CEO Q&A: Innovation for Inclusion

A conversation with Greg Carmichael, chairman, president and CEO of Fifth Third Bank. Listen to the full interview on the ABA Banking Journal Podcast.

Q Your career began not in banking, but IT. What was the biggest shift in perspective for you joining a bank as a midcareer IT executive?

A I spent almost two decades in the manufacturing sector, as a technologist, selling systems all over the world, and leveraging technology to solve business problems. That’s really what I was interested in: high-leverage technology and how to use technology to solve business problems in the most efficient way.

When I made the decision to go to Fifth Third, I wanted to go into the financial services sector. I believed, at that point, that financial services were ripe for the opportunity to apply technology and use technology differently to change the business model, both in how they serve customers and how they operate their business. I was interested to leverage the knowledge and experience acquired in manufacturing. Looking at Fifth Third’s legacy system, the opportunity was to transform these core systems to enable the bank to be more agile as we advance into a more digitally transformative age—in a way that aligns with how our customers want to bank.

Manufacturing saw some of that digitization fast in stores and retail prior to banking. But if you think about how our customers want to bank today, over 60 percent of our financial transactions now go through our digital channels: mobile app, website or digital ATM. Over 50 percent of our consumer deposits now come in through our mobile app or digital ATMs. Customers still want to go to a banking center for a complex transaction or to solve an issue, but they increasingly want to be served though digital capabilities.

My CIO experience came in really handy as a CEO. A lot of what I do every day is think about our investments in technology: how we serve our customers, what products we can offer our customers to make them more efficient. Today, customers are not comparing their last banking experience to another bank. They’re comparing it to their last great digital experience with an Apple, or a Google, or an eBay. Their expectations are very different today.

Q What are some of the strategic investments you’re making now that you’re really excited about?

A It starts with our innovation strategy, which is anchored in our “buy-partner-build” approach: if a technology is ready or a product is available, I prefer to buy it and rapidly integrate it into our systems, or partner with this company. I only want to build it if needed.

It is all about solving problems for our customers. For example, when we talked to thousands of millennials, the number-one issue they face is student debt. How do we help them solve that problem and pay down their student debt faster? We developed an app called Momentum.

Every time you swipe your Fifth Third debit card, you can round up to the nearest dollar, or add a dollar to the amount. At the end of the month, we apply that towards your student loan, whether that loan is with Fifth Third or not. We allow you to pay down that loan a lot faster.

In addition, anyone in your family network—your grandparents, your mom and dad—can help: every time they swipe their cards, they can round up also and help you pay down your student loan. On average, students can reduce their debt by five or six years in a program of this nature. That’s very meaningful to them.

Another product we recently introduced that we’re proud of is called Dobot. It’s really about people’s savings. How do we help people save? In the financial services sector, how do you step up and think differently than in the past to help our consumers save? When they have more money in the bank, they don’t overdraft as often. They can get cheaper access to resources versus trying to borrow at short-term rate.

Dobot is an app that looks at your spending patterns: how much money you have and where you’re spending your money. It provides you suggestions and recommendations for small savings at a time. Then we will pull money each month into that account from other accounts. It’s designed to help you think about the total way you spend money and where you have opportunities to save. It’s been wildly received, and we’re very excited about the platform.

On the commercial side, we help companies be more efficient and effective, with solutions like Avid Exchange or Transactis. These make us a better business partner. We will continue to invest to remain on the leading edge of what customers want.

Q I know you have the Express Banking product, and I’d love to learn a little bit more about that and how it helps address the challenges facing the unbanked and enhancing financial inclusion for everybody.

A First off, I think it’s the responsibility of banks and the financial services sector to help consumers be more financially aware and get into the banking sector. We don’t want to create an environment where people are exposed to overdraft situations nor create more complexity, challenges and debt for them. How do we do that in a safe and secure way?

Basically, Express Banking is an account with no monthly fees. We give people a debit card to have easy access to their resources, but cannot overdraft. We don’t allow that. The more often people deposit, the less each deposit costs. We find ways to help customers save money on their transactions, whether it be a transfer, wire or cashing a check—to make the service they need cheaper for them. It gives them an entry into the banking sector, then helps graduate them up into other potential credit opportunities.

Another product we offer is a secure card. It’s a credit card to help people establish credit and build that type of capability in their financial portfolio, and then allow them to continue to grow upon that.

Getting the unbanked and underbanked into the banking sector gives them access to liquidity that they wouldn’t have in the past, or at a different rate. It is what Express Banking is about. We have over 400,000 Express Banking users. We try to bring these types of products to help more of the unbanked and underbanked get into the financial services sector. This is what they need as a first step to financial health.

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About Author

Evan Sparks

Evan Sparks is editor-in-chief of the ABA Banking Journal and vice president for publications at the American Bankers Association.