Commercial Loan Automation
Small Business Banking
BirdsEye Viewdon't waste the reboot: make the "new normal" better than the last
The past six weeks have been such a roller-coaster for our industry. The calls we have been holding told a story of initial despair and frustration which quickly turned into amazement at the pace of change and adaptability the industry was experiencing. Management teams which could not make a decision on Docusign as a reliable signature tool made the decisions and implemented it within a week. Other parts of the bank adapted equally quickly, setting new rules for branch access, implementing WFH (even the acronym, Work-From-Home, is new) tools, instituting new Information security measures, etc. etc.
Then came PPP. The magnitude of the effort cannot be overstated. Going through it has been an exhausting and exhilarating effort, mobilizing new talent from across the bank, writing RPA routines on the fly and racing to get applications into E-Tran to help keep millions of Americans employed and thousands of businesses afloat.
At the same time, the tone of the calls we have been holding with thousands of bankers has changed. Our call participants were seeking information, many working harder than ever before, but there was excitement. PPP brought new customers to our banks, many who wanted to consolidate their entire relationship at the community banks that helped them. Change themes started emerging as executives began contemplating life after COVID. Customers, companies, vendor partners and the whole world started learning how to get this done differently. The implications to our industry can be very positive.
And I, as an industry observer and cheerleader, saw how this disaster can turn into an opportunity to leapfrog years of stagnation and slow movement.
Not all banks should leapfrog. Each of us is different, offering their own value proposition and brand promise. Yet all of us can benefit from digitization toward efficiency and improved customer experience and from picking up the pace of change.
As I was cogitating on life after COVID and preaching sustainable change, my son-in-law Jake shared a fascinating article with me. It’s by the Yak Collective and it’s focused specifically on the opportunity before us. The message in the article, which, admittedly, is quite out there in many respects, resonated: “Warmed-over “crisis management” models and hastily repackaged models drawn from the last half century of “normalcy” in the business environment, and uncritically run by interchangeable spreadsheet grinders, all graduates of the same boot-camp is not going to cut it”. What we need, says the PowerPoint deck, is dealing with unfamiliar situations (AB: like PPP, debt forgiveness etc.) without the old playbook; “bring fluidity, aliveness, imagination and boldness” to our daily corporate lives. My translation: cherish and build on the outstanding agility of decision making and execution that the industry, and each of you, have shown over the past six weeks. Our future will be less about the next great product and more about how quickly we can move, how well we read the marketplace and our customers’ needs, and how effectively we can execute against those needs – execute, make mistakes, learn from them and continue on. This agility, coupled with a fortress balance sheet, will give us the resiliency we need to tackle unforeseen forces and opportunities effectively for the next decade and beyond. It is a culture, a way of thinking, rather than a tool, a project or an event.
The YAK report summarizes what individual consultants as well as McKinsey, BCG and Bain recommend as the best discipline to handle the post-COVID world.
This crisis showed us how flexile and adaptable we can be. Examples:
• Drive-through’s became a major outlet of banking services, including ACH and other functions that typically were considered out-of-bounds for this channel
• Large parts of the workforce started working from home, often with improved productivity
• Large groups of employees were trained “on a dime” to perform tasks they had no exposure to before, such as PPP application processing
• Branches largely moved to “by-appointment-only”, which worked very well
One downside to flexibility is the need to walk away from sunk costs and familiar processes, even if they can help you hobble along. Flexibility is the goal, and it can be achieved efficiently, albeit often with upfront costs. An example is investing in cloud-based systems or wrapping your legacy core with an API-enabled wrapper. There is certainly an upfront cost, but the flexibility associated with the enhancement is priceless.
2. Making decisions in an uncertain world.
PPP, and now debt forgiveness, were built on the fly. The process PPP started with minimal guidance, and banks continue to modify their approach as bottlenecks emerged, customer anxiety rose, and specific guidance continued to change (best example – SBA banning RPA submissions). Despite all that, the job got done, hundreds of thousands of jobs were saved, and we all are better and stronger for it.
The lessons are many. Examples:
• Start building the process before you know exactly what it will entail. Debt forgiveness is a good example. We still do not know how it will unfold, but we do know we will have disputes. Setting up a dispute resolution process now, from forms to workflow, will save you from doing that when the switch is flipped.
• Get the technology that will help you remain flexible. From RPA and API tools to customer input tools for account opening, application submission and other functions, will give you a strong base to work from in the future. These building blocks can be modularized to perform different tasks once the foundation is laid.
• Consider data needs, storage, manipulation etc. today, again laying the foundation for future needs and rapid response.
3. Improving decision-making skills to prepare for decisions in uncertain environments.
Many tools have been developed over the years to organize thinking when full information is not available. An example is OODA, (Observe, Orient, Decide, Act) is a discipline that helps teams gain a time advantage instead of waiting for events to unfold and information to coalesce. OODA was invented in the military to handle highly volatile, complex and uncertain situations. Banking is based on reducing uncertainty and volatility, yet crises create precisely such conditions.
The book Blink by Malcolm Gladwell outlines how to train the mind to make decisions based on previous experiences and data points rather than rely solely on current information gathering. Some call it “the uncertainty mindset”.
Training one’s mind to think through alternatives, make reasoned decisions based upon partial information, and mitigate risks is a discipline like any other. Getting good at it will be an asset in the post-COVID world.
4. Turning on a dime.
The post-COVID environment will have one certain characteristic – fluidity. The “new normal” will keep changing. Accepting this expectation and preparing for it is another key success factor we should incorporate into our managerial thinking. Employees and management alike should understand that tactics will change quickly and dramatically in the coming months in response to massive changes in the environment. Strategy and brand identity will remain constant, but the tactics and tools needed to achieve both will continue to change, sometimes quite suddenly and without warning. Not knowing can be a powerful tool – anything is possible!
5. It is still all about people.
These are unsettling times. Many of us are going through “firsts” – first time at home without going out; first time working from home; etc. It can be uncomfortable; discombobulating; disconnecting. Management should be more intentional than ever on engaging their teams and understanding their state-of-mind, current anxieties and value drivers. These are times to find new ways to connect and nurture each other, in small and large groups (while, of course, socially distancing), highlighting commonalities and learning who we are as a team. These are great times to reinforce corporate lore, tell the stories that made us who we are today, and share the amazing accomplishments of today and tomorrow. Share not only the typical heartening client-saving stories, but also the struggles to get your PPP system stood up, let the unsung heroes in the back office tell their stories, and find ways to unite everyone around a shared mantle that is consistent with your brand and history.
As the country starts emerging from lockdown, there are countless opportunities for all of us to reexamine how we do business today and how we should transform going forward. There are strategic and tactical opportunities, and our calls focus on them. While we capture these opportunities, it is important that we reconsider how we make decisions and what changes need to be made to make us stronger and more resilient in the future. These are deep, broad and difficult questions, but they must be asked and answered. Don’t waste the reboot.