Innovation and traditional banks don’t generally go together. In order to compete with emerging challenger banks and enhance the digital experience, financial institutions closed the gap with technology and modern products.

Despite fintech startups maintaining the advantage with product agility and a tech-first approach, large banks (such as JPMorgan Chase) placed significant investments in transforming their organization in the last 6 years.

With 58M+ customers using its digital and mobile banking, Chase is hyper-focused in staying ahead of both banks and fintech competitors. A commitment and high-level of execution when it comes to innovation helped JPMC roll out new functionality during the pandemic and pivot existing channels to be fully digital. It’s novel approach of continuous updates, prioritizing data, and setting up teams (as business units) creates a fintech advantage against competitors.

technology Updates become business-as-usual

Despite fintech competition having an upper hand in addressing banking gaps quickly, financial institutions still have the lead when it comes to impacting volumes of users all at once with new products & features. Startups must establish momentum as they go-to-market with new solutions and grow their user base from 0.

Delivering modern technology on top of an established brand becomes a differentiated strategy for large banks like Chase. When it comes to launching a new service, the approach is no longer an extensive update released quarterly. Small, bite-size features are now the way to go, which enables streamlined testing and launch.

Additionally, if a compelling product is already available through a vendor, then the bank can opt to use this solution instead of working on a build-out internally. The decision weighs on how important it is to keep control of the product architecture, data access, and proper security protocols — all in-house. JPMC’s “Buy, Build, Partner” framework continues to be a critical part of its technology strategy.

Leveraging Data for customer benefit

Bank accounts hold tremendous transactional data on customer habits and behaviors. Financial institutions have yet to actively tap into this area and provide custom solutions that clients need. Our discussion last month on personalized banking experiences is a prime example. For startups, the quantity and scale of customer data isn’t there yet when compared with established banks.

The same data can also be used for multiple purposes as well. Besides enhancing digital banking experiences, new systems can be built and updated throughout the year based on an urgent client need. During the pandemic, deploying government assistance programs quickly developed from existing software that JPMorgan Chase used elsewhere.

avoiding silos within the banking org

The organizational challenges of legacy financial institutions are well-known. Gaining approval through hierarchical, multi-level departments for product development becomes time-consuming due to lines of business (LOBs) being siloed. The amount of players and authority levels isn’t conducive to being an agile, customer-first company.

The solution for JPMC was to narrow down the process within business ‘units.’ These are all-inclusive teams represented by a leader from design, technology, compliance, legal, etc. — no loss of time in coordinating with outside parties in order to move forward in development. All teammates maintain detailed line of sight on the customer need and use this as their north star along the way. Speed and communication is constantly prioritized.

There’s still a challenge of gaining input towards the top of the organization, but there’s less risk of gatekeeping and higher prioritization in moving with a sense of urgency. There’s also less of a burden to come up with “the next big thing” — instead business units can focus on steady, incremental improvements. New functionality rolls out on a weekly or monthly basis.

bridging tech development with the branch channel

With all this focus on deploying innovative, digital products at a faster cadence — it seems traditional bank branches will no longer be utilized. For top brand banks with large retail footprints in the US, the branch channel will still be a critical part of customer engagement strategy.

The emphasis for retail branches will shift from transactional to advisory when it comes to in-person interactions.

Customers still want the option to meet with staff face-to-face, especially for impactful financial decisions such as home financing and retirement planning. Mortgage officers, financial advisors, and business bankers that can flex between online and offline will be in high-demand over the next decade. As a result, hiring and training this next generation of in-branch staff becomes a crucial next step for financial institutions.

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