Usher in the Future of Banking with a Great Data Strategy: A Conversation With Theo Lau and Jill Castilla
As part of Banking Transformation Week, Theodora Lau, founder of Unconventional Ventures, interviewed Jill Castilla, President and CEO of the Citizens Bank of Edmond, about data, analytics, innovation, customer service, and more.
Lau opened the discussion by talking about how customer expectations have shifted dramatically since the release of the iPhone. Castilla has seen this shift firsthand at Citizens Bank of Edmond, and she talked about how she takes inspiration from other industries, including hospitality and tech, to better understand and exceed those expectations.
Lau and Castilla then explored the difficulties they’ve experienced in putting data to use. They also talked about the inroads they’ve made on this front from incorporating ongoing in-person conversations at a local diner to being active on social media to even, in the case of Castilla, publicly offering her personal cell phone number to customers.
For both Lau and Castilla, the way forward hinges on integrating data with the personal touch to address real human needs. It’s all about empathizing with customers at every stage of their lives and being there when they most need help —particularly right now as people are wrestling with the fallout from the coronavirus crisis.
You can watch the interview, which was filmed mid-March 2020, and read the transcript below.
Also, be sure to read how Citizens Bank of Edmond and MX have launched an SBA loan application portal to help small businesses apply for Payment Protection Program (PPP) loans.
Theodora Lau (00:01)
Hello, everyone. My name is Theo, and I'm the founder of Unconventional Ventures. I am so excited today that I get to have 15 to 20 minutes to spend with Jill Castilla, the president and CEO of the Citizens Bank of Edmond.
Jill Castilla (00:36)
So excited to be here.
Theodora Lau (00:39)
So we are here for Banking Transformation Week, and we're going to be talking about data. Today everything is about data. From the minute we wake up to the minute we go to bed, we’re generating mountains of data. But data is just data. What we do with data is the important and interesting thing. So we’re going to be talking about the future of banking with a great data strategy, and what we need to do and how we can make good use of it to do something good for our society.
Now, before we talk about data strategy, let's go back to the beginning of the iPhone. Since the iPhone first launched, subsequent launches of smartphones have changed. The way that we live has changed, and the way we expect things to happen, right? I think last time I checked, there are 2.5 quintillion bytes of data created every day. I can't even comprehend that. And that's from 2018, so now we're in 2020. I would expect there would so much more of that right now. It has changed our habits. What we expect is changed.
And when we buy something, we no longer go to the store. We just go onto Amazon or other eCommerce sites. When we read the news, we're not so much looking at cable news channels, we are actually scrolling through social media feeds and looking at what's relevant to us. Everything is being spoon fed to us in a way.
And I'm curious from your perspective in banking, how does that change what customers expect and how do they behave?
Jill Castilla (02:33)
I think we're starting to see changes every single day with customer expectations on how you're reading their behavior —behavior that's not really apparent to you whether they interact with you in person or at the lobby or even using bank devices. They expect you to be one step ahead of what their expectations are.
And so as bankers it has required us to not just stay insulated in our industry, but to really look at the hospitality industry and the technology industry to see how we can garner some of that wisdom and apply it to what we're doing every day. And you know, I think we still fall short in meeting those customer expectations, maybe even pretty significantly, because we don't have the data and analysis tools that some of these more sophisticated industries have.
When it comes to looking at human behavior from a data standpoint, it requires us to be a lot more attentive to customers personally and be a lot more aware and present so that we can be the humanized version of data analysis. We’re running toward being on par with the hospitality industry and others that really do a great job at identifying human behaviors and then we’re modifying our industry to fit expectations or even elevate them.
Theodora Lau (03:55)
Yeah. It's interesting that you were referring to the hospitality industry.
I’m thinking through the experience of getting on a plane or even checking
into hotels. That experience has changed a whole lot.
Last year I took a short flight within Asia, and I switched to a different airline and I was like, wait a minute. Where's my boarding pass? Why do I have to print something out? What is wrong with this? Why couldn't it just get everything pushed to my phone? It was a sign that the process has changed a whole lot in recent years.
Now one of the things that we always like to talk about when it comes to data and technology is artificial intelligence. Some people like to say that data is the new oil. I prefer data is the new oxygen because it's there, it can be regenerated, not depletable. But it's not just about having data as much as it's about having something that's useful. Like what you were saying, something that you can actually relate back to someone. It's contextual.
It's not as easy as a lot of people think, is it?
Jill Castilla (05:21)
It is so difficult. As a small bank and even as I talk to my friends who are in megabanks, I realize we still don't have the level of accessibility to our data we need. And then there’s the ability to not only analyze it, but use it for predictive purposes. You would think that the megabanks would be eons ahead of a little small bank like mine, but across the board data is in a vault. We can get reports about it, but it's very, very limited.
So I actually get the best reporting on data with free analytical tools. I can see the demographics of my Twitter followers and what their net worth is and what their behavior is or my consumer buying standpoint than I can with my bank customers. And so, we have to sometimes lean outside the industry to even get some perspective about our community and what the behaviors are because the data is just really hard to get to and almost impossible to analyze. Then to think about and use it from a predictive standpoint is almost impossible.
Theodora Lau (06:27)
I came from the telecom industry. I spent 15 years in it and a lot of what you're talking about is absolutely relatable. I remember having to deal with different points of sale systems depending on if you sign up for solo service, at a store versus online versus if there's a salesperson you end up having different sets of customer data in different databases that they're not relatable. You have different instances of almost the same information but not exactly the same. So it was painful. It's almost like you have a lot of something but you can't really use it. It's hard to analyze. I remember those were some of the challenges that we had.
So is it just because you have to transform your legacy culture that takes a while to build up or is it because of regulation or culture?
Jill Castilla (07:28)
Yeah, culture and regulation aren't a problem for us. The problem is that we're not technology companies. We talk about us being like a technology company now. But in fact we are just a consumer of third party technology and then put it together to be able to serve them. We're like the face to the customer, and the way to get to that data is impossible for us.
We can run queries — you know, an import into a spreadsheet and do our own analysis that we do just the same thing we would do 15 years ago in Excel. I mean we just don't have that robust analytics, and you can buy different things to pretty the data up, but it really doesn't give you any kind of behavioral aspects or trends to know where behavior is going for a customer or where are those expectations leading. It still just kind of gives me the historical representation of the data rather than anything that can be used to project forward. And I think a lot of that is just more the culture of the technology supporting our industry. We haven't elevated our expectations of what they need to bring to the table and are held hostage to just a few. You know, it's not a super competitive environment because it's so difficult to be a core provider. And in our industry there just isn't that elevation of what they're providing us.
We just did a core upgrade with one of the major cores, and so it's at least giving us the foundation to then be able to open the ability to plug more things in so they can take more data out.
Theodora Lau (09:04)
It’s a long journey.
Jill Castilla (09:08)
It is, it is. I mean, I talk about with my fellow bankers that we need our pitchforks and our torches, and we have to storm the castle and demand change. And the core providers are wanting to do more, but it's really difficult because we haven't all elevated what our expectations of them are. And so the business model works with the status quo.
[Read how Citizens Bank of Edmond and MX have launched an SBA loan application portal to help small businesses applying for Payment Protection Program (PPP) loans.]
Theodora Lau (09:33)
And also I would imagine there’s a risk factor too, right? Because at the end of the day, you're holding someone's money. There are all a lot of things tied to it. It's so different when you're looking at technology companies and not talking about, the big infrastructure core tech companies, but the smaller ones, right? Some of the fintech firms, what's riding on them is so different than what's riding on the bank. So you need to move more carefully when you're proceeding.
Jill Castilla (10:02)
That's true to a certain point. But then when you look at the rampant fraud that occurs within our industry and how analytics has been so beneficial in the card industry where you can see credit card behavior and you can then be a little bit more predictive about what the consumer says. So then if it looks like it's something that's outside their predictive analytics and then that next charge doesn't go through the checking accounts, we really don't have that kind of capability. So I had to wait for the customer to tell me that something happened and then it's a loss and that, you know, just kind of like, let's hope this has to happen again. Let's change, you know, change your account, you know, make them close their account or something so that something doesn't occur. Or then us being able to be more, a step ahead of the customer to be able to identify fraud. So, yeah, there are risks with going too fast, but, but we're also incurring so many risks in the customers as well when we don't have access to that data.
Theodora Lau (11:01)
That brings me to something else I think that we're all living in right now —the elephant in the room, which is the virus outbreak. A lot of banks are trying to figure out what's been happening to their business and how they can help their customers.
From a customer perspective, be it your consumer or small business or even a bigger organization, there are so many question marks and uncertainty as to where things are right now and how things will be in the long run.
There was a survey I saw this morning that talked about consumer's response to the virus. And a lot of them are rightfully so concerned about their wellbeing or their loved one's wellbeing. There’s not so much worry about their personal finance, which I think it will pop up the next time when the bill becomes due or you know, when, when, the cash flow stops because consumers stop visiting banks. So kind of look for the silver lining and all of this. How can banks better leverage the data so that like as you say, better understand what the customers are going through, better understand what their financial stresses are. So to proactively help them out.
I'm interested to hear your perspective and also a lot of the things that you guys are doing right now as well.
Jill Castilla (12:27)
Yeah. We do think in probably a much more practical than sophisticated sense and so much of it is about using data to improve our human interaction with their social media, through community leadership and through just being at the diner in the morning that I go to hear what the conversations are around me and then using that to then reference the data that we can have access to at the bank. And then what type of programs or funding sources or mechanisms can we put into place to then match up what are the deeds, where are the anxieties, and then what are we seeing that's truly happening as far as weakness or opportunities in the bank data. And then matching those two together by bringing in a third party or other funding sources or, government guaranteed, opportunities and, and then kind of mixing it all together.
Data's one component of it. For us it's about leveraging digital with the data. So the coronavirus has been limited in how it's infiltrated Oklahoma so far, so our community is not exceptionally anxious about it other than what's happening internationally. And so we've been able to use social to ensure that customers know when we're available.
I provided my cell phone number out there in a tweet so that they know that we're here and can see what steps we're taking to protect them. But then we can also look at our information to see restaurants or hospitality —customers that may be susceptible to significant decline. And then we match that to what type of preemptive steps we need to take and potentially offering deferral options or waving, overdraft fees, or provide some type of funding potential. And then you put all that together. So it's not the data alone, but you're just definitely using the data to make decisions to identify the customers that may be most at risk.
Theodora Lau (14:47)
I like that. I think a lot of times we forget about the fact that all the beautiful shiny technology we're putting in and all the data, the ones and zeroes, it's not about the ones and zeroes, it's about the people. The people need it. The human story, their businesses, what they aspire to, what they're trying to do. And we lose sight of it. And as tough as things are right now for a lot of people, I hope that if there's one thing we can learn coming out from this is we can bring the goodness of humanity out.
Jill Castilla (15:24)
It's so true, Theo. We were making a list earlier today about what customers we need to make sure we're checking up on because they come to our branch because they’re family, they're all loaned here and this is their social interaction. And if they have to stay home, who's going to check up on them? Who's going to make sure they have adequate groceries and that everything is that they're well cared for?
And so, that goes well far out of banking, but it is about caring for our community and one another. And as bankers, especially on the community bankers side, we have a responsibility to our community. So even when our community here hasn't really understood why the virus is a threat, we've tried to be in a leadership role to explain this is why we need to be sensitive to the rest of our population because there are those of us in our population that are vulnerable to this virus and that we have to ensure that they're safe. And so as bankers another great thing that we get to do is to take that leadership role and communicate things that are difficult or be supportive of public officials and give them the backing in the community so that difficult messages can be conveyed and infiltrate the community appropriately.
Theodora Lau (16:39)
Yes, absolutely. That’s what we love about you too. I want to close on a more positive note. Let's say we have a crystal ball. We get through all this together and we have what we have in our disposal to move forward, to move to the next stage. What would an ideal future bank be like? What kind of applications and things will get you excited? We have no constraints to serve our community.
Jill Castilla (17:20)
Yeah, I think it's a combination of different things. So, when you look at the most beloved technology companies in the world, they're taking you to an elevated sense of sophistication, how you interact with your data and how I guide you to that next level. Whether it's better economic prosperity or the perfect thing to buy. And so technology from a banking standpoint that gives you that, but that there's also at the same level of sophistication, a great level of care for the Y financial being for the people that we serve and the communities that we serve. 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, and it has nothing about the best intentions for the customers that they serve and is able to guide them to achieve the dreams that they have for their businesses and for their lives.
Theodora Lau (18:20)
Perfect. Wonderful. Well, hopefully we'll get there soon. And so thank you so much for joining us at a Banking Transformation Week with MX.
Jill Castilla (18:30)
It was great to see you.
[Read how Citizens Bank of Edmond and MX have launched an SBA loan application portal to help small businesses applying for Payment Protection Program (PPP) loans.]