‘Friend or foe’: What banks have learned from working with fintech

Three years ago fintech startups thought they were coming to eat banks’ lunch, but today the two are frenemies that acknowledge each side needs the other to stay in business.

Silicon Valley gave Wall Street a brief ego trip by bringing new technologies like blockchain and machine learning that could “revolutionize” the banks. But even though banks are more open to cross-sector collaboration, they still maintain that they understand the business of finance better than anyone.

“The narrative has changed but it does creep back every once in a while,” said Mary Harman, a payments strategy executive at Bank of America, at the Swift Business Forum in New York Wednesday. “We whipsaw on whether fintech is friend or foe… we’re distracted by legacy issues and regulatory compliance issues.”

Now that banks are catching up on the technology side, they’re learning that technology isn’t the problem to be solved, commercialization is. “We don’t innovate for the sake of innovation” has become their mantra as they’ve learned they can’t get swept away by the mere idea of innovation, they’ve gotta stay focused the business.

Here are three things the industry has learned from that process.

When not to innovate
Sometimes banks have to trade agility for standardization, sometimes it goes the other way around.

Banks can innovate fastest if they do so alone, but if they don’t have clients or customers to actually transact with, the innovation becomes pointless. That’s why involving a network of other industry players is so crucial — but getting many different entities to agree on many different things is bound to slow down all organizations involved.

“[Consensus] becomes the interest of the individual versus the greater good, and how we manage that drags the process along. It takes time and effort to get through legacy,” said Michael Bellacosa, global head of payments and treasury services at BNY Mellon.

Plus, it’s usually more important for institutions to keep the lights on and bump innovation down on the list of priorities.

“There are a lot of legacy services that make organizations a lot of money,” said Sean Rodriguez, faster payments lead at the Federal Reserve Bank of Chicago. “They’re well known, well run and profitable. If you look at them and say you’re gonna change all that, you have to think: how fast do I really want to do that?”

Approach startups as vendors, not partners
It takes long enough to bring a handful of banks to consensus. Technology startups in financial services now exist to speed up various processes, but adding in more participants can be distracting too. Banks need to focus on providing a business solution to a client or customer, and not on the hierarchy of relationships as institutions try to maintain the status quo.

“‘Is fintech a threat to banking’ is a very narrow part of a much wider discussion,” said Mark McNulty, global clearing and financial institution payments head at Citi. “Sometimes there’s way too much focus on the threat. This is just about partnership opportunities, about leveraging a vendor.”

By approaching startups as vendors instead of “partners,” one financial firm could even find a partner in another. For example, Citi recently launched a partnership with Nasdaq, that links the bank’s business payments services to Nasdaq’s blockchain platform — all made possible by Nasdaq’s use of blockchain startup Chain’s distributed ledger technology.

“This is an opportunity where fintech being deployed in another realm of the industry for settling another type of transaction still needs payments first,” McNulty said.

Don’t be a know-it-all
Financial organizations have to break themselves out of the silos they’re so used to working in, in order to evolve and become more nimble, which is essential in an environment where the technology underpinning the business develops so quickly.

For BNY Mellon, that kind of thinking began in its innovation centers, where it has been able to take its business development, operations and technology employees, put them together with third parties and push client problems to see what it could solve.

“When you’re embedded in the same things everyday, you don’t think of it the same way and usually don’t get that fresh outside look that allows you to be a little bit more nimble,” said Bellacosa. “I get very different perspectives and you can usually get to a solution you never would’ve thought you’d get if you didn’t attack it that way.”

Although, bankers have to be wary of catching “bright shiny object syndrome.”

“It has been a problem for a while across our industry,” said Citi’s McNulty. “It takes a lot of discipline to really focus on problems as opposed to technology.”

Inside BNY Mellon’s marketing strategy

There’s an intriguing innovation race taking place among legacy banks in which everyone wants to be second to market. Except for BNY Mellon.

The 233-year-old bank prides itself on its history of firsts. It provided the first loan to the U.S. government and was the first stock to be traded on the New York Stock Exchange. Later, it became the first bank to create a mobile trading app for its clients. Today, it has nine innovation centers around the world learning about new technologies to be able to educate and inform its clients, which make up 78 percent of Fortune 500 companies, on how to use them to keep up with changing business models.

This “pioneering spirit,” as Aniko DeLaney, the bank’s global corporate marketing head calls it, is deeply integrated into the bank’s culture as part of the legacy of Alexander Hamilton, founding father of the United States, the U.S. financial system and of BNY Mellon itself. It’s DeLaney’s job to carry the legacy, but with a view on innovation. To do so, she and her team feature a Test Your Knowledge of Our Founder quiz on the website, as well as short videos (less than two minutes) on BNY Mellon Then and Now, Hamilton’s Impact and The Buck Started Here. The bank also sponsored the now Peabody Award-nominated PBS documentary, Hamilton’s America.

It also publishes an annual People Report, which highlights how the firm’s investments in people have been the key to success and showcases the work of more than 50,000. It’s advertised in seven parts on the bank’s YouTube channel.

Tearsheet recently caught up with DeLaney at NewsCred’s #ThinkContent Summit on BNY Mellon’s mission to educate through storytelling. The following has been edited for length and clarity.

As one of the oldest U.S. banks, BNY Mellon appears the least shy about new technology.
Today, we have nine innovation centers around the world and one of the key topics they’re all talking about is a distributed ledger, which of course we know as blockchain. That’s where our employees are really being challenged to say there are interesting technologies that are disruptive, new business models. We’ve kept these beautiful handwritten ledgers and we have account information from Alexander Hamilton and Aaron Burr. Back in the day, that was very advanced, to keep track of accounts and information. 

So you’re on a mission to educate?
My role is to share what the evolution of our services are. For example, what are we going to do about blockchain? We really do want to work collaboratively with our clients because as they’re changing their business models, we want to help them operate in an agile manner — and part of that is learning what’s offered out there. Again, we’re a well established firm so I get the benefit of having that foundation and being able to share our brand story.

Where do you connect with clients?
In this quickly evolving [content and information] arena, people use various channels: social media, they may be checking Twitter, which is a constant news feed, LinkedIn for talent, Facebook for connections, YouTube for education. We’re focusing on those channels, where we believe more and more of our constituents are looking for that expertise and good content.

How do you tell that story?
Our teams are not only thinking about optimizing the actual channel but designing the content to be easily digested; more snackable, more videos, more infographics. It’s hard to have all the key messages in the right format based on the channel. It’s a fun challenge to figure out how to bring those messages in the most appropriate manner to the audiences out there. The level of sophistication has grown so much.

Suddenly it seems like banks are tech companies that employ technologists. Is there a language barrier with the “traditional” bankers and clients?
Our business models are evolving. So the way we interact with clients, our marketing, the language is evolving. We are definitely focused on the evolution of our technology in our innovation, so we’re using robotics to really enhance some of our operational processes. But this marrying the best of man and machine — just trying to explain its capabilities requires some new language and new examples. And I think that also gets to the stories.

The future of bank media centers, as told by BNY Mellon

BNY's new newsroom

When it comes to social media, financial institutions can’t afford to be left behind. Banks are getting more involved in social channels – even Snapchat is getting some bank love. However, while banks are increasingly investing in building engaging – and sometimes, operational – social media presences, one media channel that has remained underdeveloped is the bank’s online media center.

Banks’ official news channels have been woefully neglected, leaving most, though not all, bank media centers resembling a standard Word document from the early 1990s. This layout is unlikely to excite investors, let alone the stray customer who accidentally stumbles upon the media center.

In 2014, BNY Mellon realized that this lackluster newsroom template didn’t reflect the innovative, modern brand the bank was trying to cultivate. “We realized that the way people consume news and information has changed rapidly,” said Colleen Krieger, vice president and director of corporate communications at the bank. “We wanted to deliver our insights in a way that was valuable and compelling for our audience.”

BNY media center

Defining the target audience of a bank’s media center is one that few banks seem to have given any thought. At BNY, the focus was broad: the firm wanted to reach journalists, clients, prospects, and employees across the globe.

“One of the biggest surprises for us when we looked at the metrics is the number of employees that are going to the Newsroom as well,” Krieger noted. The bank tries to meet the wide range of interest and needs generated by the size and diversity of its audience by creating a variety of content and a site that’s designed to make content discoverable.

With its target audience in mind, the media relations and digital marketing teams at BNY, supported by the bank’s design agency, created a newsroom whose visuals and content are styled after a digital magazine. This design enables the creative teams at the bank to produce and share multimedia content that’s more visual, global and shorter.

It’s not that BNY has completely done away with the Press Release, nor is it trying erase its corporate tone or language. The bank simply believes that PRs are just one tool in its messaging toolbox. So while it still issues PRs, the bank is focused on writing articles, producing videos and creating slideshows that are transitioning away from the corporate voice towards more journalistic and more conversational style.

The site’s metrics show that the bank’s vision of higher newsroom engagement through more innovative content formats was spot on. Press releases are no longer its top performing content, having lost the traffic and engagement battle to the bank’s original content series, including Behind the Scenes Q&As, summer intern articles and Expert Voices.

The viewer numbers have also experienced a significant bump: From the third quarter of 2015 to the third quarter of 2016, external visits to the newsroom increased 32 percent, page views rose 22 percent and engagement is up 6 percent. The creative team takes its cues from how the media center’s audience is actually using the site, and the bank will be rolling out some updates to the media center late-2016 based on learnings from its user base.

Why aren’t more banks reworking their outdated pressrooms? Krieger thinks that stale pressrooms aren’t just a finance problem – they’re emblematic of official corporate content channels. “Great PR is not about press releases,” Krieger emphasized. “More and more amazing content campaigns are originating with PR teams, and that requires a fresh approach to the online newsroom.”

Not all banks are ready to take the plunge into this brave new world of communication. But they should consider it. Whatever the future of corporate media centers is, it’s not a bullet-pointed Word document. Krieger thinks that in the near future the bank media center will grow to resemble content hubs that have traditionally been owned by marketing.

The challenge of crafting that space will be rapid-response content. “How do you create and distribute timely content that responds to events in the news in a matter of hours rather than days or weeks?” Krieger asks.

“It’s an opportunity that we’re actively exploring.”

Big banks top 5 online media center designs

Banks’ digital media centers often resemble a bullet-pointed Word document, circa the mid-1980s. As newsrooms are the website space designated for banks to broadcast their most newsworthy news, it’s interesting that from a design perspective, most banks have left their newsroom pages to fossilize and petrify.

However, a few banks are breaking free of the monotonous newsroom mold to offer up a content product that’s actually alluring.

Here’s our top 5.

United States

BNY Mellon

In 2014, BNY Mellon released its revamped newsroom, and boy, a lot of thought went into it. After years of going down the beaten press release track, the megabank decided it was time for a change. “We recognize that that’s not how people consume their news currently,” said Colleen Krieger of the bank’s corporate communications in the newsroom’s release video.

bny-mellon

Instead of bullet points, the newsroom is organized more like a magazine interface, in keeping with millennial reading preferences. The content itself matches the design’s millennial vibe, with world finance news coexisting happily with top exec interviews, blockchain experiment announcements, and tips from BNY Mellon interns. 

J.P.Morgan Chase

Perhaps unsurprisingly, the United States’ largest bank by total assets has invested in its news design, and it shows. Although the newsroom itself is fairly drab, their news tab is current. The bank hasn’t entirely done away with the bullet-point press release system, it’s only one facet of the newsroom – and it’s in blue. The rest of the newsroom consists of a mix of written, visual, and video content arranged in boxes of varying sizes.

jpm

For the parent company, the newsroom is very community-oriented, showcasing a number of programs and bank employees that are dedicated to giving back. While Chase’s newsroom is a grid of boxes with smiling people giving down-to-earth financial advice, it appears the company doesn’t think this relaxed vibe should extend to its investment arm. JPMorgan’s newsroom is a press release listicle in blue.

United Kingdom

The Royal Bank of Scotland

The UK’s third largest bank by assets easily wins the UK newsroom design competition. While the Kingdom’s other four big banks have stuck with the tried-and-true bullet point system, RBS’ newsroom is much more similar to JPM’s boxed blog-like format, with vibrant images to go with a wide range of topics: financial advice, economic analysis, developments and the bank, and CSR.

rbs

European Union

Deutsche Bank

Deutsche Bank also seems to have grasped the basic principle that the listicle newsrooms of yesteryear are out. Instead, the German bank’s media center has opted for an assortment of boxes with news inside. However, the design – and the content – is much less vibrant than BNY Mellon’s. The colors are more subdued, the boxes are side by side, not interlocked, and the announcements are for bankers, not youngsters.

skitch-1

Still, replacing the list system with the box system demonstrates that Deutsche Bank is thinking out of the box. Interestingly, online German bank N26, whose tagline is “Banking by Design”, wasn’t particularly creative with its newsroom design.

ING Bank

ING Bank’s newsroom design is a long way from BNY Mellon’s Pinterest-like interface, but it wins points for adding a splash of color, the brand’s trademark orange, as well as pictures.

So while their newsroom is still just press releases, it looks more like a media publication than a list typed up on a word processor that’s still running on Windows XP.

At least they’re trying.