For centuries, people were stuck with whatever bank had good enough service at a location close enough to them. They were looking for convenience. They wanted banking that was near them.

But a phone in the pocket is even nearer than a branch down the street. And that changes everything. As Chris Skinner, author of Digital Bank, puts it, “We built an industry on the physical distribution of paper in a localized world, and we’re now having to get to grips with the digital distribution of data in a networked world.” 

Unfortunately, too many bankers still haven’t realized the full implications of this shift or the urgent need to flip old models on their head. James Robert Lay, CEO at the Digital Growth Institute perfectly illustrates via a pyramid growth model in his book Banking on Digital Growth.

He writes, “When digital came on the scene, digital was bolted onto the pyramid, retrofitted to the old structure.”

But, as Lay shows, that approach no longer works. Today, digital must now be the primary entry point at a bank. This means that the traditional pyramid must be turned over:

James Robert Lay Pyramid Banking

Lay writes, “What we’re trying to do is flip the growth pyramid upside down: transform the entire growth model so it’s now three-fifths digital and two-fifths physical — at a very minimum — as digital becomes the primary driver for growth, regardless of whether someone applies online, calls into a call center, or comes into a physical branch location to apply for a product. Digital is the heart of the consumer buying journey. With the new pyramid, your growth model will reflect that. In fact, maybe digital might become four-fifths — or even 100 percent — of your growth pyramid.”

This process requires adopting a digital-first mindset from top to bottom at your organization.

How do you do this?

There are many ways to go about it, but one of the best is to start with a group of digital enthuasiasts within the bank and expand from there. Walk through each step of your processes and explore what a digital-first or possibly a digital-only approach to the process would look like — from opening a checking account to getting a mortgage. From there you can work toward a unified vision, develop a tight, 5-minute pitch about why being digital-first matters, and then spread the idea in every internal communication you have. The goal, above all, should be to develop the kind of banking that customers — now and in the future — actually want. And, as we've described above, people want convenience. That's what a digital-first approach can give them.

Here's an example from Citizens Bank of Edmond to illustrate what the transformation might look like:

A Case Study in Going Digital-First: Citizens Bank of Edmond

Jill Castilla, CEO of Citizens Bank of Edmond, tells of her experience transforming a bank that was more than 110 years old into a digital-first bank — most pivotally with the decision to sell their branches in favor of a single, high-end lobby. “When I started sharing the economics with our team through staff meetings with all of our team members, I would have tellers raising their hands and asking, “Why are they keeping these branches if they’re losing us so much money and we’re saying we want to be around for the long term?” We’re really fortunate our bank is owned a third by our employees through an employee-stock-ownership program, so those tellers are my shareholders. Having that come from them, through sharing the analytics and the information, really helped us get the buy-in.”

Still, the transition wasn’t easy. Castilla says, “This board designed those branches. They built them. They were part of the site selection so there was a lot of pride attached to them.” 

Eventually, Citizens had an offer for all the branches and managed to move forward. Castilla says, “We were able to retain the deposits, just in how we communicated with customers. And then we deployed some technology to take the place of the drive-through near where those bank branches were. And we were able to have net customer growth as a result. A lot of it was about just being really transparent.”

Above all, the goal wasn’t just to replace branches with technology, but to instead be driven by what’s ultimately best for their customers. “Technology, from a banking standpoint, gives us a great level of care for the financial wellbeing of the people that we serve,” Castilla says. “And so that there's not just a digital representation of the bank, but the human aspect of it — that piece is combined. And so a bank that is intuitive, both from a human standpoint as well as a digital standpoint, ... is able to guide customers to achieve the dreams that they have for their businesses and for their lives.”

Human-centered digital banking: That must be the key motivator to developing a successful digital-first mindset. By partnering with the right technology companies to build data-driven mobile banking, banks will lay the foundation for years to come.