In the digital banking age, legacy banks (even the biggest) are badgered to be more innovative. Offer more personalized experiences. Add more digital experiences. But also, retain what makes a traditional bank special.
Can massive organizations like Chase Bank, with $3.2 trillion in assets, even get out of their own way? Nimble fintechs should be able to outgame them every day of the week.
With 58 million active users of its digital banking platform Chase is ahead of its peers and well ahead of the biggest neobanks. At the same time, PayPal claims 325 million active account holders. And while not really an apples-to-apples comparison, numbers like that demonstrate why even the biggest banks are looking over their shoulder.
Chase takes the fintech challenge very seriously, from CEO Jamie Dimon on down. Out of its total staff of 255,000, the New-York based megabank has allocated about 12,000 employees to focus on technology and engineering initiatives to help it stay in front.
It’s not easy. The bank’s Chief Product Officer Rohan Amin says, “there’s a lot of work to do.”
A bank with a consumer base the size of Chase’s can’t afford to be lazy or slow. The competition not only forces the financial institution to be persistently innovative — it also strongly influences how and when the company rolls out its technology updates.
Amin and Chase’s Chief Information Officer, Gill Haus, who spearheads the bank’s technology and engineering teams, spoke with Jim Marous, Co-Publisher of The Financial Brand and CEO of the Digital Banking Report, during a Banking Transformed podcast.
Haus says that he and his teams have needed to pivot multiple times over the course of the last several years, as the Covid-19 pandemic sped up their bank technology trajectory. Now, even more people are doing everything digitally — even applying for substantial loans, like mortgages, online.
“Making sure that the functionality that customers want in their hand, on the mobile app or a web — this is something that we’ve been working on for quite some time, but the pandemic made it all that more critical,” Haus explains.
But, Chase doesn’t approach technology like other financial institutions. Here’s what Amin and Haus say set Chase apart from the rest of the players in the banking sector.
Releasing Tech Updates Frequently
Both of the Chase executives agree that fintechs have earned their right at the competitor table. Haus acknowledges these younger players are tactically focused on the customer problems that legacy banking might not have addressed before. Yet, he insists the fact that they are startups still means they are at an inherent disadvantage.
“What’s exciting about that is, when we get it right — and we do often — immediately, millions upon millions of customers have this opportunity and can use the feature versus a startup that would have to gain traction,” Haus maintains. “We’re bringing the fight to the startups.”
Chase already has a brand and a name that people know, he continues. Arguably, though, any traditional bank has this advantage in its market. That’s where Chase’s prudent strategy with its digital interface comes into play.
For example, Haus says they are “in both the private and public cloud” and for a very explicit reason. “We use technology that’s been solved by others so that we can have our engineers, our product teams, working on what solves that unmet need for a customer versus building something that already exists in the market,” he says.
What Chase decides to build on its own, it doesn’t release publicly in one massive sweep. Instead, Haus’ teams works on the tech in small chunks — what he says is often referred to as ‘microservices’ — so it is easier to test and deploy. Then, they can decide if there is a fintech or software that already exists to make this system fluid or if his teams should continue designing the software themselves.
Keep Your Options Open:
Banks and credit unions might be drawn to fintech partnerships or insist they want to build their own tech. Sometimes, it works better to integrate a hybrid model instead.
“There will be cases where we recognize that something that we want to build is going to be more IP-based,” he continues. “We would like to make sure that we are building that and we have that wherewithal to control it, or if it’s data and we’re protecting that for our customers, we may make decisions on it being something that is internal versus being external.”
In the end, Haus says it’s crucial they make the right decision who to go with — “whether it’s in-built, or it’s a buy, or it’s partner, or it’s a foe.”
Why Data Is at the Core
Key to their digital plans is access to consumer data, which underscores the bigger problem: what do customers need? And what can banking providers give to people as a solutions to needs they didn’t realize they had in the first place?
“We have an incredible amount of data that we use to provide a better, more personalized experience for customers,” Amin explains. “I think data and scale are two big things that other players don’t necessarily have. The other ingredients, strong design, strong modern platforms, less legacy, increasingly, that’s us too.”
One of these ‘other ingredients’ is Chase’s approach to building software that serves not one purpose, but several. Take their PPP loan platform. Instead of designing an entirely new system to account for the billions of dollars of loans that flooded in during the early stages of the pandemic, they used their existing software and altered it as the year went on.
Keeping Teams from Siloing
Keeping all employees of a community bank or credit union working in sync is a challenge, let alone teams with employees in the several thousands. Nonetheless, Haus and Amin say Chase found the solution to avoid these teams from becoming siloed.
Instead of organizing teams around a ‘business unit’, Amin explains that executives at Chase have fashioned about 100 different teams which are built around the customer journey, in what he refers to as a design-led organization.
To explain further, Haus uses customer onboarding as an example. “If every business unit has a team that’s responsible for building onboarding software, I have to coordinate across all of our business lines. By organizing instead around one product —where you have one tech leader, one design leader, product manager, etc. — now you have one place where you need to go.”
It can still get tricky, Haus says, when executives at the top want to provide insight on the systems or the products. But, in general, it is much easier for teams to prioritize workloads and, most of the time, it eliminates a lot of the need to send ideas up the chain of command.
Think Outside the Box:
To create a stronger customer experience, sometimes it takes reinventing the employee experience.
“Those teams are much closer to the customer and what we’re trying to deliver, so they’re able to make decisions much more quickly without having to escalate that and bring in thousands of people,” he says. This process can even aid the engineers, who aren’t typically facing the customer.
“The engineers don’t have to talk to many other people in the organization. They can work when needed in an autonomous fashion, and that’s how they’re able to move quickly. And we’re able to move at speed, even though we have a large group.”
Amin points out that establishing a team structure like this also means that employees don’t have to feel pressured to think of a revolutionary innovation in order to grow within the bank and rise up the ranks. “I think one other point I want to make is that innovation doesn’t necessarily always have to be some brand new, big idea.”
The Timetable Has Changed
A decade ago, legacy banks assumed they could roll out new features en masse on a quarterly — or even annual — basis, instead of constantly innovating and updating like tech companies.
“We have teams which are delivering new features and functionality whenever they can,” Amin says. “They’re making new releases on a daily, weekly basis because they can.”
Part of that is automating formerly manual processes that don’t require teams or even single employees to run them anymore. Even with teams of several thousand, automation can save time and resources.
“We will do automation — sometimes robotic process automation — so that we can free up our people to work on other things that add more value while we wait until we have the time to go back and actually modernize and refactor that application,” Haus explains.
However, while customers value these new digital technologies, they also still want that human interaction on occasion.
Amin says branches are still a crucial part of Chase’s game plan, even amidst all the technology focus. In fact, he says branches have evolved in their role to become even more a part of people’s life in one major way.
“The story around the branches is less about being a place to execute transactions, and really more a place to go for advice,” he continues. “That’s the changing nature of things and the power of being able to have the digital tools — but then you’ll be able to have that same conversation with somebody who can guide you along the way. That is what the branch is turning into, and I think that’s just a very powerful combination.”
What It All Boils Down To
Jim Marous drove down on the idea of upcoming threats, specifically fintech competitors, in the podcast conversation with Haus and Amin. In his last question, he prompted the executives to answer what they foresee as the biggest place for opportunity in the next two years.
Most people would say artificial intelligence and cloud-based programs, Haus says, which he agrees are important. But, there’s another thing that he considers to be far more integral: how the company organizes around its products.
“You need to change the way that you hire, the way that you fire, the way you build, test, deploy, manage your application, and also the way that you organize around your product,” Haus maintains. “If you can’t do that, you won’t be able to compete.”