“The banks that are the most successful at core modernization have a north star” feat. Valley Bank and Galileo

Most banks right now are at a crossroads: Either they choose to overhaul their legacy systems or come to a point where they will continue to battle the complex legacy spaghetti of multiple software systems, struggle to access talent that can manage their tech, and alienate customers that expect the best of everything. Although the choice is obvious, going through with core modernization is extremely hard. Guests on the show have been excited about moving to the cloud for many years, but very few have really taken it on, which is why when I have the chance to talk to not one, but two individuals that have hands-on experience with helping banks modernize, I really dive into their recipe of success.

Joining us on the show today is Russell Barrett, COO at Valley Bank, who shares the path to modernization his $60 billion institution took, how he and his leadership team devised the bank’s change management policies, the role of consultants in this process, and the challenges the bank faced. Pouring his deep experience into this conversation on Valley Bank’s work is David Feuer, CPO of Galileo Financial Technologies, who brings his expertise of handling and guiding multiple banks of all sizes on their transformation journey. 

Listen in for today’s episode, where we dive into the real-world challenges and strategies behind core banking modernization. If you’re facing the complexity of outdated systems, struggling to manage talent, or navigating change in your organization, this conversation will offer valuable insights. You’ll walk away with practical takeaways on overcoming roadblocks, implementing successful change management, and driving long-term innovation—no matter where you are in your modernization journey.

The big ideas

Why core modernization is critical for banks right now: “If we want to be able to hire in the next generation of technologists that are graduating from university and maybe have a few years of experience, we need to have systems that are native to what they know and not what the previous generation knew.” — David Feuer, CPO, Galileo Financial Technologies

How to stay up and running while changing at the same time: “We owned it, and we made sure that the “run the bank” and the “change the bank” people were operating in the same governance structures.” — Russell Barrett,  COO, Valley Bank

Change management begins at the top: “Change management begins and ends with that principled alignment at the top, and then making sure that the culture understands that one of the key pieces is to swim in the same direction, which then goes to setting the guiding principles on how you’re going to go through something like that. Because most of our attention spans, especially as you start thinking about execution, don’t last as long as a large-scale core conversion would take.” — Russell Barrett, COO, Valley Bank 

The bank needs to stay in charge: “I’d say outsource implementations help on the technology side. But when it comes to the business strategy, it’s so core to the mission of the bank, that the bank has to own it – has to own the vision, the change management, what they’re going to roll out and when, and what they’re willing to delay in order to build new products on the new core. All those decisions have to be owned by the people on the ground that are closest to the business and, more importantly, closest to the customer.” — David Feuer, CPO, Galileo Financial Technologies

What to expect when modernizing: “Once you free up your mindset to not expect 100% in one shot, that creates a cultural understanding that the investment in change management and transformation is perpetual, and that’s  critical especially for legacy banks.” — David Feuer, CPO, Galileo Financial Technologies

How to manage the vendor-bank relationship: “It’s  important for us that we’re able to get creative, and that we grow our business along with our clients. As opposed to we’re selling software and so here’s the software – handshake – and goodbye. That’s just not a business model we’re interested in.” — David Feuer, CPO, Galileo Financial Technologies

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Barrett, Valley Bank: : I’m Russell Barrett. I’m the COO at Valley Bank, which is a $60 billion regional bank based in New Jersey. In my role, I am responsible for technology, operations, data, all of our corporate services and a number of other commercial services we provide to our customers. As I like to say, most of the things that go wrong tend to roll up into my role. 

Feuer, Galileo:  I’m David Feuer, I’m likewise based right outside of New York City. I’m the Chief Product Officer of Galileo Financial Technologies. So I’m responsible for all of our products, which span four major areas, including payments products, banking products, we have a risk portfolio, and we also have a set of services that we offer to support those businesses. I’m in charge of everything from understanding what our customers’ problems are, spending a bunch of time working with our customers in the market to try to understand what problems to solve, partnering closely with our engineering organization in order to make sure that we build products that resonate, land, are profitable, and beneficial for the customer base.

Planning a core modernization

Barrett, Valley Bank: : Valley, as a nearly 100 year old institution, had a legacy core platform that was very aged – as is typical in a number of banks, large and small, as they grow and develop through either M&A or organic growth. At the end of the day, most removals of legacy platforms come from two fundamental areas: one which is the changing needs of the customer. Valley, like most organizations, is ruthlessly focused on making sure that we evolve, especially in an innovative way for our customers.

Then the second piece, which is a pretty unique variable for core banking technology, is what it impacts in your culture and how it impacts your culture. For Valley, the main drivers were this pursuit of serving our customers now and into the future. Then the second piece is for all the associates of Valley being able to evolve the culture from a legacy mindset into one that is better positioned for how banking is evolving in today’s digital world. 

I’m a product of, in many ways, Valley’s growth, because I came via acquisition to Valley. Valley has a storied history of being a community bank with deep ties into the New Jersey community. But as you would look at the evolution, a lot of the growth and the significant portion of the attributed balance sheet is now actually in the state of Florida. The organic and M&A growth that’s occurred for Valley, in the last 10 years, but specifically in the last seven since Ira Robbins, who’s our CEO, took over, took this bank from what was a $20 billion institution to a $60 billion and growing institution. A lot of that was centered around geographical dispersion and also trying to continue to provide that community banking mindset, but with the capabilities and the footprint of a regional bank.

Feuer, Galileo: It’s funny, Russ, as you were speaking, I was thinking about natural migration patterns, where people tend to raise their kids and have their jobs outside of New York City, and then tend to retire to Florida. There is this arch in banking, where you want to grow with your customers, because you don’t want your customers to mature out of your bank. As Valley Bank grew, and a lot of the Valley Bank’s customers moved to Florida, it makes sense to me that, likewise, Valley Bank would go to Florida, because that’s where your customers are in their journey, right? 

We see that in all stages of the customer journey and all stages of life, where you might be targeting university students or even even younger kids, and then they grow up, and they want to have their own businesses. So banks are starting SMB practices to stay with their customers in their journey. It totally resonates. It makes a ton of sense. 

As I see the internet era themes right around engagement and availability and having an application-first mindset to serve customers, as opposed to a bank/branch or teller-first mindset. I’ve seen a lot of banks follow that and say, hey, the world is changing, how can we change with it and participate there? So yes, it totally resonates with us and it makes a ton of sense.

Change management

Barrett, Valley Bank: : Anytime you’re doing something as ambitious, especially for a bank that has close to a million customers – doing a conversion, there’s a lot of ways to do it, but the way we did it, which was a big bang conversion at that size and scale – the change management has to start at the top. Right off the bat, the first impetus was to gain alignment and clarity at the executive level of the organization and make sure that there was clarity in terms of the direction we were taking. Not just from a technology play, but the operating model and what it meant for the culture. 

Everyone who is sitting on the executive team had a role to play in their respective domain, and then just generally as leaders, to make sure that we were swimming in the same direction. Change management, to me, begins and ends with that principled alignment at the top, and then making sure that the culture understands that one of the key pieces is to swim in the same direction, which then goes to what are the guiding principles on how you’re going to go through something like that? Because most of our attention spans, especially as you start thinking about execution, don’t last as long as a large scale core conversion would take. 

When you think about the endurance that you’re going to need to sustain from beginning to end, obviously there have to be some guiding principles, because there’s going to be thousands of tiny little decisions that are going to be made and countless interactions that you’re gonna be making. We used these guiding principles to dovetail off of that leadership alignment. 

For the first time ever, we built an organizational change management practice inside of the bank, because we wanted to make sure that every associate of the bank understood what it meant for them individually. We had a team of people in this organizational change management. They went into every one of our 227 retail branches and spent time to make sure that everyone  understood what this meant. 

That’s the commitment that we had in terms of just making sure that people were able to  connect that change, whether it be at the top of the house, at the C-level, or whether it be, a personal banker working in a retail branch in Alabama. We wanted to touch them, and we wanted to make sure they understood. That was  important for us on the change management journey.

Owning the core modernization is critical

Feuer, Galileo:  Let me ask you, because what I see a lot in core transformation is that there’s the cost metrics around cost savings and all of that, which might be the easiest way to build a business case around core transformation. But what actually sustains the effort is time to market growth, customer lifetime value, like how the old core was holding me back, and how the new core is going to enable my business. Are you seeing that as a better north star for you to align around as an organization? How do you think about running the bank versus building the bank? 

Barrett, Valley Bank: David, the way we processed it was that, for anyone who was working and had been acquired by Valley, the limitations that existed were pretty visceral. So there wasn’t a lot of controversy about the call to change – the process of change and how to be able to execute that change is  where a lot of the challenge was, because it means trade offs and compromise for that duration of time when you’re doing large scale change management. 

A few things which I think assisted us in that run-change calculus was we were very light on using external consultancy. So 100% of our project was managed organically. There wasn’t a single presentation that went to a board executive team or the rest of the organization that was delivered or performed by anyone other than Valley associates. What that means is that you understood very clearly how to be able to take some of that business as usual, BAU type work, and some of the more aspirational work and process that in a conversation that’s not multi-threaded.

That’s critical in terms of staying aligned, because it’s a long period of time that you’re going to be traversing between the BAU period and the change management period. You want to have those same people who are connected to both. I don’t know if that’s what you see in the implementations that your customers are doing, David, but for us, that’s important. We owned it, and we made sure that the “run the bank” and the “change the bank” people were operating in the same governance structures.

Feuer, Galileo:  That makes total sense, and it is what I’m seeing as well. I think there’s an increased reliance on what I would call consultants – outsourced implementation help on the technology side. But when it comes to the business strategy, it’s so – I apologize for using the word – it’s so core to the mission of the bank, that the bank has to own it: has to own the vision, the change management, what they’re going to roll out and when, and what they’re willing to delay in order to build new products on the new core. All those decisions have to be owned by the people on the ground that are closest to the business and, more importantly, closest to the customer. So that makes total sense to me. I’m glad to see that you guys are doing it that way. 

Barrett, Valley Bank: One thing I would just add is one of the interesting challenges that I’ve observed, just generally, in a career of banking, is where these types of initiatives can somehow become scope crept, or a challenge is when project management – when you think about it as a discipline – has an ending and core banking technology has no ending. Obviously there’s going to be certain inflection points, like a conversion itself. But the reality is, this stuff is always iterating. It’s always changing. So getting into the mindset that this is a journey also allows you to handle the fact that you don’t need to get everything 100% perfect for this one inflection point, because you’re going to be at this as long as you’re working inside of a bank. Once you free up your mindset to not expect 100% at one shot, that creates a cultural understanding that the investment in change management and transformation is perpetual, and that’s  critical for especially legacy banks.

Feuer, Galileo:  I think it’s critical. The other piece I’d just add to that is, when you think about things like the cost calculation and the risk calculation, being able to look at these large scale projects in terms of piece parts, and that there’s going to be ongoing check ins, into investment metrics, progress and all that. It lets you get away from a TCO view or a big bang view of we have to replace x with y. It will allow you to say ‘what makes sense for my business?’ 

As the market changes, my customers change, as all these changes are happening around my business. Do I need to take a different direction? Do I need to implement a core augmentation strategy? Do I need to take third party ecosystem components and add them to what I have? Because I need more than just a core to offer all those things. It makes a lot more sense when you think of it as an ongoing journey with individual pieces versus one very large, big bang event, right?

Barrett, Valley Bank: : Especially because the mindsets of change management tend to be delineated into that legacy waterfall, traditional project management, and then the more modern, agile and iterative one. And the reality is, for something like a core transformation, you do need both to be working in congruence and that’s a critical piece that we tend to not think about because it’s seen as this binary project. In reality, underpinning all of the work that’s going on is a series of very agile workloads that need to be managed iteratively and in a fluid way through the bigger initiative in general. 

Barrett, Valley Bank: : The challenges are almost always going to be people-centric, because large scale transformation happens with people. Most of the challenges are going to be the conflict that always exists between the guiding principles of how fast you want to do it, and what’s right in terms of minimizing the disruption for your customer. How do you make sure that you’re doing it in a way that’s going to deliver the value proposition that you’ve promised in terms of the program? A lot of that centers around people. 

For us, the challenge is, when you’re a regional bank, we don’t have 8000 people surrounding our program. So we have people running work streams. These are heroes. These are courageous warriors out there trying to bring the bank together. You have a high degree of key person risk. When you lose someone along that journey, it feels very deflating. In our case, we did it pretty quickly from beginning to end – including all of our studies, assessments, business analysis, pre-execution work – from launch to the closure it took us 16 months.

That’s short in the core banking world. But I would say if you’re working on these things as intense as this, it’s exhausting. So managing the fatigue and the mindset and the energy of your key talent is perhaps one of the most important challenges, and part of the reason why there’s a tendency, in many cases, to outsource parts of these implementations to consulting firms. In general, one of the great success stories we had at Valley is just the incredible people who sustain that level of energy in being able to drive to the outcome despite 16 months of hard work and a lot of sacrifices, and that was hundreds of people. In some cases, one person drives a domain where there is a lot of real trust and dependency. 

So key challenges were mostly people and we did a reasonably good job on our partnership network. We identified very early who are our key partners in the third-party ecosystem and we were in front of them early. We did of course have challenges. When you’re integrating, in our case, 160 integrations, you’re going to have challenges. We established the right rapport up front with all of our key partners. We always had a quick way to relegate any issue that came up. In general, all internal associates, because they sacrificed a lot, and we wanted to make sure that they kept their energy and they saw the value and the meaningfulness of their work. 

How to keep motivations high 

Barrett, Valley Bank: We promised everybody that they would never have to do this again. I was the leader and I made everybody – including Ira and Tom Iadanza, our President – promise me that I was never going to have to do this again. 

That’s the first piece. The second is we built a well-thought out incentive program for those individuals who we knew were necessary to be able to get us across the entire institution. We built the right incentives, as well, with our partners. That’s something that I think is a little bit more rare. I don’t know your views on how your customers are working, David, but we were very intentional with a number of our partners that we wanted to go ahead and work outside of the standard Statement of Work. We wanted to make sure that there was incentive for success and disincentive for not being able to deliver as the partnership needed in this particular case. I don’t know if that sounds unconventional or is that normal for you, but it’d be interesting to see how you react to that.

Feuer, Galileo:  It sounds both unconventional and normal for us. A lot of the way we do things, and we’ve even boiled this down to the way we price our core, we think of how we can maximally align incentives between us and our clients. It’s important for us that we’re able to get creative, and that we grow our business along with our clients’. As opposed to we’re selling software and so here’s a software handshake and goodbye. That’s just not a business model we’re interested in. We work more and more with clients that are focused on whatever market dynamics they’re focused on, whether it’s a given segment or a set of products, or a new set of products that they want to launch and they can’t launch it from there old core – we try everything we can to align incentives so that we both get what we want. 

We get more use of our software and more growth for our business and ability to learn more about what our clients actually need in order to be successful and in exchange for that our clients are successful. Being able to align incentives is  important, and I think that that’s fairly pervasive across our ecosystem of partners across banking software in general. I don’t think that’s the norm but I do think the world’s changing. 

As we move from these shiny refrigerator style racks that used to sit in the basements of these large buildings, to cloud based technologies and APIs, there’s a lot more portability and accessibility to technologies. So banks can be more choosy about who they choose to partner with and go seek out the partners that they want to do business with, not the ones they’re forced to do business with. 

That opens the door to more, aligning incentives and being more creative. We talk about camping with customers, right? How can we get shoulder to shoulder and think about what the customer is trying to accomplish and how to get creative with them – whether it’s at the architecture level, whether it’s at the business level, whether it’s about choosing the right partner and other third party partners that might be able to augment the core to do whatever new thing they want to do.

From an R&D perspective, my ability to build new products and new ideas to meet the needs of clients – all of that starts with:, how can we get together, align incentives, and figure all of this out? That totally resonates with me, and I love it. If we’re lucky as an industry, the entire industry moves in that direction, and we’ll all benefit from it.

Barrett, Valley Bank: It’s a credit to firms like yours, because it’s created more of an industry Call To Action. What I’ve noticed is that in the DNA of a number of partners, if you’re engaged in work agility and that level of general action, they’re clearly capable, but it’s not embedded into the DNA of the firm. 

What you start to see is if you bypass the Call To Action for agility and partnership, they tend to have the ability to do it. But it’s not necessarily always yet hit that point where it’s  just their default go-to-market strategy. Certainly you have a lot of luxury of being able to have that inherently in your DNA, from the onset. It’s just an interesting thing – I observe the whole landscape of our third-party ecosystem, and who’s got that advantage and who’s got their own legacy to contend with.

Challenges in core modernization

Feuer, Galileo:  There’s a bunch of things happening all at once. The first is that the COBOL programmers are retiring. So technology is evolving past us, whether we’re ready or not. The need for modernization is for it to go across people and processes and technology. First of all, we can no longer get people to maintain or build out the old technologies. 

There’s a move towards technologies that better address the skill set of the next generation of software developers, that are cloud centric and use APIs and expect headless architectures and microservices. If we want to be able to hire  in the next generation of technologists that are graduating from university and maybe have a few years of experience, we need to have systems that are native to what they know and not what the previous generation knew. 

There’s also pressure around two speed architecture, and the way we’ve done whatever we can to stretch the value of our legacy technology finally breaking and saying, okay, we’ve  got to redo this. There’s all this technology stuff that’s happening and there’s the people stuff, which is that people who know the legacy technologies in COBOL are retiring. We need to replace those technologies, because we can’t replace the people with the same skill set.

There’s the technologies themselves, which are evolving and enabling much more and faster. Growth in terms of our ability to build new products, get those to market, and solve customer problems at the speed they expect them to be solved at – which is the speed of other in other industries, even unregulated industries – because customers download a banking app and a social media app and they want to be impressed at the same level, right? Then lastly, and this is something that Russell talked a lot about, it is the process. There’s a lot of process around how we do business cases inside of banks, how we decide to make investments, and a lot of that is based on the legacy way and waterfall thinking with big projects and heavy investment. 

There’s much more of a move inside banks that says, can we make a light investment and test a value proposition? Can we get something quickly to market and see if it resonates with customers? If several customers ask for something, but we don’t know if all customers want it, and we don’t have the ability to go do a survey, can we turn around a product in a month or two, get it to market and see if that’s something customers want? If so, then we’ll invest more. If not, perhaps we leave it on the shelf. Perhaps we will retire it. 

That mode of development is starting to become more pervasive, particularly with community banks and credit unions – where for a long time they were based on large stacks that were hard to differentiate with, and were very immobile. Those stacks are inflexible. Is there a way for us to get a more flexible stack and try to do things that surprise and delight customers? Some of the pressures we’re seeing are affecting people. They’re affecting processes, and they’re affecting technology. 

Everybody wins, because the bank can move at the speed the customers expect. The customers are getting more from their bank, but they still have that trusted relationship, and they still have their ability to go back to the bankers they know and trust to get the help that they need. I think all of that is – I hate to use the word ‘conspiring’ – but all that’s conspiring to make our industry better, and those are the pressures that I’m seeing. Banks like Valley Bank take advantage of and use it as leverage to gain a new and important footing in a market that’s perhaps previously underserved.

Barrett, Valley Bank: I  agree and just appreciate the whole perspective. I always say, because I’m obviously a lifelong bank guy, I love banks, and I love people who work at banks. Right off the bat, it may not be for everybody, but what I would say is banking, and the cornerstone of banking – and we will talk about a lot of things like what banking is, relationships, and the foundation of any relationship is trust – so to me, I’ve always associated the number one critical imperative of banking is making sure that you can earn and maintain the trust of your customers and your counterparties. 

I think where technology creates such an interesting challenge for many banks and people who work in banks is that technology, especially nascent and unproven, technology, comes at the potential risk of trust, and bankers are absolutely adverse to anything that could potentially disrupt that trust. 

What we have observed inside of banks, and even the people who are serving banks with financial technology, is this evolution where we’re seeing more and more exciting technology hit the level of being trustworthy. 

That’s where the real power of creating – not necessarily a disruption of banking – but a disruption of the customer’s experiences and the type of relationships you can fortify going forward exists, compared to the ones that had to be addressed with a human being located in a branch or on a phone. These are the things that are exciting about what technology can do. But I think when we start putting the technology over the trust, is when we’ve started to see a lot of things move into the fad and hype cycle, but not gain the traction and create the disruption that it promised. 

Most of the third party ecosystem that we engage with in banks has smartened up to that, notably over the last five or ten years. Just watching what’s happening in AI is proof in the pudding that trust remains number one, and how do we get AI to earn that level of trustworthiness? This to be able to deploy. It’s just something that brought out so many layers to what David highlighted. 

What trust means today

Feuer, Galileo: The nature of trust is changing. Our definition of trust was security and reliability, right? We were about things that were heavy and didn’t change, and just every time gave us the same experience. This next generation actually has a different perspective. They trust things that are ever evolving, ever changing, and they view that as a form of customer sensitivity, that they are constantly refining the experience to drive the needs of the customer to the forefront of the customer experience, as opposed to the needs of the business. They’re customer-focused, and they’re customer-obsessed, and that builds a different type of trust. 

So the question is, how do we as an industry take that trust and internalize it so that we can also be constantly modernizing and evolving and be customer-obsessed, but do it in a way that is secure and reliable and doesn’t – you mentioned AI that doesn’t have AI hallucinations – but may leverage AI to get your answer much faster than talking to a human? How can we get the great parts of technology that help build on that trust, as opposed to doing the opposite? I think that’s a lot of the tension that I work with on a daily basis. And I love the fact that you’re feeling that, and you’re also focused on it.

Barrett, Valley Bank:When we started doing our core transformation, there was a thought piece that was put in front of the board, which showed a strategic horizon that broke it into three phases. The first phase was just the core conversion itself. So if you want to talk about, we’re all sitting here and throwing parties, but that was just the first piece of what was intended to be three pieces. 

We’re right now squarely in this second piece, which is trying to make sure that we can continue to have innovation as a cornerstone of how we go ahead and serve our customers, so making sure that while we were sitting there and going through this large scale work, that the agility and the ability to iterate and completely serve the evolutions of technology for our customers, didn’t in any way, get lost. 

We’re on this dual path as we speak. Then the third is what I would call this continued focus on purposeful modernization. So purposeful modernization is when we  are focusing much more on capabilities, things that are going to move the needle for our customers and what we can go to market with and what our customers need and their journey. 

When David was sitting here and connecting the dots between people from the Northeast going to Florida, we also, in a lot of ways, have similar connecting of dots when we start thinking about some of the various capabilities that our customers are now asking us for as their businesses become more complicated, as their internal needs to manage their own spend and their own life cycle events start to become a little bit more, tied to their banking partnership and a little bit less is something they want to keep on the side. 

We’re focusing on those experiences that allow our customers to get end-to-end [fully integrated products], and making sure that we make them feel very confident that when they’re banking with Valley, they’re banking with an institution that is going to modernize in a way that answers to what they need. That is the goal that we have in that third piece. 

There’s a whole litany of things that probably will have me begging David for a little help and support. But it’s just this continuous journey of making sure that once you have this foundation, you’ve built the foundation the right way, now you have no limitation on what you can execute in your change management agenda, because you’ve done the hardest thing. So now, all of the work that we’re doing right now feels very easy on a comparative basis to what we’ve been through over the last probably 18 months.

Feuer, Galileo:  What I love about that is you talk about focusing on the things that move the needle, and you talk about the litany of things under consideration. The reason there’s a litany of things is because there’s still customer needs that are not yet met.  

You have an appetite to do more for your customers and do more for your business and you want to push the technology as far as it can go to meet the needs of the business. At the end of the day, these are technology projects, but without their ability to be 100% focused on meeting the needs of the business, they’re just cost reduction projects at best. 

The banks that are the most successful at this have a north star that says, here’s how I’m going to affect my business by affecting my customers and focusing on, what are the actual things I’m going to solve in the market by doing this project, what are the things that are going to affect my business, my customers, our relationships, and put that technology to work. We previously talked a little bit about technology, and not wanting to make this about technology – I think it’s a big mistake to make this about technology. 

Obviously, technology is the key. But to your point, on things that move the needle, what are the KPIs, the OKRs, the business impact that I expect to get from this transformation, and how can I ensure that everything I do on the technology side is focusing on those needs, and then the litany of things that are still left to do, these are all based on yet unmet customer needs, and, not necessarily, technology gaps. Technology gaps may be what’s missing those customer needs, but at the end of the day, shifting all of that to focus on customer needs is where I think banks start to build their business based on a core modernization versus just running their business.

Barrett, Valley Bank: : The only thing I would add to that is that I think what’s also interesting is just something that’s part of the journey at Valley, and I think it’s in larger banks. I think it tends to be a little bit further along, maybe almost too far along. But I would say, thinking about the concept of an enterprise business architecture, to the point of saying, okay, we have this north star in terms of where we want to be. How do I then, within the confines of this architecture that we’ve spent so much time and energy to be able to get to a point where it has got a solid foundation, solid management, solid control, and solid risk, how do I by the same token, allow rapid innovation in the context of that architecture? 

And this is something that for us has been a real part of, if you will, the sidecar of a lot of our transformation work is figuring out: How we get the new and the existing to get to a point where we, as a regulated institution with a very strong risk and control mindset, ensure rapid innovation – and our CEO is a strong proponent of creating that cultural dynamic where we can continue to innovate like that. It just dovetails with what you were saying there in it being less about the technology, but more about how we make sure that there’s value for it, and that we’re thinking about doing it with some form of strategic mindset.

How the role of banking is evolving 

Barrett, Valley Bank: Banks that are very successful truly understand this trifecta, if you will, between the customers that you want to have relationships with and serving them. From the onset, through their life. The second is making sure that you have an understanding of communities. Banking’s heritage always ties back to communities. At Valley, our role as being not just in the community, but involved. Having a lot of what I would say, focus on making sure that we are relevant and prominent in the communities in which we operate. That’s critical for banks as they go forward. Look, at the end of the day, it is a mostly commoditized business. So if you don’t have relationships and you don’t have communities, it’s very difficult to even get to the third pillar, which is your associates, your people.

How do you make sure that the mindset, whether it be a growth mindset, whether it be an innovative mindset, those are the things that allow you to be able to make great, modern, cutting edge, differentiated experiences – it’s that trifecta between having world class people, engaged and high value customers, and being pillars in the communities in which you operate. For a bank like Valley, we believe that we have a lot of runway in front of us where we can still hold on to that trifecta and be the bank of choice for our existing customers and for new customers as well. 

Feuer, Galileo:  The role of banks evolving in the future is going to be congruent with customers evolving in the future. We recently did a survey of a bunch of customers and prospects and found some fascinating gaps. 85% of consumers say they have a positive experience with their primary financial institution. So we think they’d be quite happy and that everything’s great. But then, if you look at Gen Z and millennials, they use over six financial tools or services. They don’t use just one bank. So more than half of those tools and services are outside of their primary financial institution, and then 20% of those are actually gig workers – they’ve done some gig work within the last year or they worked for Uber, they worked for Instacart, what have you. 

The role of banks evolving is changing with consumers. We talk about account primacy. We talk about top of wallet. What does that mean in a digital world, if your customers are going to be gig workers? On the side, is that the new SMB do we have to start thinking differently about the nature of accounts, because from a tax perspective, they’re going to want to segregate that revenue. But frankly, they’re a consumer. They’re a different type of consumer, but they’re a consumer, they’re not  a business. What do we think about the nature of SMB banking? 

How do we think about the nature of how customers are changing, and how are we evolving banks to meet their needs? And I think a lot of that has to do with their digital flow, and the friction with becoming the primary bank is not what it used to be. So I think it’s not about us evolving as an industry as much as our customers are evolving, and we as an industry are forced to keep up with them. Or we’re going to lose them. How do we follow them on their journey and make sure we are where we need to be on their journey, so that we can meet their needs? 

That’s putting us in an interesting spot for innovation. Rapid innovation as a cultural dynamic that’s super important, because we know our customers are rapidly changing. So we as a bank have to as well, as banks have to be able to rapidly change to meet their needs. As a software provider, I have to constantly think about how I am ensuring that I have the right customizability, the right extensibility in my product, so that as banks are evolving, they can build things with my products that I never envisioned, that’s key for us. Thinking about that’s how we’re going to ensure that banks can keep up with the customers that are on their own journeys, and make sure that they’re in sync with those customers, so that they’re meeting those needs, and that’s how they’re going to evolve. 

Barrett, Valley Bank: There’s definitely a perspective that underpins the way I, as a lifelong banker, and as someone from a financial technology, how we see the world is obviously a different lens. What’s becoming very interesting is that there is a little bit of a debate in terms of what this evolution or disruption, depending on where you stand, of banking will come from. What I would say is  being disrupted is what I would call the delineation of what a bank produced and what a technology company produced for banks to serve customers. 

There are going to be niches that start to spawn different competitors, and banks focusing on that. But I think at the end of the day, what I would say, and maybe this could be our final agreement, is that one of the great tools for the banks that exist, and one of the most amazing parts of the United States, is this vibrant banking ecosystem, where you have so much diversity and such community roots. It is such a critical part of our economy. 

When you think about what technology firms are offering in terms of being able to say, hey, I do discover that a part of my customer base that either I have or want is belonging to this niche and needs customized experiences. The way it used to be was that you probably had one of three companies to call and ask if they had that on their roadmap. Now the diversity of the options that you have to be able to extend out your capabilities with technology is a totally different game. 

How much of the bank truly can be disrupted, versus how much of the differentiated experiences need a bank has, is a debate probably for another podcast,  but i think it is exciting to see what technology in the third-party ecosystem is now offered to smaller, even community financial institutions to actually go out there and serve their communities if there is a particular differentiation or niche that needs to be built down.

Feuer, Galileo:  The democratization of technology is both great for you and hard for you. On one hand, you’ve got a menu of options to choose from to meet your needs. On the other hand, so do your competitors. So democratization of technology is great, but also a little bit frightening, because it’s made it easier to meet the needs of customers. In the spirit of not wanting to agree with you on absolutely everything, we’ll split the difference on that one.