Banking in the Age of Digital Disruption

Jim Marous:

Hello and welcome to Banking Transform the top podcast in retail banking. I'm your host, Jim Marous, owner and CEO of the Digital Bank Report and co-publisher of the Financial Brand. An uncertain economy combined with technological advances, increased consumer expectations and new competition will forge banks to reimagine business models and rethink how financial services are delivered. More than ever, banks and credit unions must find ways to meet consumers, individual needs at speed, and at scale. Continuous digital transformations required across the entire organization. I'm really excited to have my friend Ron Shevlin, Chief Research Officer at Cornerstone Advisors and Senior Contributor to Forbes on the Banking Transform Podcast. We are discussing how banks and credit unions must respond to the major opportunities in the marketplace today and try to avoid the threats facing financial institutions. In the GIST release report authored by Ron Shevlin, what's going on in banking, it was clear that the banking industry was concerned about the uncertain economy and the impact on interest rates and the cost of funds while still being challenged to hire and train the right people.

At the same time, there is a diversity of opinion on how to respond to the opportunities of real-time payments and the speed of digital transformation. The question continues to be how does a bank credit union or a FinTech firm become future ready? So welcome back to the show Ron. We have conversations on an ongoing base, but it's always great to have you as a guest, early stages of each year helping to set the stage for what the banking industry should actually expect going forward or what we think they might have to expect. So in your report and in your research, what would you say is the most important trend that we'll see emerge in 2023?

Ron Shevlin:

Well, Jim, first, thanks a lot for having me. Well appreciate being on every year. I've been wrong every other year, so I'm not sure why this year will be any different, but thankfully I've got no shortage of opinions on those things. I think there's a couple of things though, that the survey of about 300 mid-sized bank and credit union executives will show that this year's kind of will merge as trends. On one hand, I don't think any question that real-time payments is going to become a lot more of a presence in the industry. We're expecting fed now to release and launch something this year, no question about that. The other thing would've said, if you had asked me this about a week ago, I would've included chat bots and AI. I think, maybe you'll want to get into this in a little bit more detail, but I think the launch of ChatGPT a few months ago just lit a fire under a lot of financial institutions to say, wow, maybe we're missing something here and really need to take a look at it.

The data that we've been looking at for the past couple years, Jim has certainly shown an increase in the deployment of chatbots predominantly by credit unions, probably not surprisingly because they tend to be more consumer focused. But I think the smart banks are also beginning to understand that chatbots aren't just sort of front end, frontline answer the easy question things, they're actually a very employee facing as well. So I think that will be a big trend as well. And you can't go wrong in this industry, Jim, by predicting that digital account opening is going to be a big trend. It does not end. It continues to be at the top of the charts of the technologies that banks and credit unions plan to invest in.

Jim Marous:

It's interesting. In your report, what's going on in banking, it spells out a lot about how the industry is responding to change. What was your biggest surprise from your research and what's the most glaring gap that you see between where financial institutions need to be and where they are today?

Ron Shevlin:

Jim, this discussion of this question could take up the rest of our time because if there was a surprise and a gap, it has to do with digital transformation. I've been asking for the past couple years, do you have a digital transformation strategy, program, initiative, whatever it might be, and how far along are you in that? So one thing on one hand, Jim, I see a large percentage of financial institutions who don't seem to be making a lot of progress in that. But on the other hand, I think I'm beginning to come around to the belief that there is no end to a digital transformation. And so I think the gap for me, and this is something we could probably debate and argue with for a long time, but you listen to a lot of folks talk about digital transformation and there's a line of thought or reasoning that says, wow, digital transformation's a lot more than just technology.

It is about culture and all those things. And I have resisted that for a couple years and was actually at the bank director of AOBA conference just a few days ago that I came back from. But I think I've kind of codified my thoughts around this, but I think a lot of financial institutions who have digital transformation programs, initiatives, whatever they might be, need to distinguish that from the idea of digital modernization because there is clearly a technology component to this. And it isn't necessarily about ripping and replacing your core system. It is about core workaround strategies. It is about modernizing the architecture, if not the core. But I had said something a couple years ago that I had written said, can you really say that you've digitally transformed if you haven't replaced your core? And now I'm coming around to the belief, if not realization, that you really can't say that you've digitally transformed if you haven't created some form of digital modernization and workaround strategy.

Because I don't think necessarily you have to rip out the core. So I think that was the surprise, was the lack of progress on digital transformation and the gap I think between where they need to be and where they seem to be.

Jim Marous:

It's interesting, we do research around the same subject and we've actually seen the number of organizations that say they're mature in the digital transformation process go down. And I don't think it's like they're not doing things, what the problem is, they're not doing things fast enough. So what happens is where they need to be based on the consumer, based on the competition, based on what we know about what needs to be done, they're almost ending up farther away because they're not moving fast enough. And to your point about is it ripping out the core, where do you focus? I think initially everybody thought digital transformation was a project as opposed to a process that's really never ending. There's no end point to this. The finish line's going to continue to get away from you, but how much further it's going to get than you're going to catch up to it.

The other part is so much attention was spent on the top of glass as opposed to below the glass. And I think those organizations are furthest along realize that if they don't digitally transform their processes, their procedures, their back office in a full sense, not just the technology, but the way they do things, they're never going to get there. And you brought up earlier digital account opening. I get frustrated every time I talk to an organization that says, well, we partner with a really good firm to bring our digital account opening process up to date. And then you realize that the first thing they do is they bastardize the process that the solution provider has created that lets them avoid using driver's licenses, for instance. As soon as they say, well, I like what you have, but we got to stick with the driver's license as the know your customer component, you've already added four minutes to five minutes on the process, it's a starting point, not including anything else.

So again, it's rethinking what's necessary and actually being willing to accept some of the solutions that are out there that can really make you digital ready. It's a big question mark out there, and as your study showed, the number of organizations that felt they were moving forward fast enough was very small. And do you think it's going to get any better with the economy being still uncertain? Is that going to be an area where people are going to actually maybe scale back when they shouldn't?

Ron Shevlin:

Well, I don't think they will because the cycle of the economy right now is causing deposit gathering to be such a huge objective and goal for the year. So I think they're going to try to accelerate that because they'll want to take advantage of easy digital account opening in order to gather some deposits. So it might light the fire under them. I think this year, Jim.

Jim Marous:

Yeah, as you mentioned, there's been a lot of innovation around payments. I've mentioned in a previous podcast that I was at a payments event and when we asked for, and these were big organizations, asked for how many of these organizations were going to implement time payments upon the availability of doing so nobody raised their hand, which astounded me. I looked and I'm thinking that I was hearing the question wrong, and what it was is a lot of organizations were thinking, well, we'll see what happens and then we may jump on board. But taking that a step further and looking at what else is going on in the marketplace and the payments area you touched base on it in your Forbes article a week ago around the biggest banks coming together to offer a wallet. And the gist of the article from where I read it was you said a big boo ha ha about nothing, it's not going to transform the industry. Can you describe that a little bit about your take on that?

Ron Shevlin:

Yeah, I think I was very negative about the prospects of a big bank developed digital wallet. And that's not to have any slight at early warning or Zelle, which has been very successful. But let's look into the success of Zelle for a moment. I had somebody argue with me on LinkedIn past couple days that I was too negative about the prospects for this digital wallet. And his point was, look at the success of Zelle. Well, Zelle has been successful, well, a couple reasons. They've done a great job of marketing and getting this out into a lot of other financial institutions. But number one, part of the success of Zelle was that there was an existing transaction base. Remember on day one of Zelle, there had to have been millions of transactions because everything that the big banks were doing around P2P were on day one now classified as Zelle.

Jim Marous:

Correct. Yep.

Ron Shevlin:

Second, I think big driver of Zelle's-

Jim Marous:

Also, if I'm not mistaken, A2A, account to account.

Ron Shevlin:

Yes, an account to account too, even more kind of, not ridiculous, but even more. So number two driver of success for Zelle has been the demographic adoption among, let's say, people you closer to age than you and me, Jim, baby boomers, who were not doing P2P through Venmo or maybe not PayPal or any other P2P platform. So question is who's using digital wallets today? Where is the growth opportunity for it? And similar things. So are they going to be able to steal share from the Googles, the Apples, anybody else doing digital wallets? That's a tough road to hoe, right? Not road. Yeah. I don't know what that saying is, but you know what I mean.

Jim Marous:

I don't think I can give you the answer to that one.

Ron Shevlin:

Yeah, I say that a bunch of times I'm always getting corrected. So that's a tough path to go down, let's call it that way. And then second, are we really going to see huge adoption among non-digital wallet users today? And just looking forward and looking at, and Jim, we talk about this all the time, how consumer behavior has changed. The idea of 20 years ago of having all your accounts at one institution in one place never succeeded. It is even worse now as younger consumers, let's say under the age of 45 or 40 even have 30, 40 different financial relationships. I think it's a really steep hurdle for the big banks to get over to drive that change.

Not to mention why are they doing this, Jim, they're not doing it because of consumer convenience. They're doing it to drive more volume. It's not a real customer-centric type of solution that they're going to come up with. I mean, a year from now, listen, please get me back on to tell me, hey Ron, look how wrong you were but I don't know, I don't see them overcoming the hurdles of changing existing digital wallet behavior and number two, driving new usage among consumers who are not big digital wallet users today.

Jim Marous:

Well, and I guess the good news is they decided not to try to jump through the hurdle and get retailers that are not online involved because that brings just a bigger hurdle out there if you try to get the small business to accept your wallet on the front end. I think the biggest interesting thing from a standpoint of being an old time banker like you and I are is that what they're doing is they're trying to capture insights around payments that consumers are making that right now show up just as an Amazon payment that doesn't show what they bought, doesn't show anything about what they've done and if you're owning the wallet, you get that additional insight.

The problem is the horse left the barn, and I'm not even sure if that's the right saying anymore, but the reality is it's too little too late. And I can certainly roll my eyes whenever I hear any banking organization, big or consortium, a big bank, any bank talk about something they're introduce in another six months now and said they've been working on it already for six months. I'm saying, well then the first six months are already going to be outdated, and why do you talk about introducing something in advance? I've just never figured out, but that's the industry that we're in.

Ron Shevlin:

One last comment on that though, Jim, before you move on, there's an aspect to this too that just doesn't add up for me. With P2P payments, if you're Bank of America and you're in this consortium with Chase and Wells and other large financial institutions, they're not going to switch checking accounts between those because of the geographic and limitations and all those kinds of things. However, how many consumers, and I'm one of them, who has both a Bank of America issued card and a JPMorgan Chase issued credit card, so a digital wallet that contains both, it creates an inherent conflict of that the consortium partners are now fighting with each other more for that behavior and that activity. And that just doesn't seem to me to be sustainable.

Jim Marous:

Switching a little bit in our research we've done for the digital bank report, we've obviously seen an emphasis on the use of data analytics and advanced technology, a greater reemphasis on it. Where do you see the impact of the emphasis on personalization and data really impacting banking in 2023, or will it be simply the largest, and I'm going to say largest and the smallest banks, the one ones that are actually have the funds to do something and those that are partnering to get it done?

Ron Shevlin:

The biggest impact, Jim, I think is going to be on product design. I think there's a limit to how much personalization they can continue to do on, let's call it customer experience. To a large extent that's kind of driven by your platform, choice of platform providers. And there's some things of course that they can do, but I think there's a growing recognition among mid-size financial institutions that they need to differentiate on something other than just simply the customer experience, especially the digital customer experience. Their hands are tied because they're relying on vendors and providers. Those providers might be very good, I'm not saying that they're not delivering a great experience, but they're pretty much delivering the same experience for every institution that they support. So this isn't just where the impact of personalization is going to see itself go, but it's really where the opportunity is in the marketplace to differentiate the products, not just the customer experience.

Jim Marous:

Well, and I'm also moving more and more towards those organizations that are most progressive are going to move beyond experience to engagement. I mean using data and technology to get more interaction between the consumer and the financial institution. But again, I'm seeing organizations still focusing so much on having good information as opposed to good implementation, good impact to the consumer. There's a big leap between being able to show an organization everything about their consumer and show it in a nice visual way and another to actually deploy that in the marketplace at speed and scale to say, I'm going to be talking to Ron when he's most likely wanting to be talked to. That's a big leap. And the banking industry to this point hasn't shown a real good ability to do that, even though they may know everything about me.

You recently also in an article you wrote for Forbes, which again, I recommend everybody follow Ron on Forbes every week, and sometimes more often he comes out with some great insights into the banking industry in his own humorous way to say, is this going to work or is it not? And it's a great insight into what you should do next. But one of the things you talked about was, as you mentioned earlier, the future of tools such as chatGPT, what do you see as the future? And there's a lot of people that have been naysayers, but I think they want a perfection out of the blocks and that's not going to happen. What do you see as the future of a tools like that?

Ron Shevlin:

Well, I just published what yesterday latest FinTech snark tank post proclaiming 2023 to be the year of the chatbot in banking. And when I put that into my predictions post about a month ago, I was probably the least well received prediction I've ever made. People were like all over me on that one. Hey, great article, Ron. I don't know about that chatbot prediction though, but I'm sticking by my guns. Not literally, of course, but I'm sticking with that, Jim, because it's more than just sort of a frontline customer support tool to handle the easy questions. First of all, we got to really distinguish with some terminology here. The underlying technology is conversational AI and machine learning is kind of part of that too. And you may think of that as a separate technology, but we're, what I'm really thinking is that these two technologies kind of merge into something we call chatbots.

But I had published a report a couple months ago called the Chatbot Journey, which talks about how financial institutions will start off with relatively simplistic chatbots that just answer a question and then maybe you answer another question and kind of evolve and grow to what a lot of folks in the industry would call it intelligent digital assistant. I don't like that term, but there's clearly a difference. And so I think thanks to chatGPT, I think a lot of financial institutions are getting to see the potential use cases for these technologies well beyond just sticking it on a website or a mobile app and as a front end buffer before they get to people. I mean, that's what the phone trees have become. There are barriers to getting to people, and that's not where we're going with this. Where we're going with this is number one, having a tool that's actually can have a conversation with a customer or somebody else where it's not just simply ask a question, get an answer, okay, ask a different question, get a different answer.

It's really more about having a conversation. And then number two, actually bringing somebody in, another human, from the bank side who can pick up on that conversation. But Jim, I think where the smart banks are seeing the opportunity is an understanding that these technology, and I keep wanting to not call them chatbots, but this technology can support employees as much as it supports the customer. In can be an internal facing tool. I interviewed a lot of firms for this report that I wrote, and a lot of them, Jim, talk about making their chatbot a member of the team. And then when I first heard that I was grown, oh really? Oh, hokey is this. But after talking to them, and these are some really sharp people, I'm like, I began to understand how they're trying to infuse their technology, their chatbot with a personality and how they want that chatbot to be utilized by other employees as much as sticking it in front of the customer.

For anybody who is interested in this topic, I would suggest you go to LinkedIn and find an article that Chris Nichols from South State Bank published last week sometime on 15 use cases for chatGPT. And these are all internal facing things. These are not customer facing applications for it, but really interesting ways that his colleagues at South State are beginning to use this technology. And I do think, Jim, that's really going to light a fire under a lot of financial institutions to say, this is not just a simple thing you put out in front of customers that deflect interactions going to the con contact center.

Jim Marous:

Well, I think also what's interesting is for those organizations that have developed great content, good wellness solutions, good ways of financial managing your money, things of this nature, this chatbot can then integrate what those learnings are and also point you to other parts of the organization. And as you said, how good is that for an internal employee that really doesn't even know what kind of content their organization offers, where this becomes part of that whole discussion point. And for those organizations want to try to catch up to Erica by Bank of America, this is their opportunity because Bank of America's got what, five, maybe seven years of advanced learning on how the interaction between a consumer and a chatbot can go and the advantages towards making those into sales opportunities, solution opportunities, recommendation opportunities. That's a good way to catch up is this technology and from what open AI has said about how this whole technology is going to transform this year, we have to watch out because it's going to be honest.

And what's interesting is every consumer right now is already talking about it, which you don't see that very often in technology upgrades where everybody's talking about what this is and what it can do and some of it's scary, but there's a lot of opportunity here. Going to go back to another article you wrote, because you've done a lot at the end of the year, in the beginning of this year, you wrote a recent article about how the future of FinTech firms may be as potential partners for community banks as VC money has dried up, but as the innovation that's needed within community banking environment really has ramped up so it's a perfect storm almost. Can you discuss a little bit about what your article said and what your belief is on how the bank and FinTech collaborations can take place?

Ron Shevlin:

For the past couple years in the what's going on in banking study? I've been asking banks and credit unions about their FinTech partnership activity this year. I asked them to quantify how much they are investing in FinTechs. Consistent over the past couple years. There is about a quarter of the respondents who say that they are making investments in FinTechs. And now sorry Jim, I got to do a quick disclaimer here, an explanation on things because it really became clear to me this year, I do this study every year and I want to say, oh, a quarter of the banks, the quarter of the credit unions, but it's never really a quarter of all of the banks or all of the credit unions. My sample is very much, first of all, it is not representative of the overall population of banks or credit unions, 4,000 banks, 4,000 credit unions.

There's no way that my data is representative of that total population. But what I do believe is that there is a segment of the banks and credit unions, my colleague Steve Williams, co-founder and president of Cornerstone likes to call this group the troublemakers, the group that are really focused on technology as an enabler and a differentiator who are not just sitting back and doing nothing. And so I really think my sample is very focused on that segment of the bank and credit union population. And so when I say a quarter of them, that's not a quarter of the 4,000, it's a quarter of the 1500 or so troublemakers in the industry. And so about a quarter of them the past couple years, past two years have been making investments in FinTech. And that average per institution investment is increasing from 3 million per bank last year to 4 million this year.

And that's a lot of money. And I want to say that's close to $2 billion. And when I look at the allocation of VC funding into FinTechs by category, I mean clearly the VC funding has gone into a lot of direct to consumer or direct to customer, direct to small business. But there's a category of FinTech that some people, and I like to call it enterprise FinTech. It's the FinTechs who support the financial institutions. And that's predominantly where the banks are investing. Chase has thrown some money into potential competitors that they might end up buying, but for the most part, mid-size banks are investing in FinTechs that are developing technology that will support the banking industry. And there's a lot of money going into that, and I think they may be becoming one of the primary sources of funding in that category.

Jim Marous:

I would agree. And I think what we've seen as well in our research is that I'm going to expand FinTech to say in third party providers because it really is changing quite a bit. We talked about the new account opening, we've talked about payments. Most of these organizations realize the best way to make headway in this quickly and at scale is to partner with an organization that's already gotten there, which is what the FinTechs are in third party providers. It's going to be interesting to see what happens because I think everybody knows they've got to change the way they do things, be it in the term digital transformation or not. But it's going to be interesting to see how those troublemakers go well above the industry norm as far as success. And we're going to start to see the differences I think, and it's going to be interesting to see what happens. So let's take a short break here and recognize the sponsors of this podcast.

Welcome back. I'm joined today by Ron Shevlin, Chief Research's Officer at Cornerstone Advisors. We've been discussing financial services trends for 2023 and what the industry must do to become more future ready. So Ron, there continues to be a lot of talk around digital transformation banking we talked about at the top of the podcast, yet the pace of this transformation differs immensely between one organization and another. To be prepared for the future where do organizations have to put their big bets on today?

Ron Shevlin:

I'm a consultant. I've been a consultant for a long time, Jim, and so I have perfected the answer it depends. It depends on where they're at and where they're going. And I think for a lot of financial institutions and especially those below the top 10 who cover so much of the industry and so much of the population, it's really time for a lot of mid-sized institutions to really make sure that they know who they're serving. And one of the challenges, and I know get a lot of pushback on this to say geography as a community is dead is a little overblown, but it's the direction it's going. And so understanding who are you really serving? What are the consumer segments that you are going to specialize and focus on serving, which of the small business segments are you going to serve is really kind of the starting point.

And without that lack of clarity, Jim, I think a lot of financial institutions just fumble around on things and just kind of move forward and try to improve processes and improve this or that. But the big bets have to be made on certain segments of the population that you want to serve from both a retail and consumer perspective and understand what are the products and set of services that you've got to differentiate on to deliver that. There's always a set of products and processes that everybody has to do, and you've got to stay up to speed on those things. But those aren't bets, those that's just cost of doing business. The bets are on the segments and the products and services that serve those segments.

Jim Marous:

So let's take the opposite of that, and we talk about this sometimes that the stop talking about this is just shut up. It's not something you should be thinking about right now. What are some of those things right now that organizations like to dabble discussions around that you just go, just stop. There are so many things that have to come before this. What are some of the items that organizations in 2023, at least as certainly the mid-size and small organizations, just should not even spend one moment of awake time with it?

Ron Shevlin:

Here's what I wrestle with Jim, is that there are things that you need to do in 2023 or banks need to do in 2023 that isn't going to pay off in 2023 and waiting until 2025 to do it, it was your comment earlier about Bank of America and Erica, when they started this, what, five, six years ago, whatever it was, it was kind of like, really? Why are you doing this? But they made the commitment, we'll still see if it pays off, but, Jim, if I talking to a board or an executive team at a strategic planning meeting, and if they were to ask me that question, what do I need to stop doing? It's like you can't answer that question without the context of the strategy and direction answer. And so-

Jim Marous:

So it's kind of like what you'd say with Metaverse in that, yeah, you may not be having to build this virtual branch, but you better keep learning in that area.

Ron Shevlin:

I'm glad you brought that up because that's a great example. I would say that to 99% of the financial institutions that I'd probably get a chance to talk to in 2023, I would tell them, don't bother with the metaverse in 2023. Having said that, let's take a look at Coastal Bank, Eric Spring, Kurt [inaudible 00:34:09], look what they've done with Coastal World and they've built a metaverse capability platform, whatever it might be to engage consumers to help drive engagement with their ecosystem. So they utilized this new technology, but it fit with their strategy. Jim, and last year I really took Fidelity to task. They had launched this metaverse thing and it was just god awful. It was stupid, it was bad game. It was kind of bad because it didn't fit the strategy.

They wanted to drive investment in a particular type of investment class. It was like, this wasn't going to work. Who's going to use this, 45 year old people? No, come on. But even though the utilization from a demographic perspective might not be there with all their consumers, Coastal built a capability to help people understand who is in their ecosystem and have a tool to drive that in a engaging way. But is that going to be right for 99% of the other financial institutions? No way.

Jim Marous:

Yeah. So you've been in banking almost as long as I have. A lot of times I'll look back and go, man, so many things have changed. I came in at the beginning of ATM cards, which is they weren't debit cards, they were ATM cards and I came in the beginning actually, of the credit card, which is really going back. But sometimes I go and I go, gosh, as much as things have changed, there's certain things in this industry that just completely freak me out that they haven't changed, that we're still battling the same battles. What surprises you about what hasn't changed since you got into banking?

Ron Shevlin:

It's funny, you should bring this up at the AOBA conference this week, I ran into an old buddy of mine, Jamie [inaudible 00:36:04], who is now chief market officer at Encino. He and I worked together years ago at Forrester. He left Forrester, went to consulting, then went to Citibank for a while, really drove probably the best PFM implementation there ever was, and Citi just let it sit on the shelf and die. And then pretty much Jamie left the industry until about six months ago when he came back to Encino and we were chatting at the conference and he said, I'm listening to all these presentations at the conference, and it really strikes me that nothing's changed in 20 years. There has been some terminology change. He said 20 years ago we were wrestling with we have to automate everything and now we have to digitize everything.

And he goes, what's the difference? We're still not there. But I think Jim, beyond that, the thing that I would say from a personal perspective that hasn't changed that really drives me nuts is the lack of understanding that technology in and of itself can drive relationship. Relationship does not have to be purely person to person, human to human. It can be technology intermediated or it can be completely technology. The founder of Commerce Bank in New Jersey, I'm just blanking out on his name, I'll remember it as soon as we end the recording,-

Jim Marous:

Went over to Europe.

Ron Shevlin:

Vernon Hill. Vernon Hill. Vernon Hill was quoted years ago as he was asked why his bank wasn't making big investments in online banking. And he said, because nobody wants a relationship with a machine. Very pithy. I'm not going to get nearly the exposure he got with that response with my response, which is nobody wants a relationship with a brick. It isn't about the brick. It is about the value you get from this products, services and interactions. And listen, I got bad news for a lot of banks, Jim, their technology interactions are better than their human interactions.

Jim Marous:

We talked about before, but chatGPT, you could end up having them being much better. That's what humanizing banking is. It's aying. Can you listen and respond? I mean, that's what people want. They want interactions, not just transactions.

Ron Shevlin:

Jim, there's a huge problem, and this might be a good transition to another topic I know you wanted to talk about, but there's a huge problem in the industry right now, and that is skill levels of staff. The pandemic saw a lot of the 30 year old, 35 year employees, Sally and Betty at the branch who knew you and knew everything and knew everything about the bank's products and services, and they retired, they're out, they're gone. And who's left? People with, I always joke, they have five minutes of work experience, five minutes of experience with the institution. They're just not as good.

My wife who handles the banking and you know my wife, and you can imagine what the hell she gives them when she walks in there is just frustrated every time. It's like she not only knows more about finances, but she knows more about their own products and services than they do because we've been a customer for 25, 30 years. So you got to use the technology to develop relationships. That view Jim has not changed in a long time and there's just not enough people who are willing to adopt this new philosophy.

Jim Marous:

Okay. So not going to be a quick answer, but maybe we can get it done quickly, is that how do organizations upgrade, update, train, immerse their employees into what they're needing to do to be successful in a more digital environment?

Ron Shevlin:

Well, number one, stop requiring everybody to be in the office and recognize that the skillsets and resources that you may need is going to come from people 300, 500, even a thousand miles away, and you just don't have the luxury anymore of drawing on local talent. Without that-

Jim Marous:

You don't need it actually, it's not even a luxury anymore. The luxury is getting the right people for the future that may not be in your neighborhood. Yeah.

Ron Shevlin:

Yeah. And second, you've got to figure out what you really have to be good at. One of the things, I think it was somebody maybe at the conference said that really stuck with me was he said, look, if you're a mid-size bank, you can't build it all, but you might have to integrate it all. And so understanding what skill sets you really need, and I think Jim, looking out for the next couple years, not only is there a set of technology skills that banks are going to need, but I think they're going to need a lot better human skills in things like integrated health. One of the things I'm concerned about from a bank perspective is that they talk a good game about financial health, but I think if you look at other HMOs and companies outside the industry who provide health, there's a much better recognition there that there is sort of this triad of physical health, mental health and financial health that really plays into each other.

So I think a lot of banks are going to need people that are like financial therapists and it isn't just some fancy label you slap on somebody. It's somebody who really has an integrated set of skills. Not going to be easy to find, they're not going to be easy to develop, but you've got to decide, is this an investment we need to make to serve a particular segment of the segments of the market that we want to address?

Jim Marous:

Finally, Ron, what's the biggest opportunity in banking today?

Ron Shevlin:

I think the biggest opportunity is to find and serve a niche of the segment of the customer base. Whether those are consumers or businesses that are either untapped or underserved today with products and services that are unique to that or those segments of the market where somebody says, oh my gosh, I can't believe you do that. Nobody else does that. You are the one I want to do business with. And you know what, Jim, and we can argue this, but I don't care if they use analytics and if they use some advanced technology to do it. If you are providing a set of products and services that are unique to a segment, that is going to really attract that segment and they're going to be willing to deal with or accept some shortcomings you might have in other technology areas because your product is so good and so specific for them, I think there's a lot of opportunity in the banking for financial institutions to find and serve those niches.

Jim Marous:

And to take out of their mindset that it's got to be just in their community. I mean, key bank's done a really good job at finding niches in the medical community and saying, we'll go globally if we have to, but certainly within the United States to serve the individual doctor better than anybody else. Again, you're not looking at simply the people that can come into your branch. The digital world gives you so many opportunities. I think you have a great point there that you've got to find that niche you can serve them better.

Ron Shevlin:

That's the point that affinity is the new community, not geography. And I think that's the key point.

Jim Marous:

And before we leave, word on the street is that you're going to be soon introducing a new podcast. Can you give us a little bit of insight into what that's going to be and what we can expect?

Ron Shevlin:

Sure. So we had talked before that for the past number of years I've been producing a report called What's Going On in Banking. I've decided to extend the brand and create the What's Going On in Banking Podcast. We already have two episodes under our belt that's out there on Spotify and all the popular platforms, but let me just give you 30 seconds on why it's going to be different. I did not want to compete with the Banking Transformed and the breaking banks of the world, so I have a very different format. Instead of a kind of talk show, let's get a guest on and kind of chat, the focus of all the episodes will be on some breaking news in the industry. So the first episode was about the OCC acting comptroller indicating that they had developed a framework for breaking up the big banks.

So I got Rob Blackwell, Chief Content Officer of IntraFi and former Editor-In-Chief of American Banker to discuss that with me. And the second episode was about the announcement as we had talked earlier about the introduction of the digital wallet from the consortium with big banks and Scott Harkey from Endava, who's a brilliant payment experts in the space, got on with me 15 minutes to 20 minutes tops discussion on one topic and what's going on, and much less of an interview style and much more of, okay, here's what I think, tell me why I'm wrong, John McLaughlin's style wrong. So 15 to 20 minutes on specific topics with people who are experts in that topic.

Jim Marous:

That's great. It's always good to expand the brand, but also to talk about current information because there's no lack of content out there that needs to be talked about on these things that even in your way of doing it, which is looking at what the industry's doing and going, you guys are thinking the wrong way, and that's going to be really entertaining. I'm looking forward to it. So again, Ron, thank you for being on the show. Again, you are the guest we've had on more than anybody else, but there's a good reason why. I mean, it shows by the discussion we've had today there's so much to talk about and you really do have your finger on the pulse of the industry, so I appreciate your time.

Ron Shevlin:

Thanks, Jim.

Jim Marous:

Thanks for listening to Banking Transform the winner of three international awards for podcast excellence. If you enjoy what we're doing, please take 30 to 45 seconds to show some love in the form of review. It really helps to grow our platform. Finally, be sure to catch my recent articles on the financial brand and check out the research we're doing for the digital banking report. This has been a production of Evergreen Podcast. A special thank you to our senior producer, Leah Haslage, audio engineer, Sean Rule Hoffman and video producer Will Pritts. I'm your host, Jim Marous. Until next time, remember, banking transformation is not a project, it's an ongoing process of modernization for survival.