As long as people have walked the earth, they’ve had banking needs. From the earliest times, banks have evolved to meet people’s financial needs. Perhaps banks haven’t changed as drastically as they have in recent decades. The financial crisis and advancements in technology have prompted banks to revisit their strategic plans so they can better respond to the needs of their customers in today’s society.
Technological advancements have forced banks to change the way they offer services if they want to remain sustainable, let alone competitive. Getting up to speed with advancements in technology has caused banks to reconstruct not only their systems and operations, but also their culture. Digital tools for banks aren’t just a pie-in-the-sky desire, they’ve become a necessity. With the digital transformation of banks, new opportunities are developing, and newer, more complex risks are lurking in the shadows as well.
Banking Technology Meets Customers Where They Are
It was not that long ago when the bulk of people either rushed to the drive-up line at the bank after work in hopes of doing their banking before the banks closed on a weekday. Alternatively, their weekend plans revolved around their Saturday morning routine of going to the bank and the post office before these establishments closed at around noon. If they missed either one, they were out of luck until Monday morning. Before the days of conveniences such as ATMs, there was no way to get money for the weekend without making a personal appearance at the bank (or finding someone willing to cash a personal check).
Today, sleeping in on Saturday morning is the norm for many people. It couldn’t be easier to make deposits, withdraw money, transfer funds between accounts or check balances now that mobile banking apps give banking customers control and convenience. With ATMs on virtually every corner, as well as at automobile service stations and retail establishments, taking care of banking needs can happen 24/7.
The year 1990 was a monstrous one in banking consolidation. It was the year that 37 banks consolidated into four banks: Citigroup, JP Morgan Chase, Bank of America and Wells Fargo. Around that time, it became evident that there was the expectation for banks to be more accessible, secure, fast and convenient. It was no longer enough to pass out personalized pens or coffee mugs. For many banking institutions, the costs of catching up to the expected technological advances were simply too prohibitive for banks to remain independent and profitable on their own. Consolidation seemed to be the only way to spread out the costs and make them reasonable.
What Do Successful Banks Have in Common?
Behind every successful bank is a solid foundation of good governance. Even in times of vast transformation, as we’ve seen in recent years, successful banks invest in quality leadership, expert boards of directors, innovation and creativity, technical exploration and effective communication.
Successful leadership entails recruiting the best talent for the CEO and the senior executives. In the board role, successful leadership means working to achieve a board that is diverse in age, gender, expertise and ethnicity. Bank boards should be reflective of the client base they serve. Boards that lack diversity lack the necessary perspectives that are required to come to a responsible consensus and sound decision-making. Regular and robust evaluations of the CEO and the board should be staples of the institution to ensure that each individual knows their duties and responsibilities and is being held accountable for doing their best.
Board directors of successful banks are continually networking. They keep up with the current trends in the banking industry and regulatory environment as they pertain to their establishments and also as they pertain to other industries. Board directors of today’s banks need to be vigilant about pursuing education over board development and banking education so that they will make well-informed decisions inside the boardroom.
Effective communication across all channels is a must for boards and senior leaders of banking institutions. Board meetings should have well-planned agendas, giving careful thought to prioritization. Board meetings should be productive and welcome all ideas and perspective, no matter how far out-of-the-box they seem. In keeping with best practices, bank boards should periodically meet without the CEO so that they can speak candidly and without hesitation.
Also, in keeping with best practices, board chairs should work to improve their relationships with their CEO. It’s important for boards to know what concerns the CEO has about operations and other areas of oversight and to make an effort to get the CEO’s perspective on various issues before board meetings. While each party should be clear about maintaining a distinct separation of roles, they should keep a steady flow of information going back and forth.
These competitive times are not the time for boards to shy away from their duties of strategizing and oversight. Boards should challenge their CEOs sufficiently to inspire the best performance. At the same time, CEOs should be able to accept constructive criticism and rise successfully to the board’s challenges and expectations.
Digital Transformation in Banking Is Forward-Thinking
How familiar are bank board directors with the products and services that their bank offers? Do they have all the electronic bank apps and use them on a regular basis? Do they use the bank’s drive-up window or a local ATM and evaluate their experience from the customer’s perspective? Do they use the mobile app to perform their own personal banking on a regular basis? Do they know how their bank’s mobile app compares to other apps in the industry?
Banking leaders who are considered leaders in their field will find the best ways to utilize technology so that it has the most impact for the least cost. The best place to start is by taking a modern approach to board governance by bringing technology right into the boardroom with Diligent Boards and Governance Cloud. A board management software system by Diligent Corporation provides all the tools that bank boards need to ensure good governance. Where there is modern governance, there is success.
Board directors of banks need to build and strategize around the future because evolution within the banking industry continues to happen. On the issue of transforming into digital banks, FinXTech advisor Chris Skinner so aptly states, “It requires ongoing support from top leadership, including our board of directors and management team, and a creative, nimble team that brings marketing, sales, risk and IT together to build an infrastructure focused on security and scalability.”
