For the New Role of Operations Workgroup, the summer workload didn't let up. During our June and July meetings, we had robust conversations that explored the role of operations in today's continued era of COVID impacts. Through that dialogue, one point became exceedingly clear: While the pandemic forced short-term reactions to banking needs, its long-term implications signal future shifts in financial institution (FI) operations.
"From my perspective, I'm seeing more destruction of boundaries with operations, particularly as relates to core providers," said Stessa Cohen, a consultant with Pivot Assets, and advisor to the workgroup. "It's also the destruction of boundaries between delivery mechanisms and core banking activities. We are at a place where there's a real opportunity for banks with fewer layers."
As we peel back those layers, FinTechs lie at the core, offering new services to meet the evolving needs of customers and members. But challenges arise in connecting those services into existing infrastructure. While application programming interfaces (APIs) introduce distinct opportunities, the reality does not yet align with the vision when it comes to infrastructure integration. But nevertheless, we're witnessing a newfound openness to FinTech solutions, particularly as FI executive leadership and Boards take notice.
"We now are getting asked about things like robotic process automation, and APIs are another of those technical things executives are hearing about in their meetings," remarked Linda Carmichael, Senior Vice President, Operations at Fidelity Bank. "It amounts to investments in the back office and operations."
With the movement towards digitization accelerated by the pandemic, operations has grown in prominence within FI strategic discussions. In fact, many institutions have begun working on efforts toward system modernization, making significant investments in everything from real-time payments to streamlined processing to customer-facing digital solutions.
"It's an eye opener the investment required to modernize the back office," shared Linda Cooper, Vice President, Operations Manager at Gorham Savings Bank.
Yet, modernization seems to be a new requirement for the industry and partnering with FinTechs provides one path to achieving it. In fact, a recent report from the Federal Reserve Board, Community Bank Access to Innovation through Partnerships, explores the growing importance of meeting customer and member needs through strategic relationships. But with a shift in customer and member needs comes a corresponding change in the staffing required to support it.
"Though our current bank staff is experienced in the field, we do not have a bench of reserves with similar experience," said Patricia Mullin, CCM, Senior Vice President, Director of Treasury Management at Cambridge Trust Company. "For example, to move to real-time payments, we would need to recruit outside the bank to bring in individuals with expertise in this field."
While technology continues to open up opportunities, the residual effects will be felt for years to come, particularly as relates to talent and staffing at banks and credit unions. As new solutions are deployed, differing skillsets will be necessary to accommodate their evaluation, execution, and ongoing oversight.
Both innovation and staffing will be addressed in the forthcoming white paper, which will be released to the industry in mid-October. In the meantime, if you want to further explore opportunities in this new era, consider joining us for the virtual Future of Payments Symposium, December 8 and 9.
AUTHOR: Joe Casali, AAP, NCP
Executive Vice President
As the EVP of Payments Innovation for NEACH, Joe focuses on exploring innovative solutions and technologies that will help position members for success, both now and in the future. Connect with Joe to read more of his blogs, articles, and posts.