Winning the Battle for Trust Against Fintech Firms

Jim Marous:
Hello, and welcome to Banking Transformed. I'm your host, Jim Marous, founder and CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous:
According to a recent study from Ernst & Young, 37% of consumers now say a fintech firm is their most trusted financial services brand, compared with 33% who say a bank is their most trusted brand. More concerning is that among US consumers, 31% name a fintech has their primary financial institution, up from just 6% in 2019. Much of these shifts have been caused by a shift to digital providers that deliver more targeted solutions faster and more seamlessly than traditional banks and credit unions.

Jim Marous:
Our guest today is Nikhil Lele, the principal for digital transformation at Ernst & Young. He discusses the shift in financial services loyalty and what banks and credit unions can do to defend relationships in the future. Welcome to the show today, Nikhil.

Jim Marous:
Digitalization has changed how financial institutions engage with consumers. Everywhere we look, emerging technologies are challenging existing business models, changing how experiences are created and also how they're delivered. According to your recent research from Ernst & Young, fintech firms are rapidly gaining primacy with consumers, posing a competitive threat to incumbent financial institutions.

Jim Marous:
So, Nikhil, as one of the authors of this study, is this shift in loyalty a continuation of a trend that was already in place, or is this shift accelerated as a result of the pandemic?

Nikhil Lele:
Yeah, Jim, it's, first of all, great to be here with you, and I appreciate you having me on with you today. This is both, actually, and the research actually highlights that there are some trends that have accelerated, especially as a result of the last 18 months through everything we've lived through and continue to live through. But these are trends that have been ongoing for many, many years.

Nikhil Lele:
Let me give you a little bit of context behind what the research really illustrates. What we're really seeing now is this complete shift and acceleration of trust to just three years ago, a narrative where when we did our research two years ago, only 6% of consumers would have named a fintech as their primary financial relationship. Now, over 30% of consumers would name a fintech as their primary financial relationship. And that change in just the past two years represents something that has accelerated.

Nikhil Lele:
However, what fintechs have always been bringing to the fold is this notion of three really interesting things that our research really drills into now more specifically. Number one, they've gone to market in a very curated way, which means they're solving very specific needs for very particular target audiences in a way that's highly relevant to those particular users.

Nikhil Lele:
Number two, they're very connected in how they construct their experiences. So it's not just about transactional and convenience based experiences. It's about ensuring that the whole spectrum of interactions that a user may want to have, both with them and with trusted third parties, can be fluidly connected together in a way where the user is just in the ecosystem of value, not trying to figure out where and how they need to re-log in and connect to what they were doing earlier in context.

Nikhil Lele:
And the last piece is that they go to market and they offer their solutions in a highly personalized way. Everything a user does with them is sent back in the form of insight that's more personalized, contextualized, made more relevant and learns as they go. And so the user, in this context, really becomes the framework of monetization, not the product itself. And that's a very, very different paradigm than what we've seen in the broader financial space.

Jim Marous:
So, do you think this is an expansion of relationships? Is it more of an expansion or is there an abandonment of previous relationships? In other words, are consumers basically building their own open banking environment, or are they really leaving someplace to go to another?

Nikhil Lele:
It's more of an expansion from what the data shows us. And what we mean by that is users aren't taking their accounts away from primary financial institutions, the large banks, the large wealth managers, et cetera, but what they're doing is lessening and lessening their interactions with those institutions in favor of other platform based experiences that are much more curated, connected and personalized. So more of their interaction flow is going into these ecosystems that still largely users and consumers are constructing themselves.

Nikhil Lele:
Whereas large institutions have done a very, very good job driving frictionless, convenient experiences, self-service capabilities. My banking app is one of my primary apps on my phone. But it doesn't mean that I go to it for anything but my most basic needs. It means it serves its purpose really well. But consumers are really expanding into a territory of constructing their own ecosystems, but that's the opportunity in front of all the players in the market today.

Jim Marous:
It's interesting, because I know in my situation, I have small business and consumer accounts that are outside of my traditional financial institution, but it's interesting because as I look at ... I'm a banker by trade, and if I look at the way we used to look at attrition, a lot of organizations, I'm not too sure, even know this is happening. How many institutions besides the biggest know that may be on the fourth day after I get a direct deposit, I transfer most of my money someplace else, or that actually, while the number of transactions maybe hasn't changed at my legacy financial institution, a lot of my transactions have gone someplace else, where I've maybe added the number of transactions. I know in my Acorns account, I have 25 to 30 transactions a month, but it hasn't really impacted the amount of engagement I've had with my legacy, but they certainly don't have the percentage they used to.

Jim Marous:
Do you see this as being a problem where traditional financial institutions may not even know that while they've kept the accounts, they've lost maybe the relationship and the trust?

Nikhil Lele:
Well, it's a pivotal question, Jim. The way I would frame our entire framework of thought around this is it's not so much that they don't know; it's what I call the last mile of transformation, which is taking an organizational construct, a planning construct and an execution construct that's been largely navigated by silos inside of a large institution, mostly product based silos, and pivoting that to something that's much more horizontally focused on the consumer.

Nikhil Lele:
And when you start to actually execute in that framework end-to-end from a full consumer journey perspective, what you start to realize is that there's very little that large institutions don't know about their consumers, because they house more data about their consumers in a very trusted way than most people would give them credit for. But what's lacking is the ability to stitch that together, turning it into insight, and then understanding that the prompts to actually get the consumer to engage are not always about next best offers. And this whole notion of the interaction being the marketing engagement has to shift from what we call from selling to caring.

Nikhil Lele:
And this notion of selling to caring is pivotal in this horizontal construct, because it's really about what's going to get the consumer to engage and interact more, not just what's going to get them to accept that next best offer.

Jim Marous:
One of the interesting findings in your study was not only there's a trust gap between fintech firms and traditional banks, but there was a very low trust consumers have in regional banks and even credit unions compared to fintechs and the largest banks. Why do you think the regional banks fare so poorly?

Nikhil Lele:
There could be a few contributing factors to this underlying that. And when you look at the data, the expectations of the consumer, for those who treat a regional bank and/ or credit union as their primary financial relationship, trust levels are exceptionally high. But it's the prospect population, those people who may have an account with a regional bank or a credit union, but also bank and do financial activities more largely elsewhere, that's where the big trust gap really exists.

Nikhil Lele:
And what the data really shows is the expectations of how experiences, how service and how solutions are being served are largely not being met to the level and the standard that consumers want. And so, it's less about not being trusted, and it's more about meeting and exceeding the expectation of this highly fluid, very connected, extremely personalized ecosystem that consumers are now surrounding themselves with, but then they go to their bank and they get still the everyday banking experience, which is perfectly fine for those people who want to do self-service. But for those folks who are really looking to connect things in their life more seamlessly, it's really missing the market at the moment.

Jim Marous:
So really what you're saying is a lot of this is based on the fact that these other players, big tech, fintech, other players, such as digital banks, the solution is only a click away. It's simple, it's easy, it's seamless, it's personalized, and it's even, in many cases, a specific personalized solution that a person's appealing to. But really it gets down to the fact that if I want it, I can get it within seconds instead of what we find in the new account opening process or digital loan process of traditional banks, 15 to 20 minutes. So really, it's the ease of shifting relationships, is it not?

Nikhil Lele:
It is, but let me give you a little bit additional context, and this is the big conundrum that's facing the large banks and the large financial institutions. And it's what I call the channel conundrum. When you look at the data across two lenses, okay, so the first lens is how much would people value if their financial institution integrated in a seamless way all of the interactions they're having across channels, and then connected those interactions to third parties in a way that brings more value?

Nikhil Lele:
In the data today, over 65% of consumers say that they would highly value that kind of connectivity and integration. Just a few years ago when we did this research, that number was significantly lower, somewhere in the 30s or low 40s. So the adoption rate of this thing that we've all turned open banking, that's not what the consumer thinks about. They're just thinking about things being better connected, better integrated, more stitched together and personalized for me.

Nikhil Lele:
But at the same time, while all of the preference for channel interaction is moving to mobile, to online, to other devices, when you ask consumers, "What are one of the most important factors for having your primary financial institution?" They say the presence of a branch, even though the future expectation for usage of a branch is the lowest of any channel that they would be asked about.

Nikhil Lele:
So there's a big conundrum here, which is no one wants to go use a branch, but everybody wants to have a branch generally close by, because problem resolution, going and seeking advice, conducting activities that are germane to, I would rather just do it in person. That is the interesting part.

Nikhil Lele:
So the question really becomes, it's ease, it's convenience and a click away for generally most things. But then what is the role of the branch now moving forward? And it's not going to be the same role that is fulfilled for the decades that we've just lived through. There has to be a reframing of the purpose and experience driven through the branch that is going to then be fluidly connected to this digital ecosystem.

Jim Marous:
So, based on what you just said, and I'm not too sure if your trust study really looked at this, but the definition of convenience, it's shifted. Obviously speed and simplicity and empathy become key components of it from a digital sense, but from a branch sense, they probably don't need a branch within a mile. I mean, Chase is building a lot of branches, but it's more of an acquisition tool, but if you're outside of the acquisition tool, the definition of geographic convenience maybe has expanded quite a bit. Hasn't it, then?

Nikhil Lele:
It has. And when we actually benchmarked, we looked at location and proximity of branch as one of the drivers of preference and value. And you start to see that there's much lower distinction between having a branch within five to 10 minutes and 15 to 30 minutes. But when you move to a branch that's 45 minutes or more away from you, that's when you start to see significant. So our sweet spot seems to be having a branch within 30 minutes of your house or your location of work, because then that's something that you could actually engage on those one-off things that you may want to do in person.

Nikhil Lele:
But the branch isn't the primary driver of trust any longer. And that's really the big conundrum. It's a necessity to continue to reinforce trust for those consumers you have. But it's not the primary driver of why you would attract people into an ecosystem. So the ecosystem play really is the more powerful part of this paradigm of really offering something that's highly curated, connected and personalized. Those three are the tenets of our framework of creating and curating value. And the branch has to play a role in it. But the paradigm of what drives trust really has shifted quite considerably.

Jim Marous:
So, moving from trust to loyalty to engagement, organizations, such as PayPal, Square, Google, Apple, have been very clear in their strategy to increase penetration in financial services. But probably in my perspective, more importantly, these seem to be focusing on increasing the reliance on engagements with consumers to increase loyalty.

Jim Marous:
For instance, PayPal put in place cryptocurrency, which I don't know if they want to become a cryptocurrency partner necessarily, but they came right out and said to make this super app, they're really looking for a consumer having to go to their phone more often to engage with PayPal. Are you seeing the possibility that really loyalty can be more based on, or at least more defined by, how often I pick up my phone or my online account app to engage with a financial institution, as opposed to the traditional sense of size of account or size of relationship, number of accounts, is it really going to be based on engagement more?

Nikhil Lele:
Jim, you nailed the one thing that probably excites me most about where the world of financial services is trending and where it's going. So two years ago, we came up with this concept and illustrated it in great detail, of what we call becoming the consumers' personal financial operating system. And that concept is this notion of fluid, connected experiences, underpinned with more sophisticated data insight and AI that help you navigate both the day-to-day of financial life, align yourself towards goals and objectives, and also help you in longer term horizons of planning in a way that's immersive, just like we engage ourselves in any other ecosystem where we go.

Nikhil Lele:
Now that's manifested in this trend line of super apps. And super apps is this interesting notion as we've studied the super app ecosystem, both here in the US and globally, and come up with a consistent set of principled characteristics of what we see. There's three things now that are really driving this trend line of the near future and why super apps will become those central points of earning engagement, interaction and loyalty over time.

Nikhil Lele:
And that's number one, they are targeting audiences based on products and solutions that are immediately needed by those audiences. So super apps typically are targeting gen Z or younger millennial style audiences. Those audiences are still highly transactional in their nature. They're anchoring to products like checking accounts and debit cards and/ or savings accounts and credit cards, but there's this simplicity of enabling the most important deposit taking and transactional capabilities from an operating perspective.

Nikhil Lele:
Then the three most important aspects that we believe are central to the entire super app paradigm, is they are enabling in a fluid way the three most important digital payment streams that consumers want and expect. That's P2P payments, that's digital wallets, and that's now increasingly contactless payments.

Nikhil Lele:
And so that's one and two: relevant solutions tied to the user base you're serving, seamless and fluid payment experiences, irrespective of who and for what purpose you were paying for anything, and third, extreme connectivity back to a very valuable lifestyle ecosystem. And so if you evaluate every single super app through that lens, you will see a combination of relevant products, payment streams, and lifestyle and commerce capabilities that are so wrapped together in a fluid experience. That's why this excites us so much, because everything that we talk about that our research has illustrated around curated, connected and personal app, super app is the manifestation of that in an execution way to actually enable those experiences for users. And that's where we see finance going.

Jim Marous:
So it really is down to speed, simplicity and personalization, but personalization to the point where when opportunities arise, we get to the consumer immediately and say, "Take advantage of this." It's going to be more driven by SMS texts than by traditional media, obviously, you're not going to want to put something on the screen or have it next time you look, you need it right now, you need to take action on it. But it's also interesting because it really is the way we're interacting in everything we're doing.

Jim Marous:
We talk about embedded experiences, but really, I liken it to a discussion I have with my son. I have a 23-year-old son that I remember when I asked for money when I was in school a long time ago, you'd call your parent on a Sunday, you'd make them feel good about what you're doing and all that, and somewhere in the conversation, you'd say, "I need money." They'd send it via check through the US mail, it gets here on Thursday, it would take two days to clear. So you pretty much had to plan about a week in advance to when you needed money.

Jim Marous:
My son asked for money with a text saying, "Can you Venmo me X amount of dollars," for whatever it may be. And I remember one day saying, "I remember having to give a reason in the past," and then I'd text him again and say, "I sent it to you, but jeez, I'd love to know why." And basically he came back and said, "I'm on a date, don't bother me."

Jim Marous:
And it's interesting because you talk about the major payment tools, the digital payment tools. Is this possibly replacing the legacy checking account to a primary financial relationship?

Nikhil Lele:
I don't know if it's replacing, because at the end of the day, consumers still need a trusted place to house their money. And so, underpinning most of these super apps are highly trusted, whether they're branded or not well-known brands, FDIC insured, highly regulatory compliant banks that house the deposits that manage the controls and regulatory and cyber related requirements that make those facilities available to people. And then it's the super apps that layer experiences on top of those things to actually create more loyalty and engagement and convenience.

Nikhil Lele:
And so we don't see that financial products themselves necessarily go away in any imminent future. Now, maybe there's some future innovations in a cashless world that may just completely upend the full market. I don't get paid by EY to be a futurist in that sense. So that maybe happens, but in the near future, in any time horizon that we all would plan for, it's really about moving the thought process beyond the product. And that's the big challenge for mainline institutions, but that's the opportunity that fintechs have already figured out. It's the product itself just serves a need. It's not the immediate point of value itself. So even in this speed, relevance, convenience world, it's immediacy that matters most to consumers in terms of the need of the moment in that moment of experience.

Nikhil Lele:
And what the fintechs have gotten right is they've cornered these needs at the combination of products and features. So getting two-day advances on deposited paychecks, or getting an immediate clear $10,000 advance of liquidity in the moment without having it to have a two-day or three-day settlement cycle in your account, having fraud detection embedded with your payment streams, having the ability to do things like data removal services in connection with your app experiences, free international money remittances, whatever it happens to be. We bet we've benchmarked about 45 of these features actually from a quantitative perspective.

Nikhil Lele:
And these matter a lot, and they matter so much that people are willing to pay for them. And so you start to see that this notion that financial products being highly commoditized, consumers don't want to pay for financial products that are highly commoditized. It's a nuisance. But they're absolutely willing to pay for features and connected experiences that are valuable to them, that sit on top of products. And that's the paradigm that I think most main financial institutions are still struggling with, but fintechs are very much embracing. And that's what we're seeing as an underpinning of why this trust quotient is really moving so fast.

Jim Marous:
I'm going to get back to you about that revenue model in a second, but let's take a short break here and recognize the sponsor to this podcast.

Jim Marous:
This episode of Banking Transformed is sponsored by FIS. The way we move money is changing. We want to send money in real time to the other side of the world. We want everything in one place integrated, seamless, and on our devices. Embedded, fast, standardized and frictionless, as well as secure. These are our financial futures. The Financial Futures podcast by FIS explores fintech innovation and the trends that are already transforming the way the world pays, banks and invests across the globe and the mechanisms we'll need to prosper in this new brave landscape. Is the world's technology up to the challenge? Are we? Are those around us? FIS, advancing the way the world pays, banks, and invests.

Jim Marous:
Welcome back to bank and transform. I am joined today by Nikhil Lele, the principal of digital transformation at Ernst & Young. We have been discussing all the raised observations from Ernst & Young's recent study on trust in financial institutions.

Jim Marous:
So, Nikhil, before the break, we were talking about the financial model of financial institutions. But part of your research, as you mentioned, was based on trust around consumers' desire to have legacy financial institutions using data available to facilitate third-party partnerships. Do you think, number one, do consumers really understand the concept, the potential risks and the opportunities of open banking, and more importantly, based on what we were talking about before the break, does this really change the revenue model for traditional financial institutions?

Nikhil Lele:
Yeah. There's a lot to unpack there. So let me give it to you in a few categories of analysis. On the consumer awareness and impact on issues related to data privacy and protection: One thing is absolutely abundantly clear. At the top of virtually every consumer's list as the most important factor is do they protect my data? And so without that baseline being met, there is no future of value that can be provided, if someone doesn't trust that you're going to protect their data.

Nikhil Lele:
But that's where things really start to open up. It's because consumers, especially in the younger age groups, just trust more institutional types to protect their data. And they're less sensitized to the kinds of data that are out there, given the open sharing environment that we live in on social platforms and other things. The sensitivity around how data is being shared really is bifurcated between the older generation who's learned all of this along the way, and a younger generation who's only ever known this.

Nikhil Lele:
And so it's a very interesting time, because banks and financial institutions win on the question of data protection, cyber defenses, privacy, regulatory compliant related infrastructure, very sophisticated and extremely important. And they will always be important in my mind.

Nikhil Lele:
Now, what does that do to the shifting value streams of finance in terms of what comes on top of protecting your data to instill trust and reinforce loyalty and drive engagement and interaction is where this gets extremely interesting and presents the challenge for incumbent institution, and also for fintechs who are looking to scale their models of service.

Nikhil Lele:
The way the monetization model of finance has always worked and generally will continue to work for the foreseeable future is financial institution makes money on transactions, lending and fees. And everything that really comes from that is a derivative of one of those three things. It's a fee based on a transaction, it's something based on a spread and it's something based on a fee you're charging for something of value. And so this model of what consumers are willing to pay for is shifting.

Nikhil Lele:
And so, consumers are moving away from wanting to pay for what they believe are completely commoditized capabilities; having a checking account, no one wants to pay overdraft. People are incensed when they get charged ATM fees because they're out of network, a whole host of fees. People just do not want to pay those fees any more. And they're moving to models where they don't get charged those fees. But in return, you have to make money somehow. Financial services is still a value-added service to the end consumer, and it's a service worth paying for.

Nikhil Lele:
And now what consumers are doing, and what fintechs are really cornering, is they're figuring out other streams by which to monetize the user. And that's the operative term, is how do you monetize the consumer as opposed to monetize the product? And this notion is moving into many models. One of them is subscription-based fees, fee-based service models, feature based bundles. There's a whole set of different models that are out there where fintechs have made generally their whole revenue model based on these kinds of fee and subscription-based services.

Nikhil Lele:
And so does this represent a risk to incumbent institutions? Not directly, not all at once, but what we're starting to see is that traditional financial institutions really need to start thinking about how to extend that value stream, not replace, but extend, to find ways to actually treat the consumer and the experience they serve them as the product and a product that that consumer will be willing to pay for. That's where a lot of the banks are struggling right now, because they haven't figured out how to move past monetizing the product to monetizing the user.

Jim Marous:
It's interesting, because we interviewed on the podcast a person from Lakeisha Bank and also Emirates NBD. Both organizations have built a youth account. I'm not going to call it a checking account because in many cases it didn't have financial services tied to it. But what they did is they built an open banking platform that brought into play gaming technology, purchasing, music, other types of engagements, where actually the outside players paid for the ability to use the data from the bank to build this model.

Jim Marous:
And what was interesting as you peel back the layers, you realize that the financial services component of this was a very small percentage and part of the overall revenue model, the revenue model is actually coming from outside players that said, "We want to have access to this very segmented position." Well, this can be the same way that that others would go about it. I mean, the open banking model would be one that says, "I'm going to bring in services and relationships that are all embedded and made it easier and pretty much do what Amazon did with shopping."

Jim Marous:
Which is, think about it. If we had talked about 20 years ago, would you pay for the right to shop at a big box store that you don't go into, that is just offering you a lot of services, but you just paid. And by the way, you may pay more for those products. Would you pay for this on an annualized basis? Nobody would do that. Now there's nobody that won't do that, and anybody who got involved with it because of free shipping, that's no longer an add-on. They've completely taken that off the table because everybody has free shipping, but still we aren't seeing, in fact, they consume to see growth on the Amazon Prime model. Is this where banking is going, then?

Nikhil Lele:
Well, part of what we're really showing with the research and the work that we continue to do with our clients is moving in this direction. This is going to be a long journey for banks of any size. But, what we're starting to see is that this pivotal notion of what is the ecosystem of value that you are providing to your consumer? And ecosystem of value, using your example, I can buy something and get it in two days, I can go to the grocery store and get a discount on goods that I buy that day, on produce, I can go shopping for new shoes. I could do about a dozen different things [inaudible 00:30:47], completely different points of interaction and app experiences, both physical and digital. And it's all tied back to me as a member, because I am the single unit of value that matters most to that entire stream of value that's been enabled around me.

Nikhil Lele:
That's the same concept that we are starting to really explore with our clients now in financial services, which is what is the core set of needs and value drivers you are serving, and how do you extend that value beyond the products that you offer? And how do you connect it in very targeted ways to third-party partners that can come into the ecosystem and play in an integrated way so that is very, very fluid for the end user?

Nikhil Lele:
But here is how it happens today, and this is the big challenge or execution that the banks need to really figure out. If I'm on my bank app and there's an auto loan, my lease is coming up and I see that there's some interesting partnerships the bank has, they say, "Click here," and I happen to have already explored a few things. What happens today is I get taken to this other site, I completely leave my bank ecosystem ...

Jim Marous:
I have to start over again.

Nikhil Lele:
Completely from scratch. And that's not connected, it's not fluid, it's not seamless and it's not personalized. And that's the challenge that we're really trying to figure out. How does that start to be brought together in a more trusted data sharing way? And how do you actually curate those ecosystems so that you're actually targeting needs that your consumers really have and will value?

Jim Marous:
Well, it's interesting, because one thing the pandemic did, if not a thousand things, is that consumers became very aware of what can be done. What can be done with Instacart, whereby they're going to understand what you buy on a regular basis and the way you want those fruits or vegetables to be, or what brands you like without having to tell them? And they can prompt you on future deliveries. Even the local restaurant will say, "Do you want to order the same thing you did the last time?"

Jim Marous:
So consumers are becoming wiser as to what's possible. At the foundation of all this is data and analytics, which is an area that financial institutions still are doing a terrible job on. And so, when you talk about the foundational components of what's needed to go forward to do everything we're talking about today, it really takes dev analytics and an ability to say, "How do I take these applied analytics and make it important for the consumer, because really, they understand better than anybody else now, the value transfer?" Are you going to save me time, you're going to save me money, you're going to make my life easier, and you're going to bring me solutions that are on time and on delivery as far as what I need. Are you going to be the GPS of financial services that get me to my destination without any detours and on the fastest route?

Jim Marous:
And what's funny is the importance of speed just keeps on coming up in everything we're discussing here, that if you make it tough, I abandon. And it doesn't matter what you do. And it's interesting, we had a conversation with Citibank where they said they're re-engaging with video now on anything that's abandoned, and they're seeing a really good recovery rate, because you don't necessarily want to hang up on a face. But the reality is that's a short-term solution. It's not finding the problem. So, it's interesting.

Jim Marous:
So, from your perspective and all the research you're doing, what should legacy banks and credit unions do in the immediate future to try to defend their turf with the existing and new relationship? What's the first thing they should be looking at?

Nikhil Lele:
Well, we do know, and here's what we see, and here's what we're helping banks think through and do. What we do know is banks house some of the largest and most sensitive, important data sets about people in the world. And with that reality in mind, they play an important role in the proper functioning of our consumer society. Now, with that being said, what the big challenge for banks is not so much the data they have. And in fact, it's not so much the capabilities they have, because the banks that we know and work with have some of the most sophisticated data infrastructure, incredible engineering and data science talent, exceptional leadership teams, and every capability required under the sun to actually make everything we're talking about a reality.

Nikhil Lele:
So what's missing is the question, and what the banks need to focus on. It's all in the execution. And the challenge now we're seeing with execution is you fall into one of multiple traps. Trap number one is you construct this really sophisticated platform environment that gives you access to every ounce of data in real time under the sun, and its incredible power, in terms of being able to serve the end consumer. But then what happens is the inertial muscles of the bank kick in and say, "Well, we want to submit new offers." So basically it's about throughput of new offers. And then the measurement of the result is about the uptake of the offer.

Nikhil Lele:
And that's fine. That has a role to play in everything we engage in in society. We get offers from everywhere constantly and we choose what we want to take and not take. So that's totally appropriate, but it's not enough. And so now, what does it require to go from selling to caring? That's the big question, the horizontal execution approach of looking at the consumer as the point of ultimate value and performance result, and then how do you arbitrarate prioritization decisions on what use cases you're going to execute, and who's helping to decide and prioritize and execute on that iterative agile way. It's an entire model of scaled agile execution that's not just about agile. It's an entire mindset shift of how leadership needs to come together and actually drive value for the consumer.

Nikhil Lele:
This is a long haul. That's why I call it the last mile for the banking industry. They solve this last mile, we're not going to be any longer talking about big tech and fintech and banks. They're all going to be on the same playing field at that point. And so this is where banks really need to start, is thinking about their execution paths, not just from a technology and data lens, but from an organizational and operating model, a governance, a top-down separating results from performance. Results are what you measure in KPIs day to day, performance is how you got there and how you can repeat it and how you can do that at scale. That's the critical thing now that really banks need to figure out and get right.

Jim Marous:
Well, and you got to blow up legacy thinking, because what happens is no matter how much we try to transform, if organizations keep the old way of doing things, you get stuck. But as you said, we add a sales message on top of a meaningful message that made some sense to the consumer to begin with, and they can see right through that. So, it's interesting that it's actually moving, as you said, from a transaction model to a meaningful engagement model. And oh, by the way, that will bring you the transaction. But it's that leap of faith in that last mile.

Jim Marous:
So, finally, most legacy financial institutions are trying to find the right blend of digital and humans to help deliver that better experience using maybe some of the resources they currently already have. How do you see the role of humanization of digital banking in general going forward?

Nikhil Lele:
This is one of an instrumental set of questions facing the industry. So there's a model that we explore at EY that our research helped uncover, which is this convergence between what we call slow money and fast money. And you can call these things anything you would like, active or passive, transactional versus relationship. The whole point being in the consumer's mindset, there is a part of our mindset with finance that's all about long-term horizon planning, savings, advice, being responsible stewards of our lives and the lives of our children and everything else. And then there's an aspect of our lives that are highly transactional. They're interactive, they're in the moment, they're lifestyle oriented. They facilitate through payments, through transactional capabilities, through investing even.

Nikhil Lele:
It's the convergence of these two things that matters most. And the human is an absolutely instrumental part of the future of finance. We do not believe in the data does not show that finance is an all-digital future. It is an absolutely human-enabled and guided future. The challenge and now the real opportunity is what role can and should the human play, and where and how and when should they play it in that moment of interaction? Advice will always remain an emotional constant in human beings' lives. People need advice. They need to lean on someone who they can trust, they will seek it out from professionals, from family, from friends and inner circle, the people who always play that role.

Nikhil Lele:
So this convergence of multi-speed money is the battleground that actually takes the super app concept and makes it real, because then everyone will have a competitive and strategic choice on what aspects of slow and fast money are they trying to integrate and for whom and what target audience. And that's what's going to create a lot of interesting evolutions in the market in the coming 12 to 18 months, because super apps are just a fancy way of saying connected platform experiences, but it's slow money, fast money and how you bring transactional and planning and long-term stewardship and advice and human guided advice together. That's the real magic and where the industry is moving.

Jim Marous:
Boy, there's some of these podcasts I go, this could go on for hours and hours, but eventually listenership either goes down or we get in a different block. So, I want to thank you so much, Nakhil, for being with us today. And also, I'll give you a warning, I'm going to be welcome you back soon, because I think what we're talking about here is so evolutionary and so different, but it's still very transactional in nature in that what we're trying to do is say, "How do we get more engagements?" Some of them are going to be budgeting tools. Some of them are going to be educational tools. Some is going to be content, some just going to be transactions.

Jim Marous:
But at the end of the day, what we've got to be working toward is having the same connectivity that we used to have when people came into branches, but on digital devices, and where you can get into the whole discussion about humanization and that do humans have to be always involved, or can there be digital tools that make it feel like humans? And we've seen the growth of Erica at Bank of America, and we see the growth of other aspects of integration that make it feel like humans. But, again, if you're listening to the data, it's good, but thank you so much for being on the show today.

Nikhil Lele:
It was a pleasure being here, Jim, and as a soft plug, I'd love to come back. We're about to launch our global study of this same style research across 14 other international markets. So that global insight will also be a very useful thing to discuss.

Jim Marous:
Great. We'll look forward to it. Thanks.

Jim Marous:
Thanks for listening to Banking Transformed, just announced as the Communicator Award of Excellence winner for Outstanding Brand Series by the Academy of Interactive and Visual Arts. If you enjoyed today's interview, please be sure to follow the show on your favorite podcast app. And we would love a review of our show. Also, be sure to catch my recent articles on The Financial Brand, and check out our recent research we are doing for the Digital Banking Report.

Jim Marous:
This has been a production of Evergreen Podcast. A special thank you to our producer Leah Longbrake, audio engineer Sean Rule-Hoffman, and video producer Will Pritts. I'm your host, Jim Marous. Until next time, challenge the status quo, and embrace opportunities around you.