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welcome to our webinar on the five keys to digital transformation in banking now if in second ecommerce Giants are disrupting the banking industry and time is running out to achieve digital maturity today's webinar can help accelerate your transformation our guest today is jennifer Borchardt vice president of omni-channel experience and strategy at US bank wealth management who will be discussing the current state of digital transformation in banking how other banks have already gained digital maturity are actually working a way to achieve it and five things every Bank needs to do to become digital ready it is my pleasure to introduce you all to Jennifer Borchardt she is the vice president of omni-channel experience and strategy for US bank wealth management she was previously the vice president of UX strategy Wells Fargo where she led the evolution of Bank brokerage and wealth management experience including digital channels in innovation she was also the lead producer at etrade where she led the design and localization of each raise international websites and she was the on-site principal in the company's European offices and worked with the teams in Australia Europe Asia and South Africa so I can't imagine a better guest to have to talk about digital transformation hello Jennifer my pleasure the digital transformation craze seems to be a little slow and the banking side from what I've read and I think the biggest risk from that that I've been seeing is all of this brand new competition so what's going on in the world today that makes it even more critical than ever for banks to get on the ball thanks just like a lot of other organizations need to need to meet customers where they are and these customers have embraced digital and especially mobile many large banks as well as smaller fintechs really any any large commercial company some small businesses everyone is going digital and it is important for banks especially to to serve the needs of their users and be able to provide the products and services that they expect imagine a lot has that has to do with like the age of your customers users especially younger users who are digital natives their ex but there are expectations about the experience how they expect things to work are being shaped by context including acorns Robin Hood and venmo as well as companies outside of financial services these companies include Apple Facebook Instagram Google and swipe apps I'm sure a lot of people know know what I'm referring to and so what's what's important to note here is that when banks are looking to to competitively Excel they need to look not only with their direct at their direct competitors but really every place where people are spending their time and forming their digital life forming their expectations about digital experiences right and I think the biggest risk is that a lot of e-commerce companies they daemon social media companies are so much better at engagement and that's the name of the game and so that's a lot of catching up to do tech companies especially fintechs are better at engagement because their experiences have been designed centered on users from the very start they have the latest information about cognitive psychology usability accessibility and behavioral economics this is this this is all baked into their experiences and their strategy from the very beginning where as experiences from larger institutions and this does not just include banks these these experiences have evolved over time based on legacy experiences and legacy systems however many large companies and especially banks they are now heavily investing in user research technology and new methodologies including agile for digital transformation and creating more user centric experiences to increase engagement in user satisfaction so this is this is actually very encouraging some of these larger organizations and banks that have previously legs in in digital readiness and digital experience they're now starting to catch up with major investments more than half of consumers would be comfortable using a technology company such as Apple or Google for various types of financial transactions and and JD Power and Associates said that that digital-only customers now account for almost a third of retail bank clientele a lot of customers prefer to interact with their financial organizations by digital and that's compared to 34% who prefer branch interactions so only about a third of branch customers prefer to come into the bank and so they're kind of it would seem that they're losing their advantage in terms of the brick-and-mortar aspect of branches that's not actually the entire story um regarding digital it's a channel of choice this is definitely true for certain types of activities including viewing balances transferring money and depositing checks the basics of financial management but other types of transactions including opening and closing accounts or handling something more complicated like a fraud event owned and branch are still still tend to be the preferred channels however as technical capabilities in customers comfort with using technology improves more of these complicated interactions are going to move to digital right I've see some other statistics up here about how 44 percent of Gen Z consumers anticipate supplementing their traditional banking services or the solutions from technology companies and that 43 percent of customers regularly use mobile banking and that customers who don't use their bank's mobile apps are twice as likely to be dissatisfied and not recommend that Bank and that's something we're gonna be talking about later but as far as customer experience and that it isn't just about having a bank website or even mobile banking so let's talk about where banks are today how prepared are they are they from what I've seen they're lagging behind can you update us large organizations because of their complexity because of their size because of their legacy experiences and systems I I think it is fair to say that they are behind but behind relative to what many many fintechs many many startups they're already farther ahead because they kind of got a head start they they they were built digital first and so thanks are making large investments in changing their culture changing the way that they that they invest in technology and their people and they are catching up and I would actually say that the disparity between large banks and fintechs one way that this is going to to start to narrow is that as fintechs kind of hit the ceiling of what they're capable of Pentax are great for doing limited types of transactions as they start to hit the limit on what they're able to do and they can't grow any further a lot of this has to do with regulations banks and fintechs are going to start partnering right this could be acquisition or this this could be a partnership and so through these partnerships both the large banks and the smaller fintechs will be able to do what they do best and be able to rely on the strengths of the others I donation that partnership is important particularly for the fintechs too because I know that the banking industry is so regulated that it would take a lot for the fintechs to really catch up to that compliance so imagine working with it so it's the who's the e-commerce and fin tech startups to partner as well yeah and in complaints with these these very complicated in arcane regulations is is really a barrier to entry some some smaller companies in this this isn't just in financial services this is also in transportation goober and lyft are great examples and Airbnb too in fact their their approach has been to just either go under the radar or take the approach of asking forgiveness rather than permission and of course as these if these companies are getting larger expanding their reach getting getting the notice of of local and local federal government's they're starting to now have to comply with regulations just as their larger competitors do and that is evening the playing field so to speak right but as far as leveling the playing field I know a lot of banks think that they just have to put an interface out that it isn't just about user experience it isn't just about a website and the digital bank report from Adobe said that most banks and unions have simply put a nice veneer on legacy systems and products ignoring many of the internal changes that are needed to compete effectively with the smaller fintechs and it's nice to see if that's beginning to change I know a lot of these changes have to do with a cultural shift at the top and I know a perfect example of this is JPMorgan Chase and company where the CEO has made it a mission to go digital first so let's talk about what it takes to make that cultural shift digital capabilities are very important and transformation readiness goes well beyond technology which of course has its costs and challenges the cultures arguably the more difficult barrier and these these challenges are not happening only at large banks but also at other medium and large organizations across many industries beyond financial services we need healthcare technology utilities in retail one one thing that comes to mind I was on a panel talking about agile transformation and and I met a leader from Pacific Gas and Electric PG&E and it was really interesting to hear that that PG&E was experiencing a lot of the same challenges transforming to agile as as the very large Bank where I work interesting now what's interesting is that the cultural shift isn't just about a CEO saying we need to transform it it requires a commitment that goes right down to the deepest levels including funding and talent acquisition and developing that talent and developing agile workflows and empowering teams to make decisions and the willingness do make risks and the budget to back it up and I know that risk-taking and banking is always a something that is it is a riskier thing to do in banking then and many other companies so I imagine that may be what's a what was it been a big barrier yes thanks thanks have historically been been a little bit risk-averse and some of some of this has to do with the with the culture and some of this has to do with the regulations regulations they're not they're not getting getting any simpler um digital transformation particularly if it includes adopting and adults about limb methodology which I know we'll be talking about later this is this is this is one of the biggest keys this transformation to be successful requires distributed decision-making which in which requires empowering lower-level team members to make decisions the reason why this is challenging and especially in larger more established organizations the types of decision most decision making tends to be centralized at the top and so making that shift having leaders I give up give up their their decision-making abilities is something something which which is hard for a lot of people to do they are human beings after all and in order to make the this lower level decision-making successful it's critical to recruit develop and retain people who know how to make the right decisions and are able to thrive in agile environments shifting these hiring practices to to enable that type of organization is neither simple nor fast right one wait a lot of companies have found to make things simpler and faster is to embrace an agile methodology I think before we talk about how to do it's also important to understand where a gel works best in where where there there's some there's some improvements to be made the agile manifesto and the methodologies that respond from it were created by and for software developers so it works very well and organizations that are highly focused on software this is this is a lot of companies however a lot of companies are not focused on software banks are focus on something other than software software empowers would empowers their goals but it's not central agile as it as it tends to be implemented does not accommodate or serve other practices quite as well as it does software development things like design and research these are very critical elements to develop and go to user experiences and empowering successful digital transformations and so so the opportunity is really how do you adopt agile how do you how do you adapt it so it can also accommodate ideation research design and and even even in innovation run allowing allowing business leaders to to come up with in test ideas edged out because of because it moves quickly and you make very rapid and frequent incremental changes it's actually very well-suited to design and research it's just a matter of applying it in the right way right and one of the best ways to apply it is in improving customer service so let's talk about the importance of customer experience because I know that's that's pivotal to your role at US bank yes it's been pivotal my entire career in fact so several years ago user experience was the hot topic and many organizations started to recognize the importance of good experiences to customer acquisition retention and satisfaction you need customers to have a successful business has a user experience correct I do know the value of good experience and I was so encouraging for me to see top level sea level leaders enthusiastically embracing and supporting user experience now this enthusiasm is shifting to agile and digital transformation but these leaders are seeing that like good user experience digital transformation and agile adoption does not just happen it needs focused in informed effort and vision exactly how to make this happen however is still elusive to many companies but they are learning although sometimes slowly right I know that more than half of clients view digital as a number one factor in England in influencing their client service experience and so a lot of people are really catching on to this another thing is about how the this is one of the advantages that I think that banks have over a lot of Finn's X's because banks have so much data and they've had it from legacy systems for decades and and that's a lot to catch up with once they're able to tap into all this data and use it using machine learning and other tools it can really improve customer journeys in the way that other cannot even touch for example using customer data deliver the personalization needed for superior customer experience and value like actually making on-the-spot their recommendations and being able to predict consumer behavior and anticipate their needs and then provide offers at the right time which is the perfect way to do not just marketing but actually service your clients because machine learning can discover customer patterns that enable the future predictions and either product offers that are hard for humans to anticipate because they can see clusters that we can't so tell us a little bit about that so banks have no shortage of user data but the challenge is how to extract order and value from these very very large sets of data and use it to create meaningful timely and personalized experiences it's AI in meat in machine learning learning advances there were more opportunities to not only identify but also predict customers needs based on their behavior and what and what they already know about them for example a bank may notice that a customer keeps a high stable balance in a savings account with this information the bank could then recommend that the user transfer their money to a money market account with a higher interest rate or even invest the cash in an investment account a self-directed brokerage account or a Robo advisor this this benefits the customer by giving them higher return on their money but it also benefits the bank by an empowering a deeper more valuable relationship and increase in customer loyalty customers feel like my bank knows me and they have my best interest in mind this is even more powerful as it happens over the life of a customer's relationship with their bank moving up providing the right products and services at the right point over the customers journey for example a student and her family get student loans from a bank to pay for college then the student opens her f rst checking account gets her first credit card as she starts college in time these loans are paid off and she gets a mortgage perhaps a small loan to pay for a wedding then a few years later she starts a 529 plan for her kids education and the cycle continues this is this is how banks can use data and life events to serve clients over their entire life in their entire financial journey terrific now we have one question how should we go about improving customer service or whether you want to improve the time on the site or to optimize it so let's talk about both those things I think the heart of this is serving the customer in the best way make sense that somebody doesn't want to spend more time thinking than they have to thinking tends to be very task oriented and and oftentimes very time-sensitive and so what we want to do is not necessarily to maximize the amount of time that they spend on the site by making things go more slowly but we want to make the most most of the time that they that they do spend so figuring out what people do the most making it easy for them checking their balances transferring money paying their bills if they're an investor placing a trade checking on the status of their order we want to make it easy frictionless and pleasant there is a way to increase customer engagement though and to increase the time on the site but we want additional time on the site to be because we are serving a customer's need not because we're making it harder for them to get through what they need right one example is that providing contextual educational content someone's looking at their balances they may notice a link to an article about investing or about preparing for tax time or something something which is meaningful to a customer and so that their we give the user a relevant opportunity to spend more time with us to learn and so is so instead of this additional time on our site or on our app being a frustration we're actually providing value and deepening the relationship it's time well spent right now they should be on your site longer because they want to be yes not because they can't find what they're looking for we don't want to hold them hostage we want them to to stay with us a little bit longer because because it pleases them reminds me of the old days when banks would have cookies and have little entertainment things going on in the lobby just to keep them in the lobby longer very much like that well-written educational articles are today's Lobby cookies mmm let's talk about mobile particularly digital banking being much more than having a mobile app let's take a look at the advantage of having mobile apps frequent users of banks mobile apps are the most satisfied more than three-quarters would recommend their bank to others let's talk about another aspect of mobile banking it really helps banks do something that banks have been trying to do for decades which is reach 20% of the population that is unbanked or underbanked see I'd like to revisit satisfaction as it relates to mobile usage I think that's very important increased satisfaction with mobile app usage could be due to a couple of factors first thanks for making a lot of investment in their mobile technology in their employing user centered design approaches so user satisfaction is kind of baked in second customers who download their bank's mobile app they may already have a higher level of trust and satisfaction with their bank customers need to make an active choice to download a mobile banking app in most cases um they need to make a decision these apps are not pre-loaded onto your phones however Google pay Google Google pays preloaded into many new Android phones where an apple pays already part of iOS and iPhones this too actually presents a challenge to banks in their mobile apps it's easier it's less friction to use something that's already embedded and where you are already in your advice so so banks do need to take the extra step to make people know that it's going to be worth their while to download their apps absent such a short life span a lot of people only have apps on their phone for a day in order to use whatever it is they're doing and so and only use about a handful of apps regularly to so it's really places a lot more emphasis on banks to make it engaging yes and also when people upgrade their devices and I actually I think this is this is a really cool feature as a mobile device user when you upgrade your phone a lot of time you're able to bring your apps with you from your old phone and so that actually increases the friction of downloading new apps which makes it even more important for people for banks to create apps that are useful that people want to connect with and stay connected with another another interesting topic of customer satisfaction and this isn't necessarily to mobile to mobile apps but it is related to banking customers who've had negative experiences such as fraud which is a really stressful experience these negative experience has have been positively resolved by their banks these clients report a higher level of satisfaction the customers who've never had such bad experiences so I I thought that was that was really interesting and it also touches on something I talked about before right now to take care of a stressful fraud event you need it's much easier much better to go to go to a branch or by phone but again as as banks technology is evolving even even these very complicated high stakes events will eventually be able to be fully self-service using digital channels right I'm sure it really places a lot of emphasis on the live customer service aspect to understand every part of the digital channel that the customers have gone through this so they can understand what what they went through in in the course of that that fraud event or any other customer service issue yeah digital especially mobile banking is a really important way that people connect with their banks but we do need to remember that this is not the only way recently banks have invested very heavily in online and mobile banking but now they need to take a step back and consider how the digital channel works across the entire ecosystem across the experience across all channels and this includes ATMs phones branches and as much as possible this experience needs to be consistent and supportive across channels and customers need to be able to use their channel of choice when they want for what they want mmm mobile apps are a great way to reach underserved baking populations yes so mobile banking is critical it's it's valuable to a lot of people but in some cases it's a lifeline for unbanked and underbanked populations smart phones especially androids are ubiquitous because they're portable they're easy to get in they're more economical than than computers there are a lot of people who have have a smartphone maybe even the newest smartphone but don't have a computer at home I actually am effectively one of those people I used to live on my laptop and now I know I hardly use it I just used my smartphone and because because of this behavioral shift this has affected how designers create mobile experiences rather how they approach their experiences when we when we take into account where a lot of these unbanked and underbanked people are they're not using iPhones they may be using old iPhones and that's actually very important so when when mobile banking first became a thing the earliest mobile apps were designed for only iOS iPhones were the first widely adopted smartphone and they work but they tended to be owned mostly by affluent people now as Android dominates the market dominates market share because phones running Android are all over they're cheap or free and they're plentiful this is true in the US and all over the world so so now designers are are having to think about how does this work on Android how does this work on a variety of devices especially older devices as people are keeping them longer more rather than just designing for the very latest device at the very um at at a particular time so so more more and more bank customers are becoming mobile only this shift has also affected where we can look to for behavioral trends in banking American banks used to look to develop countries in Europe and Asia for the future of Technology in banking technology and banking innovations were adopted there first they were developed there they were sometimes years ahead of when these technologies became widespread in the u.s. huh this was the future of American financial services however as the unbanked and underbanked populations grow in this country in other parts of the world especially especially with increasing number of immigrants who regardless of their documentation status they have lives to live and business they need to conduct they need to send money to the friends and family they need to pay their bills and for these people fintechs and accessible technology rather than big banks enable these activities so developing countries in Africa and Central America for example can show us how these extra banking financial systems can operate at scale large populations using very simple mobile phones and very simple payment applications many many of us may take this for granted but there are really important things to learn and I believe this is only going to become more relevant to sign goes on mmm-hmm well let's look at advantages that banks have which is the branch and this is one way in addition to having all of this data on consumers is that banks have the advantage of the branch and how can they branch out and um is that to increase their foothold in the digital world is so um different channels are better suited for different types of activities in many times multiple channels are being used concurrently someone who walks into a branch may have very specialized needs they may have an established relationship with their with their banker and so branches definitely do serve a purpose however the branch visit of today looks very different than the branch visits just a few years ago a few years ago people may may have walked into a branch talked directly to to a banker and then and then leave but what happens today is actually actually more omni-channel somebody a customer walks into a branch with their smartphone running the mobile app of that bank there their teller their banker they are face to face at a desk or perhaps sitting side-by-side and the teller or the banker has has an application on their tablet and so now you have the in-person experience you have the mobile experience that the the client is is taking pardon and at the very same time you have a tablet application that the banker is using and all of these things are working together to to serve the customer in the best possible way I would say the biggest advantage that branches provide is the human connection no matter how advanced technology isn't matter how intelligent AI becomes nothing is ever going to fully replace the human connection that's probably why majority of US customers feel that online-only banks are somehow less legitimate and that even Millennials and Gen zere's prefer to walk into a bank and talk to person when they're doing something like opening an account yes or and here's a personal use case getting a cashier's check to put a deposit on an apartment or or buying a car I my my primary bank is this is almost completely branchless there are two branches in the entire country what happens to be here in San Francisco the others in New York and 99 percent of the time this is just fine but when I needed to have it to have a cashier's check for something I went to another large Bank a competitor and opened an account and I keep this account because branch is an in person in person relationships sort of you know an irreplaceable purpose and this is especially important for people who cannot use technology who are not familiar with technology older people and people who have very high value relationships with their financial institutions an app isn't going to pop them about succession planning about how they're going to manage their millions of dollars and even though many many people may not be able to relate to that right now it is something that's very important it's it's very important to bank certainly because these are very valuable clients but being able to provide a personal experience that touches on the emotion of human connection is something which which banks know apply to everybody and that's something that's going to be really hard for AI to replace yeah certainly it also explains why the highest overall satisfaction comes from branch dependent digital customers this was the interesting thing that I heard from McKinsey was saying that for uncommon financial institutions the biggest hurdles relate to organizational organization and skills as much as investing in technology at scale so with that being highlighted as one of the problems let's talk about how things can improve these skills gaps yeah I think I think one way that ace can improve these scull gaps is by is by training their team members to to embrace technology to learn about technology so they themselves as team members are understand how technology works but are also able to help their clients understand how technology works and adopt it and again relationships in human emotion and connectivity this is something which technology can never really replace and so in so developing soft skills leadership skills organizational skills communication these are all very important it's also important for banks to invest in training further further for their team members learning about agile learning about different different types of Technology applications learning about how to do how to create a good user experience and good user experience is for everybody it's not just designers it's not just me and my team but everyone has has a stake and good experience and this is and this is the type of training which banks should invest in for their key members but individuals should also invest in it for themselves as they do as they explore their personal professional development right so that include things like courses in design thinking design thinking absolutely project management becoming an agile scrum master getting you're getting your PMP certification but you know in in addition to training just learning how to communicate with other people learning how to connect with other people huh yeah that's terrific now I think we're coming to the end of our prepared portion and the so we'll invite people to provide their own questions at this point too but just to sum up because we talked about there are five keys do digital transformation and banking that relies on making a cultural shift from the sea level down learning from the successive failures of other organizations that are trying to transform transitioning the agile methodology beyond IT when it's applicable in a banking situation and it isn't always the case but there are many areas outside of software development that agile can help of course focusing on customer experience and making it better at all touch points from the outgoing message and the voicemail to the branch to the apps and beyond and finally bridging internal skills gaps in digital capabilities through training incumbent employees and that includes not just digital skills but design thinking and human capabilities to make people much more personable to be able to prove that social aspect that banks worthy bring to all people yes and getting training in data science if this is something that you're interested in has never hurt anybody in fact I think this is probably one of the most important fields not just in banking but but for anything data is going to drive so many decisions so many experiences in shape a lot of organizations so that is that is also a wonderful area to explore the training what are some things that a smaller bank can do to bring their staff up to speed most quickly it's a with this transformation well investing in technology certainly even though a smaller bank may not have the same large training budget as as a large bank there are a lot of free and very affordable resources online in lib aries or not only executives but also the lowest level team members to learn about digital transformation this is a topic that's in the news people are talking about all over the place and individuals in and banks alike can take advantage of this do you have any recommendations to help make a cultural shift how do you manage upwards in order to speed this transition along in terms of the cultural shift in terms of managing up executives rely a lot on data and so providing providing data to rationalize your recommendations showing what competitors are doing how they're doing it and this is something which is often missing from competitive analysis how can these best practices seen elsewhere apply to a particular organization justjust because it works for company 8 doesn't mean it's going to work within companies beat culture cups are a company B's culture or company B's tech technology infrastructure and so taking that extra step providing thoughtful analysis in some in action and actionable recommendations is going to go a very long way in influencing leadership right now someone is asking what's the difference between business transformation and digital transformation can you talk to that or oh yes this is business transformation I would say is larger it's more overarching whereas digital transformation is more focused it's focused more on the digital channel it's focused more on the technology and services that that support the digital channel but business transformation includes more of the cultural shift that is necessary to ensure a successful digital transformation and one of the big things one of the big pieces of that again is decision making have empowering people to make decisions and empowering people to take more ownership of what happens day to day instead of just following following directions they have a stake in the business they have they have a stake in the decisions in this this not only results in better user experiences but it also results in better team member experiences people are more likely to be happy satisfied long-term employees if they feel like they have a stake right and control over what's happening excellent let's talk about branches are they are they going away no but they are changing in San Francisco there are a couple of very large banks who have piloted the branches of the future branches which used to be large and plentiful there now there are fewer of them in the ones that that remain are smaller but they they actually provide I would say better service elite at least better service for for people who are connected to digital like a lot of us are so there is a branch on the Main Street in San Francisco on Market Street it used to be very large now it's about a third of the size but there's a lot more you can do there there are ATMs that that dispense change roles which is very important if you're a business yeah there are fewer tellers there but the tellers that are there can do a lot more they are well versed in more areas of the business but they also have these very powerful applications on their tablets that they carry around with them and they can engage directly with customers who come in customers or prospects even people who aren't yet we don't have yet a relationship with the bank they're able to do a lot more and they're using digital to increase how much they can service their customers and the quality of that service any predictions for the future like even in branches like I've seen some ideas as far as computerized kiosks not just ATMs and lobbies where you have a live person on the other end are there any other or describe a little bit about that or any other trends you kind of see down the pike because we have a retreat here is that we have an inside person who can tell us what's uh what's what's looking forward that's actually not the future that is happening now and there's another large Bank who has video chats with tellers this is something with which they've had much they've had for a few years and it's it's really it's really great it's really neat to see it so in this video chat over mobile right over no we actually have these screens or by iPhone in the lobby they're actually in the lobby you walk in and if you want to talk to a banker live then you can do that but instead of the banker needing to be at that physical location they can be anywhere it's their centralized and these bankers can service people all over the country wherever Reverend these these video kiosks exist and so someone can can go in there and that could be the primary interaction or maybe they're at the ATM you run into a problem they have a question that an ATM can't answer but they can then then go to the video kiosk and talk to a banker in real-time and get and get what they need mhm it's very powerful we're running to the end of our time here so I just wanted to say thank you again Jennifer Borchardt for joining us today and we look forward to talking to you again in the future thank you [Music]