Five Characteristics of the Future 'Smarter Bank' Organization

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By Terence Roche

3 minutes

Tomorrow’s 'smarter bank' leaders will cultivate managed chaos, inspire creative thinking and encourage results-driven action.

For some time, Cornerstone has been talking about the “smarter bank,” focusing on how our clients must use new skills, knowledge, technology and information to complete the long and tough transformation to the future delivery model. In November, my partner Steve Williams wrote about the Pillars of Smarter Bank Leadership. Today, we are going to look at the smarter bank through another lens: What are things we will see in the future smarter bank organization? What will be key corporate personality traits? To answer these questions, we offer five characteristics of the future smarter bank.

1. Horizontal Accountability Is as Clear as Vertical Accountability

My partner Al Dominick has often said that banks need to transform while they perform. Accountability for many aspects of traditional performance can be seen in the traditional vertical organization chart. Most of us could quickly figure out who is responsible for major components of profitability—lending and deposit growth, credit quality, wealth advisory growth, fee income and fraud mitigation, to name a few—by looking at the names on an org chart.

It isn’t always as clear when looking at major horizontal components such as creating a consistent customer digital experience, applying AI to business processes or creating/maintaining consistent customer information. Smarter Banks will identify specific major horizontal transformation/improvement opportunities and assign accountability with the same specificity.

2. Teams and Alliances Can Be Formed Quickly and Be Given the Ability to Identify and Solve Specific Horizontal Problems.

This concept is very familiar to technology companies and bank IT groups that have applied the rules of rapid application development, agile development and other methodologies for years. More broadly applied, it will allow teams to identify specific horizontal opportunities (process, delivery, efficiency), quickly formulate solutions/prototypes, test, adapt/modify and then deploy. There will be a strong focus on quick, pragmatic solutions—no “boiling of the ocean.”

While all banks do this now to some extent, the smarter bank will make this type of business improvement a core competency in all areas. And to be clear, “teams” will not be just groups of managers. They will be a mix of all levels of employees with different skills and perspectives. And they will be given latitude to make decisions and budgets.

3. Accountability to Peers is Clear and Transparent

Employee accountability to managers is usually clear. That is the aim of goal setting and performance reviews. Often, however, accountability to peers is not clear. To add to this, many of your team members are uncomfortable with conflict and view calling a peer out for not meeting a team deliverable as creating conflict.

Smarter bank employees will embrace being held accountable and will expect the same from peers. Commitments will be clear (what did you say you were going to do by when?), and tracking of commitments will be transparent through simple tools. This will be much of the basis for the building of peer-to-peer trust.

4. Measurements of Transformational Success Are Clear

Success measures for ongoing performance are usually clear and centered around financial ratios (profitability, growth). Success metrics for transformation often are not. How do you define the success of a customer digital experience re-design, for example? Or the efficiency pick-up after a major process re-design? These can be hard to measure numerically. However, even when a team can intuitively see that improvement occurred, Smarter Banks will translate that into some quantifiable target result.

5. Pragmatic Standards and Design Rules Will Be Followed Across the Organization

An excess of rules and standards can be stifling. Simple example: I once had a manager at a bank who announced we all had to use our computer mouse with our left hand (Yes, seriously. Yes, he was left-handed. Yes, we did say we refuse, and you can darn well go ahead and fire us if you don’t like it. No, we weren’t.). On, the other hand, too few standards can quickly create unmanageable complexity.

The smarter bank will find the right balance and focus on those that empower employees to make important changes and decisions. Many will be centered around systems and information, of course, and many of those are in place now. Others may address processes and organizational issues—for example, there should be one process that can be applied to several groups of functions and must be looked at in tandem.

Transformation is an inherently chaotic process. Smarter bank leaders will understand that and create an environment that recognizes this and encourages the right amount of managed chaos that translates to creative thinking and results-driven actions. As Steven Hayes said, “Chaos at the bottom means order at the top. Order at the bottom means chaos at the top.”

The good news is that the environment smarter banks create will be very appealing to employees who want to grow and make a difference. So, let’s get to work and let them loose.

A co-founder of CUESolutions provider Cornerstone Advisors, Scottsdale, Arizona, Terence Roche brings 40 years of experience in bank operations and consulting. He has directly managed over 50 system selection processes and written numerous technology plans. He has directed several organizational assessments and process redesign engagements and has performed assessments of corporate and functional job titles and incentive plans. He frequently works with boards on governance issues.

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