Borrower expectations are shifting. Fast, secure, and accessible digital services are no longer an advantage – they’re imperative to remaining competitive. With the rising popularity of non-traditional banks and lenders, banks are seeking innovative ways to meet changing expectations, compete with new challengers and remain profitable.
Last week, banking professionals in the areas of information systems and security, compliance, risk and more gathered at the New York Bankers Association’s (NYBA) Technology, Compliance & Risk Management Forum to discuss industry trends, emerging technologies and best practices.
I hosted a session at the Forum, where I spoke directly with attendees about the future of digital banking. The session – The Banking Technology Roadmap – explored best practices when partnering with fintech companies and previewed what’s on the fintech horizon.
Here are some of the session takeaways:
BEST PRACTICES WHEN PARTNERING WITH FINTECH COMPANIES
Know the tech budget
What percentage of your operational expenses will be allocated to tech this year? Over the next three years? How much of that will be devoted to new technology versus existing infrastructure? Banks must understand their total technology budgets and set reasonable expectations for what innovative and new-process projects can be achieved.
Identify and prioritize fintech projects
The fintech reach extends into many aspects of banking and lending transactions. Fintech planning should complement the bank’s overall strategy and focus on customer experience, compliance, and data privacy and security. Banks should ensure projects are clearly defined and prioritized to support their long-term business goals.
Build it or buy it?
How will these projects come to life? In-house development can be cost and time prohibitive but can outfit banks with proprietary differentiators and alternate revenue streams. Readily-available, out-of-the-box solutions can expedite digital transformation and enhance customer experience with far-less effort and expense. Banks must determine which method makes the most short- and long-term sense for their organizations and existing staff. A good rule to follow: If there are multiple vendors offering a required solution – buy it. If a solution doesn’t exist – build it.
Is this a strategic partner?
How do potential fintech partners support the defined strategic plan, helping banks achieve their business goals? Banks need to identify partners whose primary offerings and solutions most closely align with their prioritized projects and ask partners to clearly document paths to completion, including robust training and implementation programs.
Does the tech meet regulatory expectations?
Good tech is compliant tech. Potential partners should provide a compliance-centric solution that easily integrates into or enhances a bank’s existing compliant processes. Chief Compliance Officers should be part of the vetting process, and fintech providers should demonstrate a willingness to collaborate with banks’ internal compliance teams and organizational values rooted in compliance.
Can they demonstrate high-quality data capture, management and reporting capabilities?
Does the fintech provider offer a data-rich solution setting the foundation for other emerging technologies, such as augmented intelligence and machine learning? Is all captured data easily accessible? Potential partners should have high-quality, audit-ready data with reporting flexibility. And, when it comes to data, seeing is believing. Partners should willingly show their data integrations and provide evidence of all stated data-capture capabilities. It’s the bank’s data – partners should be able to demonstrate banks can access the entire data set at all times.
Prepare the entire organization
Digital transformation requires a cultural shift. Changing technology and process without first addressing the workforce will result in a struggle to maintain any forward momentum. To truly enable a successful digital transformation, banks should be prepared to bring the entire organization along from the beginning. From leadership to front-line employees, banks need to encourage the company-wide involvement and transparent work environment necessary for widespread tech adoption.
Develop a customized training approach early
Thorough training customized to each job role is critical for seamless tech implementation. Employees who feel uncomfortable with the technology can be hesitant to adopt. Fintech partners should heavily support training and work closely with all internal teams through project completion – ensuring employees are comfortable and fully realizing all of the solution’s benefits.
Keep the momentum
Post-launch adoption doesn’t guarantee ongoing success. Continued monitoring and communication safeguards against employees reverting to old ways of working. Partners should work with banks to highlight use cases and help identify ways to further embed technology deeper into employee workflows and processes.
A LOOK TO THE FUTURE
It’s no secret fintech solutions and emerging technologies like machine learning (ML) and augmented intelligence (AI) have the potential to completely transform the banking industry; and, the industry is eager to leverage these technologies to enhance processes and increase profitability.
But first, we need to focus on creating the building blocks required for this tech to exist. ML and AI require an extensive amount of data. And, not just any data – the right data. Banks need to make sure their proprietary or purchased solutions emphasize data quality and integrity.
Properly vetting and strategically partnering with fintech companies can ensure a solid technology foundation on which to continue innovating and evolving.