Tag: Financial Institutions

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Three Strategic Issues Shaping Financial Services

By Al Dominick, CEO of DirectorCorps (parent co. to Bank Director & FinXTech) | @aldominick

Quickly:

  • Banks need to think beyond the notion that they can either build a technology solution or buy it — for inspiration, take a look at how Silicon Valley Bank uses APIs to tap into technology from third party providers.
  • Thanks to products like Amazon’s Alexa, financial institutions must now prepare for “hands-free banking.”
  • Various startups are using behavioral economics to nudge people towards making better financial choices for saving & investing.

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If you have been to any of our conferences, you’ve probably heard me (and others) encourage participants to get up & out from their offices to see what’s happening with their customers, potential partners and competition.  I do my best to practice what is preached — and have recent trips to San Francisco, New York City and Austin to prove it.  As I re-read hand written notes, dog-eared white papers and highlighted sections of annual reports, I realize just how much time I’ve spent talking about technology-driven trends shaping the financial industry.  To me, three of the bigger issues being discussed right now involve:

  1. The push for retail customers, which may already be spurring dealmaking.
  2. How customers experience and interact with their bank — which broadly ties into the question should an institution buy, partner or mimic a fintech; and
  3. Given all the hype surrounding machine learning and advanced decision modeling, leadership teams want to know how to augment a bank’s revenues & relationships with such technologies.

To these three trends, both our editor-in-chief, Jack Milligan, and I agree that most bankers understand the imperative to innovate around key aspects of their business, whether it’s payments, mobile in all its many permutations, lending, new account onboarding or data.

Personally, when it comes to knowing one’s customer (and potential customer), I find any good experience starts with great data.  As Carl Ryden, the CEO and Co-Founder at PrecisionLender, made clear at their recent Bank of Purpose conference, “if you hold your data close to the vest and you don’t do anything with it, it’s not an asset. It’s a liability.”

So with that in mind, let me close by sharing a link to our newest issue of Bank Director magazine.  This is our “Great Ideas” issue, one in which we highlight companies like USAA who crowdsource upwards of 10,000 ideas per year for products and new technology.  At a time when banks of all sizes are starting to take advantage of platform-based services, this new digital issue is one that I am really proud to share.

 

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FI Tip Sheet: First Quarter Favorites

As I come off of a great week in Chicago and Bank Director’s annual Chairman/CEO Peer Exchange, today’s post takes a look back at the first three months of the year.  Yes, certain discussions during this time focused on tepid loan growth, higher capital requirements and expense pressures & higher regulatory costs hitting banks today.  Nonetheless, many more conversations focused on growth, innovation and “what’s working.”  So, to wrap up this week, three points from the past ninety days that inspired me.

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Some of Banking’s Best

To kick off the year, I put together a two-part series on some of the top CEOs in our industry.  Inspired by my coach and an article entitled the “Best CEOs of 2013” that ran on Yahoo Finance, I reached out to a number of colleagues that work for professional services firms to ask their thoughts on the top CEOs at financial institutions — along with why they hold them in such regard.  Part one shared various thoughts on some of the best CEOs in the business today — broken down into three categories: the “biggest banks” with $50Bn+ in assets, those with more than $5Bn but less than $50Bn and finally, those in the $1Bn to $5Bn size range.  Part two built on that piece, highlighting three exceptional CEOs that lead publicly traded banks before shifting to the thoughts and opinions of two very talented colleagues.

Eat or Be Eaten

As the President of Bank Director, I’m lucky to lead one of the industry’s biggest (and dare I say best?) M&A conferences: Acquire or Be Acquired.  Let me first offer up big time props to my many talented colleagues for everything they did to make this year’s the biggest and best yet!  One of the cool new things I did at the Arizona Biltmore this year?  Film a 90 second or less video each evening that summarized the day’s salient points.  As much as I shared big takeaways in written form on this site (e.g. what if I told you that by December 31, 2018, we’d witness a 25% decline in the number of institutions between $500mm and $1Bn), I’m proud of these two videos from the desert that relayed what caught my eyes and attention on two of the three conference days.

 

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The Innovator’s Dilemma

In my role, I find myself talking with Chairmen and CEOs about their strategic plans.  This year, quite a few shared their thoughts for leveraging financial technology to strengthen and/or differentiate their bank.  In a piece I shared at the end of February, I cited Clayton Christensen’s “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.”  His book inspired that Friday’s FI Tip Sheet title – and first point.  If you’re not familiar with his work, the Harvard professor writes about two types of technologies: sustaining and disruptive. Sustaining technologies are those that improve product performance. As he sees it, these are technologies that most large companies are familiar with; technologies that involve improving a product that has an established role in the market.

Most large companies are adept at turning sustaining technology challenges into achievements.  However, large companies have problems dealing with disruptive technologies — an observation that, in my view, does not bode well for many traditionally established banks.  While risk is inherent to banks of all sizes, taking chances on emerging technologies continues to challenge many officers and directors… a theme I anticipate covering in greater detail over the next 90 days.

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Whether this is your first time or 78th time reading About That Ratio, let me say thank you for doing so.  It is a real treat to share, each Friday, three short stories about what I’m hearing, learning and talking about as I travel around the country.  Being that I meet with so many interesting people — be it a bank’s CEO,  board members or executives at professional services firms and product companies — I find it tremendously rewarding to share anecdotes and insights that might interest others.  As always, Aloha Friday!