For far too long, IT teams at community financial institutions have centered around integrating with the banking core. In the meantime, financial services have quickly evolved beyond simple point-to-point application integrations. Unprecedented customer demand and new consumer behavior have introduced a proliferation of new technologies and are redefining the role of the bank CIO. In this post, we’ll share the transformational journey that lies ahead of the CIO and how we’ve partnered with others to help them become the Chief Innovation Officer.
CFIs find themselves in unchartered territory
ModusBox CEO, David Wexler, called this “a new age for community banking – the era of Fintechs.” Today, survival alone mandates seamless integration between internal tools such as CRM and loan origination systems. However, community financial institutions (CFIs) are learning the hard way that to remain competitive, they must digitally transform and adapt to a constantly changing landscape around them.
Much of the responsibility for navigating this new world falls on the CIO. Leadership demands that they have answers for building a flexible API infrastructure, developing open banking capabilities, and spearheading strategies for real-time payments, Fintech partnerships, sponsor banking, embedded finance, crypto, and more.
Additionally, the CFI’s customer is younger, more tech-savvy, and willing to change banking solutions if their needs aren’t met. Consider my son, for example, who won’t even walk into a bank if they don’t offer Zelle, Venmo, or similar services. Even “walking into a bank” is considered an inconvenience.
The job description for today’s CIO has expanded and demands that the leader and their team evolve from Information to Integration to Innovation.
“Information” is just the beginning
Information is critical to success for CFIs in our fast-paced world. Static data in the banking core is worthless. Modern CFIs need this information tied to internal systems such as online banking, CRM, and loan origination systems. Cultivated information formed into a holistic story about your customer is powerful for growth.
For example, if one of your customers just bought a house but didn’t get a loan from your CFI, the business needs to be able to determine why they didn’t. Or, even though they didn’t get a home loan, your system should be able to detect when it’s potentially the right time for the customer to apply for a home equity line of credit.
However, the CFI can only achieve this level of intelligence when all of its systems share information. Customer data tied to the CRM system will tell you when to contact him, how to follow up, and maybe convert that account into a HELOC customer.
“Integration” is information in motion – the Customer 360
Integration equals moving information. When proper integrations are in place, the CFI can share information around its ecosystem, delivering on-demand data to its other applications. In the industry, this single-pane-of-glass view of real-time data is known as Customer 360. A complete picture of the customer informs you as to which products he has already opened, which products he will potentially apply for, and even intelligence regarding other members of his household.
Creating banking core independence is only half the battle for any CFI. Establishing an integration layer with the core unlocks this level of detail regarding your customers’ behavior and needs. Abstracting the core and building the customer 360 also drives the bank’s IT competencies into the last stage of digital transformation – innovation.
“Innovation” is profitable experimentation
Any experimentation will result in either success or failure. Embracing failure as part of the organization’s culture and building the ability to fail fast is the difference-maker at successful CFIs. In other words, get started, get feedback, decide a direction, and get on with it.
Technology evolves at a pace that doesn’t allow for months of development only to find that it doesn’t work. If you’re going to invest nine, ten, or sometimes 18 months on simple things, your team isn’t innovating. This wastes time and resources and creates suffocating technical debt for the organization that is challenging or impossible to overcome.
An innovative CFI embraces experimentation (and failure) as a normal part of the development process. When the business wants to launch a new feature, your IT team can respond quickly with a prototype, allowing the decision-makers or customer stakeholders to vote on whether or not to take it to production.
The IPaaS for Chief Innovation Officers
Banks should no longer look to their CIO as the Chief Information Officer. The job is to create an integrated, flexible architecture that enables new capabilities for quickly onboarding vendors, transitioning from one banking core to another, rapidly responding to customer demand for new products and services, and more.
PortX is the Integration-Platform-as-a-Service designed specifically for financial services. Integration Manager is the API integration ESB that allows your IT team to abstract banking core data, easily build enterprise integrations, connect your system of information, and spend more time experimenting with the innovative products and services that will propel your CFI and the Chief Innovation Officer into the “era of Fintech.”
If you would like to learn more about how we empower CIOs to accomplish this, check out these recorded webinars with two of our customers:
- Martin Walker, VP Digital Experience & Innovation of Sound Credit Union, discusses his behind-the-scenes experience from the CU’s digital transformation initiative.
- Kevin Guenthner, CIO at Stockman Bank of Montana, shares his real-life digital transformation journey and tips for other CIOs.
We are always ready to start a conversation about how we can accelerate your transformation from Information to Integration to Innovation. Contact our team today.