FSI Member Spotlight, Episode #3: The Role of Big Tech in Banking & Finserv
Our Senior Director of Innovation, Lance Vaughn, recently had the pleasure of meeting with the one and only financial services analyst and ‘Snarketing’ expert, Ron Shevlin. Ron is Managing Director of Fintech Research at Cornerstone Advisors and Senior Contributor at Forbes, Fintech Snark Tank. Lance and Ron uncover the history of Ron’s trademark snarkiness before deep diving into the differences between innovation and transformation and the role Big Tech plays in the future of banking.
Before entering the financial services analyst world, Ron served as a consultant, both of which draw strong parallels in terms of delivering advice based on deep industry knowledge. Ron incorporates much of what he’s learned over the years in relation to organizational dynamics, decision making, and the politics of change in the writing he’s known for today. Recently, Ron’s suggested that banks may not have an imperative to innovate — and that any fears of being ‘Kodaked’ should be allayed. Instead, decision makers should maintain focus on the right kinds of customers and the right kinds of problems to solve — making marketing a driving force behind sound decision making.
Part of the innovation problem in banking today is the belief that innovation means the invention of something totally new. That’s not the ticket, in Ron’s estimation. Instead, incumbent banks should focus on monitoring innovations throughout the industry, acquiring and deploying available solutions that make the most sense for their customers, their problems, their business needs. Real talk? Few organizations are equipped to truly innovate new products in-house. So, thanks to the explosion of fintechs of late, the problem becomes determining which new product or service among a host of new products and services will most serve the unmet needs of your customer — and deploying.
Ron is careful to distinguish between innovation and digital transformation. In his view, banks that position digital account opening capabilities as partnerships have it wrong. Digital account opening is accomplished by a vendor relationship — not a true partnership, and not truly innovative either. Without discrediting the need for digital account opening, Ron suggests that banks focus more on pursuing partnerships towards innovative new products and services — not just process improvement. Further, the so-called accelerating trend towards digital transformation in our post-COVID era is completely wrong, in his view. What we are seeing? Acceleration in digital adoption across banking. So what would indicate true digital transformation in Ron’s eyes? Full migration to a digital core. Until the majority of financial institutions have migrated, the industry simply hasn’t digitally transformed.
Finally, while Ron acknowledges the many bank executives who are wary of Big Tech, moves made by the likes of Google and Amazon suggest that they aren’t so much Big Threats as they are positioning themselves as vendors and providers to financial institutions. The bigger threat? Challenger banks. Their hyper-focus on consumer segmentation coupled with rapidly changing consumer behavior leaves Ron wary of their competitive advantages over traditional banks. Full circle? Innovation is all about meeting the unmet needs of identifiable segments of the market.
Key Takeaways
- Innovation doesn’t have to mean invention and rarely occurs in-house.
- Innovation and digital transformation are also two different things, distinguished by one’s deployment of partnerships vs vendor relationships, (or new products/services vs process improvements), as well as the industry’s imperative to migrate to a digital core.
- Challenger banks may pose a much bigger threat to traditional financial institutions than Big Tech poses.
- Let the unmet needs of specific, identifiable segments of your market be the guide in your bank’s pursuit of innovation.
About FSI
FSI is an exclusive community for financial services executives and digital product leaders who are looking to deepen their understanding of relevant innovation and emerging trends. What you can expect to get as a member of FSI:
- Access to conversations and discussions with your peers.
- Exclusive content focused on helping grow your business.
- A forum to ask questions, share experiences, and learn from some of the top leaders in this field.
This group is not for promotion, and content of an overtly promotional nature will not be allowed. The community is professionally moderated.
Share your experience and find solutions for the greater good. Invite your friends & colleagues!