Transformative Chief Information Officers (CIOs) steer their institutions through challenging times by aligning innovation with customer-centricity. Since the banking industry has changed more in the last five years than in the previous two decades, it is no longer just enough to keep banks buoyant. Successful CIOs need to drive transformational change and ensure technology is creating business value. Here’s a closer look at the six key areas where community bank CIOs should focus to optimize business outcomes and impact.
Growing Deposits and Customer Base
Core deposit growth remains a primary concern, with issues like capital constraints and small geographic base obstructing deposit growth. Digital branches, being more cost-efficient compared to physical branches, generate far higher deposit outgrowth.
When it comes to bank expansion, digital branches are also far cheaper than their physical counterparts as they operate at a fixed cost. Community banks merely launch in one state and gradually expand nationwide with little additional expenses. Automated processes minimize human discrepancies, enabling banks to onboard new customers swiftly and cost-effectively.
Digital Banking Transformation
One success metric of digital banking for community banks is to contrast them with their primary competitors: commercial banks. Surprisingly, 90% of banking executives in S&P Global Report of 2022 expected digital transformation to double their increase in total deposits – overshadowing similar-sized U.S. banks.
Likewise, more than 300 community banks were countering challenges with innovations like seamless online banking platforms and user-friendly mobile apps. The rationale for these choices was their potential to streamline daily banking operations, helping their service deliver quick solutions to “keep people first”.
Enhancing Customer Experience
One McKinsey report concluded that customers who are “highly satisfied” with their bank’s services are 2.5 times more likely to open new accounts with that bank than those who are merely satisfied. With the right digital tools and relationships networking, CIOs can revamp their banking with quick accessibility, convenient onboarding, and superior user experience. Insights gleaned from data and AI tools like chatbots expedite service response times and elevate overall quality.
Regulatory Compliance and Security
Modern CIOs are faced with two primary challenges:
- Cybersecurity risks encompass three aspects: Escalating advanced threats, vulnerable IT environment, and limited resources for mitigation. This ultimately leads to the bank’s eroding ability to protect customer data.
- Increased regulatory challenges with regulations including GDPR Compliance, PCI DSS Security Standards, and the ISO 27001 data protection governance. CIOs today need to study the evolving security landscape, while maintaining routine operations. Negligence can lead to legal action, financial penalties, and reputational damage.
Core Banking Modernization
Digital transformations can be disruptive and costly, especially when CIOs have to integrate new technology with rigid traditional systems. Banks maneuvered around these challenges by choosing solutions that let them “run the bank” instead of “changing the bank.” Employees embraced these innovations, recognizing their potential to increase productivity.
Adopting a cutting-edge digital omnichannel approach that aligns with client needs allows community banks to be more nimble and adaptable, offering services around the clock. Upgrading core banking systems provides CIOs the tools to expand their community reach, serving a more diverse clientele.
Resource Management and Budget Constraints
To optimize business outcomes, CIOs need to strategically manage technology investments. For many executives, that means prioritizing innovations in areas like security or in critical front-end areas, like payments or digital loan applications.
Bank Director’s 2022 Technology Survey revealed that 89% of bank senior executives chose cybersecurity as their key area for investment, while 62% of respondents prioritized security and fraud concerns. An additional 63% of executives implemented or upgraded their payments capabilities, while 54% focused on enhancing digital retail account openings. Most respondents wished they had the resources to recruit data scientists to leverage their bank’s data.
Lean on Experts for Help
It’s a challenge for community banks to be at the forefront of IT when it is constantly evolving and creating new opportunities, and complexities. Hartman Executive Advisors provides IT leadership and advisory services to community banks who want to leverage technology to drive and enable their business goals. Hartman’s team of experienced bank leaders work alongside your business and IT executives to help banks perform better and achieve their goals through the strategic use of technology. For more information, please contact Hartman Executive Advisors for a free consultation.