Reflecting on Trends in Banking, with Women Corporate Directors - Maryann Bruce
It was a pleasure to be a panelist at WCD’s Membership Café discussing global perspectives on banking and financial services. My fellow distinguished director colleagues, Anne Berner, WCD Finland, Candace Duncan, WCD Washington, and I each discussed some industry trends that we are observing in our respective markets and we shared our thoughts about the future of banking.
The major trends I highlighted were the reimagining of the role of the bank branch and digital transformation. The following comments are related to my 30+ year career as an executive in the financial services industry and as an independent director serving on the Board of Amalgamated Bank, America’s socially responsible bank empowering organizations and individuals to advance positive social change.
The pandemic has had a broad and deep impact on financial institutions and their customers, especially regarding digital transformation. The rapid shift to digital has been a blessing for some banks and an unwelcome wake-up call for others.
Many banks including Amalgamated Bank were forced to close branches in the early days of the pandemic due to safety concerns for employees and customers. These closures accelerated the longstanding consumer and business shifts away from conducting financial transactions at the branch to digital channels. Because we did not want to reopen these branches once it was safe for all only to close them later due to this shift in behaviors and the belief that these behaviors would not revert even after the pandemic was over, Amalgamated Bank made the difficult decision to consolidate and close a few branches sooner than originally anticipated.
It has become abundantly clear that digital banking providing the ability to deliver products and services to customers via the web and remotely using a smartphone or tablet has now become the default mode. Banks need to develop a robust digital strategy for online and mobile banking. By consistently investing in digital tools and capabilities including data and analytical operations, banks have the potential to substantially improve the overall customer experience. As a result, many banks are currently reimagining the role of the bank branch and the desired talent needed for long-term success. For example, some banks are in the process of transitioning from a traditional teller branch model to a universal banker model. You may be aware that universal bankers are not only tellers, but they are also trained to handle other activities such as opening new accounts and performing lending duties.
And while digital banking has taken on heightened importance, I believe human-centered support will remain essential especially in transitioning to new models. Banks need to recognize that a digital model that complements and works cohesively with a branch model is necessary to meet the changing behaviors of their customers. Banks will also need to train and upskill their employees with the new digital skills and capabilities needed for success.
Some questions that Boards should consider regarding re-imagining bank branches are:
Is the bank’s workforce ready for the digital future?
Are the bank’s employees digitally savvy meaning they have an ability to leverage technology to achieve stated business goals and objectives?
If the bank does not have the right talent in-house to lead the future digital strategy, then the Board should ask how are they going to attract it and how long will it take?
When it comes to the future of banking, executive management, and boards need to develop a mindset that allows them to embrace change, innovate, question accepted wisdom, and pivot from “this is what we’ve always done” to “this is what we can become.”
Fed Chairman Powell has stated repeatedly that he sees interest rates staying near zero through 2022 which negatively impacts a bank’s traditional source of revenue thereby hindering profitability. It’s therefore imperative that banks consider what additional revenue drivers can be implemented, both organically and inorganically, to deliver prudent future growth.
Successful banks of the future will embrace emerging technologies and master data and analytics underpinned by artificial intelligence and robotic automation. This will help to ensure better strategic decision-making regarding new product development, entering new business segments/markets, and geographic expansion domestically and/or internationally. Successful banks of the future will adhere to what I refer to as a “VOC” or voice of the customer approach putting them at the center of every strategy. And successful banks of the future will be agile and remain flexible regarding adopting evolving business models.
To summarize, agility has grown increasingly important as the banking and financial services industries respond to customer behavioral shifts and change the pandemic has brought to bear on the US economy. The pandemic has increased both the pace and scale of digitization and workplace innovation more than many of us thought possible. As financial institutions are forced to do more with less, banks and financial services companies are finding better, simpler, less expensive, and faster ways to operate. I believe the key to driving sustainable long-term success will be a bank’s ability to deliver value by creating unique personalized data-driven client experiences consistently across multiple channels.
