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Leaders in Lending | Ep. 04

Disruption & Innovation of Banking Business Models

In a digital world, threats to banking business models often appear on the horizon. Marc Butterfield, the Senior Vice President of Innovation and Disruption at First National Bank of Omaha, spoke with us about digital transformation and some of the disruptive threats his team has identified.

Marc Butterfield
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GUEST SPEAKER

Marc Butterfield

Marc Butterfield, Senior Vice President of Innovation and Disruption at First National Bank of Omaha. He has nearly 20 years of industry expertise, focusing in fintech, digital banking and consumer lending. He leads change management and strategic thought leadership to drive process and cultural evolution necessary for effective innovation practices. Marc has served in leadership positions in Marketing, Credit Risk and Product Development during his time at FNBO. 

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ABOUT

First National Bank of Omaha

First National Bank of Omaha, the largest privately held bank in the US, a subsidiary of First National of Nebraska with 6.6 million customers across the country and locations in seven states and $24 billion in assets. Their mission of delivering exceptional customer experience is driven by the bank's desire to grow and maintain long-term relationships with their customers. Their values are grounded in treating their customers with integrity, respect and passion. 

Key Takeaways

  1. Modern generations expect great digital customer experiences. Banks need to decide which experiences they want to own and execute better                 than anyone else.

  2. AI and machine learning will help make "self-driving money", or autonomous finance, a reality.

  3. Blockchain and cryptocurrency will power many future banking processes.

  4. A successful digital transformation depends on defining why you’re doing it.

EPISODE RECAP & SUMMARY

Three Areas of Disruption in Banking

First National Bank of Omaha wanted a separate team that could adopt a startup mentality — a more nimble operation that could exist unconstrained by the current realities of the business — to find the disruptors in the industry.

As part of their work, Marc’s team identified three potential areas for innovation:

Banking as a Service (BaaS)

Marc distills this theme down to two options: Where do we want to be good at customer experience, and where do we want to be good at distributing products to the most consumers?

It’s a question of front end vs. back end.

Some things his team thinks about:

  • Where do we want to be really good at creating and curating the best experiences for customers?

  • Do we need to own versus operate?

  • Where do we want to be super efficient on the back end of the tech stack and enable others to figure out the best front-end experience for the customer?

Most banks simply do not have the resources to better every single customer experience. So they will need to decide where to place their bets — where they want to own the customer experience over competitors — and focus on those areas.

Self-Driving Money

A good analogy for self-driving money is Google Maps. Consumers can plug in a destination and Google Maps will provide them with the optimal path to get there. Autonomous finance will work in much the same way.

“When you think of products and experiences and advice and guidance within the typical banking business model, they’re all doing those things in a non-automated way,” Marc explains.

In the future, customers will just plug in what they want their future financial state to be and AI and machine learning will work in the background to show them the optimal path to get there. 

Blockchain and Cryptocurrency

Blockchain will power a lot of processes in the future. So right now, Marc’s team is looking at potential use cases for blockchain and cryptocurrency in banking.

Find your Why 

One reason why many organizations fail at digital transformation: they haven’t clearly defined why they are doing it.

Maybe your goal is to be more efficient and save money. If that’s the case, then you should focus on digitizing your back end processes and systems to speed up customer outcomes.

Or your goal might be to create a better customer experience. In that case, you might work on the front end and the UI.

Or maybe you’re behind on some table stakes feature, and you need to catch up.

In any case, you need to be clear on what exactly your objectives and measurements of success are. Because if you aren’t clear, your digital transformation efforts will amount to nothing.

Changing Customer-Facing Roles

With the prospect of self-driving money on the horizon and the closure of many bank branches, is there still a role for branch employees in the future of banking?

Marc thinks so. In fact, he says that automation is actually freeing up employees to have more meaningful and helpful conversations with customers.

“We have some great people that have a ton of knowledge on how to help our customers,” he says. “But over the years, they’ve gotten bogged down with more and more tasks that are important, but not very fun.”

In this new paradigm of banking, Marc sees automation taking over those mundane tasks so that employees can focus on building stronger relationships.

“I think it’s about unlocking the latent desire that they have to help customers and giving them more time to do that.”


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Stay tuned for new episodes every week on the Leaders in Lending Podcast