digital transformation Archives

In an evolving financial landscape, US Bank has emerged as a leader in digital transformation. It has reshaped the way customers interact with their finances. Today’s episode of the Tearsheet podcast features Gareth Gaston, Chief Product Officer of Digital Platforms at U.S. Bank. He discusses the bank’s decade-long journey of innovation and customer-centric development.

“We’ve been on a multi-year journey on digital transformation across all facets that you can think of digital,” Gaston explains. This transformation has been more than just a technological upgrade. It’s been a cultural shift that has positioned U.S. Bank at the forefront of banking innovation.

The journey began with the recognition that customers were using more than just physical branches. “When we started this journey, we were renting all our digital tools,” Gaston recalls. “We didn’t have a mobile app. We were kind of renting our online banking and bill pay.”

From these humble beginnings, U.S. Bank has built its own digital platform and in doing so, laid the groundwork for successful future product development. In doing so, it has created award-winning apps and platforms that serve millions of customers.

Here’s my conversation with U.S. Bank’s Gareth Gaston.

Evolution of U.S. Bank’s Digital Transformation

U.S. Bank’s initial move was to shift from renting digital tools to creating their own. This allowed them to develop in-house products tailored to their needs. This shift allowed for greater control over the customer experience. It resulted in faster innovation cycles.

“We rebuilt our app from the ground up, below the glass and above the glass, as we call it,” Gaston shares. This effort paid off. The app got the recognition for “the best app in banking” shortly after its launch.

Expanding Digital Services

The bank did not stop at mobile apps. They expanded their digital offerings to include:

A voice assistant, now recognized as a leader in financial services

Spanish language conversational experiences

End-to-end digital mortgage applications

Same-day business loan approvals and funding

Gaston emphasizes the importance of these developments. He highlights, “Our mortgage experience has won awards and it’s fully end-to-end. Most of our applications and processes are done digitally.”

Enterprise-Wide Digital Transformation

U.S. Bank is now expanding its digital capabilities across the entire company. This phase aims to enhance digital services throughout the enterprise. “Having had great success in consumer and business banking, let’s take that across the whole enterprise,” Gaston explains.

This expansion includes creating foundational capabilities. They can be used across all divisions. From payments to wealth management and commercial banking.

Embracing Open Banking and Connected Finance

US Bank has embraced the concept of “connected finance.” It has created APIs that enable various use cases. These include embedded payments and partnerships with other financial institutions.

“We offer both real-time payments and FedNow as one API,” Gaston notes. He highlights the bank’s commitment to staying at the forefront of payment technology.

Leveraging AI and Machine Learning

The bank recognizes the potential of artificial intelligence. U.S. Bank has recently welcomed a new Chief Artificial Intelligence Officer. This move underscores their commitment to integrating AI across their operations. From personal productivity tools to enhancing the product development lifecycle.

The Big Ideas

Digital transformation is a continuous journey that requires both technological and cultural changes. Gareth says, “We’ve been on a multi-year journey on digital transformation across all facets that you can think of digital.”

Developing in-house digital tools enables more innovation and control. This improves the customer experience. Gareth says, “We rebuilt our app from the ground up, below the glass and above the glass, as we call it.”

The reusability of digital platforms across the enterprise accelerates product development and ensures consistency. “The whole idea of reuse is that we were very intentional around creating these seven different platform groups”, explains Gareth.

Open banking and connected finance are key to meeting evolving customer needs and expectations. “We embraced, uh, you know, we call it connected finance. But open banking, from the start of the journey in the U.S.”, Gareth says.

AI and machine learning will play a crucial role in the future of banking. This requires dedicated leadership and governance. “It’s so important. We, this week, just welcomed our new chief artificial intelligence officer”, Gareth highlights.

Listen to the whole episode

Tearsheet Podcast · How U.S. Bank is reinventing itself for the digital age with CPO of Digital Platforms, Gareth Gaston

Subscribe: Apple Podcasts I SoundCloud I Spotify I Google Podcasts

Read the transcript (for TS Pro subscribers)

As the financial world evolves, open banking and digital transformation are opening up new opportunities. This comes with several challenges for banks and fintechs. In today’s episode, I sit down with Alessandro Hatami. He is a managing partner of Pacemakers, a consulting firm that offers a systematic approach that allows its clients to find the partner that is right for them.

Today we discuss some of these seismic shifts in the fintech industry.

Hatami has a unique background in financial services, spanning both upstart tech companies like PayPal and traditional institutions like Lloyds Bank. His background offers a compelling perspective on the future of financial services. “Financial services is the ideal digital product,” Hatami asserts. “because there isn’t a real tangible exchange,” he says. Yet, despite this potential, many institutions are struggling to embrace digital transformation.

I’ve been saying for years on this podcast that the ability for both larger and smaller institutions to partner – to partner well, at scale, quickly, and deeply – can be a differentiated, defensible model moving forward.

Hatami explains, “They have gone through an evolution. But they haven’t gone through a transformation.” The challenge facing the industry today lies in balancing adaptation with true transformation. from legacy systems to cultural barriers.

Through Pacemakers, Hatami aims to bridge this gap. He wants to improve partnerships between established financial institutions and agile fintech innovators.

Here’s my conversation with Pacemakers’ Alessandro Hatami.

Three stages of financial services innovation

Hatami outlines a three-stage model of innovation in financial services:

Adapting – Banks begin by adapting existing capabilities to digital platforms.

Evolving – Institutions develop new digital-only services not possible in traditional branch settings.

Transforming – The toughest stage is rethinking financial services with a customer-centric perspective.

“What’s on the other side is a financial services proposition. It is not designed to sell a product to an individual. But it’s designed at understanding what the individual needs,” Hatami explains.

Overcoming challenges in fintech partnerships

Successful collaborations between incumbents and fintech face several hurdles:

Timing mismatches between fast-moving startups and slower corporate processes

Difficulty in translating innovative propositions into terms that resonate with traditional banks

Identifying the right internal champion with P&L responsibility

Hatami advises, “You have to explain to the big company what you could do for them. But you have to explain to them in their terms.”

Rise of open banking and banking as a platform

The concept of open banking is transforming the consumption and delivery of financial services. Hatami predicts, “The future in banking will be. The banks will become the gatekeeper of my financial relationship. The bank may or may not deliver the services and products I receive.

“Banking as a platform” is a major shift from the old model where banks made all their products themselves. Now, banks collaborate with others to offer a wider range of services.

Role of AI in reshaping financial services

Artificial Intelligence presents enormous opportunities for the financial sector. Particularly in data processing and pattern recognition. AI will likely support, not replace, human interaction in customer service roles.

“The way I think about AI is about it as an efficient, effective, interesting way of capturing data. Through the new visualization techniques. And also processing gigantic amounts of data,” Hatami explains.

Cultural Transformation: From product-centric to customer-centric

The biggest challenge is shifting from a product-centric to a customer-centric approach. This requires a cultural change. It needs banks to completely reorganize their operations. And change how they measure success.

Hatami notes, “In a customer-centric world, banks must use customer segmentation for their profits and losses. Not just product-based metrics. This requires a complete transformation of how banks operate.”

The Big Ideas

Digital transformation in financial services is vital. “They have gone through an evolution. But they haven’t gone through a transformation,” Hatami observes. Banks must move beyond adapting existing services. They must reimagine their role in customers’ financial lives.

Hatami highlights the importance of cultural alignment in partnerships. “You have to explain to the big company what you could do for them, but you have to explain to them in their terms,” he advises. Successful collaborations need mutual understanding and clear communication.

Open Banking is the future of fintech. “The future in banking will be. The banks will become the gatekeeper of my financial relationship,” Hatami predicts. This shift will change the delivery of financial services.

Hatami focuses on the role of AI in financial services. “The way I think about AI is as an efficient, effective, interesting way of capturing data,” Hatami explains. While AI offers significant opportunities, human interaction remains crucial in financial services.

Hatami highlights the shift to customer-centric banking. “In a world where the customer is centric, they go through the segmentation P&L, not the product P&L,” he notes. This fundamental shift requires completely transforming how banks operate and measure success.