Feature Story

Banking on Digital

Traditional bank branches haven’t changed much over the years. See how one CEO has moved from paper and long lines to true digital disruption.

When Ray Davis, CEO, Umpqua Bank, came to the bank in the early 90s, it was a tiny operation in the woods of Southern Oregon.

Today, it’s the largest Oregon-based bank with branches in Oregon, Washington, Nevada, and California.

But Umpqua’s growth is not what makes it unique.

If you walk into the San Francisco branch, for example, you would think you stepped into an exclusive, high-end café or collaborative workspace. Some say it feels like an upscale hotel lobby with touch-screen technology woven throughout.

“When I interviewed with the board of directors, I basically told them, ‘Look, if I am a candidate, don’t hire me if you want things to be status quo, because I’m going to turn this place inside out,’” said Davis.

“Everything you know about banking, I’m going to try to change because we want to create value. We want to build intrinsic value in the corporation. It’s going to mean we have to change,” he told the board.

And he meant it.

But it wasn’t easy.

Delivering on the promise meant creating a customer experience the banking world had not seen before.

“I knew that I couldn’t outspend, out-man, out-computer the big guys.  How am I going to do it? What it basically boiled down to is that our greatest weakness, which was we were very small, became our greatest strength,” he explained. “We could implement change fast.”

This change was fueled by digital innovation.

Develop Your Roadmap

How can other innovative banks (both startups and incumbents) become as disruptive as Umpqua?

With rising pressure from agile digital competitors, every financial services organization must think like a tech company.

According to Chris Skinner, author of Digital Bank, “If banks aren’t digital, they’re going to be dead in the water.”

Becoming digital in the banking industry means being laser-focused on your customers. It means being obsessed about them.

Most customers are used to intuitive, seamless, and efficient experiences in online entertainment and shopping.

Retail banks must offer similar personalized interactions. This could include everything from shortening lines to offering timely insights and advice anywhere, anytime.

To start the journey to becoming a digital retail bank, there are three steps organizations can take. This is according to a newly published whitepaper by Cisco called Roadmap to Digital Value in the Retail Banking Industry.

As the Chinese philosopher Lao Tzu said: “The journey of a thousand miles begins with one step.” To begin your journey, consider these steps:

  1. Evaluate: Look at where you are on the journey. Are you enabling digitization with the requisite technology infrastructure investments, differentiating with new customer offerings, or defining new business models? Begin by evaluating the capabilities that you already have. Many of these can be key elements of an expanded digital foundation.
  2. Build an investment plan: Implement a combination of use cases that best support your business objectives. At first, focus on those that will deliver the quickest value. These gains can then help fund longer-term digital strategies with the potential to drive even greater value.
  3. Close the gap: Use the investment plan to close the gap between the digital capabilities you need to achieve the outcomes you want. While the fundamentals will remain the same, your objectives and priorities may change over time.

Top-down leadership is essential for this journey. It means aligning the company culture with customer needs and business outcomes.

“What makes it work for us is our company culture,” Davis explained. “It is centered on one word, and that’s empowerment. Our people are empowered to do whatever they want.”

Davis doesn’t want his employees to go to the branch manager and ask permission. He instills a leadership style that allows his employees to “just do it.”

This type of leadership can also ensure that as new digital capabilities are adopted, they are woven into the workflow with as little internal disruption as possible.

Indeed, for a spirit of bold innovation to prevail, technology transformation must go hand-in-hand with workforce transformation.

A willingness to try new ideas, field test them quickly, iterate rapidly, and fail fast if necessary must be instilled at every level.

The result will be a bank that is agile and inventive, creating secure experiences and products that reflect the changing needs of customers, before they even ask for them.

At the same time, by making the right technology investments, you will also cut costs, simplify compliance, and speed time to market.

Though a roadmap is only as good as the journey it inspires, it is a great place to start. Once your roadmap is aligned to your bank’s best business outcomes, you will leverage current investments to drive growth.

For those just starting down the digital path, Davis offers this advice: “Take that customer experience, put it in the digital program. Now if you do that, you’re going to be successful.”

Kevin Delaney, Senior Writer, Connected Futures contributed to this piece.