In the history of retail banking, there have never been so many changes in such a short period of time. Digitization is spreading throughout the sector, and continues to change the way the banking industry delivers their products and services. New challenges and new challengers appear every day.
New competitors are entering the marketplace, mainly as the visible face of the progressive digitization of financial service business models. Soon, there will be no banking except for digital banking … with banking in the future looking more like the financial technology firms that are considered competitors today.
With transformation and disruption all around the industry the big question is, “How does a retail banker from yesterday become a successful digital banker positioned for tomorrow?”
Given the known challenges and opportunities, there are five essential roles a successful leader in digital banking needs to embrace in the very near future.
A lot of changes are coming at the industry very fast. New regulations and compliance, new consumer expectations, new technologies, new competitive business models – all changing daily. In addition, the interaction among these changes makes things even more complicated.
Gone are the days when banking was a relatively static, immutable business, where customers would go to the same branch for everything they needed, dependent on what the banks offered. The 500 year old model is gone, without complete clarity as to the model that will replace it.
Those who will lead the digitization of banking and build new financial technology-based banking will need to drive investments and strategies with a clear cut, sharp vision of the future. These visionaries will need to guide the repositioning of organizations for the long run. While experimentation and failure will be part of the game, the vision of the future must be strong, providing the foundation for investment of resources towards the future vision.
Retail banking is no longer a business where having a strong accounting or finance background is enough. BBVA Chairman Francisco González referenced the dramatic impact technology is having on banking when he made his now famous statement that, “BBVA will become a software company in the future.” Most organizations today would agree.
Retail banking leaders throughout the organization need to understand what the COO and innovation team are talking about. This not only includes the middle management of a banking organization, but even the board of directors as referenced in article, “Why You Should Be Worried About Your Bank’s Board of Directors“.
This doesn’t mean that a digital banker needs to take a post-graduate course in technology, but they will need to be digital-savvy, with a first-hand understanding of concepts like a distributed ledger, banking from cloud, IoT, API gateways, and biometrics. Digital banking leaders will also need to understand the benefits these technologies can bring, and the most likely 5-10 years developments.
Finally, today’s technologies will be displaced by technologies of tomorrow. That means continuous evolution, at a faster pace than ever before.
Successful digital bankers will also need to understand digital design.
The very first thing financial technology startups and neobanks brought to the banking industry was a refreshingly new way of designing User Experiences and front ends. Started from IX (interface experiences), the job is getting more serious today.
It is no longer a job of just visual elements and graphic designs, but now a job of User Experiences designers, which includes middle and back-end design in addition to the all important customer-facing design. It is about the whole process stack at any touch point with clients.
Customers are used to experiencing the best practices coming from Apple, Amazon, WeChat, Uber, etc. – and this is now the standard set for banking. The bar is high.
Banking is different from other industries, with heavier regulation and many more nuances, but customers will increasingly choose and switch financial partners on the basis of being able to receive smooth and simple digital experiences. Successful digital bankers, who lead the banking transformation process, have to think customer-first, with an end-to-end digital experience in mind,. Compromises will result in a significant business loss.
4. Team Leader
The vast majority of banking employees started their job when smartphones and social network didn’t exists. Many started when the commercial internet didn’t exist, or when it was just at the very beginning.
In addition, most banks have been designed and structured with traditional pyramidal shapes and vertical silos – one for each segment of the business, many times geographically fragmented. This is not a successful structure in the digital world.
Work is now horizontal and inter-functional, and from the design phase, the mission is to solve problems as opposed to ‘selling stuff’. Today, most organizations need to move from a black Ford Model T business model to a consumer-centric, 1to1 banking model, where the value proposition is delivered contextually … in real time.
In today’s vertical, hierarchical world, ideas – the corporate blood – don’t circulate. They are stymied by bureaucracy.
A successful digital banker needs to be a great transformer of organizations and a great motivator. He/she will have to have the vision and the courage to break internal barriers, fight bureaucracy from the top, inject the required new talent and motivate them to create global thinking and design with local adjustments and executions.
These leaders will also need to recruit and integrate younger talent among experienced veterans, empowering innovators, and giving the breathing room and power to ideas wherever they come from.
“Resistance is futile”. This has to be the motto of the digital banker of the future. No complacency, no regrets, no nostalgia of the comfortable past.
The passion of the digital banker will need to drive the bank to the future. Digital bankers will encounter everyday resistances from IT, compliance, regulators, HR, risk and probably from shareholders and the board. People will point at early failures as evidence of a wrong vision and strategy. Of a wrong direction.
Naysayers may not understand the value of experimenting, testing, progressing through interactions and proof of concepts in the real world with your customers … typical in a digital banking world. Very few will understand what Bill Gates correctly said once: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten”.
People tend to underestimate the power of innovation in the long term. To be a successful digital banker, one will have to drive the laggards and naysayers through and even against themselves. Tomorrow’s successful digital banker won’t have choices … they will need to be great fighters, having in mind that what really matters is the war not the battle.
Successful digital bankers will have to work from the inside … much harder than starting from scratch. The journey will be tough, but the destination worthwhile.
Roberto Ferrari is the General Manager at CheBanca!. Ferrari is the author of the book: “L’Era del FinTech” (2016, F.Angeli). He is listed in WSJ’s Financial News (2015 and 2016) as a Top 40 Fintech PowerPeople in Europe, and in 2015 and 2016 as Power 50 Digital Banker in European digital financial services from Digital Banking Club London.