Digital Now!

By Eddie Ho, CIO, Los Alamos National Bank

Eddie Ho, CIO, Los Alamos National Bank

Millennials and Fintechs. It seems each time a CEO returns from a conference, those two concerns dominate the conversation. The Fintech’s digital banking options have laid the groundwork for the democratization of self-service financial management and growth. A customer participating in digital banking has more direct control over personal financial data than ever before in the past. It seems the demise of the traditionalist customer experience— nine-to-five service and a good handshake—is imminent. 

The drive for open banking services and payment API from core service providers are creating a new level of excitement and enablement for the Fintech option. These interfaces will allow banking customers even greater convenience over sharing and accessing their own financial data. Today’s mobile banking customers expect self-service digital tools for making and receiving payments. But tomorrow, they will use an intelligent financial management app that enables them to quickly assess a personal financial status for the purpose of moving funds into savings, investments with third-parties, etc.

The Fintech customer-service model of convenience, availability, and ease of use dovetails well with the millennial’s service expectations of digital efficiency and reliability. Today’s mobile solution stack is application driven. Since these digital expectations will continue to evolve over the next five-to-ten years, all parties in the conversation can agree a strategic migration to digital is necessary for retaining existing customers and engaging a new customer base. But brick-and-mortar behaviors are ingrained in banking culture as much as in the traditionalist customer. Technology teams can make the necessary software and hardware moves to digital, but without cultural adoption, the ROI is lost.

“If you haven’t begun the digital journey, start now by engaging a CDO with the authority to drive the conversion to digital”

Going digital is difficult, which is why top-down conversion to enterprise digital behavior for a bank must be driven by a digital advocate at the C-level. A Chief Digital Officer (CDO) should establish a strategic digital tone that is critical to creating buy-in from employees who may have little motivation to change. In the diagram above, culture and technology are shown as key anchors for the conversion of internal processes, digital presences, operations, and future synergies. The CDO can drive the conversion of these areas in three phases: assemble a digital team, perform future state analysis, and deploy prioritized changes to the marketplace.


Under the CDO’s guidance, the digital team would first identify the desired future state of the culture and technology. The future state should include a strategic FinTech partnership option, represented as FinTech Synergy in the diagram above. This option arms the institution with dedicated resources who will continually assess the current state of the industry and envision the unfolding future state. With this strategic option in play, the institution is prepared to engage in timely and effective responses to changes in the industry, even if a partnership never develops.

The digital team would create a list of high-level, future-state requirements, such as “The future state of the culture is all employees will be proficient in the use of mobile banking solutions” or “The future state of back-office technology is digital centric for all tasks”. These statements create the framework for performing gap analysis.

Admittedly time consuming, gap analysis is a necessary precursor to identifying what’s relevant for a migration to digital, as well as what’s achievable from the traditional banking side. The digital team would perform a structured and detailed gap analysis of current internal processes, digital presences, operations, and synergies.

From there, focused analysis by a taskforce team would result in a list of recommended changes. Documented as concise statements and provided to management for review, the changes would be prioritized with resources assigned according to the strategic plan.

Finally, at the deployment phase, the digital team would become the project management team and, under the guidance of the CDO, deploy the prioritized changes following standard project management methodologies. Expect the processes leading up to the deployment phase to take six-to-nine months. Going digital in the banking world is both an art and a science. It is an intensive culture change and technology adjustment. The integration of the banking stack with the Fintech provider is opening up new levels of opportunity but also standard issues. If you haven’t begun the digital journey, start now by engaging a CDO with the authority to drive the conversion to digital. It is the first step.

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