Our guests discuss the pivotal role of leadership in setting the right tone for creative thinking, empowering employees at all levels, and fostering an environment that rewards risk-taking and learning. Guests spotlightsuccessful banks that have embraced innovation and the tangible benefits that have ensued. Tune in if you're part of the banking sector or simply interested in how innovation can revolutionize traditional industries. Featured experts: Kumar Sidhartha, Head of Sales and Service Modernization, Bank of Montreal Shelly Kramer, Founder and Principal Analyst, Kramer&Co
This discussion isadeep dive into the pressing need for innovation within thebankingindustry. Our experts explore the intricacies of cultivating a culture of innovation within banks, a sector often characterized by a traditional and risk-averse mindset.
Our guests discuss the pivotal role of leadership in setting the right tone for creative thinking, empowering employees at all levels, and fostering an environment that rewards risk-taking and learning. Guests spotlightsuccessful banks that have embraced innovation and the tangible benefits that have ensued.
Tune in if you're part of the banking sector or simply interested in how innovation can revolutionize traditional industries.
Sarah B. Nelson 00:02
Welcome back to another episode of The Progress Report. I'm your host, Sarah B. Nelson, Chief Design Officer for Kyndryl Vital. Today's episode is on one of my favorite topics. How do you innovate and sustain a culture of innovation in a highly regulated environment? In my own career, I've led visioning work for user experience strategy in places like federal banks, commercial banks, credit unions, and one of the things that's interesting to me was that I worked with innovation teams to help them develop their strategy, but I've always been on the outside. So sometimes that strategy was 10 years into the future. And I often wondered, whatever happened to it. And so it's always this mystery of what happens to the concept in the work that it takes for banks and financial institutions to actually bring these experiences to life. So we're gonna set some context of the challenges the banks are facing, and how they've evolved and approach those over the last few years, and then how they need to strike a balance between innovation and risk management in the face of strong regulation.
Sarah B. Nelson 01:12
So I have some wonderful guests with me today, we have Kumar Sidhartha, who heads up sales and service modernization at the Bank of Montreal. And we have Shelly Kramer, who is the founder and principal analyst at V3B. So welcome, Kumar, and Shelly.
Shelly Kramer 01:28
Thanks. It's great to be here.
Kumar Sidhartha 01:29
Great to be here. Thank you.
Sarah B. Nelson 01:31
So what I want to do is, I want to just get started with a little bit of context. So I'm wondering if you can help our listeners and especially those people who are not in the industry, understand some of the nuances of being in the baking industry. So Kumar, can you tell us a little bit about you and your role at the Bank of Montreal?
Kumar Sidhartha 01:51
Thank you, Sarah. So I head up sales and service modernization within Bank of Montreal's personal and business banking division. And basically, my role is really focused on empowering our frontline branch advisors with the right set of tools and solutions, in order for them to improve their experience as well as our customer experience. And so this really takes a form of transforming our sales and service journeys in the goal to improve our employee productivity, as well as our customer experience. So that's a little bit about my role at the Bank of Montreal.
Sarah B. Nelson 02:27
Shelley, can you help us contextualize some of these challenges that leaders like Kumar are facing and maybe compare those with counterparts in other industries?
Shelly Kramer 02:39
You know, I honestly am not sure that the challenges the banking and financial services industry faces are really all that different than a lot of the challenges that people in the industry face. That said, specific to banking, I think probably one of the most important things is really, really understanding customer expectations. Customers today want fast, comprehensive, personalized service. And they'd like you to know what they want, actually, before they say it. So a big challenge that banks and financial institutions have is being able to understand this. For a very long time, I think banks had this image of being staid, old school, classic all of those kind of words that don't in any way inspire agility, or really having a finger on the pulse of customer experience. And I think that it used to be, the banks were in a position of control over customers, and I'm not sure they are so much anymore, I think that what customers are looking for is, "what have you done for me lately? Here's what I want." And if you can't deliver, there are many, many other options out there. So I think that understanding the change in customer expectations is a very, very big challenge. Understanding that customers really like to do it yourself these days. And, you know, if I don't have to talk to somebody, I don't want to talk to somebody. But you know what I'm saying, I mean, we're a nation of do-it-yourself, people. So I want to be able to pick up my device, I want to be able to have a great mobile banking experience. You know, I was looking at some data here this morning. 86.5% of Americans in a recent research study used a mobile device to check their balance in 2020 - by the way - three years later I'm sure that number has gone up. But you know, we've also got things like Venmo, and Zelle, and Cash App and PayPal, all of which are making it super easy to bank away from your traditional banking institution. So understanding the competition that those kinds of companies and services introduced I think is really important. Another challenge that is at the top of every person's list every leaders list, and certainly every CIOs list is security and authentication and customers want to feel like if they're using a mobile device that it provides the same level of data security that they are accustomed to otherwise, there's adopting AI, which is something that is a challenge that many banks are wrestling with. The use of AI, of course, is increasing across the board and every business. Banks sometimes struggle with this a little bit. Sometimes it's a lack of internal expertise. Sometimes it's a lack of a strategy not knowing where to start. You've got fear factor; employees in many instances, view AI as being threatening in terms of "is this going to take my job?" So I think that all of these things, and of course, then increased competition, because we've got lots and lots of startups in this space that are vying with traditional banks. And so there are no small number of challenges that Kumar and his peers in the banking industry are facing.
Sarah B. Nelson 06:03
One of the things that struck me was something that you said Kumar, and then something you said, Shelly, which was, so we're talking about, there's the expectations that consumers have of banking, "what have you done for me lately?" How easy it is, I don't really want to talk to people. And that was one of the things I wanted to. And I'll be honest with you, I don't know when the last time I've talked to a banker is there's a cafe run by a large bank and I have talked to their baristas. But what I'm curious, so Kumar, I think you were mentioning that you were working with advisors and front-end people, as well, when you're thinking about how you're designing experience. Is that right? Did I hear that? Right?
Kumar Sidhartha 06:39
You're absolutely right, Sarah. So most of the work that I do is actually transforming the experience that our bankers, you know, providing them with the right set of tools and equipping them to have those conversations with customers, like, as Shelly said, there is a shift towards digital channels and self serve. And I think a lot of the, you know, what we would like to say activities that individuals and consumers can do themselves, absolutely are shifting away. But at the same time the branch is still very important in terms of customers coming in for advice and guidance, and we see a lot of that happening. So there is absolutely a changing role of the branch and an evolving role of the branch. But at the same time, like our research tells us that a lot of customers like to come into a branch, to speak to a banker to be able to get the advice and guidance that they need. And in my role, it's very important to make sure that we build a culture of innovation that supports an understanding of how the customers are interacting with the branches, what are the needs of our bankers, and we've taken a number of steps in order to make sure that we've inculcated a culture of innovation and also a methodology and practice behind it. So that we're making sure that we're turning around, both based on our customer as well as our needs, from our frontline employees, and providing them the right solutions, empowering them to have those conversations and to be able to help our customers with their day-to-day banking.
Sarah B. Nelson 08:24
You said you've done some things internally to sort of foster the culture of innovation. I'm curious both about what you've been doing - and then also Shelly - what you've been observing in terms of patterns about how other banks are evolving or working with innovation. So I know I put that question out at the same time to both of you. So whomever jumps first gets to start.
Kumar Sidhartha 08:44
Yeah, sure. I'll take that one first. So we're doing a few things to make sure that we're able to create a culture of innovation. So the first thing that we're doing is, it's it really starts with the people, right? So making sure that we've got the right people making sure that we're empowering people to be able to take on the problems, providing them with the right skills, the tools, allowing experimentation, right? Like a lot of things, the attitude that existed was "I'm going to start a project and it's going to have a start, it's going to have predefined objectives, and it's going to get to, and end, net." We're saying no. We have to build a culture of experimentation. We have to build a culture where we're using more and more data, so that we're able to pivot based on decisions. We're implementing working practices, using human-centered-design, working very closely with both our customers as we design and scale solutions, as well as our employees to make sure that we're getting feedback each and every step through the process. So we're also making sure that we're doing these things cautiously as well. Sarah, I know you had mentioned like banks are very regulated, so we have to make sure that we've got the right guardrails in place as as we go about doing these things, what that means is working very carefully with our risk stakeholders, legal, compliance, and other teams making sure they're actually embedded as part of the work that they're that we're doing. Rather than being part of different teams, we're all working together to make sure that the bank is protected as well, and consumers are protected. So that's some of the things that we're doing in terms of building that culture of innovation.
Shelly Kramer 10:26
I think for me, it boils down to something really, really simple. The status quo won't cut it anymore, and it won't cut it anymore whether we're talking about employees and the experience that we serve up for them, or customers and the experience we serve up for them. And I think that we've got talent, recruitment, retention, all of those sorts of things. And, again, this is true of any industry embracing innovation and making sure that your employees know that this is a constantly evolving journey. And I remember, a couple years ago, my husband and I were buying a new car, and I had one vehicle that was coming off lease, and it needed to be turned in. We found this vehicle that we kind of had to - quite honestly we were looking for a manual transmission in a jeep - and we find this vehicle and I call my bank, where I've been a customer for 30 years, and I say - I haven't had a vehicle loan forever - and I say, "Hey, Mark, and I are buying this car, love to talk about a loan." And so the bank sets about gets information, whatever, whatever. And they come back to me and give me the documents, "well, you're going to have to come in and sign these." And I said, "Well, I'm kind of in a bind, because I don't have a vehicle at all." And I think at this point in time, my kids were little enough that I had to take him back and forth to school or something. So can't I do this electronically? My husband's traveling, can I do this electronically? And they said, Oh, no, absolutely not. That's not how we do things. You've got it, we got a wet signature, you're gonna have to come in. And I said, you know - and by the way, this is like five years ago, so it wasn't just yesterday - and I said, "you know what, I work in the technology space, and I gotta tell you there's got to be a better way." And so I'm talking to the car dealer. And I said, you know, I've kind of hit a little bit of a snag, my husband's traveling, the bank won't let us sign the documents electronically. And he said, "Oh, you know what, let me reach out to my banker," and this was another BMO this happened to be a BMO Harris bank here in the US. And within about 10 minutes, he called me back and said, "Oh, yeah, this bank, I'll do it, no problem." So in a blink of an eye, I went from a 30-year-relationship with a bank that has my business money, and my personal money, savings accounts, everything else. And I had a new relationship with a bank that did business the way I wanted to do business. And I think that's kind of the wake up call that banks and financial institutions need to understand. It is truly - there is a better way. And how are we creating our processes and our systems, and our rules and our compliance and all of the things that are so important, but how are we doing this all with a view toward what is today's customer want? And need? And how are we delivering it for them? And I think those two things, both what you're doing with regard to employees and innovation and how you're embracing innovation and technology and changing the status quo to serve customers the way that they want to be served is really the path forward for success.
Kumar Sidhartha 13:36
You know Shelley, really good story. And, you mentioned the e-signature component, right? And, that's interesting, because one of the teams under me actually just rolls out those kinds of solutions, right? And, and we found ourselves when the pandemic started, where a lot of customers weren't able to come into our branches to be able to sign documents, and there were some documents that we were able to already get signatures, but the pandemic really accelerated the pace of change and customer expectations. And so we had to pivot really, really quickly and even overnight, change our processes to be able to make sure that anything that could happen behind the confines of the branch could also then be done virtually in an assisted manner with our bankers. And now that's become the new normal, like it's convenient for our customers. It also works well for our bankers as well.
Sarah B. Nelson 14:30
I want to pivot just a little bit. I'm curious about how you structure your organization, Kumar or patterns that you've seen, Shelly. What is like on the ground, the practices, the organization, the tactics that you use to build these cultures of innovation in this context, because, we also know I think, in some of these more established industries, you've had people who've worked in the industry for a long time, who know what made it work. And now they also have to change their own mindset. So I'm just curious, what are some of your practices and organizational structures and tactics for that?
Kumar Sidhartha 15:10
From my perspective, I think one thing that's really kind of helped us as moving away from a project or an initiative perspective to a journey perspective, right? We've started to stand up teams that are focused on customer journeys, right? And the moment we shift that mindset that already starts to pay dividends. Now, because we're laser focused on a customer need, that's unmet that we're trying to change. So that organizing hierarchy itself lends itself to us thinking in the right way. And then secondly, just along with that, is we've stood up agile teams so we started to shift from, again, waterfall and to iterative, agile practices. We do a lot of work, as I mentioned before, in terms of human-centered design. So when we think about a problem, we do a lot of research, interviews, right at the outset. If we're building a digital tool, we'll make sure that we test it out with our bankers, get the feedback, make sure that they're involved in the process, as opposed to being recipients at the end of the process as well. Those are some of the tactics that that have been working really well as we've kind of made that transition.
Shelly Kramer 16:26
I mean, first of all, a reality is that no one individual ever gets up in the morning and goes, "I can't wait to call customer service." Right? I mean, the only time we do these things is because we have to. We have a problem; we need help, right? And how many times have you embarked on a customer service journey, you make that call, and I mean, for me, because I'm an analyst, because I'm a process-oriented thinker. When I'm working through an experience like that I so many times, I think, not one member of the senior leadership team has ever walked this journey, that this provider is requiring me to walk and it is so frustrating, because if just one of them would be walking this path, they would quickly be able to identify the many things that are wrong with it. So I think that that's a really important underpinning when we say we want to embrace a culture of innovation, it's really understanding what our customer desires are, but also understanding what the journeys that we put them on are like.
Sarah B. Nelson 17:40
What this brings to mind for me is that who's responsible for customer experience? To me, it comes down to like customer experience belongs to everyone. And it's something that everybody should stand for. And there's a lot of times in organizations, they'll kind of pay lip service to it. I'll just tell you one financial institution I worked with, they have a ritual, actually, at the start of meetings, where they have a statement that they read, that is about the service that is to their members. And I always just thought that was just this wonderful ritual that reminds everyone that the members in the room with them when they're making decisions. So I think that's something interesting, just thinking about people who are listening about things you might do in your organization. So I have a question for Kumar. We've talked about sort of all of these different issues in banking with customer experience and how you build innovative cultures. How are you measuring progress?
Kumar Sidhartha 18:37
There has to be a quantitative and qualitative way to measure progress. And so the way we measure progress, is in terms of people and teams. We look at what kind of engagement and satisfaction our teams have in this mind shift and change of culture, in terms of the products that we're launching what is the time like - looking at business results - how is the time to market improving? We use measures like net promoter score to see what kind of differences it's building in terms of our customers. So those are some of the measures that we're using in terms of making sure that this change of mindset and change of attitude as we shift left, if you will, and build a more innovative culture are really building out the right results.
Sarah B. Nelson 19:29
So Shelley and Kumar, thank you so much for a really fascinating conversation. I've taken a lot away from it around how to really build customer-centric financial experiences. And also, just that really like the importance of that attentiveness to what customers need in order to be able to transform your bank. So thank you very much for joining us today.
Shelly Kramer 19:53
Well, this was great. Thanks so much for inviting me. Kumar, it was great to meet you.
Kumar Sidhartha 19:56
Yeah, great meeting you as well. Thank you, everyone.
Sarah B. Nelson 20:01
Thank you all for joining us on this episode of The Progress Report. Join us in two weeks for our next episode. If you've enjoyed this conversation, be sure to like and subscribe and share it with a colleague who might also be interested. Thank you!