The Digital Bank of the Future


[MUSIC PLAYING] There’s a new generation
of banking consumers. A huge problem, or a chance
for traditional banks. Changing or leaving,
what needs to be done? Which platform is the basis
for the new challenges? That’s what we want to
talk about with Appian, an American software provider. My name is Ralph Szepanski,
welcome to The Business Debate. [MUSIC PLAYING] Michael Heffner, Vice President,
Financial Services, of Appian. You say every company needs
to become a software company. Why? Are you hoping for
more customers? We’re absolutely hoping
for more customers. I appreciate that question. The reality is every company
truly is in an environment now where software
is eating the world. We didn’t invent that phrase,
but we’re seeing it realized. Especially in
banking, where banks have to compete
for every customer, have to respond to
regulatory requirements. And the mechanism,
in most cases, is to modify or
build applications. Does the market share
this point of view? Or is digital transformation,
first of all, a buzzword? I think there’s a little bit
of a buzzword effect here, but the underlying
transformation is real. So if you look at the
agenda of top 2,000 firms around the globe,
digital transformation tends to be in the agenda at
least of 3/4 of those firms, with digital transformation
representing the number one spot with at least
half of those firms. So I think there’s a
lot happening there. Fintech companies are emerging
by the day and in flux with minimal cost, they are
out to eat bankers’ lunch. How can traditional
banks compete and thrive in the long run? Yeah, I think the
Fintech revolution, if you want to call it that, is
actually a really good thing. I think it’s customer driven. And if you look at what
the fintechs are doing, they are attacking
gaps in value. So they’re figuring out for a
particular part of the value chain, how do we create
a better mousetrap? How do we create more
value for the customer? It’s really spurned
traditional banks to respond. Some of the traditional banks
will go and buy a fintech. But I think what’s
also interesting is the number of innovation
labs that have been stood up by banks that have
direct line of sight to the board and the C level. I think banks have
to rethink, they have to orient themselves
towards the customer, and I see that happening. But they are the consequences
that were drawn out of the financial crisis. Is the dinosaur trying
to shake up the chains? Yeah, dinosaur is
a good phrase here. Because it’s tough
being a bank these days, because you’ve invested over
decades in legacy technology. So the real challenge
is how do you take the best parts of what
it means to be a bank, and respond quickly to customer
demands and market demands? Luckily, there’s new
technology available that can actually help banks
accomplish those outcomes without having to rip and
replace what’s already there and what’s working. On the other hand,
they are the customers. Their expectations are
rising extremely everything at every time. What is necessary to
deliver these expectations? Yeah, I think it’s very true. So it’s more faster. Much of that’s being
actually driven by this intergenerational
transfer of wealth that we’re seeing. Depending on which firm,
analyst firm you focus on, upwards of 30
trillion in value is being transferred from one
generation to the next. I think what really
is required is a rethink by
foundational legacy banks of how do they get the
best of what they have and deliver it anew,
focused on that segment. And if not, is
there any loyalty? Well, loyalty I think
traditionally in banking has centered on this concept of
stickiness and high switching costs I don’t think that’s enough. For banks to compete
in the future, I think they need to innovate,
they need to focus on value. And there’s lots of– luckily, there’s lots
of new approaches and new technologies
that can help banks. So your bank is dead,
long live your bank. Michael Heffner, Thanks
for this Business Debate. Thank you. [MUSIC PLAYING]

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