Embracing a Bank Culture of Innovation

By Lisa Gold Schier and Helen Sullivan

As we have traveled to conferences and met with bankers, one common theme arises; banks want and need to innovate. However, given the vast range of new technologies effecting nearly every aspect of banking, innovating can be daunting for many banks. Informal polls conducted by the American Bankers Association at conferences and banker roundtable discussions found that that a majority of banks do not have a formal innovation process, nor a cross functional team to evaluate new initiatives. Most banks face a similar challenge as they begin the innovation process: how to do we adopt the best technology that will positively impact my bank within a highly regulated environment. Bankers are busy running their banks; some have a designated person or group focused on technology, but too often they lack an overall strategy on leveraging technology to achieve specific goals.

Typically, there is no formalized interdepartmental team to collaboratively assess creative ideology from a business, operational, and risk management perspective. While challenges exist, banks know that to continue to grow and meet customer demands they must develop a culture of innovation that leads to idea and technology implementation. There is no real innovation without implementation.

In response to bankers’ needs, ABA has entered into a strategic partnership with Alloy Labs Alliance, a consortium approach that employs low-risk methods to jump start bank innovation. Through this partnership, banks join a bank network focused on fostering innovation and strategic implementation. They gain access to exclusive research, benchmarking surveys, valuable peer discussions and best practices sharing.

Participating banks can choose to receive customized training focused on building and leveraging innovation capacity. The emphasis is on understanding each bank’s unique goals and then helping their teams evaluate and prioritize competing projects to fit within the bank’s strategy, budget, and bandwidth. As the CIO of an ABA member bank recently stated: “We accomplished more here in 24 hours than we typically do in three months.”

Banks can also work together in deep-dive peer work groups designed to reduce risks, lower costs and accelerate fintech partnership results. Work groups are in progress on P2P payments, small business lending and digital onboarding. Banks are walking away with deep customer insights and shared functional requirements for product development. New work groups are launching soon on data access and availability and financial wellness and are open for additional members. Additional topics are also under discussion and are all driven by member needs and priorities.

Banks that don’t participate in a given work group benefit through the resulting implementation kit and blueprint, which includes a negotiated fintech contract with group discount along with all of the documented due diligence, risk assessments and evaluation process. “It’s like buying into a 12-month project at month 9,” said the chief of staff of another ABA member bank. Several ABA members are among the 30 founder and charter member banks that are already experiencing results.

This partnership with the Alloy Labs Alliance is focused on assisting ABA members in building their internal innovation capacity and leveraging effective strategic fintech partnerships. It helps banks identify, evaluate and implement new ideas and technologies that forge ideas into tangible results in a faster and more cost-efficient way.

Lisa Gold Schier is a managing SVP at ABA, where she leads the ABA Endorsed Solutions team and New Business Initiatives. Helen Sullivan is an SVP on ABA’s Endorsed Solutions team.