The Digital Transformation of Banking

At Fifth Third Bank, we put the customer at the center of everything we do. Our enduring values fuel our vision to be the one bank people most value and trust. 

These values will never change, but how we deliver value is changing. It is adapting to many external and internal factors, from new products and services to evolving customer sentiment; from changing regulations to investor expectations. But more importantly, the digital transformation is at the center of this change. 

Customers embrace technology, and their expectations are rapidly evolving. They want to bank anywhere, anytime, and they compare their bank experience to their last best digital experience – not to experiences with other banks.

The digital transformation has dramatically changed the landscape of every industry, every business and every life. The evolution of technology enablers such as cellular phone technology, greater bandwidth and web-based solutions made the transformation possible. People likely hold more computing power in their pockets these days -- through their cell phones -- than their employers did in their “computer rooms” just a few decades ago.

In banking, a key technology enabler was the Check 21 Act. This transformative legislation, passed in 2004, allowed the use of checks in an electronic format and thereby eliminated the need for the physical document. It then contributed to enable ATM check deposit and soon after, the mobile deposit. 

Additionally, the emergence of new business models, driven by the FinTech companies, addresses gaps in products and services in our industry. This creates disruption in financial services.

At the same time, customers have embraced technology, and their expectations are rapidly evolving. They want to bank anywhere, anytime, and they compare their bank experience to their last best digital experience – not to their experience with other banks. 

In short, banks must adapt if we want to compete, and capture and retain customers.

Change is upon us. As I stated at a recent Bank Director’s Bank Audit & Risk Committees Conference in Chicago, the only question is whether we shrink from it, ignore it or embrace it.

Some might tell you that the digital transformation is a threat to traditional banking. Anyone close to me knows that I see it as a tremendous opportunity. I’m excited to be at the helm of a bank well-positioned not only to embrace transformation, but also to help drive transformation and create value from it for our customers, our shareholders, our employees and our communities.

If we look at the core banking value proposition, which I define as stability, convenience, value-add and efficiency, what do these mean in the accelerating pace of the Information Age? 

On stability, I see three key elements in the Digital Age:

• Security now means that information and identity are protected. Whether by choice or by obligation, all banks must view cyber-security as a necessary part of their risk infrastructure.
• Reliability relates to system uptime and availability, and embracing the small failures to avoid the big ones.
• Longevity is about building and managing a business that is durable through various economic cycles, through the changing regulation and rapidly evolving technology. 

Next, Convenience today is the ubiquitous experience of the omni-channel integration. More and more, it is the mobile application and digital smart ATMs, allowing customers to check balances, move money, deposit checks, pay bills, pay friends, freeze a credit card, engage customer support, apply for a new product, sign a document and more. It’s no surprise that 60 percent of Fifth Third customers’ financial transactions now occur through a digital channel.

The banks that can be opportunistic and adaptable are going to be the winners.  As a result, they’ll also make winners of their customers, their communities and their shareholders.

The third element is value-added products and services. It is all about providing solutions to solve problems, enabling strategic discussions to align future initiatives/opportunities, and creating interfaces to meet customers at the point of sale. Banks must be able to meet a broad range of their customers’ needs, whether that is borrowing, savings, wealth planning and transaction support for consumers or working capital, accounts receivable solutions, etc. This is Fifth Third’s One Bank approach. 

Last but not least, Efficiency. In the Information Age, it will be about three transitions:

• From making it easier or cheaper for people to work to making it unnecessary for people to do the work, freeing them to spend their time on more value-added products and services. In other words, it is pursuing automation at a meaningful scale.      
• From optimizing process flows to optimizing end-to-end customer experiences, empowering the engineers, designers and their business partners to think holistically and bring the best products and services to our customers.
•  From architecting for scale to architecting for agility. We want to make it easy to plug in third-party applications, third-party products, third-party data. It’s about curating the outside world for our customers, delivering a consistent experience, ensuring to deliver in a way aligned with our Vision.

The banks that excel at this nimbleness -- that can be opportunistic and adaptable -- are going to be the winners. As a result, they’ll also make winners of their customers, their communities and their shareholders.