Financial Technology (FinTech) seems to be taking over the world of banking. And your Board of Directors, Executive staff and possibly even you are all a little on edge. You all know banking…but this whole technology thing…maybe not so much.
Loans and deposits will always be with us–but in the future, the winners in banking will have to fight through the value propositions in all of this new technology to find the things that matter.
So, what matters? The same banking metrics that have always mattered.
Seek out the technologies that improve your institution’s overall performance. You know, bottom-line kind of stuff. People that matter most (investors, shareholders, members) still want to see loan growth, efficiency and stronger margins. Sinking money and talent into technology that doesn’t achieve these endpoints in the near term can be disastrous.
Most institutions are not ready. It may be a money thing, but there is also a talent gap. Rare is the institution that has strong tech-savvy executives who can discern the importance of why and which and how to monetize new technologies, or not. Every institution will need smart people to help them understand, assess and execute strategies and tactics that take advantage of these FinTech changes.
In my opinion, two tech areas are essential today.
Strategically you cannot live without 1) leveraging client data analytics for use in strategy, sales, marketing, cross-selling, retention and 2) integrating the most friction-free ways for your clients to transact business with and through your institution. Each of these technology efforts can and will add value to your traditional “banking” metrics. They must help you make money. And these two areas uniquely enable any financial institution to efficiently capture and nurture the client and allow them to “bank” digitally.
Some institutions have already embraced FinTech in even more significant ways. Bank of America just announced card-less ATMs are coming, while at the same time filing over 12 more patents on block chain technology (they have already filed 20 patents). Are they a bank or FinTech? Now Neo-banks are beginning to partner with marketplace lenders and credit card consolidators to offer a bundle of services to customers, emulating what traditional banks do. This can and should be viewed as a direct threat to financial institutions.
Success requires leadership. Yet many executives are standing by, watching the game change before their very eyes. And why? Because they don’t understand any of it. It’s technology; it’s not banking. Yet it is this very technology that is informing the very transactions that every successful Financial Institution must embrace and deploy down the line to stay in business. And the rewards of unleashing the power of data analytics is undeniable.
Yet no future exists in banking without being able to monetize these game changing technologies. How will technology move the needle on the loan growth, efficiency and/or profit margins? You must embrace those things that can improve your institution’s overall performance. Consider the need you may have for technology folks who understand the context of marrying these new/valuable technology pieces, while keeping the bottom-line in mind. This is essential, right? After all, this is the future of banking… No freakin’ out is needed.