The changes taking place in the financial institution industry require a sure hand at the helm and the ability to see through market complexity to identify a level path to the future. In this interview with Debbie Bianucci, President and CEO of BAI, she shared with me what she has learned about what it takes to create sustainable value, how to manage brands in a virtual environment, the outlook for new bank strategies and what kind of leadership skills it takes to guide innovative design from concept to market.
In 2024, BAI will celebrate its 100 year birthday and by that time, what is the most important sustainable change that will have taken place in the banking industry?
That’s right, BAI has been serving the industry for almost a century. Over that time, we’ve witnessed many changes and have been proud to be at the forefront of what’s been happening in the industry by delivering research, information and insights to help financial leaders make smart business decisions.
I will say that 2024 is still quite a long way off, especially for an industry that is constantly evolving. My answer about the most sustainable change that will take place would be – sustainable change! That being said, if I had to pick one thing that would impact financial services, it would be the drive by financial services companies to simplify their business and operations to improve how they serve their customers and provide opportunities for their associates.
Many have this on their radar and are in the process of executing against it. Simplification impacts every part of the business. At its most basic level, from a customer perspective, it positively impacts the customer experience, increasing loyalty because it’s easier to do business and it makes the organization more relevant for customers. Moving toward simplification also has internal benefits by removing some operational burden and empowering associates, as well as offering efficiencies by leveraging technology to improve processes and improve responsiveness. This can free up resources to focus on more forward-looking strategic initiatives for financial services companies, such as sustainable innovation.
In the years spent assessing a bank’s ability to be innovative, what are some of the key findings related to leadership that have become apparent over time?
Innovation and its importance within any organization must come from the top down. But, that’s not enough in itself, it has to be instilled and fostered in every part of a company. I think that leaders in innovation also recognize that it is not about the next best product or service, it’s about solving problems. Strong leaders identify the most impactful issues and then find solutions to them by being open to new ideas and approaches. They also recognize that innovation is not a part-time job; it takes commitment and determination from company leadership. In BAI’s Retail Banking Outlook Survey, 30% of the large banks we surveyed indicated that they have digital innovation labs and when it comes to research for digital innovation, almost 60% of all banks surveyed, regardless of asset size, are using outside firms to provide research on digital innovation. So, I think that the desire and commitment to innovate is very strong in leading organizations.
Finally I would say, leaders that are of the “test and learn” mentality and instill in their company culture the notion that it’s ok to fail, are quite successful. Failure is a great teacher and without it, there could be no success. I’m a big sports fan and one of my favorite quotes from Chicago Bulls legend Michael Jordan is so appropriate here, because he said “I can accept failure, everyone fails at something. But I can’t accept not trying.” That’s what innovative leaders do – they constantly try, they fail, they move on quickly and hopefully along the way, they also meet with success.
How do you see banking leaders using research and information differently today than they have in the past? Have their needs changed or is it more about new delivery channels?
Effective use of data, research and information is critical to financial services companies today. But, with so much information out there, the challenge becomes the ability to focus on the information in a way that’s most relevant to their organizations and customers. That’s why analytics has become such an important part of strategy and why banks are in search of strong analytical talent. I see many organizations really trying to connect with their customers differently by providing more relevant and personalized experiences. It’s important that financial services companies show that they know their customers, that they understand their goals and that they demonstrate they are going to help customers achieve them. Personalization and relevancy – for example next best offer – can really make the difference.
With the shift to more digital and non-face to face interactions, this becomes even more important as financial services companies struggle to build and maintain consumer relationships across the digital divide. The other important thing about data and information is that it’s being consumed differently today, so financial institutions need to make adjustments accordingly. Tactics like social listening and content marketing are critical to show that financial institutions understand what the issues are and where they can add greater value.
I would say that this change in how data and information are being used is really not about the banking leaders’ needs or about delivery channels. It is and should be about responding and adding greater value to their customers. It’s about understanding what consumers are looking for, as well as how they want to interact and communicate with their financial services providers.
How are financial institutions going to manage and improve their brand equity in an increasingly digital-oriented services environment?
It’s important that financial brands are meaningful, relevant and are synonymous with value, i.e., how can a brand personally connect with and help customers and their overall wellbeing. A good example of this is BBVA. Under their digital transformation strategy, one of their main goals is “to make customers’ lives easier.” You’ll notice that they don’t say customers’ “banking lives,” but rather “their lives” – it’s really about their customers’ overall wellbeing.
Customers want to be able to identify with a brand and so financial services companies need to tell their story in a relatable way. They also need to place that story where consumers can “find” it. Again, with the shift to digital channels, financial leaders now need to leverage digital media more vs. traditional print and TV advertising. In BAI’s recent Retail Banking Outlook Study, the financial services executives we spoke to said that 37% of their advertising budget is now being spent on online and on mobile.
Internally, financial services leaders also need to integrate functions more closely – sales, marketing, product, IT and distribution to ensure that there is a customer centric approach that leads to an integrated customer experience.
In a market like the United States, where there are thousands of banks and credit unions, is there still a place for de novo banks or is the market essentially closed to new regulated entrants?
Since the financial crisis, it has been slow for de novo’s with very few new charters since 2010. This is due, in part, to regulation and capital requirements. However, there will likely be some regulatory relief that will ease some of this burden. There also is updated regulatory guidance for new banks including a “practical guide” for new bank charters due later this year. But it’s more than regulation limiting the de novo environment – it’s also a lack of investment. It’s clear that investors have focused more on funding startups than de novo banks. This is evident in the growth of non-banking companies that, while not taking on bank charters, are providing various types of financial services.
Despite all of this, at BAI we believe that there will be more de novo growth in the next few years. It won’t be at the same rate we saw before the financial crisis but there will be an increase. I think that these new financial institutions will be in a position to succeed with changed regulatory requirements and capitalizing on the digital transformation we are experiencing in financial services. With the trend towards more personalization, some de novo’s may choose a focused model to make a play for more niche markets/segments. It will be interesting to watch.
You’ve been in the financial services/banking industry for your entire professional career. Was this a career path you chose or did it choose you and further, what have you found to be the most unexpected aspect about the banking industry?
I started working in my father’s community bank at age 14. What started as a part-time job evolved to be a lifetime career which I have loved. I learned so much through high school and college in the various part-time roles I had including teller, proof operator, loan operations coordinator, trust coordinator and personal banker. When I joined Norwest Bank as a senior in college, I already had a strong foundation of knowledge that made it easy for me to quickly become proficient as a banking professional.
It’s hard to explain but banking always made my heart beat fast. I have had a lifelong passion for this industry because of its importance to consumers, businesses and communities. Perhaps the biggest surprise is that this passion has never wavered and is stronger today than at any point in my career. What we do at BAI makes it possible for me to work with people in the industry from all over the world in ways I never imagined. And, there is so much passion in our industry by bankers who want to do an excellent job of serving their customers. It inspires me every day.
Debbie Bianucci is President & Chief Executive Officer of BAI and a member of the BAI Board of Directors.
At BAI, we’re passionate about our pursuit of the trusted information, powerful tools, and actionable insights that provide leaders with the clarity and confidence needed to prepare for tomorrow, while performing better today. For over 90 years, this has been BAI’s mission: empowering leaders to make smart business decisions, drive positive change, and move the industry forward because a strong financial services industry helps consumers, businesses, and communities thrive.
BAI helps financial services and payment leaders power smart decisions through a variety of comparative analytics, education and networking opportunities. BAI’s research provides competitive perspectives that give leaders unique insights that strengthen their strategic and tactical plans to serve their customers.
Debbie has been in financial services for her entire career, including senior positions with several major financial services companies. She is a frequent speaker at industry events and has authored numerous books and articles on financial services topics. Debbie holds a Bachelors of Arts Degree in Journalism and a Masters of Business Administration Degree, both from Drake University.
Learn more about BAI here.