Tuesday, September 9, 2014

Now Hiring ...... The Banking Team of the Future

If you are the CEO or executive of a credit union or bank you are facing a rapid transformational change as a result of technology and the emergence of non-traditional financial service providers. Credit unions and banks are struggling to understand the impact of this new environment, and how to succeed. Combine these factors with increased margin pressure and consolidation and you have a recipe for credit union and bank opportunity and failure.

Is there any doubt that emerging technology and rapidly increasing and evolving member/customer expectations has and will continue to change the way banking is conducted? Do you believe that banking as we know it today will look the same in five years? If you answered "no" to either of those questions, then it is time to rethink your credit union's or bank's strategy. Your credit union's or bank's viability may hinge upon your and your executive team's vision; how to address the changing market conditions. It is time to reevaluate your vision, perspective and hiring to meet the revolutionary changes occurring and about to occur in the financial services market. 

If you believe technology is and will become increasingly more important to your credit union's or bank's strategy, one of the first questions you must address is, "how is your credit union or bank going to afford the technology resources required to compete?" Citi, BofA, Wells Fargo and Chase have the resources, but I can assure you, long-term your credit union or bank does not. 

One of the complexing statistics discussed in a previous article I wrote titled, "Who's on First? The Contradiction of Millennial Research", Chase, Citi, BofA and Wells Fargo are among the ten least loved brands by Millennials, yet 68% of Millennials use Chase, Citi, BofA or Wells Fargo as their primary bank. Only 15% use a credit union and only 9% have a regional bank as a primary bank. More Millennials bank at national banks than any other generational group (55% for Gen X and 43% for Boomers). Why is that the case if Millennials don't like the brand? 

The answer is simple, the four national banks have such a lead in technology implementation that credit unions and other banks cannot catch up. Who do you want to bank with, the original or a "copycat me too" provider that is 6 to 24 months behind? This is not good news for credit unions and most banks. You cannot afford the resources necessary to:
  1. Identify
  2. Purchase or build 
  3. Implement 
  4. Support/upgrade
the technology solutions nor can you catch up. Add to this to the fact that you cannot out branch the national bank's branch network and you have to ask, "how do you compete?" Price or a niche? Boutique banking? In my last article titled, "Credit Union and Bank Premature Death Proclamation" I identified a way credit unions and banks can compete. 

Through cooperation. Technology and non-member/non-customer facing operations do
not have to be owned, controlled and executed by each credit union or bank. Instead, a new cooperative entity can be created to handle all technology and non-member/non-customer facing operations. Through the use of shared resources true economies of scale can be achieved, but it must include both technology solutions and back-office operations in order to realize the full true cost savings. It may be radical thinking, but based on the prognosis for credit unions and banks, it may take radical action to change the paradigm. Sometimes radical surgery is required to cure the patient.

For those credit unions and banks that are ready to move forward, your hiring and team must change. The easiest step is identifying new technology solutions. The second easiest step is purchasing new technology solutions. Most credit unions and banks have handled the first two parts reasonably well. Implementation, that is a whole different ball game. Most credit unions and banks create a project team, identify a wish list, send out a request for proposal, review the proposal, purchase the solution, test the solution and then put it out to their members or customers. 

WRONG, WRONG, WRONG. Implementation is the most important part and the least effectively executed part of the equation. You see...... it is not about the technology. It is about what you do with the technology. If the same people that have been implementing and supporting your core banking and network solutions are the same people implementing your member/customer facing solutions you are doomed to failure. 

The team you need to hire today is very different than the team any credit union or bank has hired in the past. The banking team of the future must include experts that cover six different areas of responsibilities:
  1. Data analyst - Google has even created a new name for this position, Data Scientists
  2. User experience designer - Must be able to tell your story in a simple and in an intuitive way
  3. Algorithmic risk specialist - Identifies risk through multiple data sets without requiring input from the users
  4. Predictive analytics - Provides services, solutions and expected responses at just the right time, "the magic second" of opportunity.
  5. Behavioral psychologist - Must understand your members or customers, their desires, buying and behavioral patterns. The future of bank marketing is behavioral patterns not demographic profiles
  6. Social media expert - The person that develops the message and engages your members and customers
Radical, maybe. Logical, absolutely. What are you waiting for?               

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