Banks Are Reinventing Themselves Through Technology

Banks Are Reinventing Themselves ThroughFor the past few decades, technology has been as important a money to most banking institutions. Although previously lagging behind banks, credit unions also have placed a top priority on employing cutting­-edge technology to better compete with their bank siblings.

In many ways, according the venerable Washington Post, financial institutions are becoming “quasi­-technology companies.” This reinvention involves multiple important factors, including the following items.

Newer Banking Technology Initiatives

●  New and/or shared branch innovations expand market areas and control brick and mortar costs. Shared branching is a particular favorite of the nation’s credit unions as they compete with larger banks having a “branch on every corner.”
●  State­-of-­the-­art electronic payment systems streamline consumer bill, credit card and loan payments, while allowing banks to offer the ultimate in customer convenience.
Cutting­-edge vendor management software systems permit financial institutions to manage vendor relationships, while controlling costs.
High-­level security to prevent successful cyber attacks is high priority. Banks utilize complex algorithms to strengthen security and protection of customers’ data.

Avant garde banks often institute even more cutting­-edge innovations. For example, nationwide bank PNC opened two new “universal branches” (their term) in Virginia in 2014, replacing traditional teller lines with employees helping customers, while using tablets to access accounts. Wells Fargo, experimenting with Google Glass apps, has set up initial high­tech locations in Washington, D.C.

Smaller community banks also are coming on board the technology train. For example, Bethesda, MD­based Eagle Banks has quadrupled its technology team since its 1998 opening. Eagle Bank’s COO commented, “The whole philosophy around technology has changed dramatically in the last 10 years . . . In today’s world the customers are the ones telling us what they want.”

This is vastly different from the days, not long ago, when financial institutions dictated the technology offered to customers. The most common current customer request is easy, safe access to accounts and services using their smartphones. For example, at Capital One Labs, the small, two­-and­-a­-half­-year old “technology spin-off” of the McLean, VA giant financial institution, small teams work on creating innovative technology, such as its mobile wallet app, independently or with equally talented partners, such as Apple Pay.

Cyber Security Equally Vital

Recent security breaches at some major retailers, costing hundreds of millions of dollars, keep cyber security enhancements on the banking industry center stage. Bank executives agree that using the most advanced technology is more than important—it is now critical to protecting customer information. Talented hackers seem to rapidly increase their ability to thwart even complex algorithms and multiple security levels. At times, data breach gurus seem to conquer security measures faster than new software can be developed. Hence, the banking industry goal of staying one step ahead of cyber security threats is becoming ever more challenging.

Vendor Management Platforms Control Costs

Proven vendor management platforms and applications offered by top banking software firms, such as Banktel, help financial institutions control costs, while efficiently tracking vendor performance and contracts. As outsourcing becomes more popular, vendor management platforms increase their role in expense
control.

These applications are integral components to the renaissance and reinvention of banks and credit unions, large and small. Smaller institutions typically need to manage fewer vendors, but often lack the talent or personnel numbers to perform this vital function. However, proven vendor management software helps all financial institutions save money and take advantage of opportunities to increase bottom lines via cost control.

The reinvention of banks and credit unions with technology as the vehicle is disputed by few, if any, banking industry experts. For example, Capital One purchased online bank ING Direct for $9 billion (yes, with a “b”) to strengthen its Internet presence. CapOne still adds software engineers, developers, designers and “data scientists” to its staff to improve Internet and Mobile applications.

The commitment to cyber security, vendor management and mobile device banking will continue. While bank advertising may still focus on traditional customer values, the technology reinvention will continue behind the scenes with talented, creative design teams.