Financial institutions have experienced unprecedented disruption in recent years, accelerated all the more by the COVID-19 crisis. From increased digitization to artificial intelligence to cryptocurrency, even a casual glance at today’s headlines reveals that banking is undergoing a revolution. These shifts are driving seismic changes in every aspect of banking, including operations. To position your financial institution for the future, it’s essential to understand and embrace the new role of operations.
“We need to not be afraid to question the status quo and think outside the box,” Linda Cooper, VP and Senior Operations Manager at Gorham Savings Bank in Gorham, Maine, and a member of NEACH’s New Role of Operations Workgroup, told attendees at NEACH's Future of Payments Symposium late last year. “We need curious, fearless, puzzle enthusiasts to dream up new ways of doing things, to come up with really innovative solutions.”
Cooper, along with other members of the workgroup, unpacked their findings from their whitepaper, “The New Role of Operations: Exploring Channels, Talent, Innovation, Collaboration, and Risk in a Complex World,” at the symposium. Their paper details each of these areas, examining the challenges and opportunities inherent in each and offers specific considerations for financial institutions moving forward.
New Delivery Channels
“We need to embrace iterative solutions,” Cooper pointed out. “Being able to accept a good result as opposed to a perfect result is key. We need a flexibility that says this is the first version, and we will address other issues in the next one.”
Cooper shared what this looked like for Gorham Bank when Paycheck Protection Program (PPP) loans hit. Staff worked hard and long hours to generate the documents needed. After receiving guidance from the bank's risk department and the Small Business Administration, the bank employed e-signatures to accelerate the process. The bank processed roughly 1,200 loans with "all hands on deck,” said Cooper.
However, in the summer of 2020, SBA changed the terms of the PPP loans, which required additional innovation and collaboration. Working within their constraints at the time, the bank looked at ways to change its workflow. They used available tools, like Word and Excel, to reduce the time needed to solve a problem from weeks to days.
The pandemic drove innovation in other areas as well. Kathy LaGrave, VP and Operations Innovation Officer at Ion Bank and another workgroup member, noted that amid the disruption of the last few years, their organization saw a significant uptick in the use of interactive teller machines.
“Interactive teller machines offer a video capacity, but customers can also request teller assistance,” explained LaGrave. “It’s a video chat, and customers can do anything they can do at a branch teller window.”
Workgroup members made clear that opportunities for process improvements and new delivery channels abound and make sense for financial institutions of all sizes, whether they're on the cutting-edge of digitization or prefer a "wait-and-see" approach.
Innovation, Collaboration, and Risk
Panel members also highlighted new opportunities for innovation and collaboration both inside and outside of the organization. Many financial institutions are finding that they can exponentially increase innovative solutions and service offerings by partnering with FinTechs or other Third-Party Providers.
"We were looking to the core for initial solutions," said Patricia Mullen, CCM, SVP, Director of Treasury Management for Cambridge Trust Company and workgroup member. "A major shift for us came when we realized solutions need to be integrated with the core but don't always have to be supplied by the core. People are able to do the plug-and-play a lot easier."
But when integrating solutions like these, be sure to conduct your due diligence in vetting third-party providers and ensure their product or services complies with regulatory requirements to mitigate risk.
Finally, when assessing operation processes and technologies, FIs need to be sure not to overlook the human element.
“Operations is a lot more than having people key transactions accurately,” said Cooper. “We need less of this sort of talent and more people who have a different way of thinking about things and can ebb and flow from very general oversight to fine details.”
While talent acquisition is a critical consideration as the industry moves forward, in other cases, cross-training existing employees and reallocating duties across the organization can go a long way toward meeting customers' current and emerging needs.
The focus on technology and changing processes creates all sorts of new opportunities for existing and new staff. Existing employees who are inclined to excel in these roles are often already subject matter experts in various areas of the organization. This creates a powerful opportunity for success within the financial institution.
To learn more about these and other opportunities to help position your financial institution for the future, download “The New Role of Operations: Exploring Channels, Talent, Innovation, Collaboration, and Risk in a Complex World” white paper, a collaborative effort between NEACH and The New Role of Workgroup.
Recommendations for Operations
NEACH and the New Role of Operations Workgroup offered these recommendations:
- Delivery Channels and Technology: Consider exploring new technologies and delivery channels to differentiate your organization from the competition.
- Innovation: Assess your organization’s needs and consider the value proposition before investing in new technologies or solutions.
- Collaboration: Consider ways to increase collaboration organization-wide, including opportunities for operations to contribute to strategic planning.
- Risk: Determine whether partnering with other financial institutions or organizations can help identify and mitigate new fraud trends.
- Staffing and Talent: Think about cross-training staff or hiring new staff with strategic skillsets to meet today’s marketplace challenges.
To learn more about the new role of operations, download "The New Role of Operations: Exploring Channels, Talent, Innovation, Collaboration, and Risk in a Complex World" on NEACH's website.
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.