Portions of the following commentary have been excerpted from the July 17, 2018 BIGcast series entitled “Out-Partnering Your Competition,” with host John Best. Jeffery Kendall and John Janclaes, CEO of Partners FCU, were both interviewed.
Making targeted bets and investments in the right places is really the name of the game.
Big money banks have been leading the way in digital banking innovation. They’re throwing hundreds of millions of dollars into the user experience and reaping rewards by attracting and retaining customers. For several years, regional banks have been outflanked by the larger institutions and that trend is accelerating, but this can be contained with effective partnering.
What these mega banks are actually doing is trying to capture the consumer’s “digital soul,” just as companies such as Amazon and Uber have done. Make no mistake, the end game is to integrate their brand, via digital banking, into the fabric of everyday life. This presents real problems for regional and mid-sized financial institutions that are also looking to increase their footprint. If the smaller banks provide a clunky, outdated digital banking experience, they risk losing their online relevance, regardless of how friendly the tellers may be.
Making targeted bets and investments in the right places is really the name of the game for regional and mid-sized banks and credit unions now. The key is to out-partner—not outspend—the competition. They can leverage their investment by teaming up with a digital banking partner that can drive innovation and a digital banking transformation. At the end of the day, banks and credit unions of all sizes are under pressure to deliver an efficient and secure Amazon-like experience. Adding the strategic advantage of an experienced digital banking partner is an effective strategy to reach this end.
I spend a lot of time with credit union and banking leaders, and this topic is foremost on their minds. Many of them started off cautiously by buying an off-the-shelf mobile banking app from their core provider. They’re now ready to take it to the next level but can’t throw as much money at it as the giant banks. For them, it won’t necessarily be about how much money they spend, but how they spend it.
“It’s important to our members that we deliver a compelling, relevant brand,” says John Janclaes. “Be clear on your strategy and what you want to provide, and then partnering with someone who can get you there is going to be the difference. This allows you to build a culture that is the fast integrator and focus less on trying to innovate and build new, cool ideas yourself.”