Commercial Loan Automation
Credit - Small Loans
BirdsEye Viewchange management - much talk little clarity
“Who Moved My Cheese?” was a transformational book. Everyone who read it understood the message: change is inevitable. Get with it. Similarly, the bus analogy resonated with huge numbers of people; “We need the right people on the bus” is a phrase I still hear often. Digital transformation was the next widely accepted and understood paradigm change; we need to use technology to improve human and other productivity, as well as create a much-improved, simpler customer and employee experience.
The problem so many of us face is, we agree with the need to change; we even know what we want to change; and yet the transformation drive falls short.
SCB Forums started a Digital Banking Forum. We also have a process automation forum and a newly created Customer experience (CX) Forum. What all three of these meetings have in common, which is quite different from the newly created Fraud Reduction Forum, is the recognition that success depends less on technology and more on human behavior change.
A perfect example is the workflow project that many of us have undertaken in the loan manufacturing area. Credit underwriting, loan onboarding, loan operations and other departments must collaborate to optimize then maximize the process efficiency across departments. The issue forum attendees noted most often was reluctance to change the way we do things, even the way out output looks! There was no argument about the need for automation; there was much disagreement about the process optimization, particularly the order in which things were done and presented.
Today’s biggest management challenge is to make dramatic changes in the way we do things in order to improve the customer and employee experience while reducing time to outcome, complexity, and costs. Our challenge is beyond moving the cheese; it involves changing the entire diet!
How does a company operationalize its change readiness and acceptance? The first step is the understanding that agility is not a project but a state-of-mind. It is a transformational process that requires fundamental attitudinal change as well as a major revision of how we make decisions and what is an acceptable outcome.
The first – and most essential – requirement to effective change management is creating a sense of urgency. There are several tactics to get that done successfully:
• Establish wide acceptance to the notion that no change is riskier than change itself. All too often we fall back on the age-old adage, “The devil you know…”. Loosely translated, it means that sticking to our knitting that has been so effective for so long is far less risky than trying new things and taking major bets on them. This mantra was true when the pace of change was slow, but not in today’s constant disruption. Observe other industries that did not change quickly and see what happened. The best example is the taxicab business and the artificial scarcity factor created by restricting taxi licenses (the “medallion”). Once Uber and Lyft entered the scene, this monopoly was broken, the profitability of the business declined, and the value of the license to operate plummeted. This is disruption at its best. Banking is under constant threat of such disruption, and we have witnessed it in the consumer and small business lending side, where technology fundamentally changed the paradigm and put tremendous pressure on banks to make their process faster and easier. No change is not an option. In fact, a fast follower market position isn’t viable either, because it guarantees customer defection. A sense of urgency is essential to survival.
• Form a broad-based leadership group to lead change throughout the company. This group doesn’t have to conform with the typical corporate hierarchy and can be comprised of change agents across levels and departments. The key to this group’s effectiveness is a shared conviction that change is essential and urgent, and it is their job to influence others to facilitate it. In reality, each project – be it Robotic Process Automation, end-to-end loan automation or digital transformation – depends on such a group for its success. The socialization of the new ideas and their rapid execution depend on champions (some call them Subject Matter Experts (SMEs) who teach the rest of the organization, empowered by mandate from senior management, how to adopt and adapt to the new technology or way of doing things.
• Build an aspirational vision for the company you’re transforming into, a vision that speaks to most employees, is simple to understand and easy to articulate. The vision should be aspirational, and can take years to realize, but it MUST be consistent with the company’s culture. For example, if your competitive advantage has always been service levels, a vision that is based on the low-cost producer in the market will not resonate with your team. A vision that redefines service in the new era of technology, gamification and self-service will inspire people and resonate as the next stage of your company’s evolution, a change while being true to yourself.
• Accept the pain of change as inevitable. We generally understand the emotional difficulties associated with acquisitions. We expect the mourning that occurs when a brand dies, a culture morphs and the company ceases to exist. Organizational transformation creates the same emotions. Processes that served the company well for decades are being discarded or disrupted, and those who lived these processes resent the change and find it hard to connect that to the new vision of the company. Much like during acquisition integration, you can accept the sense of loss without accepting lack of progress or buy-in.
• Change the way you make decisions. Historically, banks were slow to make decisions. Some say this hasn’t changed at all. We are a quantitative business, and precision counts. It is difficult, if not impossible, to accept a built-in error rate, or an unknown regulatory risk. A good example is ApplePay, or Zelle. Both innovations came with rigid contracts and no negotiations, a “take it or leave it” proposition. Most banks I know debated each topic for months, only to realize the inevitability of the outcome. These truly aren’t optional for those who want to prosper long-term; therefore, early execution might be beneficial. We need to limit information gathering only to elements that will affect the decision, and be mindful of the opportunity cost of time wasted, delays and being fourth to market vs. first. Giving SOME latitude for mistakes (without betting the bank, of course) is also essential to effective change management, because none of us can forecast the future with complete accuracy. It should be OK to make CONTROLLED mistakes in our search for best practices and transformational ideas.
Effective change management cannot be achieved overnight, but it can be reached through the steps described above. What you’re aiming for is a tipping point, where enough leaders at all levels embrace the new way of making decisions, are less wed to current practices and dare to dream while keeping their feet firmly on the ground. The CEO’s job is to acculturate these concepts at all levels, finding disciples and early adopters who will help spread the word, while modeling the desired behaviors themselves. Leadership indeed starts from the top, but it does take a village!