Financial Technology (FinTech) appears to be overtaking the field of banking. And your Board of Directors, Executive staff and perhaps even you’re all just a little on edge. All of you know banking-but this complete technology thing…maybe not a lot.
Loans and deposits will always be around -but later on, the winners in banking will need to fight with the value propositions throughout this new technology to obtain the stuff that matter.
So, what matters? Exactly the same banking metrics which have always mattered.
Seek out the technologies that improve your institution’s efficiency. You know, bottom-line type of stuff. People that matter most (investors, shareholders, members) still need to see loan growth, efficiency and stronger margins. Sinking money and talent into technology that does not achieve these endpoints in the near term can be disastrous.
Most institutions aren’t ready. It might be a money thing, but there is also a talent gap. Rare is the institution that has strong tech-savvy executives who are able to discern the significance of why and which and how to monetize new technologies, or otherwise. Every institution will need smart people to enable them to 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 do without 1) leveraging client data analytics for use in strategy, sales, marketing, cross-selling, retention and 2) integrating the most friction-free methods for your clients to transact business with and thru your institution. All 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 lender to efficiently capture and nurture the customer and permit these to “bank” digitally.
Some institutions have already embraced FinTech in even more significant ways. Bank of the usa just announced card-less ATMs are coming, yet still 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 starting to partner with marketplace lenders and charge card consolidators to offer a bundle of services to customers, emulating what traditional banks do. This could and really should be observed as a direct threat to financial institutions.
Success requires leadership. Yet many executives are waiting, watching the game change before their very eyes. And why? Because they do not understand any of it. It’s technology; it isn’t banking. Yet it is primarily the very technology that’s informing the very transactions that each successful Lender must embrace and deploy down the line to stay in business. And the rewards of unleashing the strength of data analytics is undeniable.
Yet no future exists in banking without being able to monetize these game changing technologies. How will technology slowly move the needle on the loan growth, efficiency and/or profit margins? You have to embrace those activities that may enhance your institution’s overall performance. Consider the need you may have for technology people that understand the context of marrying these new/valuable technology pieces, while keeping the bottom-line in your mind. This really is essential, right? In the end, this is actually the future of banking… No freakin’ out is required.