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Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.

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Smaller Banks Risk Losing Digital Customers

According to a recent Harris Poll, 40% of respondents said they are likely to leave their primary financial institution for digital banking that compares to an online shopping experience.

New benchmarks have been set as to what is acceptable regarding digital experiences at financial institutions. While consumers still want to bank with community institutions, these smaller firms must accelerate digital transformation efforts to avoid disintermediation to larger banks or big tech organizations.

We are joined on the Banking Transformed podcast today by Craig McLaughlin, CEO at Finalytics.ai and Extractable. He discusses the results of the Harris research and provides insights into how smaller organizations must respond to the digital experience challenge.

This episode of Banking Transformed is sponsored by Microsoft:

See how Microsoft can help to unlock new opportunities at speed through innovative business models, deliver differentiated customer experiences across channels, products and services, and redefine new ways of working.

More at Microsoft.com/financialservices

This episode of Banking Transformed is sponsored by PayPal:

This podcast episode is being presented in partnership with PayPal. PayPal provides access to more than 403 million active global accounts and multiple buy now, pay later offers in a single integration. PayPal Pay in 4 enables shoppers to make purchases in four interest-free payments.

Customers get more buying power and flexibility, and you get help maximizing reach and revenue.

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Jim Marous:
Hello and welcome to another Banking Transformed Podcast. I'm your host, Jim Marous, CEO of the Digital Banking Report and co-publisher of The Financial Brand.

Jim Marous:
According to a recent Harris Poll, 40% of respondents said they are likely to leave their primary financial institution for digital banking that compares to an online shopping experience. New benchmarks have been set as to what is acceptable regarding digital experiences at financial institutions. While consumers still want to bank with community organizations, these smaller firms must accelerate digital transformation efforts to avoid disintermediation to larger banks or big tech organizations.

Jim Marous:
We are joined on the Banking Transformed Podcast by Craig McLaughlin, CEO of Finalytics.ai and Extractable. He discussed the results of the Harris research they did and provides insights into how small organizations must respond to the digital experience challenge. Over the past 18 months, consumers have been increasingly exposed to both excellent and terrible digital experiences. This has raised the bar on what consumers and small businesses want from their bank and credit union. While the research from the Harris poll commissioned by Finalytics.ai finds that more than 50% of consumers rely on community banks and credit unions for their banking needs, these relationships are at risk because of digital expectations of consumers.

Jim Marous:
According to today's guest, Craig McLaughlin, CEO and co-founder of Finalytics.ai, he said, "The way community financial institutions respond to these challenges will determine the future of these organizations and in many cases, the futures of the communities they serve. To remain relevant in the marketplace, it is crucial for credit unions and community financial institutions to consider emerging technologies that unlock the value of data and apply machine learning that can automate a digital experience that goes beyond customer and member expectations."

Jim Marous:
Craig, great quote. Great focus on what your research did. We go way back, probably over 10 years. Often meeting at the Financial Brand Forum events and sharing our thoughts around the status of the marketplace. Tell me a little bit about your new endeavor of Finalytics.ai and why you commissioned this research on the digital banking consumer.

Craig McLaughlin:
Those are great questions. Thanks for having me on the podcast, Jim. I'm super excited to be here and glad to be a part of what is huge transformation in financial services. As so as you know, in Extractable for 20 years, we worked with a range of different companies, helping them rethink how to approach the digital channel and financial services was just one of those sectors. We're based here in Silicon Valley, so lots of work in high technology organizations. We were able to bring a lot of that kind of modern thinking around how to use digital like a big tech and bring it to incumbent financial services clients. And so, in that process, what we found is that every one of the key recommendations we would make during a strategic engagement, so coming in, working with the leadership team, interviewing members to define what is the right digital strategy for this community financial institution, would include some kind of personalization element.

Craig McLaughlin:
And it's no surprise that every big tech or FinTech company that you see that has performed really well really has the same secret sauce. It's how do we use digital in a compelling way to really deeply connect with a customer in a way that's personalized? And so every credit union aspires to do exactly the same thing. Problem is the tools that are available to do that are hard. They're expensive, they're complicated to deploy. They're hard to hire people to keep running. And then it requires you as an organization to really feed it with content and interesting materials to put in front of those customers. Most community financial institutions don't have that DNA so they're not kind of born to ship code.

Craig McLaughlin:
What we found is that is we made these recommendations that required expensive platforms and lots of cost, there were so many variables in that journey that made it hard to do right and we thought, enough is enough. Why don't we go and build a platform that we know is going to bring the same experience that a FinTech would use to go in and court and win new customers to an incumbent organization. And so also what we're seeing in that regard is that there are really kind of two pieces of financial services when you think digital. One is an online banking platform to go service the customers you already have, which is great, which every institution needs. But when you look at the growth of FinTechs and you say, "Well, why are companies like Chime killing it in growth?" Well, they're killing it because they're really good at acquiring new customers.

Craig McLaughlin:
And then you go and you take a look at the online banking platforms and you say, "Is this platform going to drive that kind of growth?" And the reality is it's not. What's going to drive the growth is everything before the pin, before you log in. And so that's what we realize is no one's doing, there's a lot of people in the market building platforms like Nymbus and Q2 and D3 and fact based and their great digital experiences to serve the existing customer. But there's nobody really saying, "Hey, here if you want to grow and you want to really connect with prospective customers in a personalized way, here's how you can go about doing that." We decided to end run that whole thing, build a SaaS platform that brings that experience to bear for incumbent organizations and have it be something that could be deployed in days not months.

Jim Marous:
Its interesting because you're referring or you're answering a question we have in our research is that we found after the pandemic that a lot of organizations immediately turned on the capability or enabled customers to apply for loans or to open a new account on a mobile phone or a mobile app or a online app. The challenge was they were very inefficient. They were 10 to 15 minute processes. Well, what we found in most recent research is that organizations have tremendously improved that experience, taking time out of the process, fix some of the back office operations that happened but they're still far more cumbersome and has great more friction than what a Chime or an Apple credit card has.

Jim Marous:
What's interesting is consumers, as you mentioned are now making decisions as to who to do business with based on these engagements. In fact, according to your research, 33% of respondents identified their primary FI as being the national bank, 20% said it's a credit union, 13% said a community bank and 8% said digital only. But I think your research also showed or you're aware of the fact that these numbers are shifting and it's not in the favor of community banks and credit unions. Is this true? And if so, what are you seeing?

Craig McLaughlin:
That's absolutely right, Jim. I think the key point to take away is the smaller numbers. 8% of respondees said that they were using a digital only bank. And if you roll that back and you say, imagine we asked that question five years ago, 10 years ago, the number would've been infinitesimal. The growth there is astronomical. They went from 1%, 10 years ago to 8% today that's 800% growth in a short amount of time.

Jim Marous:
And was a primary financial institution, we're not just talking about, oh, do you use one? Your question was what's your primary? That's really astonishing.

Craig McLaughlin:
Yeah, it is. When you think about though what we were always trying to solve in working with credit unions and banks and community banks was that the digital experience was so subpar that the question the board would always have is my grandchild came to use the experience and they don't like it. Or my son used it, they don't like it because it's not innovative. Now the important thing to note is that that board member never touched that experience. They never went and used it at all because they went to a branch. My mom goes to a branch. That's what she does. Now the next generation of membership is making decisions and they're being presented with Apple experiences or Chime experiences that are really compelling so it's put a lot of pressure on the incumbents to deliver that kind of experience. If you ask yourself, well, how do you do that as an incumbent?

Craig McLaughlin:
You wake up and you decide actually it's finally true, we need to change the way that we do business. We need to go into a digital first approach and you talk about the application process being slow and cumbersome. It's hard to get that right. That is you've got technical systems, you've got approval processes, you've got visual design, you got user experience, you've got tracking. All these people need to come together to be able to yield those experiences. Really easy for a FinTech to do it. The FinTech DNA is look, we've got a short runway to build a great product. Success is dependent on people understanding it. We can't afford to talk to them. They have to get through this process. Lots of effort and time is put into removing friction from that process.

Craig McLaughlin:
The kind of opposite is the case in an incumbent organization where friction is just built into the DNA. Friction is frankly it's risk management, in which banks are fantastic at. Now so how do you balance that is the question and you've got, I think as a leader in a financial institution, what we're seeing is that leaders are starting to understand that and they're realizing like, hey, for us to move to the next step, we've got to loosen up and we've got to be in a position where we're focused on key goals and objectives. I think a lot about in it, being here in Silicon Valley, when we work with a high tech client, they show up and they have a budget allocated for the year and they are in a big hurry to get that money spent because they need to get to results. They're going to be on the hook at the end of the year to say, "Did we achieve the outcome or not?"

Craig McLaughlin:
Now incumbent financial services organizations are a lot different than that. They don't have that in their DNA, which is no one's being rewarded for taking big risks and going for it. People are really, you talk about Jeff Bezos saying, "Fail fast." You say fail fast, that's a bad word inside of most financial institutions, failing is not really an option. We've really got cultures that are at conflict. And so what we've tried to do in building this platform is put something in place that gives a leadership team the ability to just say yes, they want to do it and we can have them up and running in a very short amount of time, not needing to kind of go and reinvent the wheel.

Jim Marous:
Yeah. It's interesting because there's a lot of risk here. Your research also said that those that did their primary banking with a mega bank or national bank, 44% had household incomes over $100,000. Now that's pretty substantial. But in second place were credit unions, where only 18% had incomes over a 100,000. What we're seeing is chicken or the egg, it doesn't matter. Are consumers with the highest incomes more likely to be at the bigger banks because of the digital capabilities?

Craig McLaughlin:
I think so. I think the arsenal that a Wells Fargo, Bank of America has had in order to build experiences that are compelling is really strong. And so they are able to, Chase for example, 80,000 engineers. That's a pretty big deal. They can really move the ball forward pretty fast. Then you focus on a community financial institution, it's a lot harder to get right. You can't build it yourself. You've got to make really smart partnering decisions in order to move that ball forward. And the prize, the goal, are those very affluent consumers. Now credit unions from the beginning, that's not their bread and butter. They're not a private bank. First Republic is focused more on kind of how do they service those kind of private customers with very high touch service. Now I think the flip is then with community financial institutions and credit unions, it's knowing you've got to get that right. It's not just, while today it's potentially a experience that's focused on high net worth individuals, I think over time, it's going to be just the norm. So it's adjusting early is going to become really important.

Jim Marous:
It's interesting. I wrote an article recently for The Financial Brand that stated that building a better user experience maybe more important than traditional marketing is an acquisition and retention tool. I take it from your research and what you've said about what your company is doing that you really agree with this, that really no marketing can unseat a bad experience yet a good experience could get word of mouth and could be the gateway to generating more business, correct?

Craig McLaughlin:
Yeah, absolutely. It's important to draw the distinction. Amazon is focused on the transaction. Amazon is saying, "I want to bring somebody in, I'm going to give them the most information possible to inform a transaction." And financial services is not a transaction, it's a relationship, it's a series of transactions. It's an overall experience. It's really important to get that right. When your experience is subpar and includes a lot of friction, it's less attractive. And I think this was less of an issue pre-COVID because we've gone through pretty advanced, rapid acceleration of digital transformation and consumers that otherwise would've found another way to go and get their needs met or were forced to go and do digital. And their expectations are now set a lot higher in terms of what they want.

Craig McLaughlin:
And I think that over time, we'll see user experience becoming increasingly important. Now I hear some people, you talked about Ron. Ron will talk about user experiences, something that's really hard for financial services to get right. And I think they're right. I think you have to look at user experience as a layer on top of a series of tools that an incumbent organization needs to buy to piece together. But that overarching layer of user experience and visual design is something that is the brand story. Same thing in a branch, you think about walking into a branch, what makes a great branch experience? Well that they know you and that they meet your needs quickly and you feel delighted, all those same things need to happen in the digital channel.

Craig McLaughlin:
And if you interviewed an executive of pretty much any community financial institution, you said, "What's really important?" They're going to think in those terms, which is how do we delight somebody that does come into a branch? And we've just got to switch that thinking to be not physical, whether that's in person or on the phone and manifest it now in the digital experience. And so what we've built in Finalytics is we looked at all these kind of industry agnostic tool sets and we thought, they're just so hard to get right. We know that most financial services companies can't afford to do this well. And we'll ultimately struggle to get it right. How can we just solve this problem and give them something that they can just put the key in and say, "Yes, I want to do it." And we can then bring them that same kind of Amazon, personalized digital experience that delights customers.

Jim Marous:
Well, so it's interesting when we're talking about this opening of new accounts in the transfer business, we're seeing customers splitting their relationships more than ever across traditional, non-traditional organizations mainly because it's so easy to open some of these other accounts but they don't necessarily have to close their existing accounts. With the organizations you work with, do you see there's maybe more of a head in the sand type mentality around if they're really losing relationships when they're really not holding them, they're just out losing the accounts. I know that I have my same accounts I've had for over a decade in both my institutions but I'm not too sure if they have the relationship anymore. They have in my account and they have some of my balances but are you seeing that organizations may be not really looking at loyalty the way they should in a digital world where a consumer can open a Chime account, can open a SoFi account, can open a Robinhood account with a click of a button?

Craig McLaughlin:
Yeah. No, absolutely. I think you're a 100% spot on with that statement. What we are seeing is that leadership teams inside of community financial institutions, credit unions and banks are so slammed trying to just meet the day to day objectives that they have. And so they're so focused and working so hard to get all these things right and done and it's so complicated. You're dealing with second and third party vendors. It's hard to pull those pieces together. While that's happening you've got these new upstarts coming in and taking very small bits of share. And it's really easy to discount them. It's easy to say, "Well it's a very small amount of money going into Chime accounts or going to Betterment accounts or going into my Robinhood account. It's not a big deal."

Craig McLaughlin:
But that's exactly what we saw with the investment startups five or 10 years ago, where people looked at it and they're like, "It's really not a big deal. I'm Charles Schwab. We have a strong foothold in the market. These small, personal capitals that are coming along and taking share, it's not really so much of an issue." Fast forward to today, it's a huge issue. It's a big deal. I think being aware of those things and having your finger on the pulse of what your customer and member expectations are is really important. And tracking it.

Craig McLaughlin:
We look at member or net promoter scores that it's an annual exercise and it's just we don't live in a world anymore where you can do a report at the end of the year, wait three months and report back on what happened 15 months ago. You need to really have your finger on the pulse and know what's going on. That's what a FinTech's going to do. And those are the processes that incumbents just, they need to adopt and embrace, which means different people. Which means bringing in new leadership teams, different thinking, you have to be open to things that are different. Your culture needs to change a little bit. There's a lot of pieces in there.

Jim Marous:
Well, it's interesting your chief strategy officer and a personal friend of mine, Alex Jimenez, recently wrote an article for The Financial Brand entitled, Digital Transformation is About New Business Models, Not New Tech. We're really pointing out that it's not just buying the technology that's the deal. You really have to change the way your organization thinks, the way it operates, the culture, the training you give employees. Do you see this as being a major problem? As you're visiting organizations, not internationally but across the country, do you find that sometimes people think they can buy the worry out of it when really it takes just a new business model overall?

Craig McLaughlin:
It's really, really, really hard, Jim. And Alex is obviously fantastic and such deep expertise as a top influencer in financial services. And he's out there on the front lines, working, doing the interviews with leadership teams to get to the strategy that they need to employ. And I think when we talk about transformation, it's really not about digital so much as it's about cultural transformation. And I don't think leadership teams understand that what we're changing isn't so much the organization, we're trying to change them. We're trying to get them to think differently about what needs to happen. And I think there's this instinct to say, "We have a technical problem, which means that we need to go shopping for new technology." And that's not issuing a strong RFP, doesn't really move the ball forward because you have to change the way that you operate and you have to change the way you think.

Craig McLaughlin:
Dealing with a CFO who has worked in the same position for 30 years, that's not fresh thinking. You need to have new ideas. You need to try. You need to take some risks and do some new things. And so we're lucky in the consulting we do you with Extractable to be able to have an organization that has hit that point, where they say, "We're finally ready to do something different. We understand." But what happens is a lot of times the person that brings us in is the CEO or the SVP of digital. And then we're having to then go and do that kind of hard cultural transformation work to go and address preconceived notions.

Craig McLaughlin:
You think this, however, the world's gone this way now and so we need to make that adjustment. Which it ends in technology, ends in tool sets and user experiences. But the thinking that gets you there needs to be fresh. And when we talk about what we do with Finalytics is we know where you're going to end up because we've done it enough times and you need to have a great, personalized digital experience that is focused on a segment of one. When a user shows up, it is content that is directed to that individual. The same thing that happens in a branch, you get to the front of line, the guy behind the counter sizes you up, understands what's the most important thing to be talking to you about? Is it a retirement account or is it your first car loan? It's intuitive.

Craig McLaughlin:
Your best staff does that every day. We're just trying to bring that same thing to the digital experience and say, "Hey, based on behavior, based on what you've done in my experience so far, we know what's relevant to talk to you about." And to actually do that. We think if you look back 10 years from now, and you say, "Did you know," if I told my son, I said, "Did you know that every financial services experience gave the same message to every user, regardless of what they did with you?" He'd think you were kind of crazy. And I think we're going to be in that stage 10 years from now. We think getting this thing right is really important. And that's a leadership team to your original question regarding cultural versus digital transformation, it's easy to dismiss something like that and say, "Well, we could probably get by without that. We don't need to spend that budget." But the reality is in order to really delight the user, you have to make those strategic investments around how you're going to address their needs on the digital channel.

Jim Marous:
Let's take a short break here and recognize a sponsor to the podcast.

Jim Marous:
This podcast episode is being presented in partnership with PayPal. PayPal provides access to more than 403 million active global accounts and multiple buy now pay later offers in a single integration. PayPal Pay in 4 enables shoppers to make purchases in four industry payments. Customers get more buying power and flexibility and merchants get help maximizing reach and revenue. Learn more about PayPal Pay Later on paypal.com/trust.

Jim Marous:
Is your organization trying to embrace digital banking transformation in 2021? Are you trying to elevate the customer experience? Figure out what technology you want to implement to improve the customer journey? Look at data analytics to really better understand and personalize the customer experience? And you're trying to make it to more of your employees can buy into and be part of your digital banking transformation? If this sounds like you, I ask you to reimagine banking with our newest podcast sponsor, Microsoft. Thank you for the opportunity to unlock new opportunities at speed throughout innovative business models, deliver differentiated customer experiences across channels, products and services and redefine new ways of banking. Microsoft and its partner ecosystem help banks to achieve differentiation through sustainable growth, streamlining core systems, reducing cost and risk and delighting customers and employees. If you're in the midst of a journey trying to figure out what to do next, maybe trying to find out what other organizations are doing to lift up their experience level, I really encourage you to look at Microsoft. For more information, visit microsoft.com/financialservices.

Jim Marous:
Welcome back. Obviously I mentioned to you before we went on the air that the biggest challenge right now is trying to sell when a lot of organizations aren't feeling pain. We see the train coming down the tracks but many of these organizations are making more revenue than they ever have. The desire to change when nothing's wrong is like going to the doctor and saying, "You got to do this, this and this become hell." You're going like, "Well, I'm doing okay right now."

Jim Marous:
So when you're meeting with smaller financial institutions and midsize financial institutions, what do you tell them that they need to do first to get up for this challenge? I mean, they got to start somewhere. And digital transformation we both know is bigger than a bread box. And it takes a lot to do it. Where should an organization start? Where do you tell an organization, "You know what? If you listen to nothing else we've said today, this is what you have to do."

Craig McLaughlin:
That's a great question. And you talk about teams saying, "Hey, I'm performing better than I've ever performed. My asset sizes has grown astronomically in this shortest amount. It's never grown faster. We're meeting our numbers. We're blowing every target we have all the out the water." In some cases, people are saying, "It's the middle of the year but we've already gotten our bonus." And there's a lot of kind of bravado. There's a lot of guys walking around like they reinvented the wheel and they're pretty hot stuff. The reality is everyone's growing, everyone's seeing those kinds of asset improvements. And so you have to say, "Hey, I'm going to be sitting here two years from now. I'm going to look back at this timeframe and I'm going to ask myself, 'What did I do with it?' COVID hit, things changed. How did I make the most of that opportunity?"

Craig McLaughlin:
I feel like if there was one thing I would say, I would say, it's about humility. You really have to be humble and you have to be focused on what is really important that we want to get right here as a team. And then you want to then align around this. I would say it's then around cultural transformation to say, "What are the things that we as a group, as a collective have come together and agreed that we're going to stand behind and we're going to make happen as a team?" Those are big deals. And so you keep coming back to the original, what we were just talking about earlier about digital versus cultural. It comes down to leadership, really good leadership.

Craig McLaughlin:
Somebody who's saying, "There's the north star. We're going to go after that come hell or high water and we as group either you're on board with making that happen or you're not. And you're on the team you're not but here's where we're going as a group." I think those are the things that make change and finding ways to achieve those goals with smart technology that can work with you is hard. We always say, "When you're working with just all the incumbents, the incumbent financial services tech providers, you're really only seeing a small portion of what's available to you and you have to kind of get outside of that world and take some risks." I always look at for me, I always look at VyStar. Those guys are so innovative and what they've done by making an investment in Nymbus and another organizations, what they've done is so impressive. And it's a model of how an innovator is really coming into the space and being disruptive as an incumbent. Really impressive stuff.

Jim Marous:
Well, it's interesting because you look at what needs to be done and you've brought up the whole thing of using core providers and all. That organizations really have to find those solution providers that can help them make those incremental steps to get better, picking out the ones who are best at it. Pick your best new account opening firm, pick out your best digital lending firm, pick out your best back office transformation firm because the reality is, if you don't move at speed, if you don't have the challenger mindset that says, "We can't sit still," you're not going to move forward. One my favorite books recently is James Clear's book Atomic Habits, which really talks about making small little changes. And he talks a lot in a personal life. But in a corporate life, how can you make these small incremental changes that'll continually improve the organization, moving it towards their ultimate goal of being a good digital banking organization?

Jim Marous:
And this is especially important for smaller organizations because if you can make these incremental changes every day and you take the cumulative effect, just like compound interest, and you can take these cumulative effects of what you do, you're going to see some big effects longterm. I've had discussion with bankers recently from across the country about digital banking transformation efforts, which certainly are really huge in context of what needs to be done but they seem to move so slowly despite them knowing what the need is and what is out there in the marketplace. And what have you seen to be the major reason why organizations don't do what is apparently needed?

Craig McLaughlin:
That's a hard question to answer. What prevents that sense of urgency that things need to change and they need to change quickly? I think it does come down to leadership because I've seen leadership teams that show up and they say, "We are changing. Either you're part of the problem or you're part of the solution." And wow, that really creates from a top down, the ability to improve at pace. Using the right technology is important too. Making the right decision. You talk about atomic habits, we think of Finalytics as a tool that will enable the digital experience to do that on a day in and day out basis, using artificial intelligence and machine learning to say, "When this user shows up and exhibits this kind of behavior, here's the right content to put of them." And it's constantly honing and getting better and better.

Craig McLaughlin:
I think that kind of connects into your concept around atomic habits. But I would say, it's finding those right tool sets so we'll support that kind of innovation, establishing the foundation of the right systems to be able to support that. And then it's re really good, laser focused, determined, supported leadership from the top down to be able to go and make change. That's what I, and we see it on a consultative basis that the organizations that have that outperform those that don't. But these are big projects.

Craig McLaughlin:
There are CEOs out there that don't want to go and rock the boat. They were like, "I get, I know that digital's the future but I'd rather maybe that be the next CEO's job. That's a messy project to get right. I know the team that I have doesn't have that competency as expert yet and it's a lot of risk." And so finding an end run around that is probably it's more comfortable, it's complacent but it's not doing right by the organization. You really want to have the time that you spent in that organization be a period of time where you look back and say, "We made big changes. We achieved some big things. We're proud of the outcomes." But you've got to have that sense of urgency.

Jim Marous:
It's interesting, Craig, I've interviewed a lot of solution providers over the last two years. And one question I've never asked but I guess in the back of my mind I was wanting to ask is, okay, so you get called in by a financial institution that is saying, or they respond to something that you go out there and say, "We can help you with this." And they invite you in. Let's say you have a two hour meeting set up with them. Can you usually see within the two hours whether or not they're going to probably buy from you or not? Can you sense just in a two hour meeting, whether or not this organization is just saying the right things or actually ready to do the right things?

Jim Marous:
And do we sometimes because I was on the sales side for years and my boss used to say, "There's very little difference between the tip of the iceberg and the tip of the ice cube when you don't look below the water." In that they look the same on top but the bottom line is sometimes we fool ourselves into thinking somebody's going to buy. In your heart of hearts, do you believe that when you go see an organization, you get a sense as to whether or not they're really buying into what you're saying? Or if they're just going through the motions because it's something they should do?

Craig McLaughlin:
Yeah, absolutely. Absolutely. A 100%. Good example, credit union client of ours, fantastic people. I love them. I think they're really great. A great team and good human beings, which is a good indicator of success. I always look for it because if it's the kind of guy that you want to beer with and that you feel like you trust, that goes a long way. What you do see is why you're doing it. We have a client that said, "Look, I'm ready. I think we're ready to jump in. We want to do this. Can you come out and talk to us?" And I said, "Sure, I can but we've talked before and it hasn't moved forward. Why don't you go to your CEO and if your CEO is interested in talking about it, then we'll come out and we'll meet with you and we'll go through that." When the CEO comes in the meeting and the rest of the leadership team comes in, you can start to read the tea leaves a little bit and you can say, "Oh, interesting. Who's engaged? Who's not engaged? What kinds of questions are they asking?"

Craig McLaughlin:
As we're showing insights around interviewing members or doing data analysis of systems, are they looking at why it can't be done? Are they looking at well, our systems prevent that so that we can't do it. Or are they saying, "How might we be able to do that?" And so we're trying to bring that framework to bear, which is the cultural transformation element. But if you don't have the leadership team bought into that, the troops, the tip of the pyramid is if they're not bought in, nothing is going to change.

Craig McLaughlin:
I think those are critical. And can you feel it in the meeting? Absolutely. There are some people that really want to make change and they're pushing. Where I feel the most pain is where I'm working with somebody let's say in the digital realm and they're like, "I get it. I'm so excited. I want to do this right. We want to work with you guys because we know you guys are the best at it. Can you come and help me persuade my team to go and do this?" And what we find is just that resistance is just getting through that it's just so hard. And so you talk about cultural transformation. It's not digital. It's not like you can buy technology all day, it's how do you get people to want to try harder, do new things, take risks?

Jim Marous:
You bring up an interesting point. The middle management many times will give you every single buy signal and they truly believe it. They're not sending false positives. And as salespeople, we'd be out there saying, "Okay, they're going to buy, they're going to buy." But as you said, unless you get in front under the top management and really read the tea leaves saying, "Okay, are you also telling your middle management yes, we want to do it but really you're not willing to sign a check or not willing to move forward, not willing to change." That's an important step. And this is important for people in financial institutions because if you think you're going to be able to get vendor to come in, a solution provider to come in and change the mind of your leadership that you know in your heart of hearts, isn't willing to change, it's probably not going to happen.

Jim Marous:
On the other hand, if you have the ability and your management is willing to sit down with a key digital transformation leader company, like your own Craig, and they're willing to sit down and listen and actually engage and they can give you some examples of how they've made steps. Because most likely, Craig, you're not going to be the first step they make. Have you improved the digital account opening process? Have you changed your core provider on mobile banking for a customer-centric reason, not for efficiency or cost? And that's the important criteria. And it's interesting because we get in this mess, this morass of circular decision making, where we don't make any progress and it does get down to leadership. And at the end of the day we have to ask ourselves, as an organization, are we to engage with a solution provider that can bring us the solution? And are we going to actually take what they say and do something with them? Because that's the biggest frustration in the marketplace today, I'll guarantee it, from both the financial solution and the solution provider perspective.

Jim Marous:
Finally Craig, if an organization was wanting to do what they should do in the future with regard to digital transformation, how do they get a hold of you and your team?

Craig McLaughlin:
Well, there's a couple parts. Obviously we, Extractable is a consultancy that works with community financial institutions to lay out those strategies that has a long track record, 20 plus years of working with companies in the space. One of the most awarded digital agencies with focused on financial services with a deep expertise, extractable.com is the URL. The opportunity to use artificial intelligence to develop segment of one experiences in an automated fashion using machine learning for banks and initially just credit unions, you can see us at finalytics.ai is the domain. The company name is the same as URL which makes that a little bit easy. But reach out and we are making some really strong traction in terms of getting the solution to market and having some early wins. Excited to continue on that track.

Jim Marous:
Craig, it's great to have you on the show today. It's interesting because as you know, I'm a big advocate of you and your firm but also big advocate of transformation as a person, as well as a company. Since we last met you, you've taken a big leap forward with your Finalytics.ai initiative. And it really works well with the Extractable agency, as far as being able to deliver on what you are recommending firms to do. And again, it was great to have you on the show today. I'm glad you could join us.

Craig McLaughlin:
Thank you, Jim. Really appreciate it. Looking forward to seeing you at The Financial Brand forum next year.

Jim Marous:
So am I.

Craig McLaughlin:
Thanks.

Jim Marous:
Thanks for listening to the Banking Transformed Podcast, a podcast of focuses on innovative solutions and challenges for financial institutions. I'd like to thank Craig McLaughlin, who was on the show today for all of his insights. If you are a solution provider wanting to discuss how you can help bankers and credit union solve a major problem in the marketplace, drop me an email, we're keen to help.

Jim Marous:
This been a production of Evergreen Podcasts. A special thank you to our producer, Leah Longbrake, audio engineer, Sean Rule-Hoffman and video producer Will Pritts. I'm your host, Jim Marous. Until next time, remember, customers no longer judge digital experiences against other banks, they compare what you provide to the experiences at Amazon, Spotify, Netflix and Uber.

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