How Innovation Itself Is Changing Inside U.S. Bank, Ally & More

Don’t just look for pain points in banking, but pain points in everyday life that banking can help solve. Here's how four innovative banking teams think about — and then tackle — the relentless improvement process.

A good starting point for any enthusiastic innovator in the financial services industry is a bucket of cold water.

However exciting the next big tech rollout is, consumers just aren’t going to be as jazzed as you are.

Innovation in banking is not so much flashy as frictionless.

“Customers don’t wake up in the morning wanting to go on their banking app,” Andrea Brimmer, chief marketing and public relations officer at Ally Bank, said at The Financial Brand Forum 2022 in Las Vegas.

Instead, they’re ordering a coffee from Starbucks with their smartphone. Or, they’re cruising Instagram, to see what their friends did the night before.

They might go on their banking app at lunch to pay the bill. Later, they could well be on their phone again to watch a show on a streaming service.

“We have to think about the totality of the consumer’s universe and innovate against those experiences,” Brimmer says.

This means not only looking for pain points in banking, but pain points in everyday life that banking can help solve.

Brimmer took part in a panel discussion with executives from U.S. Bank, Synovus and MSU Federal Credit Union, as they shared their experiences on how the quest for innovation is evolving.

Much of it is incremental these days rather than revolutionary, but the sheer volume of change remains a challenge, long after the early upheaval of the global Covid-19 pandemic.

For many banks and credit unions, the question becomes, where to even start?

U.S. Bank’s Dominic Venturo finds focus is critical.

“What problem are we solving? And what are the technology tools that can enable that?” says Venturo, the chief digital officer for the Minneapolis bank.

Where Should Innovation ‘Live’ in Financial Institutions?

Many banks and credit unions talk a good deal about innovation, but turning aspirations into actual products and processes requires more than lip service and “innovation theater.”

Panelists at the Forum said the days of innovation labs with dedicated staffs dominating the process are over. More input and development comes from business units now, and consumers have a hand in the innovation process at many organizations.

At Ally Bank, staff members rotate through its TM Studios for specific projects, Brimmer says. They might be at the studio for a stretch of six or 12 months, before returning to their departments.

Much of the emphasis is on eliminating pain points, so getting consumer input is an essential part of any Ally innovation project.

“We don’t always have to be the leading edge, but we’ve got to be pretty quick to market with innovation,” says Brimmer. “When you are a digitally native brand, they expect you to be like Uber. They expect you to be like Instacart.”

MSU Federal Credit Union recently created the position of head of innovation strategy to demonstrate how committed top management is to this priority, according to April Clobes, president and chief executive at MSUFCU. The new position reports directly to Clobes.

But, she stresses, innovation is still encouraged throughout the credit union, rather than looked at as the job of one person. Staff members from across the credit union cycle through its innovation lab to learn. Then they share their experiences when they return to their business units.

At U.S. Bank, innovation came solely out of a central lab for years, but Venturo says that embedding innovation in business units and product functions became more important. The aim is to create continuous innovation at the customer-facing level.

U.S. Bank continues to operate a centralized innovation lab as well. However, that lab concentrates on emerging technologies such as artificial intelligence and blockchain applications — more the “pure science” that needs to be refined before multiple business units can practically apply it.

The bank’s Innovators in Residence program teams up experts in various tech areas with business units requiring assistance in those specialties.

Read More: Tactics to Spark Innovative Thinking from a Disney Exec

How Damaging is Employee Resistance to Change?

At Synovus Bank, there’s a strong emphasis on speeding up innovation. One tactic that helps is getting everyone needed to execute a new idea in the same room, says Liz Wolverton, the head of consumer banking and brand experience. Agility depends on making sure all players are on the same page, so a useful result emerges.

In some financial services organizations, the leadership team wants to push through a particular change and dictates that that is the way it’s going to be. But that doesn’t work, Wolverton says. Without other leaders and their subordinates being on board, the initiative will fizzle.

This doesn’t mean that progress depends on having a pack of “yes men.” Once the need for a new approach is agreed on, the battle over ideas can commence.

“We disagree quite a bit. But I think we all feel the imperative to change. We don’t look at innovation as something that’s just a warm and fuzzy. We see it as a necessity.”

— Liz Wolverton, Synovus Bank

Bad attitudes can hinder innovation, Clobes says. A single team member who isn’t on board with the need for change in a product or process can create enough friction to bring it to a halt.

“You need everyone rowing in the right direction together,” Clobes says.

There have been times at her credit union when a manager has had to speak frankly with resistant staff and say something like: “This is the work that we want to do. You need to see where we’re headed. And if it’s not something that you want to be a part of, then this may not be the role for you in the long term, because the entire team has to see the value of being relevant in the future.”

Wolverton adds that a key lesson of the pandemic, especially the early days of isolation when remote banking became critical, was that a singleness of mission helped focus everyone on the need for speed and common understanding.

“There wasn’t anything else,” she says. “We had to get it done — it was the #1 priority. And we did some awesome things.”

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What’s the Formula for Innovation Success? A Mix of Buy, Build and Partner

When it comes to innovation, don’t try to do everything internally. That’s the advice from both the biggest and the smallest financial institutions on the panel.

Ultimately, according to U.S. Bank’s Venturo, innovation requires a balancing act.

“You have to be able to build things in-house, you have to work with what’s going on in the outside world, and you have to learn how to partner,” Venturo says.

U.S. Bank works with “a ton” of partners, he adds.

As a smaller organization, MSUFCU relies on partners for agility. “They help us get to market more quickly than we could ourselves,” Clobes says, adding that the credit union has more than 400 partnerships of all sizes and types.

The panel moderator, Jim Marous, co-publisher of The Financial Brand and host of the Banking Transformed podcast, noted that even J.P. Morgan Chase works with partners, saying the launch of its Chase digital bank in the U.K. depended almost entirely on tech partners.

One of the biggest monkey wrenches in partnerships is compliance. Fintech partners need to understand how critical information security and risk management are for financial institutions, Venturo says. He has seen fintechs walk away from a potential partnership because they can’t figure out how to meet these needs.

“But if you have a team of folks who really understand the vendor well, they can then help shepherd and coach those companies along the way,” Venturo says. “They will become better vendors as a result and they will become better partners as well. “

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