Every year, digitization further rattles the relevancy of the traditional hierarchical banking organization. In the throes of managing balance sheets and loan portfolios and at the same time executing daily “run the bank” operations, bankers are faced with the need to continuously develop new customer experiences and scale enterprise capabilities. And, quite frankly, they’re struggling.
Trying to manage this fast-paced environment with annual plans, static operating budgets and gatekeeping project management offices is proving too slow and clunky for an industry that has innovators delivering new apps at 10x the pace of traditional banks.
To overcome the struggle, banks need to build leadership teams that align with how a future “Smarter Bank” will operate. Based on our advisory work with hundreds of financial institutions and fintechs, Cornerstone has identified four Foundational Pillars of Smarter Bank Leadership.
As more banking activity gets embedded into digitization, platforms, data and artificial intelligence, Smarter Banks will bluntly need more smart people. This mandate will force higher aspirations when it comes to recruiting talent.
Think about the quality of candidates that top tech companies, Wall Street investment banks and Big 4 management consulting firms recruit. Think about companies that apply rigor to intelligence testing like the famous Microsoft logic interview puzzles. That’s the new DNA we need to increase across the banking industry.
At the same time, tomorrow’s leadership will have little to do with “book smarts.” Banks and credit unions that are successfully transforming today tend to skeptically analyze new industry trends and conduct the hard work to dig into the details. Once they run buzzwords and innovations through management’s “B.S. meter,” they boil down their actions into pragmatic investments and experiments. The very best bankers are consistently gritty and creative with how they adapt and apply innovation to their businesses.
Most regional and community banks grew up executing the fundamentals with sheer hustle and hard work. However, as these organizations grow in size and complexity, hustle won’t translate into scalable processes or scaled efficiencies.
Smarter Bank leaders have an eye for designing and building new systems that align people, processes and technology and that leverage data and intellectual capital. Credit officers don’t approve every loan – rather they build credit models and portfolio management systems. Marketing doesn’t hustle the next campaign – they build a segmented and data-driven marketing funnel process.
In the new banking environment, adopting Elon Musk’s “first principles” approach can open new performance opportunities for bank leaders. First principles thinking focuses on the fundamentals of identifying assumptions, breaking down the problem and constructing new solutions. This approach allowed for breakthroughs at both Tesla and Space X that were previously deemed infeasible by auto and aerospace industry “experts.”
In a world where the bank is continually releasing new digitized processes, it becomes more important to design and execute projects cross-functionally across the organization. The traditional vertical chain of command can’t handle this challenge.
When business lines must continuously collaborate with marketing, I.T., risk management and operations, trust becomes the fuel to move quickly across organizational lines, and trust becomes the personal currency of leaders. A corporate culture of public politeness coupled with private backstabbing usually spells the death knell for transformation.
Smarter Bank leaders know how to civilly debate colleagues and work to build compromise requirements that help optimize the demands of stakeholders. Amazon scaled in miraculous ways and addressed heated debate with the 13th Principle in its “Amazon Way” document, “I disagree but I commit.”
Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.
While many banks are chock-full of experienced, resumed leaders, they consistently struggle with execution. In an industry that collects 99.75% of the money it lends out, projects are most typically late, over budget, and do not achieve the original business outcomes targeted from the investment.
In a Smarter Bank, leaders tend to be resourceful guerilla warriors when it comes to execution. They don’t break a sweat with the typical vendor technology mess they have to deal with or the ambiguity that comes with any challenging project. These leaders know how to pivot when issues arise and keep their teams focused on milestones, issue resolution and quick escalation. Simply put, the banking industry needs more leaders who can consistently hit milestones and achieve visible business outcomes.
So, GonzoBankers, try this thought experiment: Build a grid with your senior and middle managers down the first column and list these characteristics across the next four columns:
Then, give each manager an A – F grade on each leadership trait.
How did the team score? Where is there work to do? My advice: Don’t wait too long to act to raise your GPA.
Until next time,