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The Great Digital Transformation: America’s Leading Banks Investing In Technology To Better Serve Customers
January 25, 2022
Driven by consumer demand and a desire to provide the best banking experience available – whether at a branch or on an app – the banking industry is in the midst of a dramatic digital transformation. Although banking may be one of the nation’s oldest and most-established industries, many of America’s leading banks today view themselves just as much a technology company as a financial services firm.
The COVID-19 pandemic has only accelerated changes in consumer behavior and banks have responded by unveiling digital banking solutions, while also continuing to provide families and small businesses the high level of service and personal care they’ve come to expect while visiting a branch. This strategic focus also enables banks to broaden the impact of their community development (CRA) investments, bringing greater access and affordability to those most in need.
As Consumer Bankers Association (CBA) President & CEO, Richard Hunt explained:
“For well over a century, America’s leading banks have adapted not only to meet the evolving needs of their customers, but to fulfill their role as drivers of economic growth across every community they serve. From the advent of mobile banking more than a decade ago to the more recent integration of voice recognition AI, banks remain fully committed to developing accessible financial solutions in our increasingly digital world. CBA’s Digital Channels Committee is working to ensure each of our members have the insight and tools they need to achieve this goal.”
To recognize the how America’s leading banks are investing in technology to better serve customers, Hunt added:
“Today, CBA is launching a new blog series – Driving the Digital Revolution –highlighting just some of the bank-led efforts fueling this historic transformation across the industry. Over the coming months, we’ll feature the latest innovations by our member banks to enhance their digital offerings and bring banking into the future for American families and small businesses. As a part this series, we’ll also explain why it’s so critical for policymakers to modernize the rules of the road and ensure consumers receive the same level of protection – regardless of where they go to meet their financial needs.”
Bank-Led Efforts, Driving the Digital Revolution
As one of the nation’s largest financial institutions, JPMorgan Chase has assembled a team of 50,000 technologists to enhance the bank’s mobile and electronic payments platforms, strengthen cybersecurity, and harness the power of Artificial Intelligence (AI) to better serve customers.
Commenting on this ongoing commitment to enhance the banking experience for customers, Larry Feinsmith, Managing Director and Head of Global Tech Strategy, Innovation & Partnerships at JPMorgan Chase, said:
"We have a tremendous amount of opportunity here (to be an) unexpected disruptor in banking and in the technology industry. Because technology changes so quickly we are not only developing technology for today, but we are also anticipating the technology needs of our consumers 5-10 years down the road."
Minneapolis-based U.S. Bank now sees 80 percent of its transactions and more than 60 percent of loan originations occurring through digital channels. Recognizing this monumental shift in user engagement, the bank recently revamped its mobile banking app, with a special focus on harnessing the power of data analytics to empower families to make informed financial decisions. Through its Personalized Insights feature, the bank provides a summary of spending behavior to help customers create a sustainable savings plan and reduce unwanted debt.
Commenting on why traditional banks, specifically, are poised to succeed in the ever-changing financial technology market, U.S. Bank President & CEO Andy Cecere said:
“I think it's a great opportunity because our combination of banking products and (digital channels) together with the people component is attractive to customers. Banking and financial services is often complicated, and while transactions can happen in a digital way, you still sometimes need people to provide advice, counsel and planning.”
For many banks, including PNC, the development of technology-driven financial suites began well before the pandemic arrived on our shores. PNC’s Virtual Wallet, for instance, was first unveiled in 2012 as one of the first technology-driven products aimed at helping consumers quickly, confidently and securely manage their finances at their fingertips.
Just this year, PNC introduced Low Cash Mode through Virtual Wallet, a new feature designed to deliver real-time intelligent alerts to prevent unwanted overdraft fees. PNC also was an early developer of QR code technology for easier payment enablement with Zelle and recently partnered with Akoya, a leading data access network, to ensure consumers’ personal financial data is secure when using third-party applications.
In an April 2021 Bloomberg Television interview following the public release of Low Cash Mode, PNC’s President and CEO Bill Demchak said:
“We’re serving our clients in a world where technology makes a different. […] Our ability to develop and deliver products is at lease as good as anybody who has fintech in their name today.”
Banks of all sizes are committed to enhancing the digital experience for customers, including Berkshire Bank, which unveiled the Berkshire's Exciting Strategic Transformation (BEST) plan in May. Through BEST, Berkshire will leverage technology to digitize operations, centralize data management and modernize the back-end technology behind all points of customer contact. These investments will enable the bank to support its consumers’ financial journeys more efficiently and effectively.
Berkshire Bank President & CEO, Nitin Mhatre, who formerly served as CBA’s Board Chair, recently commentedon the bank’s new partnership with AI lending platform Upstart, designed to improve access to affordable credit among underserved populations:
“With an exceptional all-digital personal loan experience, it will make credit more accessible and aligns with our focus on reaching more people in our communities while helping grow our consumer lending business. It's also the first of many programs to result directly from the 'digitize' pillar within (our) BEST plan.”
The Need For Level Playing Field Has Never Been Greater
With greater competition in banking serving as a key driver behind these bank-led technological investments, consumers stand to benefit from the ability to choose a bank with the innovative product suite which best serves their needs. At the same time, a growing percentage of consumers are utilizing the services of fintech firms that are competing for the same customers as traditional banks, but do not abide by the stringent federal oversight requirements as banks do, depriving families of the protections they deserve.
Recognizing the importance of instituting a level regulatory playing field to maintain the safety and soundness of our financial system, JPMorgan Chairman & CEO Jamie Dimon said last year:
“America’s financial system is the best the world has ever seen, from our regulatory system and rule of law to exchanges, venture capital and private capital, banks and shadow banks. As our system changes, our government and regulators need to understand that maintaining the vibrancy, safety and soundness of this system is critical – and this includes maintaining a fair and balanced playing field.”
CBA has long served as a leading voice in Washington on the harmful implications of this regulatory disparity for hardworking families and has advocated for policymakers to modernize the rules of the road to ensure safety and stability in the rapidly evolving banking industry. To learn more about our advocacy efforts, click HERE and HERE.
CBA’s Digital Channels Committee
As one of fourteen standing committees within the enterprise, CBA’s Digital Channels Committee focuses on digital banking and related issues to enhance the customer banking experience and increase user engagement. The Committee provides a forum to discuss challenges and opportunities for digital banking, as well as insights to assist our members as they adapt to the rapidly growing multichannel bank environment, including digital’s role in physical channels.
The Committee’s goals are to:
- Provide thought leadership and highlight best practices in digital channels for banks;
- Share insight and guidance on the digital payments ecosystem;
- Provide a vital forum to discuss banks’ digital evolution and look ahead to additional growth and transformation; and
- Generate original research and plan compelling CBA LIVE programming on digital banking topics – expanding participation and engagement.
To learn more about CBA’s Digital Channels Committee, click HERE.
Join members of the Digital Channels Committee and other top industry leaders at CBA LIVE 2022, March 7-9 in San Antonio, Texas, to hear their perspectives on this ongoing transformation in an increasingly competitive banking marketplace. Register now to secure your spot at retail banking's premier annual event!
Stay tuned more from CBA’s Driving the Digital Revolution series in the coming weeks.