Too Busy To Think

I had lunch with a wise woman recently, a friend who is positioned through role and experience to see all the important trends in banking.  Over hot clam chowder in a snowy old city, we talked about innovation.  We compared notes – what we’ve been seeing, hearing, doing.

We agreed that today’s technology change is too big, and moving far too fast, for either banks or regulators to absorb it without wrenching disruption. Some shifts are still mostly hidden because they have not yet converged. When they do, everything will accelerate.

My friend put down her spoon and looked at me.  She said, “A lot of bank executives listen to these predictions and say, that’s all fascinating but I don’t have time to think about it.  Everyone has a mountain of practical things on their desks -- regulation, especially.  Plus they figure the big changes are far in the future. They think they’ll be able to address them later – or they plan to retire before they have to.”

She’s right, and it worries me. Every bank is working on tech issues of course, but many will be blindsided and broken by what’s coming at them.  If they disappear, customers will be hurt, even while benefitting from innovation.  And the regulators themselves face incredible challenges.

We explore these issues here at my blog (and in coming podcasts), so please keep coming back. Meanwhile, try the suggestions below, no matter how busy you are.

1. Move tech innovation from the edges of your work to the center.  The future hinges on it.
2. Name a chief innovation officer, on the senior team, and immerse the bank and board in learning.  Start with these topics: mobile payments, big data, artificial intelligence, natural language voice technology, and of course data security (plus, pay attention to digital currency).  Send your people to tech events like Money 20/20, Finovate and Singularity University. Watch TED talks. Read Wired and Fast Company.  
3. Shift from product- and channel-centric thinking to being customer-centric.  Then build solutions to wow customers and make their lives better, rather than using technology to automate what you already do.
4. Connect your innovation team at the hip – the business, IT and risk/regulatory people should sit in the same place and do it together. This is how nonbank innovators create new things.  It works better than silos.
5. If you’re going to close branches (and even if you aren’t), help your lower-income and senior customers switch to mobile, now.
6. Obsess on deserving your customer’s trust. Consumers will be choosing financial offerings through their cell phones, using simple tools that amalgamate information about product terms, complaints, customer ratings, comparison pricing, and much more. It is going to get easy to do this. People will migrate to providers they are sure they can trust about every single thing -- every product, rate, fee, sales tactic, everything.  Some will use a nonbank middleman, to help them select. Be ready to win that contest.

Here are two quick reads:

First, BNA’s Chris Bruce has a great overview of the fintech issues that will dominate this year (and was nice enough to quote me).  It’s below:

Reproduced with permission from Daily Report for Executives, 17 DER S-28 (Jan. 27, 2015). Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>

Bloomberg BNA - "Finance Tech: Cybersecurity, Payment Processing, Virtual Currency, Patents"

Second, consider this analysis of exponential technology growth by venture capital investor Niv Dror. It will stay in your head and make you think.