Process Innovation is the Lower-Cost Growth Engine
The current economic conditions have made many banks and credit unions
pause to make sure they do not misstep, but the truly innovative
organizations are finding an environment to focus more clearly on
their goals.
Take, for example, USAA Bank in San Antonio. They were the first bank
to offer retail remote capture, and they currently have more than
150,000 active home users on the product. As reported by Susan
Stellin in The New York Times, USAA Bank announced on August
9 that they have added an application to their mobile banking
product that allows customers to deposit checks by taking a picture
of both sides of the check and sending it to USAA for processing.
Initially this will be a service for iPhone customers, or about 60%
of their one million mobile banking customers; by the end of this
year, however, the rest of their qualified customers will have the
tool. They have about 14% of their more than seven million customers
using mobile banking within two years of launch.
While USAA has only one branch, it is enabling their customers to bank
without the physical plant. To put this in perspective for bankers
with an extensive branch network, more than 50% of branch
transactions are commercial or consumer deposits, and an additional
20% are split deposits (with cash back). Think of the cost and
service improvements to the innovative banks that closely follow.
BBVA Compass is redesigning its delivery of services using BBVA
Compass Virtual Banker, a fully interactive, high-end
video-conferencing platform. The product will allow BBVA Compass to
offer specialized one-on-one services (such as mortgages and
investment advice) directly to any branch, regardless of the
banker’s location. Integrated document sharing functionality allows
the banker to simultaneously exchange documents and brochures on
screen with the customer, send documents to the printer at the
customer's station in the branch, and retrieve signed documents
using an integrated scanner. The program was scheduled to be
launched by end of summer 2009 for the wealth management group and
the mortgage banking functions. Again, the ability to deliver
consistency in documents, message, and delivery can be accomplished
through innovative integration. This will drive down the cost of
branch errors and will eventually deliver a full array of
interactive products at a lower cost of delivery to BBVA Compass’
nearly 600 branches in the Sun Belt.
Other banks are incorporating process innovations. Zions Bank made
technological improvements to its online account application process
to improve the quality of the account opening process and to reduce
cost. In addition to achieving service and cost goals, the bank
increased its online loan application completion rate by 74%, while
online deposits increased by 25% year over year.
It is not just the big banks—like Wells Fargo with foreign exchange
online or JPMorgan Chase with their event workstation or US Bank
with Visa payWave—that have taken innovative approaches. We have
seen many community banks, including Umpqua and its Innovation Lab,
point to what the rest of the creative banking community can
accomplish.
Process innovation—focusing on People, Process, and Technology—is
helping banks advance customer interactions at a lower cost of
delivery. The pioneers create a path for future innovations by
contemplating what is ideal for their customers and designing it,
even if current technology does not allow for execution. It
positions them for advancement when technology catches up.
