ref lect things that we may have missed or not thought about. The env ironment is changing pretty rapidly. What we thought made sense 12 months ago may not be quite as applicable now, just because of the evolution of the market.”
Inertia vs. leadership People interviewed for this article suggest that adopting an agile banking approach requires a fundamental change in culture and comfort zones. There will be resistance. To be successful, organizations need leadership from the top and enthusiasm through the ranks. “ There were inter na l roadblock s” when Fresno First Bank started changing things, Miller admits. “There was just lack of knowledge or fear of making progress. The same people who complain about the process, when you give them a very good solution to fix it, they complain about the solution. I’d say that’s human nature. As senior managers, you have to stay committed to seeing it through and recognizing who the real roadblocks are. If they are truly, truly trying to derail something, then you go right after it. You have to either convince them or move them out of the way.” In Columbia Bank’s case, Pratico found support from his staff. “I started talking about it with my staff, and I was blessed, and maybe unusually so. Just about all of them were hungry for this change. When I presented the idea, there was a lot of interest. The other key, too, and this is probably true for any kind of change: They were involved at every step of the process. They had a vote. We literally sat down every bit of a dozen times, formally, and came up with ratings and metrics and how we would look at them. When we f inally made the choice, it wasn’t my choice. It wasn’t the CEO’s choice. It wasn’t one appraiser’s choice. It was the department’s choice. When you own the decision, you’re more likely to embrace it.” A lot of it ties back to leadership culture and organizational structure, Accenture’s Sadowski notes. “When you look at how traditional banks are structured, they are very siloed, very regulated, and very bureaucratic,” she says. “The reason they go there is sound logic. They are all managing risk. The challenge is they’ve taken that risk-averse approach and applied it everywhere. There are areas where they don’t need all of the structure and silos
for risk management, and they need to pivot in order to empower their people to deliver stuff sooner.” Ag ile Bank ing’s Croa l champions the idea of designating a specific “process owner,” who has the clout and the acumen to align the path that given t ra n sa c t ion s t a ke a cross t he or gan i z at ion , such a s b e t we en lend i ng departments, compliance departments, servicing departments, and so on. “The process owner needs to have an understanding of the impact of operational efficiency to the profitability [of the organization],” Croal says. “It has to be somebody who knows banking.” The process owner doesn’t do the fixing, Croal adds. That person needs a team to reengineer the process, and the team should include stakeholders from all the affected areas. Further, he says, the process owner “needs to have a say that if this particular technology can’t integrate [with other systems], then get rid of it and get something else. Or if these employees can’t perform their jobs correctly after they have been educated, he or she can say, ‘I don’t want them any more.’”
Staff buy-in is key to agile banking. If you own a decision, you’ll embrace it, says Michael Pratico, Columbia Bank.
Measuring success Numbers don’t lie, as Fresno First’s Miller points out. “When you make a change, you have to track it. You show people what you’re doing, make sure you train people the right way and educate them, and communicate clearly. Then you track the hell out of it so people know that it’s working. Then, for any of the naysayers, you can shut them up pretty quick.” Croal estimates that banks can shave 10 to 15 percentage points from their efficiency ratios with digitally agile processes. “This is worth $750,000 to $1 million per year for the median community bank between $100 million and $2 billion in assets,” he says. But it’s not all profit and loss numbers. “Managing innovation is different than managing business as usual,” says consultant Nicols. “You have to look at metrics that aren’t financial early on. You have to look at how many new products did you launch? What percentage of our ideas are coming from new sources? How much faster are we moving on those things?”
The wrap-up Agile banking is just taking hold. It could be the thing that keeps banking relevant.
“Make little course corrections regularly,” advises consultant J. P. Nicols, “not at the end of the project.”
“I left my 20 years of banking in 2012,” says Nicols. “What I’ve been focusing on since then is this intersection of banking and f intech innovation. In 2012 and 2013, I got a lot of bemused smiles, paternalistic pats on the back, a lot of ‘That’s cute, son. I run a real business.’ In 2015 and 2016, many of those same directors and CEOs were calling me. The tide is beginning to change, but it’s still a long battle.” Consultant Cady puts it this way: “Banking is at the cusp of a huge seismic change. It’s coming, and how you remain relevant, that’s the overriding question. The answer is agile banking.”