We sat down to talk with Andy Harmening, Vice Chairman of the Consumer Banking Division at Bank of the West. Harmening details how improvements in digital technology have changed the industry and how banks and fintech providers can work together to move the industry forward.
What is your mission in the consumer banking division at Bank of the West?
We’re serving the client in the way they want to be served in a world that is constantly changing. The idea of what the customer does is changing, branch usage is changing, digital usage is changing — nearly every aspect of banking is changing. And we’re right in the middle of it.
In the consumer banking division, we work across customer segments and across distribution channels, trying to understand how each moving aspect of banking fits together. I spend a lot of my time coordinating all of those pieces.
The world of banking is not siloed. It’s matrixed. You need to depend on other key positions within your company to succeed. You can’t succeed on your own. You need a strong segment manager in consumer finance. You also need a great front-end and a great back-end.
Thinking about how all of these pieces work together and how they’re organized is the key to banking going forward. We have to think about organizing differently than we did in the past.
Do you have any key metrics you focus on to determine success?
We’ve had success on the customer advocacy side. For instance, we look at our version of the Net Promoter Score very closely.
We also have a customer service team that coordinates feedback from employees and clients. They try to understand what is a problem and what is an opportunity. The team looks at everything from process improvement to client outreach, and then coordinates solutions across the bank. In the past, being nice in the branch, which is important, is just not enough anymore. Now the solutions require us to coordinate across departments.
How do you think digital is impacting retail?
Digital is impacting virtually every aspect of banking; from selling and customer acquisition to account opening to servicing. If you think about the ecosystem that makes up consumer banking, digital / digitization is happening everywhere.
Let’s look at selling. We’re using new data-driven solutions to help target our marketing. We’re using sophisticated algorithms to help determine what we should be talking with our customers about.
When you look at account opening and customer onboarding, we’re working to fully digitize those processes. And it’s not just because we want to streamline things. Customers are expecting these things. They want Airbnb-like, transformative experiences.
While we benchmark ourselves against other financial institutions, when it comes to customer experience we’re looking at the leading apps and continually challenging ourselves on how to make banking that easy. And then we’re putting the resources behind it to make that happen.
Take for example our commitment to digital. At Bank of the West, we’ve shifted a considerable amount of our budget towards digital. When I started 10 years ago we had fewer than 3 people in digital, and now we have more than 100. We made a big bet on mobile a few years ago and of course the uptick in customer adoption has been better than anything we’ve seen before.
How are you trying to compete in the digital age?
We start from a strong position in contrast to stand-alone fintech startups in part because we’re multiline instead of monoline. That is, we can reach our customers through multiple angles because we offer so many different services. We also have pre-established relationships with customers who have banked with us for years and who trust us.
In addition, we have an advantage when it comes to analytics since we get data from multiple channels. I didn’t realize 10 years ago that I’d be bringing in people with a doctorate in mathematics to run analytics, but we have, and it’s awesome.
Of course, you have to get a lot of things right before you talk about digital. You need to get your data process right, back-end platforms right, and invest heavily in mortgage platforms. You have to tighten your credit processes. You have to leverage your multiline advantage, so if someone is doing business with you and uses one channel to enter information and then logs into a different channel, you’re prepared to connect that experience.
So there’s a big infrastructure build and I still think there’s opportunity for all of us.
How is Bank of the West trying to create a more personalized experience in a digital world?
I would argue that people are still looking for a relationship, but it’s different. People are looking for ease-of-use. Most of the banks that rolled out traditional personal financial money management and aggregation services haven’t realized high levels of customer engagement, despite wanting it to happen. But all of that is starting to change and gain momentum. Banks can offer single sign-on, easy transfers, one place to call. This cohesion can make your world — and your customer’s financial world — easier.
Specifically, right now we’re working on a lot of the infrastructure that drives personalization. We’re bringing together customer data across channels and products so we have a comprehensive view of customer relationships and interactions with the bank. From there we’re creating targeted offers that really get at the heart of promoting the right products to the right people at the right time.
What do you think about fintech at a high level?
I think it’s crucial to ask which are competitors and which are enablers, which are on the consumer side, which are on lending, which are in investments, and so on.
Once you know that, it’s important to know where the venture capital investment is going. Right now it is heavily in lending and payments, so we’re keeping an eye on those areas.
One of the latest buzzwords going around right now is ‘Fintegration.’ Do you see Fintech as friend or foe?
Our team is excited about fintech, and we’re proactively seeking partnerships. The more partnerships and skills we have on our team, the more excited about fintech we get.
What areas of fintech are you most excited about?
Data and credit.
Data is on the top of the list because of the plethora of data we have. We’re getting it in a format we can use, understanding our customers in more detail, and understanding channel usage preference by segment.
Regarding credit, we’re working to understand models and validate them more quickly. We will have to be more agile and safer at the same time.
These are the two categories — data and credit — that I am most interested in.
What steps should banks take to solve problems on the data front?
You have to have expertise in two key categories. One, you have to have expertise in your IT group so they can help access the data, whether structured or unstructured. Two, you have to have expertise on the analysis side, so you can understand what is helping by channel and segment.
Any final thoughts that you have around fintech?
Customer expectations are evolving. Nearly every aspect of banking is changing. As a banking institution, it’s important to maintain what has made you a success, while finding new ways to meet the needs of your customers – today and in the years to come.
You need a plan to both compete against and work with fintech. If you don’t have a plan, you have a big risk of becoming obsolete.
I am optimistic about fintech, but to move quickly you need a plan to ultimately provide better service to the customer than ever before.