Moving from a Reactive to Proactive Digital Culture

Banks and credit unions can no longer succeed being a slave to quarterly shareholder results. Instead, there needs to be a proactive culture that supports long-term growth strategies.

If you’re like most people in corporate culture, you’re familiar with the following situation. You arrive at the office, grab some coffee, check your messages, and look over a list of the tasks you want to complete today. Then — before you can fully focus on anything — you’re told by a manager that there’s a new time-sensitive project that deserves priority over everything else. You pivot, work on the new project, and when the day ends, your original tasks remain undone.

It’s unfortunate, but this same thing happens at an organizational level, particularly in banking. Bankers experience high pressure to meet shareholder demands for quarterly profits along with ever-shifting regulatory demands.

For many financial institutions, scrambling to meet quarterly demands means that years go by and none of the most important problems (such as updating legacy software) get proper attention. Most employees of these organizations recognize that something dramatic needs to shift if the institution is going to gain a competitive edge in the digital age, but the tyranny of the urgent takes hold, and none of the most important long-term tasks get done.

How does an organization shift from a reactive culture to a proactive culture?

Here are five ways to get started.

1. Acknowledge the Problem

It sounds obvious, but the first step is to acknowledge the problem. Are employees honest about whether the organization is reactive or proactive?

To find out, hold a meeting where key players list what would be accomplished if there weren’t any of the urgent projects that come up each day. Ask what each person would most want to accomplish in the next five years … and in the next ten years. Then ask what things each person is doing each day to work on those long-term goals. If you find that most employees are on track, that’s great. However, upon doing this exercise, many institutions will find that they’re focused on short-term tasks at the expense of long-term cultural change.

Some questions to consider:

  • Does the organization have a specific plan to transition from legacy banking software? How actively is the organization executing on that plan?
  • Is the firm willing to ignore some of the “urgent” demands that arise? Can an organization say “no” to projects that aren’t the top priority?
  • Are there employees whose job is to focus exclusively on long-term digital strategy? Do these employees have a real voice in the institution?
  • If there is a problem, can it be acknowledged?

Acknowledging the problem isn’t a one-and-done thing. In fact, these questions sometimes need to be asked over and over. If this isn’t done, the tyranny of the urgent will creep back in and overpower the organization.

2. Restructure the Executive Team to Include Digital Specialists

To really enact change, an institution needs an executive team that deeply understands the shifting digital landscape. This doesn’t mean that people on the executive team need to know how to code (though that can help), but it does mean that members of the executive team need to know the full extent about why digital banking matters. At the very least, they need to be open to big cultural changes.

To put it in concrete terms, proactive financial institutions tend to have a chief digital officer. They also tend to have teams that deeply understand the fundamentals of technology and the changing digital landscape.

3. Adopt a Lean Startup Methodology

Anyone who has worked on a large-scale banking project knows that they’re often unpredictable. The only way to plan for such projects is to embrace the unpredictability. This is often best done through the lean startup methodology.

The lean startup methodology, popularized by Eric Ries, encourages companies to quickly develop and release a minimum viable product. Once the minimum viable product is live, a firm can start getting feedback and immediately iterate on that feedback (which is often unpredictable).

It’s clear that since no one truly knows the best path forward, it’s best to deliberately factor unpredictable feedback into the proactive plan at the outset.

4. Seek Proactive Technology Partners

Contemporary technology is so complicated that not even the most advanced financial institutions can develop everything in house. In these cases, it’s crucial to find partners that understand the dynamic nature of technology and have a long-term plan for whatever comes next.

To properly vet a partner, be sure to look at the foundational components of their technology. Are they coding in a language that might soon be outdated, or are they coding in a language that’s adaptable? More importantly, can they clearly articulate a 5-year plan and a 10-year plan? Do they have an informed long-term vision for the future of the financial industry?

The main point here is that there needs to be enough internal know-how to discern which fintech partners aren’t proposing long-term solutions and which ones are. If a dozen potential partners are interviewed, and there is not clarity around which one to choose, it’s a sign an organizations needs more expertise on the due diligence team. Bottom line, it is best to look for the partner that builds with the long-term in mind.

CFPB 1033 and Open Banking: Opportunities and Challenges for Banks
Reserve your seat today for this live webinar and explore the potential of CFPB 1033 for open banking initiatives within your bank.
WEDNESDAY, April 17th AT 2:00 PM (ET)
Enter your email address

5. Regularly Articulate the Long-Term Plan to Employees

At times it might seem like “low-end” employees, such as tellers, don’t need to know the details of a digital strategy or even what the 10-year plan is. In reality, nothing could be further from the truth.

For instance, all signs indicate that the bank branch is in flux. It’s no longer a place to deposit checks. Consumers have remote deposit capture for that, if they use checks at all. The branch is also increasingly no longer a place to open an account, since more and more of the process is being handled online.

Because of this, tellers need to acquire more knowledge and skills if they want job security over the next decade. They need training in servicing loans, in servicing phone calls, and in digital products. They especially need training in offering solid financial advice to consumers.

The time to do this training is now — not five years from now. By articulating long-term plans, employees can be provided detailed instructions on what they need to do to prepare for the change that’s inevitably coming. In addition, it can help them understand what “urgent” priorities they should ignore and which priorities they should pursue instead.

What is Your Proactive Plan?

The more a firm focuses on proactive solutions, the more likely an institution will get ahead of the digital transformation.

It’s time to put an end to the tyranny of the urgent and prepare for long-term success.

This article was originally published on . All content © 2024 by The Financial Brand and may not be reproduced by any means without permission.