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The Surprising Secret to Digital Transformation at Regional Financial Institutions

The retail banking industry is facing a digital transformation quandary that impacts all financial institutions, small and large.

The largest banks (e.g. Bank of America and JPMorgan Chase) have the resources to staff expansive software teams and have the budget and resources to build sophisticated applications across mobile, online, in-branch, and voice channels.

These behemoths grew through numerous acquisitions, leaving them with the burden of multiple disparate legacy systems that are difficult to integrate. In spite of their prodigious resources, such banks struggle to deliver a seamless customer experience that is the lynchpin of a successful digital transformation.

Midsize banks and credit unions also focus on building a modern digital presence, and many companies resort to purchasing off-the-shelf banking apps which are point solutions. However, they are finding that the mobile apps that their core banking providers offer lack the functionality and customization they require, thus limiting their digital initiatives.

At the core of such initiatives is a focus on customer value. “Banks want to deliver value to customers while giving them a digital experience that differentiates their brand,” explains Jeffery Kendall, SVP and GM for Global Banking and Financial Solutions at Kony, a leading provider of digital banking applications. “Customer expectations are being influenced and informed by companies all around them, such as Amazon, Starbucks and Disney, who are focused on digital leadership.”

Digital Transformation at TDECU

TDECU (Texas Dow Employees Credit Union) in Lake Jackson, Texas, is executing an ambitious digital transformation strategy. “For us to compete, we had to do something different,” explains Andrew Wayman, Vice President of Digital Strategy for TDECU. Wayman says that compared to digital efforts in the retail industry, banking is years behind.

The essential difference between the retail industry and banking is that in retail, digital presence is a competitive differentiator.

In contrast, banks often treat basic web and mobile app capabilities as necessary for meeting member and customer expectations, without being strategic to the organization.

In today’s digital era, that equation has fundamentally changed. Today, software-based capabilities drive competitive differentiation in banks as well as retail and most other industries.

This strategic requirement, creates both a challenge and opportunity for regional banks and credit unions. “The most important thing isn’t the individual features, but the ability to adapt to change quickly,” Wayman says.

Competitive differentiation, after all, isn’t a static target. It requires being agile to adapt to ongoing shifts in customer demands in an ever-changing economic and competitive landscape.

Choosing the Kony Platform

To address this complex set of technical and strategic challenges, TDECU turned to Kony with a particular emphasis on digital and online applications. “With a vertical product, focus on retail banking, and an innovative roadmap, we knew we could drive our digital transformation agenda by partnering with Kony,” Wayman explained.

Like TDECU, many financial institutions are prioritizing their digital initiatives. “Over the past 18 months, we’ve seen an increase in the number of inbound requests about accelerating digital banking from credit unions and midsize banks,” Kendall says. “They are finding their current path of relying on their core banking system providers and traditional players is slowing them down.”

For TDECU, outsourcing the entire effort was expensive and wouldn’t have provided the business agility essential to a competitive digital offering. “We had a choice to compete for tech talent, to completely outsource it, or partner with a leader in this space,” Wayman explains.

The credit union chose to partner with Kony, thus giving the credit union the ability to add new features in multiple channels more quickly than with other providers. “With Kony, we can add new features, while reducing the go-to-market time,” Wayman explains. “Quality assurance and end-user testing can be accomplished in days and weeks rather than months.”

The Intellyx Take

Kony offers TDECU more than a faster, cost-effective way to add features. It gives the credit union and regional banks the flexibility to build a competitive offering – which means adapting to ongoing change.

Kendall sees TDECU’s experience as part of a broader trend. “Banks want to remove customer friction,” he explains. “How fast can they keep up with changing customer expectations.”

The possibilities are endless. Wayman is looking forward to building differentiated offerings in the modern world of phone-based payments, invisible transactions (think of getting out of an Uber), and even the Internet of Things – say, connected cars that can automatically make a payment at a drive-thru window.

Digital transformation is changing the game – and with Kony’s help, TDECU intends to be a leader in the race.

Copyright © Intellyx LLC. Kony is an Intellyx client. At the time of writing, none of the other organizations mentioned in this article are Intellyx clients. Intellyx retains full editorial control over the content of this paper. Image credit: TDECU.

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More Stories By Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is ranked #5 on Onalytica’s list of top Digital Transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists.

As founder and president of Agile Digital Transformation analyst firm Intellyx, he advises, writes, and speaks on a diverse set of topics, including digital transformation, artificial intelligence, cloud computing, devops, big data/analytics, cybersecurity, blockchain/bitcoin/cryptocurrency, no-code/low-code platforms and tools, organizational transformation, internet of things, enterprise architecture, SD-WAN/SDX, mainframes, hybrid IT, and legacy transformation, among other topics.

Mr. Bloomberg’s articles in Forbes are often viewed by more than 100,000 readers. During his career, he has published over 1,200 articles (over 200 for Forbes alone), spoken at over 400 conferences and webinars, and he has been quoted in the press and blogosphere over 2,000 times.

Mr. Bloomberg is the author or coauthor of four books: The Agile Architecture Revolution (Wiley, 2013), Service Orient or Be Doomed! How Service Orientation Will Change Your Business (Wiley, 2006), XML and Web Services Unleashed (SAMS Publishing, 2002), and Web Page Scripting Techniques (Hayden Books, 1996). His next book, Agile Digital Transformation, is due within the next year.

At SOA-focused industry analyst firm ZapThink from 2001 to 2013, Mr. Bloomberg created and delivered the Licensed ZapThink Architect (LZA) Service-Oriented Architecture (SOA) course and associated credential, certifying over 1,700 professionals worldwide. He is one of the original Managing Partners of ZapThink LLC, which was acquired by Dovel Technologies in 2011.

Prior to ZapThink, Mr. Bloomberg built a diverse background in eBusiness technology management and industry analysis, including serving as a senior analyst in IDC’s eBusiness Advisory group, as well as holding eBusiness management positions at USWeb/CKS (later marchFIRST) and WaveBend Solutions (now Hitachi Consulting), and several software and web development positions.