New technologies and a focus on improving the digital customer experience are changing the business models of financial institutions. This digital banking transformation is resulting in new products and services, refined processes, reduced costs, and accelerated time to market. As digital capabilities across all industries have matured, consumer expectations have continued to evolve, transforming the value chain of many financial institutions.
More than any time in the past, the largest banks in the world have capitalized on the customer’s increased willingness to use digital financial services. U.S. Bank, the sixth largest bank in the country has been one of the leaders in going beyond the basics in digital banking transformation. From streamlining new account opening and onboarding processes to creating new ways to manage finances across channels, U.S. Bank combines innovation, modern technology, and a focus on the customer experience to change the way people bank.
Innovation and digital banking transformation at U.S. bank goes far beyond simply enabling the consumer to process basic transactions on a computer or mobile device. The bank has completely rethought the way a consumer interacts with the bank … and how the bank uses data and actionable insights to provide value to the customer. This transformation at U.S. Bank has resulted in providing the customer an experience that is faster, easier and more intuitive than ever before, enhancing each engagement at a time when the majority of engagement with the bank is across digital channels and when competition is more intense than ever.
To better understand both the innovation and digital transformation process at U.S. Bank, I interviewed Dominic Venturo, Senior Executive Vice President and Chief Digital Officer at the bank for the Banking Transformed podcast. Dom is a 23-year veteran of the bank, having managed product development, innovation and digital transformation during his long tenure.
He discusses many of the ways that U.S. Bank has leveraged the recent changes in consumer behavior to increase efficiency and grow revenues. Below are highlights from the interview.
How does U.S. Bank approach digital banking transformation?
Dominic Venturo: First we looked at how we serve the marketplace and then organized around customers and customer segments, not products, not features, not apps, not websites, etc. We have a lead digital executive for each of the major customer groups, including consumers, small businesses, commercial, wholesale and employees.
When we think about employees as customers, we recognize that an employee has two roles – they have a role of being an employee and the tools that they use in getting their job done. And, there’s the collaborative side of an employee with the customer. Things like co-browsing, chat, and the one-to-one interaction with the customer. If you have this framework of the customer segments, and each of those segment executives is working with the business lines to understand their priorities, strategies and business objectives, then we can begin to prioritize what we do next.
Then, we looked at how many things we could do through the digital channels by taking an inventory of all of the customer journeys across all segments. We looked at those things that we could do not digitally, but could be digitally enabled, those things that could be 100% digital, and then those things where you have the opportunity for both banker interaction and digital interaction at the same time. Those journeys then get prioritized based on frequency, reach and impact.
Is it more than just making a process ‘digital’?
Venturo: You can’t just take a process and make it work within the digital channel, you must redesign the process end-to-end for digital. Instead of key punching each line of data, why not just ingest the data directly from the system of record, through an API or other modern technology? You redesign the system front to back, when you digitally enable it, and you do all of that in a co-creation way with the customer.
Can you explain ‘customer co-creation’ at U.S. Bank?
Venturo: With customer co-creation, we’re using customer feedback, and then we’re using iterative improvement cycles to be able to refine the overall process. If we build a new system, or a new service or a new process, and we launch it digitally, we’re immediately monitoring it for the feedback. In some cases, we get feedback where we got something not quite right, or it could be better, or it didn’t work as smoothly as we had thought. We then rapidly modify adjustments using an agile delivery method. This allows us to get a fix in within weeks, or even days, instead of being put on a ‘project list’ that gets delivered nine months later.
Dominic Venturo on Digital Banking Transformation:
“Being organized around customer segments, agile delivery methodology, redesigning the processes front to back, and then using the customer feedback to iterate and improve in a dynamic way, has all been part of our digital transformation process.”
Read More: Digital Transformation Is About New Business Models, Not New Tech
How did your internal innovation labs respond to the pandemic?
Venturo: Our internal innovation labs [agile studios] work cross-functionally across the company, covering every function and business line. When the pandemic hit, we had to change the workforce dynamics immediately. We couldn’t use sticky notes on whiteboards for instance. We also pulled forward the priorities and looked at the most urgent things in a Covid environment – where branches are closed for safety – and did them in an accelerated path. We also had to rapidly adapt to be able to accept government stimulus checks digitally, and be able to process those.
How did you redesign your account opening process?
Venturo: We already had a way to open accounts on digital channels, but there were issues with it. The process included fields of information that were an aggregate, or a superset, of multiple product applications. One of the big things that someone suggested was, why don’t we start with no fields of information, and only work with the information that we already have. In other words, we would only ask the customer for information if we couldn’t provide it ourselves.
We reduced the number of fields of information by more than half by pre-filling information we already had and that we were legally allowed to use, or had permission to use. So, if someone’s coming to us for an incremental product, there’s very little information we need to get from them. It may only be income that we need to update, and everything else is review and approve. It’s very fast.
What roles do data and advanced analytics play in digital transformation?
Venturo: First of all, it is important to not only have good access to data, but to make sure that the data you have is good. Data hygiene is a big deal. We’ve been investing and spending quite a bit of time on the data infrastructure. The other thing is being able to have visibility, or at least knowledge and capability of data across channels. For instance, our bankers have visibility into what a customer may have been shopping for and where they have gone on our website. This makes it so our bankers don’t offer a consumer something they’re not interested in.
We also offer personalized insights within our online and mobile experience. For instance, “We saw a charge from something that looks like a subscription. Did you intend to renew that subscription?” This insight allows the customer to potentially save money. We also look at spending behavior and we are able to help people save for a specific goal or reduce debt based on their daily behaviors. This capability only happens if you have access to the data over time, and you can actually intelligently assess what might be contextually relevant insight.
What has been the biggest challenge with digital transformation at U.S. Bank?
Venturo: The biggest challenge is that there’s just so much to be done. We’ve gotten really good at the actual execution part and we have agile delivery in place. But the world changes constantly. The customer’s reference point of an excellent experience is the last experience they had with anybody. It isn’t, what is ABC competitor doing? It’s what is this other company doing that was completely cool and unique?
The way we determine expectations is that we look at the customer feedback, we look at the trends and the commentary that we get – which is more qualitative and anecdotal – and we look for the behavior in terms of the trends. Are sales going up, is engagement going up, is digital use going up? Those then become the metrics that help us understand if we’re making the right decisions along the way.
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How do banks and credit unions catch up to customer expectations?
Venturo: The consumer is the most demanding, and has had the earliest start in terms of self-service. They want to take the remote control in their pocket, if you will, and be able to do everything on it. The small business segment is a little bit behind the consumer segment. A lot of small businesses had other legacy systems that they used so there wasn’t as much immediate impetus for change – but that’s changing dramatically. On the corporate side, we had a very long lag of where corporations didn’t really change a lot of what they were doing. Now, almost immediately, they want much of the digital functionality of consumers and small businesses.
To respond requires innovation. Most larger banks have in-house teams that are delivering these products and services. We have built our solutions internally, and then we partner with solution enablers for unique features, capabilities, and the like. We have some benefit of scale because we have a lot of really amazing talent, and we have continued to build out the engineering and technical resources to be able to do this work, and it’s an investment.
“The importance of partnerships with solution providers that can help speed innovation and digital transformation is imperative for small and mid-sized financial institutions.”
— Dominic Venturo, U.S. Bank
But not everybody can afford to make that investment, because they don’t necessarily have the customer base, or the overall business dynamics to be able to support it. In these cases, they may rely on vendors and partners, with whom technology is outsourced. Organizations need to pick partners carefully, though, to make sure the solutions are updated and responsive to customer expectations.
How important is the concept of humanizing digital?
Venturo: The interaction of human and digital is critical. We as humans have a number of traits or characteristics, one of which is face-to-face conversations and creating trust. Whether it’s personal banking, business banking, wealth management or corporate banking, you need the human relationship side. We don’t see that going away. We see humans enabled and augmented by digital. Digital really helps people become superhuman in some ways, because you can get real-time access to insight, and you can use machines to help analyze it.
Think of things like next best action recommendations. Digital enables human experience to be even better … but it does not take the place of it. There will be a great deal of self-service and other things folks will do on their own, but when it comes to advice and interactions, we see a lot of value in human augmentation through technology.
What role does culture and leadership play at U.S. Bank?
Venturo: I don’t think it’s taken for granted at all. I’m grateful for it daily. We started the innovation function 13 years ago, and we were one of the early ones in the banking space to do that. Part of what we were doing at the time, was recognizing that the world was changing around us, and we needed to start to find our way towards how could we compete more like a fintech firm or a startup or an early stage entity that is very focused on solving a unique set of problems.
This led to introducing some new things like design thinking and being customer-led, with lean startup practices and all of that was new. Finally, we had the digital shift, which involved organizing around digital and having a digital vision and strategy. This shift is not just in innovation and R&D, but a whole company transformation. This came from the top.
Our CEO has embraced and pushed this change, has recognized that things are changing faster now than they ever have in the past, and that if we don’t change, the future isn’t going to be bright. You have to really be grateful for the leadership and the support, because not everybody has it. We’ve had a CEO and an executive leadership team that has supported this for a decade, which has enabled us to be prepared culturally for the transformation.
What is the future of digital banking?
Venturo: I think we are getting a lot closer to a concept I started talking about a couple years ago called ambient banking. There are a lot of interactions that you may not want to have to hassle with. With the right permissions, you could give the system permission to do things like pay a bill that is the same amount that you get every single month. Even if the amount is variable, could you authorize transactions within a pre-set range and not worry about having your bills paid?
We could also do proactive warnings similar to the umbrella reminder that I have on my weather app. The analogy for that for banking – if you know I may have financial challenges down the road, then tell me I might want to take an action with my finances to be better prepared.