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Is tech the secret sauce?


o. Okay, now that we’ve got that out of the way, what is? Well, it’s a secret, right? But it’s an open secret. The phrase “secret sauce,” of course, has become a marketing term of art (thank you, Big Mac). It implies, “We’ve got something unique that gives us an edge, makes us the better choice,” etc. Buzz phrase or not, it’s a legitimate concept. In certain f ields—pharmaceuticals being the first that comes to mind—the billions spent on research does produce unique advances that at least for a time give a company a true edge. It’s also true in the tech industry, although there the advantages seem shorter-lived. With a few exceptions, banking is in a different category. Mostly it’s not R&D driven and its products are essentially the same among almost all f inancial institutions. Product innovations often come from vendors. Much has been said about banks partnering with nonbank tech companies. The odds are slim, however, of a fintech company signing an exclusive deal with one bank—other than one of the Big Five, perhaps. So again, the notion of technolog y providing that secret sauce advantage is spurious. As bank attorney/consultant Jeff Gerrish pointed out to us a few months ago, technology isn’t so much a competitive advantage as it is a competitive disadvantage if an institution does not keep pace with the changes. The downside there is that providing what’s expected is not a differentiator. Providing the unexpected can be. Businesses and consumers in most markets, for example, now expect a bank to provide mobile remote deposit capture. So if your bank is just now rolling it out (assuming you’re not in a one-bank market), it would be a defensive move. Even so, how you roll out the product can turn defense into a plus. If, for example, you trained a group of mobile geniuses (to borrow from Apple) in each location to help customers get set up— or even sent these helpers out to local small-business customers—that would



March 2018

be unexpected and appreciated. Building up your bank’s social media expertise and using it to promote customer businesses and events would be another example of the unexpected. For most banks (and any primarily service-oriented business), the secret sauce almost always comes down to their people—in particular an enlightened leader and a team of engaged associates. Together they can come up with creative ways to go above and beyond for customers. They innovate. That is the greatest differentiator. With talented people on board, given the right encouragement, a bank in a slow-growth market can do quite well. Without them, even a bank in a fastgrowing market will never quite achieve its potential. Of course it’s true that many other factors contribute to banking success, one being a solid credit foundation. But even there, it’s people who ensure adherence to credit principles while at the same time encouraging creative ways to accommodate borrowers who don’t qualify for standard credit. Banking has a great pool of talent, fortunately. That will ensure its future relevance and success—if it’s used. A s numerous people, ba n kers included, have observed, the ongoing consolidation in the industry has more to do with a lack of leadership succession than it does with regulatory burden or outdated technology. Developing the next generation of talent, then, is the single most important priority for any bank leader. (Not coincidentally, it’s why we created our “20 under 40” recognition program—details at One more thing. Developing nextgen talent requires an open mind to the possibilities, be they related to gender, experience, education, or other fa c tors. Too of ten incumbent lea ders follow comfortable or traditional paths in developing talent. That may be understandable, but in an increasingly competitive market, it’s essential to step outside the usual.

BILL STREETER, Editor & Publisher

As many have observed, the ongoing consolidation in the industry has more to do with a lack of leadership succession than it does with regulatory burden or technology

C T D t B H m a P D G t c E s

Banking Exchange March 2018  
Banking Exchange March 2018