Four Axioms to Consider While Responding to Post-Pandemic Digital Expectations.
Variants from the COVID-19 virus continue to trouble areas of the world and certain states within our country. However, the mindset of most businesses has shifted toward planning for a future that does not include lockdowns and limitations. Some organizations will resume a business-as-usual mode of operation but for others, what was true before the pandemic is not the same as COVID-19 fades in the rearview mirror. The latter is especially true for community banks and credit unions.
As financial institutions consider their path forward, the axiom below may provide some direction. Three of the axioms are focused on things to avoid and the fourth describes a strategy for remaining competitive in the “new” marketplace.
1) If It’s Not Baroque, Don’t Fix It
The IT landscapes of many financial institutions are similar to European castles that feature baroque architecture. Because these castles have been around for hundreds or thousands of years, their structures often feature areas that were additions over their extended lifetimes. Some of the additions blend into the architecture and some do not. Back offices of community banks and credit unions with their collection of third-party products are similar to these castles.
The pandemic compressed the timeline for achieving a level of digital transformation that will retain the best customers. A five-year time horizon for this goal has become an 18–24 month necessity. That is an incredibly short runway for any community bank or credit union. Assuming back-office systems are functioning at a level that will support current operational needs, do not spend valuable time considering replacing them, for now. If it is not baroque, don’t fix it. A replacement of a major back-office system, by its nature, requires a singular focus and numerous resources. By the time the deed is done, the digital world will have evolved exponentially.
2) Resist Putting Lipstick on a Pig
In the 18th-century, Russian prince Grigory Potemkin tried to impress Catherine the Great during her tour of the Ukraine and Crimea by erecting fake villages with imposing facades along her travel route. The Potemkin effect is now used in discussions about digital transformation to describe a client-facing system that offers an attractive façade but lacks the underlying application support to deliver on its promise. In other words, it’s pretty but behind the beautiful interface is a digital experience that does not satisfy.
In the South, this is called “putting lipstick on a pig.” Too many community financial institutions have adopted this approach with their digital channels. From the outside, the digital experience looks like something worth a visit. Yet, once you “walk through the front door” the experience offered is suboptimal. Community banks and credit unions need to focus on keeping customers “at home.” Not only is the time spent putting lipstick on a pig significant but in the end, it is a waste. A pig with lipstick is still a pig. Customers know this and will leave to look elsewhere for something that meets their expectations.
3) If You Play Dead Long Enough, You Will Die
Chris Skinner is a bestselling author (Digital Bank, ValueWeb and Digital Human) and a self-described troublemaker who consults with leading financial institutions. In one of his blog posts, he took on the misperceptions community banks have about adopting new technology saying, “What they (the community banking segment) do not understand is that it (new technology) is cheaper and simpler. That is why I cannot handle it when a CEO says, ‘that’s not for us.’ Thinking that way is like saying, ‘I am just going to play dead until I am dead.’”
The institutions Chris references generally are opposed to what they see as the “high risk” associated with using new technology and/or new solutions offered by younger companies whose products are built on newer tech stacks. Continuing to believe legacy providers in the banking industry are the answer to remaining competitive in the marketplace is “playing dead until you die.” Community banks and credit unions will and should continue to use these providers in areas where it makes sense. However, history would suggest the idea that innovative, value-add options are going to be delivered by these suppliers is a dead end.
4) You Can’t Boil the Ocean
So, what to do? Instead of having three to five years to retain customers by providing a digital experience, they will accept, the timeline has shrunk to 18-24 months. Replacing back-office systems is a non-viable strategy as is the impulse to dress up a digital banking experience that is not keeping pace. Institutions can incorporate new value-add offerings built on modern tech stacks using best practice development methodologies that allow for integration with existing systems, with little disruption or commitment of resources.
Find an offering that has the greatest chance to “wow” your best customers by delivering simple, intuitive ways for them to better manage their assets. Look for solutions that help you be more proactive in anticipating the needs of customers. Look for options that can deliver data that gives you a competitive advantage. Don’t try to fix everything at once (boil the ocean). Consider the customers that are key to your institution and find an offering that will cause them to notice. Once you have wowed them with that, search for the next “wow.” A succession of carefully planned “wows” sends the message that your bank is actively building a digital experience that will meet customer expectations.
Don’t play dead until you are dead. Don’t waste time with “nice to haves.” Don’t make the mistake of thinking in a post-pandemic world, business as usual will work. Partner with innovators and deliver a “wow” that sends the message that your institution understands its customers’ needs and is actively working to meet them.