Banking's Midterm Report Card from Professor Marous


Editors Note: Back in December, Jim Marous published his thoughts on 2016 Retail Banking Trends and Traditions. Today, we discuss this and his midyear assessment on where the industry is at as a whole. At the Digital Banking Summit in New Orleans next week, Jim and Michal Panowicz will discuss a few of these trends in greater detail.

In December 2015, Jim Marous of The Financial Brand published 2016 Retail Banking Trends and Traditions. As usual with Jim's work, the report was very thorough and provided a good view to the data that supported its findings. Jim's report indicated that in 2016, banking would see:

  1. The 'Platformification' of Banking
  2. The Removal of Friction from the Customer Journey
  3. Big Data Made Actionable
  4. The Introduction of 'Optichannel' Delivery
  5. The Expansion of Digital Payments
  6. The Execution on Innovation
  7. Exploration of Advanced Technologies
  8. The Emergence of a New Breed of Banks
  9. The Mining of New Talent
  10. Response to Regulatory Changes

It is an interesting list in a number of ways. First, you can know for a certainty that marketers were involved in creating the verbiage for the first and fourth items on the list. The general rule of thumb is, if the word looks made up, the marketing folks had a role in helping create it. (See Scott Adams, the creator of Dilbert.)

However, by no means am I suggesting the points being made in items one and four are irrelevant. In fact, the list in total captures much of what is on the mind of anyone working in banking currently. For that reason, I was particularly interested in Jim's midyear assessment of how well these predictions are manifesting in our industry. According to Jim,

"... the vast majority of the projections made by the crowdsourced panel of financial services industry influencers are becoming a reality to some degree... Interestingly, the largest and smallest of the organizations seem to be doing the best in most cases. This may be caused by either the amount available to invest in solutions (the larger organizations), or the ability to be more agile and move quicker (the smaller firms). Their success has been reflected in recent JD Power survey results that show customer satisfaction being highest for these two asset categories of financial organizations."

In particular, I am looking forward to hearing more on the third item from Jim's list for 2016. Next week, Jim and D3 Banking will be sharing the podium together at an Innovation Luncheon being held during the Digital Banking Summit in New Orleans. Jim will be speaking on "The Data Analytics Imperative - A Matter of Survival." Joining Jim will be Michal Panowicz who is the SVP of Digital Banking at Nordea. Michal will discuss his view as a digital banker of the promise of data and how to unlock it.

Jim's midterm view is that financial institutions have begun to realize the value of data but most are still perplexed about how to leverage it. This is congruent with what we are seeing in our conversations with customers and prospects. Though there is a way to go in the journey, the depth and intensity of these discussions is significantly greater than a year ago. In our regional and midsized institution target group, we have seen a move away from the hype of "big data" toward something more manageable called "actionable information." (Yes marketing was involved in creating that term!)

A report published by Celent entitled Defining a Digital Financial Institution by Daniel Latimore and Zilvinas Bareisis echoes this assessment by Jim and the anecdotal information from our meetings with banks and credit unions:

"Banks have always had a wealth of internal data about their customers - product relationships, transaction data, service interactions, and so on. However, historically they have not been very good at using that data. It is typically in silos, updated in batches, and often just poor quality. In recent years, the amount of data that banks can and do capture about their customers has proliferated; some financial institutions now seek to track data at the "atomic" level, i.e. click-by-click customer interactions to understand and optimize how customers engage with them."

The key is how to optimize that data and turn it into a relevant, personalized experience for the consumer or small business customer. While things are improving consumers relative to data as noted above, the progress of helping small business owners with data is nearly non-existent. With technology such as Amazon, Apple and Google raising the bar daily regarding to what makes for a tailored digital experience, banks and credit unions have no time to waste in getting adept at turning all that data they have into "actionable information." As Jim alludes to in his title for the presentation in New Orleans, it's a matter of survival.