mandate. Often, there are mid-level managers who make small changes over time that accumulate to impact top-level strategy.
Regardless of approach, organizations moving their culture to a customer-centric mentality are constantly making small shifts towards aligning internal thinking and execution with customer feedback and pain points. This continual internal investment includes equipping staff with the tools, training and skills they need to forge meaningful relationships with the people they serve.
When an organization prioritizes customers, it must create a team that is capable, proactive and eager to tackle any new regulatory changes, market shifts or challenging events with a growth mindset.
To make the “how” of internal change seem achievable and worth the effort, organizations must clearly understand and see the value of the “why.” Shifting focus away from internal limitations and towards customer experiences creates momentum forward for organizations regardless of external forces. Organizations that relentlessly push forward to meet customer needs and exceed their expectations are not simply weathering this pandemic: They are continuing to grow.
Future-Proof Your Digital Strategy with Flexible Tech
Organizations that have successfully created a customer-centric mindset must support their strategy with adaptable technology to create digital experiences that prioritize customer needs and effective communication. If financial institutions implement the right kind of moldable, flexible, modular technology, they will have the tools and capabilities to adjust to whatever future conditions bring.
Instead of technology being an immovable, stationary island that changing tides and storms erode over time, technology becomes a ship — a vessel designed to ride the waves of whatever changes an organization will inevitably deal with in the future.
One aspect of flexible technology that helps protect organizations against the unexpected is that it enables collaboration. Truly adaptable technology is not a hindrance to quick communication between departments and teams — it promotes connection and problem-solving.
During the COVID-19 pandemic, fast and constant collaboration became the norm. Institutions that could support it looked like heroes, fostering loyalty with both their customers and employees. It is important that this new normal is not lost as economies begin to settle, and that the right technology is put in place to make this trend permanent.
This kind of agile collaboration depends on a financial institution’s ability to create strong data-driven insights. The banking industry has long understood the importance of making data-driven decisions, but the capability to do so has lagged.
As organizations shift towards a culture that centers on a digital-first approach to improve customer experiences, this must extend to the relationship between technology and data.
At Temenos, we have seen firsthand how widespread use of analytics and self-service reports has increased returns for financial institutions by deepening their understanding of what is really working for customers and what is not. Identifying trends in the data early on can pinpoint essential small, quick adjustments or aid the re-evaluation of priorities to better align institutions’ digital focus with customer pain points, feedback and behavior.
Having this data-driven knowledge is incredibly powerful when technology is scalable and fluid. Technology that enables a layered, brick-by-brick approach to development and implementation allows organizations to focus on what is important to the most critical customer needs at the right time.
Instead of having to be all things to everyone — and running the risk of being of no help to anyone — organizations can narrow their focus and shift resources nearly instantly to respond to changing needs.
Then, when things have stabilized, they can pick right back up where they left off without sacrificing progress towards long-term goals. The ability to strike this balance between short-term responsiveness and long-term vision is what creates explosive growth for innovative organizations, even if they have not always been on the cutting edge of technology.
Invest in the Right Technology at the Right Time — Now
The digital trends that have been on the rise for the last five years are now knocking on every financial institutions’ front door.
Banks and credit unions must commit to a customer-centric mindset by increasing leadership buy-in, cross-department collaboration and digital priorities to catch up, or risk falling further behind. To support this shift and anticipate future disruptions, it is essential that leaders design a scalable technology strategy that can grow at a sustainable pace and still meet customer needs.
Whether it’s in a year, after the dust from the pandemic settles, or in three to ten years when economic conditions invariably change again, financial institutions that prioritize customer experiences and flexible digital investments will have the tools they need to continually iterate and improve banking for their evolving audience.