On Leaders, Laggards and the Middle Way

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Editor's Note: In part two of this blog series, we take a deeper dive into the recent Forrester Report, "The State of Digital Banking, 2016.".  In the blog, we discuss the premise of leaders vs. laggards in greater detail as well as thoughts on the origin of the digital disruption in the financial services industry. 

The December Forrester Report entitled "The State of Digital Banking, 2016" provides a view of why 2017 should be the year when banks and credit unions get their digital houses in order. To not do so, the report implies, is to risk losing whatever advantages these institutions have today with their customers and members. According to the report, digital disruption is a fully-formed phenomenon in the industry. The authors and I disagree on the origin of this disruption - Forrester makes too much of the role the next digital start-up play while I think the consumer ultimately drives the disruption. Nonetheless, the counsel of the report regarding options available to banks and credit unions is worth serious consideration.

The Forrester report asserts that when it comes to digital, the gap between leaders and laggards (their word, not mine) is growing. The following quote is an excerpt from the report: "Most banking executives still think of 'digital' in a tactical way as relating to just touchpoints or technologies." This statement would suggest that Forrester feels there are more laggards than leaders. However, their definition of leaders as "an institution that focuses its efforts on digital customer experience and digital operational excellence" seems to be to be a bit grandiose. In addition, the tactical mindset they attribute to "laggards" is unfairly broad. After all, tactics serve strategies and how can anyone outside an institution know with certainty that what appears tactical is not part of a strategic plan?

Forrester goes on to note that the state of digital banking today includes a wide array of approaches to the digital reality manifested in modern society. Some institutions are launching digital only-brands. Some are focusing more on using digital tools in marketing. Some are looking for improved operational efficiencies by attacking the paper that abounds across their multitudes of processes. However, according to the research firm, "Only the leaders are investing in business technology with the aim of delivering compelling digital customer experiences and building strong digital capabilities in the future." My view is that there are a fair number of institutions doing just that, though the signs that this strategy is in place - i.e., the replacement of aging online and mobile products with API-driven, full-service digital platform - are not yet obvious. 

As I noted in the previous blog "On Pundits, The Theory of Shiny Objects and Untimely Distractions," there is a lot of noise being created by a variety of agents in the financial services industry - noise being the operative word. To deploy a successful, differentiated digital banking strategy, an institution must filter out the noise to find the signal that will take them forward to their destination. This is not easy but I find those who run banks and credit unions to be far smarter than some of the noisemakers assert. I think these leaders in our industry will find the signal amongst the noise and move along a middle path that takes into account the true complexity of the financial services environment and the realities of running an operation. 

In Antifragile, Nicols Taleb makes a special point to talk about how often the mistakes of the individual benefit the collective while creating suffering for the person who makes them. The collective, in essence, wants a certain level of failure in its subunits in order to make the collective stronger, maybe even antifragile, i.e., benefiting from stress rather than simply surviving or being destroyed by it. If you think about those who would pontificate and predict the future in any industry in this way, then their service to the whole is to be appreciated - and their advice, generally, to be avoided like the proverbial plague.