Podcast: How to operationalize a bank

Whitney McDonald 0:03
This episode of The buzz is brought to you by bank automation summit us 2024. This annual event is tailored to resonate with financial services professionals focused on business optimization through technology and automation. Learn how to overcome implementation challenges by hearing firsthand from C level executives from institutions, including Bank of America, Wells Fargo city and more. There is no better place to get a read on the competition than at Bank automation summit us 2024 Register now at Bank automation summit.com. My name is Whitney McDonald and I’m the editor of bank automation News. Today is February 13 2024. The buzz welcomes Emily Steele. She is the president and chief operating officer of FinTech Savannah. Before joining Savannah, she spent time at Tech provider Temenos. She is here to discuss how financial institutions can invest in technology in a way that won’t lead to disjointed experiences in the long run. She will also explain how long term tech investment can lead to better banking experiences, and overall better customer experiences. The buzz welcomes Emily.

Emily Steele 1:06
Terrific, thanks so much with me, it’s a pleasure to meet you. And thank you for allowing me the opportunity to participate in the buzz podcast. So my name is Emily Steele and I have been in the technology industry my entire career, I have worked on technologies that surround the core, I have sold and been a part of companies that have built core software, and most recently joined Savannah about a year and a half ago. And our focus is really two primary missions, we are focused on helping the financial industry improve the banker experience, and helping banks improve their customer experience. And I say banks, but it can be banks, credit unions, FinTech, anybody in the financial industry, really focusing on creating that truly frictionless interaction between a bank and its customers. So that’s what our mission is. And we do that by bringing a digital delivery platform to market with a multitude of solutions for the banker and the customer. So we are very excited to be a part of part of transformation in today’s crazy technology space that we’re in.

Whitney McDonald 2:27
Yes, crazy. Technology, space is definitely one way to put it. There’s something new happening in the industry, when it comes to technology, it seems like every day. So again, thank you so much for joining us. During today’s discussion, we will be talking about how to address clunky core systems approaching modernization. So with that, maybe we can just start bigger picture here. How does a financial institution address these clunky core systems? How do you modernize what works? What doesn’t work when you’re when you’re taking this approach to modernization?

Emily Steele 3:06
Yeah, it’s, it’s so interesting, Whitney, because I feel like the industry often thinks about modernization as core transformation. And you use the word clunky. And the industry uses the word legacy, for course, and we only really consider a transformation at the back end from a core perspective, or the front end from a digital digital perspective. And we really come at it. And I come at it from a little bit of a different viewpoint. Because if you look at the last two decades, there’s a tremendous spend billions of dollars spent on driving transformation and modernization. But it is almost always targeted at improving self service and digital customer experiences. However, it’s actually creating in our opinion, problems with mismatched, disjointed array of solutions that ultimately begin to present a, it’s supposed to create a unified front, but ultimately, it creates a completely disconnected front, what we find is that really all of these systems that are getting added on the back or the front, they’re ultimately hampering operational efficiency, not improving customer experiences. And from my point of view, modernization, I think we need to look at it from a different lens, and not the back, not the front, but rather look inside of a bank and a credit union and focus on an approach of modernization that’s really operationalizing the bank unifying technology inside of the bank so that those different silos or different systems can begin to talk to each other and ultimately serve the customer better. I think that’s actually how We create a better banker experience and a better customer experience, not just looking at core transformation, but instead operationalizing a bank.

Whitney McDonald 5:10
Now, you mentioned this this disjointed experience, of course, you’ve seen different solutions that can work for the short term or you’re plugging in here are plugging in there. How is the financial institution? Do you really know when your system has reached its limit? That you do need to look internally and your operations aren’t necessarily working at their max capacity? What are those signs that you should be watching for to say, hey, I need to take a look at how all of these systems are working together or not together.

Emily Steele 5:39
I love that. So I think that there’s a couple of places to look. So if we think about, I’m often asked, the question is specific about core? And I always like to say that, look, I don’t know that core is really the always the challenge. The purpose of a core is to act as a ledger, to provide the account balances the transactions, the interest post, posting, the product manufacturing, if the core is actually performing those well, and it’s an open system, allowing the bank to connect surround systems, then I would challenge is that really the problem that you’re having? So for me, when you think about what’s reached its limit, as you described? I think that it’s about asking, what’s the real problem that you’re trying to solve for. And often, what we’re finding is if bank executives or credit union executives, ask their operational teams, what’s working and what’s not, or stand behind them, and watch how they’re working, what they’ll find is, most bankers are actually entering into anywhere from eight to 15 different systems at any given time. And ultimately, that’s creating a swivel chair, it’s creating inefficiencies, it’s creating mistakes. It’s how regulatory issues get missed whenever you’re trying to be regulatory compliant. But you’re toggling between systems, or you’ve got this procedure book of a checklist of the way that you’re supposed to create or execute a task. So from my perspective, I think that you look at how are you operating? And is it efficient? Is it driving the results that you’re looking for? So for me, whenever you think about the silos that you mentioned, and how do you know it’s the limit, it’s whenever your fingers are working in too many systems, the systems aren’t connected. And ultimately, that’s not able to be pushed forward to your customers. So I don’t think it’s always about core, let the core do what the core is supposed to do. Act as a ledger, be the householding be the product manufacturing. And if all of that’s working, look at what the other problem is, and try to solve for that specific problem.

Whitney McDonald 8:04
So So you mentioned a couple of things. One being asked that specific question of what is the problem that we’re solving for? Rather than Are we are we doing all of these different tasks at the same time? What are we actually trying to address? And then you also mentioned looking internally, so not looking at the backend? Not looking at the front end? Maybe we could break that down a little bit? How do you really do that? What does that approach look like? And how do you change your mindset to not just look at the back end or the front end? But really look at the operations as a whole?

Emily Steele 8:38
Yeah, that’s an excellent question. And it’s exactly what we think that the banking industry needs to look at today. True modernization of today is about orchestration technology, not just that front and back like you described Whitney, but orchestration that really enables both channel and core agnostic, because those systems that are in the back are often multiple cores to support deposit servicing, to support mortgage servicing, credit card servicing. So that’s what the silos have a very business specific need in the bank. So you need an orchestration technology that’s core agnostic, that can talk to all of those systems, unify them. But it’s also channel agnostic so that you have an opportunity to layer and drive consistent experiences. Regardless of where your customer is actually sitting. They might come in through a self service channel, they might come in through branch through call center, through back office, through an online banking channel through a kiosk, a orchestration technology that can connect all of those channels from a channel agnostic and connect to the core agnostic is where we believe that modernization should actually begin today. The end result then is that the orchestration you is really from core to customer. And then it’s pushing all of that process communication and everything in between. So that the channels can be leveraged very consistently, what it results in then is a bank employee can better do their job, they’re able to help customers as problems arise, while those customers then get a better consistent experience, regardless of how they’re interacting, and it really does include operationalizing processes. And then integrating those two, the front and the back, ultimately providing a single place versus those eight to 15 different places, a single place for a banker to work, and then the customer service channel, regardless of the channel, they’re getting that same experience, because the processes inside of the bank have been operationalized. Does

Whitney McDonald 10:51
that make sense? It does. And maybe we could take it a step further, just just to clarify this idea a little bit more. So talking through this, the seamless communication, the connection necessary so that you don’t have this siloed approach? What does this really bring to a bank? And I know that you talked about customer experience, and I know that you talked about having that seamless experience. But what does that really bring to the bank, even on the on the back end, your digital potential, what you can bring in terms of, of innovation? What is that connectedness and that that seamless communication bring to the back end of the bank, or institution? Yeah, no,

Emily Steele 11:29
that that’s excellent. And I think it’s a few things. We really believe that once you’ve got a digital layer, or this single platform that’s connecting or unifying the bank, it simplifies a lot of things. One, it enables, as I already shared the banker to have a single platform, it also ensures that all of those processes are orchestrated today, bankers are going individually into each of those systems. And they have to remember what the steps of very simple or very complex processes are. And then they’re often routing their work to various different departments inside of the financial institution. So if you think about what a unification platform brings to a bank is, it’s orchestrating that process in its entirety. It’s automating it where it can, it’s routing it, and it’s sending all the communications notifications and alerts immediately out to the consumers. So it eliminates a few things. Once the bank has operationalize, it makes training so much simpler. They’ve got one system to train in, when they’re then a second thing that it does. You and I started the conversation with technology craziness, right? There’s always a new technology, there’s always a shining star out there that everybody wants to try something new, it’s very difficult to implement in banks, modernization is hard, because they’ve got to retrain employees, they’ve got to retrain their customers, all of their materials have to be updated, they have to ensure regulatory balance, and everything remains intact. If you’ve got an operation system that’s unifying all of that, you can swap out technology much faster, much easier, because you don’t have to change all of your procedures. So you don’t have to retrain your staff. You don’t have to retrain your customers, it eliminates that because everything’s been centralized. And then finally, the other thing that it does is, it really begins to simplify a customer’s experience. And this is probably the most important, and I’ll use an example. I’m gonna use a simple example. But one of the things that we’ve been talking about for years is bringing the ability for us, you and I, as customers of our financial institution, much more self service, we don’t want to rely on our bank, we did, when was the last time you actually went to your bank, you want it to all be online. So the ability to bring a lot more self service forward to our banks, customers, or our credit unions customers. And the way that we can do that, once we’ve unified the processes is by having open technology that can push those same processes. So let’s use an example. You want to change your address today. Very simple process. But for a bank, it’s not that simple. Because there’s regulatory considerations. There’s, you’ve got to check and make sure that it’s a valid address that I as a consumer might have fat fingered and entered wrong, and we don’t want garbage in garbage out right into a system. So the system needs to check and make sure that that’s a valid USPS address velocity. We’ve got fraud considerations if people are changing their address regularly, it may be because of some fraud that they’re trying to commit. There’s notifications from a regulatory that if you change your address, you’re required to get a notification just in case it wasn’t you that did it. Imagine if all of that is orchestrated. If, and if you can push a button and all of that happens, and all of the backend systems get updated, now you get a better experience. Or if we take another one, let’s assume you start a loan application online, but you hit a snag. Now you want to call into the bank to figure out where that loan is, if the systems are connected, your banker can pick up the phone and see exactly where you left off in your self service channel. So the third and I think the most important is it really creates a better customer experience bringing that self service to them, and consistency across their channels.

Whitney McDonald 15:40
I mean, those are all key points and create key drivers. And those questions that you were asking or that you mentioned earlier, what should you be asking of your institution? What problems are you solving for? Those are all examples of those problems that institutions are working to solve for with the ultimate goal of that seamless customer experience. At the end of the day, it’s a people’s business with, with all of the technology that you have, you want to be serving your customers in a way that’s that’s the easiest and most convenient. Maybe we could go through some examples of financial institutions that are that are on their modernization path, or that are simplifying this, this journey to the customer side, on the back end side. You don’t necessarily have to have to name an institution. But if you have any examples there of some of those processes that have been improved throughout modernization, that’d be great.

Emily Steele 16:34
Absolutely, at one of the we’ve been implementing bank right now, that is a perfect use case for this, and they’ve got over 800 branches, they’ve been in business for a very long time. And they have a lot of what would be considered legacy systems. They’ve selected Savannah specifically to support them in a full stack, tech conversion. And their goal is to unify their departments and their service channels through a single digital delivery platform. They’ve selected Savannah to do that for them. And this is Woodforest bank has actually partnered with us to bring this technology forward. And ultimately, what they’re looking to do is enable their back office, front office teams both call center and branch to support all of their customer and product needs. On any channel with speed and consistency. Their goal is a single delivery platform, we do have other financial institutions that don’t want to bite off sort of the big bang approach of doing core to customer all at once. So sometimes they’ll start on the front, because we have solutions, that you can start at the front and then build your way back by operationalizing, after you’ve gotten your digital channels in play. So some of our customers choose to start on the front to enable as much self service while they’re implementing their operationalization of the overall bank. What we’re really finding is a trend we’ve we’ve talked about unifying. And you saw technologies over the years that were integration layers, or ESPs. So lots of people have been talking about this, the difference in what we’re talking about today is it’s not just an integration layer, it’s banks really having a desktop that they can work from. And then behind the scenes is the magic of the integration layer, regardless of where you want to start that implementation. So we also have banks who are using it for the the trends that you’re probably talking about on other podcasts with embedded banking and bringing more FinTech services to their customers. So they’re integrating using our servicing layer and our digital channels to get embedded banking and additional services out to their customers quickly.

Whitney McDonald 19:06
Now, I’m going to kind of combine my last two questions just based on what you were saying, In your previous response. A full tech conversion sounds very intimidating. It’s a huge undertaking. So what you were just mentioning about you don’t necessarily have to do it all at once. You can you can do these more self service implementations early on. So you don’t necessarily have to do it all at once. So that that is one question that I have. So what could we done in the short term what you kind of discussed so maybe we could take that a step further, but maybe combine that with, with what would what advice or one one lesson learned that you would get one of these financial institutions listeners in our audience about how to approach modernization and noting that you don’t have to do it all at once? So what is that takeaway of how do you get started or or what’s one place to start on this path of modernization to to really enhance your institution?

Emily Steele 20:07
Yeah, I think you nailed it as well. I think the key is to just get started. And getting started isn’t about trying to solve for utopia, figuring everything out. It doesn’t have to be operationalizing every single thing in your bank, you can choose one process to start with, one that we have a bank, who we’re working with today, that’s decided to first start with disputes. I think it goes back to what you and I were talking about at the very beginning, really understanding what are the problems that you have at your financial institution that you’re trying to solve for, and not just leaping to the buzzwords of modernization, modernization is more than just replacing the core modernization is more than just adding a new, sexy digital channel. It’s about looking at how do you holistically change the way you serve your customers? How do you create a wow customer experience? And I think it is time to take the bold step, intimidating step, but bold step to re operationalize from the inside out at begin to eliminate silos, empowering employees and delivering exceptional frictionless experiences across customers. And while we’ve talked about that vision for a long time, we’ve not actually been able to achieve it. And it really is how financial institutions can future proof themselves for really generations of banking. And it only takes one step. It doesn’t have to be every process. It doesn’t have to be front to back, choose one and get started.

Whitney McDonald 21:47
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Transcribed by https://otter.ai