It’s easy to grow when money is cheap. But how do you keep your foot on the gas pedal in a climate where rates are rising and the economy is slowing?
One thing proven again and again in the wake of the 2008 financial crisis: You can’t cut your way to high performance. Rather than falling back on the quick-fix urge to cut costs, banks need to refocus on ROI by squeezing more value out of every dollar they spend.
Get more value from your tech spend
Bank leaders are right to take a closer look at technology spending. Tech rationalization and/or consolidation offers a proven cost-control strategy—and with the pace of tech proliferation over the last several years, many banks have a few easy opportunities to eliminate redundant or unused tools.
But growth-minded banks recognize that rather than reducing tech spend, they need to reframe tech rationalization in terms of how they can drive more value from their tech spend.
For example, more banks are replacing multiple point solutions with comprehensive, modern customer relationship management platforms that reduce administrative costs and the challenges of juggling multiple tools and vendors. A more powerful, consolidated CRM platform also drives efficiency and value through its scale—streamlining user workflows with a single interface, eliminating manual data transfers and other gap patching between point solutions and enabling more efficient and effective collaboration across teams and sites.
Get more value from your data
One of the main outputs of the typical bank’s growing tech stack is a torrent of data on customers, prospects, internal operations and more that pours in every minute of every day. Yet most banks only make use of a fraction of that data.
Leading banks are looking closely at how they can activate their data to drive more value from their tech spend. The consolidation strategies previously mentioned address the data silos that present a major barrier to data activation in most banks’ tech environments. Moving toward a consolidated CRM platform, for example, creates a single, centralized and standardized source of all customer data.
But banks also need to solve the fundamental big data challenge: pulling the relevant, meaningful, actionable bits of insight out of all that noise.
For example, lending officers and retail banking sales teams need to have access to customer insights that go beyond surface-level personalization (using first names, sending birthday emails, referencing customer account types, etc.). Banks should be able to see customer or prospect actions that signal intent or need and use this customer intelligence to increase their marketing and sales effectiveness.
But now more than ever, banks don’t want to be hiring a team of in-house data scientists, nor do they want to pay eye-popping consulting fees to train generic analytics and BI tools. To get more value from their tech spend, banks need to seek out purpose-built analytics tools that already know how to harness this data in the context of key bank customer journeys—shopping for a mortgage, taking out a loan, opening a new deposit account, etc.
Banks need to invest in tools that can immediately tell them what they really want to know: the who, when and what to drive more value from their sales and marketing spend.
Get more value from your people
After spending the last two years talking about how difficult it is to attract and retain good people, banks are rightly hesitant to let people go. The better strategy focuses on how you can get more value out of your human resources—making them more productive, more effective and fundamentally better at their jobs.
Forward-thinking banks are giving their sellers the tech to drive personalization at scale—tools that harness customer intelligence and use it to trigger automatic communications in a strategic cadence or journey.
Done right, this strategy is the perfect example of balancing smart tech with a human touch. Automation enables your sellers to do a lot more, in a lot less time. They can lean on tools to automatically orchestrate personalized communication journeys with dozens (or even hundreds) of customers and prospects at one time.
But the right tech also enables your sellers to focus on what they do best—tech uses intent signals to alert your sellers when it’s the right time to reach out with a phone call to make a perfectly timed, hyper-personalized human connection. Arming your sellers with the best tech tools will quickly turn your bank into a talent magnet—a place where other top sellers want to work.
It’s the opposite of layoffs and staffing cutbacks. Instead, you’re making smart tech investments to get more value from—and ultimately expand— your pool of human resources.
Focus on time-to-value
While banks can’t afford to cut back or slow down, now is also not the time to take on moonshot initiatives, where value or ROI sits years away on the horizon. Banks need to continue strategic investment, but these initiatives need to prioritize time-to-value. Banks should be looking at changes that can be deployed rapidly and benefits that can be realized (and measured) quarterly, rather than annually.
Tech-savvy banks will prioritize cloud-based platforms and software-as-a-service solutions that don’t require major capital outlays, and deploy in days or weeks instead of months or years. We’re also going to see banks moving away from the “it can do everything” promises of horizontal platforms and toward vertical-specific solutions that give them the out-of-the-box capabilities they need from day one.
It’s undoubtedly frustrating to be in the middle of another daunting, anxiety-inducing period in the banking industry. But we also have the benefit of learning from past experience.
Research from Bain, McKinsey and Gartner all arrives at a similar conclusion: Economic slowdowns present unique opportunities for businesses to create and extend advantages. But the winning banks aren’t the most effective cost cutters. They’re the ones building smart strategies and making targeted tech investments to generate additional value for their customers and for their institution.
James White is general manager of banking at Total Expert.
We offer actionable insights on other digital evolution topics that can benefit banking institutions in the BAI Executive Report, “Keeping up with banking’s digital evolution.”
