For Banks, Survival Hinges on Embracing Technology
In early February, SunTrust Banks and BB&T announced a merger worth $66 billion that will make the combined institution the sixth largest bank in the nation. Much of the impetus for the merger was continued investment in technology; for instance, as part of the deal, a new corporate headquarters will be established in Charlotte, N.C., which will include an innovation and technology center focused on driving digital transformation, according to the announcement.
“By bringing together these two mission- and purpose-driven institutions, we will accelerate our capacity to invest in transformational technologies for our clients,” SunTrust CEO William H. Rogers said. “Our shared culture embraces the disruption of technology, and we will take this innovative mindset to expand our leadership in the next chapter of these historic brands.”
Such efforts will only grow more common as banks aim to meet ever-evolving consumer demands, BB&T CEO Kelly King told CNBC’s “Squawk on the Street” shortly after the deal was announced. “Our clients now demand what I call real-time satisfaction — they want what they want, when they want it,” he said. “We are all facing an increasing set of complex economic realities where we have to invest more and more in technology.”
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Enhanced Scalability Matters Now More Than Ever
More and more, banks will “find themselves on different sides” of a merger and acquisition, based on their willingness to adapt to and embrace technology, ConnectOne Bank CEO Frank Sorrentino writes in Forbes. Cloud solutions, for example, can help banks more easily expand as their client needs grow, he says, while mobile tools allow consumers anytime, anywhere access to services.
“Technology is not only the means to delivering a new type of banking; it’s creating a whole new way of doing business — a reinvention of banking,” he writes. “That is why scale matters more than ever. … For banking M&A activity, technology is a flywheel that’s just started spinning.”
Enhanced scale was alluded to several times in the SunTrust-BB&T announcement, with Rogers saying that the company will be able to “achieve substantially more for clients, teammates, associates, communities and shareholders.” The combined company expects to save $1.6 billion in annual net cost synergies by 2022, due in large part to deployment of IT to “create a sustainable competitive advantage.”
Banks Must Not Ignore the In-Branch Experience
It’s just as important for banks to focus on evolving the in-branch experience for consumers, CDW’s Scott Hiemstra says. He points out in a recent BizTech blog post that, according to PwC’s 2018 Digital Banking Consumer Survey, two-thirds of its more than 4,000 respondents said having a local branch was important. That’s why many organizations are leveraging technologies, including video and digital signage solutions, as part of their upgrade efforts, including Chicago-based BMO Harris Bank and the Regions Bank “concept branch” in Alabama, where “universal bankers” greet customers in the bank lobby’s open layout.
“The key is the right mix of technology paired with a smart strategy that includes a role for modern branches,” Hiemstra says. “While it’s true that today’s banking consumers demand a seamless digital- and mobile-banking experience, they also want access to live professionals to answer their questions and help manage finances.”
Like Sorrentino, Stephen Bird, CEO for global consumer banking at Citi, believes that a bank’s survival depends on its willingness to change with the times.
“The benefit of being 200 years old is that we have a survival reinvention DNA, and that is core to who we are,” Bird said at the Hong Kong FinTech Week conference last fall, according to CNBC. “We think of it as we are living through an extinction phase. It’s not an incremental thing, it’s an epochal shift.”