How Product Innovation Changes Customer Experience

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This is a podcast episode titled, How Product Innovation Changes Customer Experience. The summary for this episode is: <p>Service is in banking’s soul. It’s a core part of driving growth. However, recent history in banking, especially fintech innovation, raises an important question: With fintechs winning so many new customers, does product innovation mean banking organizations can no longer depend on service to compensate for a commoditized product offering? Joe Welu is joined by Ron Shevlin to answer, is customer experience dead?</p>
Obsession with Customer Experience
02:01 MIN
Product Innovation
01:07 MIN
Grading Customer Experience
00:50 MIN
Product Innovation Changes Customer Experience
01:32 MIN
Product Innovation as a Catalyst for Growth
02:39 MIN
Customer Experience is Table Stakes
01:00 MIN
To Build, Buy, or Partner
01:54 MIN
Dedication to Fintech Partnerships
01:12 MIN
The Power of the Consortium
00:39 MIN
Scaling Resources
01:56 MIN
Hurdles of Acquisition Growth
00:57 MIN
Wallet Share Over Attrition
02:12 MIN
Can you Calculate Wallet Share?
01:16 MIN
Are You in the Consideration Set?
01:12 MIN
Building the Relationship to Be Considered
02:27 MIN
Intelligent View of Your Customers
01:17 MIN
What Ecosystem Do You Play In?
02:23 MIN
Two Hurdles: Mindset and Technology
02:21 MIN

Voiceover: Welcome to The Expert Insights Podcast. Each week, we sit down with executives and leaders in financial services to discuss industry trends, challenges, and strategies, creating a playbook that upcoming leaders can follow to drive revenue and find their own success in the market.

Joe Welu: Joe Welu here with another episode of Expert Insights, where we tackle the growth and loyalty playbook for modern banks and lenders. Today, I am joined by Mr. Ron Shevlin, Chief Research Officer at Cornerstone Advisors. It's always awesome to catch up with Ron. Ron is considered one of the industry's preeminent, most notable banking experts. Ron has been a management consultant for more than 25 years, has worked with leading financial service organizations, consumer products, retail manufacturing firms all over the world. As the chief research officer at Cornerstone, Ron calls on his analytical acumen to author a variety of corporate and commission research reports. So Ron, it's always a pleasure to be with you, sir. How you doing, bud?

Ron Shevlin: Oh, I'm doing great. Trying to stay warm here in Boston, and thanks for having me on, Joe.

Joe Welu: Absolutely, man. Likewise. It's nice and chilly here in Minnesota. So Ron, I'm going to get right into it. You published a recent Forbes article around The Rise and Fall of Consumer Experience in Banking, which initially the headline caught me a little bit, to be frank. And I'd love to dig into that a little bit. In your opinion, what is driving the need to shift focus on consumer experience?

Ron Shevlin: Joe, I've got to be honest. I've had a beef about the customer experience concept for a long time. I've always wondered, why do we use that term in the singular versus the plural? Don't consumers and customers have many different experiences?

Joe Welu: That's so true.

Ron Shevlin: So the idea of trying to boil this down to the customer experience has always bugged me, but I'll let it go. I'll let it go for now and say this. I think the industry has obsessed over the customer experience for about 20 years now. I think it's about 20 years that that terminology has really caught on in organizations and has become accepted as a key differentiator or enabler of companies' strategies. But as I look at how consumer behavior and attitudes are changing, many consumers are adopting a lot of FinTech companies offerings. And I would argue that, and especially in a lot of neobanks who really aren't banks. I like to call them community FinTechs because they really tend to focus on narrow niches of the market. And when you look at how they're differentiating, I don't think they're necessarily doing a better job of online banking or mobile banking. They probably are doing a better job of digital account opening and loan origination, but okay, why are they even in the ballpark of consideration for those things? And it's because they differentiate on the product offering. They have personalized, targeted products for their customer segment that they're going after, and when you look at especially large banks, they're not focused on specific niches of the market. And if you look at the community financial institution market, the community banks and credit unions, many of whom, by the way, of the past 20, 25 years have transitioned from a special employer group focuses to community based charters, who are they designing products and services for? They're designing products and services for geographic segments. There are no unique needs. So it's the FinTechs who have really disrupted the market, not displaced the banks and credit unions, but disrupted consumers' behaviors and attitudes with products and services that are tailored to particular segments. Yes, they might be doing a little bit things better from an experience perspective, but it's really those products.

Joe Welu: Product innovation is really what you're talking about.

Ron Shevlin: It's product innovation more so than it is experience innovation. So my stake in the ground here is not to say that customer experience isn't important, but I think you've got to look at this from a very strategic perspective. Let's say you're a financial institution that already excels in customer experience. Joe, what's the real lift you're going to get... Let's grade it. Let's say we could grade customer experience on a scale of zero to 100, and you've got a financial institution who's at 95 today. What's the lift in terms of bottom line business results that they're going to get from going from 95 to 97 or 98? I don't think it's a lot. I don't think they're going to get that much more lift.

Joe Welu: So to your point almost, experience is one thing, but if they don't have product innovation, and product innovation meaning do they have a product that can get the outcome that the consumer desires in whatever phase of life they're in or whatever industry they're serving, the product delivers the desired outcome the consumers are seeking. Would you agree?

Ron Shevlin: Yes, I think it's a great way of describing it.

Joe Welu: So it's really about, from my perspective, I think about experience is one thing, but it doesn't always mean you're getting the desired outcome that the consumer needs as part of that financial journey, right? The product innovation is really geared towards, " I'm going to focus on specific product innovation that gets said outcome for this particular set of consumers or target customers." Is that how you frame it, how you think about it?

Ron Shevlin: It is. Although, let me, just for argument's sake, take the other side of the coin. This is the argument I typically get when I try to make this argument, is that changing the actual product features and functions, which I would think of as product innovation, changes the customer experience. So part of the problem is where is the line between product design and product delivery, which we would typically interpret as being the experience. So it's a murky situation, but I think bottom line, Joe, the reason I wrote this and the reason I'm... What I'm trying to do is to get bank and credit union executives thinking differently and thinking that, listen, their path to differentiating and improving in the market will come more from their product design for new products, new services, new product enhancement than it will be in terms of enhancing the experience of the existing product set. Providing a better design for your mobile banking application may be great-

Joe Welu: But it's only marginal though, right? To your point, it only gets you marginal-

Ron Shevlin: It's marginal. Yes.

Joe Welu: Do you have any examples where you think product innovation has really nailed it and been a catalyst for growth?

Ron Shevlin: Yeah. I'll give you an example. I'll give you a real example with real names. Los Angeles Police Federal Credit Union. This is a credit union that, yes, it is geographic based in that it serves certain communities in the Los Angeles, greater metropolitan area, but they also have a very targeted market, which is law enforcement professionals. And I would argue that there's probably not a whole lot of credit unions in the country who know law enforcement professionals as well, and those credit unions would be other law enforcement focused credit unions. So they have designed lending products, in particular, that serve the unique needs of those segment. It's not a particularly pleasant thing, but as we all well known, law enforcement personnel have pretty dangerous jobs, and they have a lending product that basically absolves the borrower from any lending requirements in case of death on the job. These are the types of things that the typical financial institution wouldn't think of if they were offering a loan to a law enforcement professional who they probably don't even know that it's a law enforcement professional. And so they also understand the life stage needs of these professionals. So there's help in terms of purchasing you equipment for the job. You see a lot of banks that will have portals on their mobile banking apps, that have discounts on things. Well, they focus their design on products that are specific to law enforcement professionals. So it's about really understanding that market, and I'll give you another-

Joe Welu: It's also depth, right? The depth they're going to serve the needs of that customer base, right. If you think about the fact that they actually thought through that if you're in that field, it's on your mind that I could get killed on the job, and if I do, having to know that loan is going to be taken care of, or I'm off the hook, or whatever the product is, but that is really going deep in terms of needs of the customer. That's a great example.

Ron Shevlin: And look at it from the eyes of the member. Joe, let's say you've got two loans you need to decide between, a loan that's going to charge you 4. 6% on interest or 4. 7% on interest, but in case of accident, death, your family is absolved. I think I'll take that 4. 7 loan versus the 4. 6.

Joe Welu: All day.

Ron Shevlin: And by the way, if I have to go through a little bit extra hoop to get that because it's not a slick online application, okay. I know I'm getting the better loan and I'm getting it from somebody who cares more about me than that other guy does.

Joe Welu: Totally. Yeah. It makes you think about the fact that the organizations that do those types of things, they genuinely go deep and care at a level other people are not going to care about that specific need. So that's a great example.

Ron Shevlin: But Joe, one more point to throw in there, but that's not to say that providing a great member or customer experience isn't important. It has still clear a minimum hurdle of being good enough.

Joe Welu: It's almost table stakes, right? You get to a point on customer experience, and from our purview, baseline customer experience, the stakes have been raised, certainly. There's a minimum operating level that you have to be at, to be table stakes, right? Or you're just going to get evaporated over the next few years if you don't meet some of those minimum thresholds. Do you agree?

Ron Shevlin: Yes. That's why this is not an either/ or type of situation. If you have a great product, but a really lousy experience, you're not going to win. But if you have a great experience and at least an acceptable experience, then you're going to be competitive. So it's really understanding how good you are on a lot of these dimensions.

Joe Welu: Yeah. So my takeaway from this is customer experience, in and of itself, as organizations many times think of it, improving my mobile application, improving my onboarding process, those things in themselves are not going to be enough from a differentiation standpoint to drive the growth in the future. That that's my takeaway. Yeah.

Ron Shevlin: Yep.

Joe Welu: Awesome. Well said, sir. Okay. Next question. We talk a lot about FinTechs. You guys have so much knowledge about the FinTech space in general. How are rising FinTechs challenging financial institutions, specifically, and what do the banks need to do differently right now, this year to take action on it.

Ron Shevlin: First of all, many FinTechs, and let's talk about the ones that are direct- to- consumer because many FinTechs now are, in effect, B2B players as much as they are B2C players.

Joe Welu: Right, right.

Ron Shevlin: They're looking to help the banks and provide capabilities around lending or deposit or whatever it might be, new product design and development.

Joe Welu: And I would break it down into you have FinTech that is competition and you have FinTech that's partnership driven, right? Those are the buckets that I think about it.

Ron Shevlin: I think you're right about competition, but I would've put the other bucket as capability. It's helping the financial institution create capabilities, which might be digital lending, digital account opening-

Joe Welu: Yeah, yeah, yeah, yeah. So they're a partner-

Ron Shevlin: ... new productcrosstalk

Joe Welu: They're a tech-

Ron Shevlin: ...management. Things like that.

Joe Welu: Yeah. They're a technology partner. Yeah. That makes sense.

Ron Shevlin: Yes. In effect, they're on the path to becoming vendors. But the reason that I would push back on the partner, because I think even if you are potentially competitive with a FinTech, there still might be products that they offer that you can partner with because you will never get or it's going to take you a long time to get to that level of product capability. Now, if it's a head- to- head comparison or head- to- head competition of a particular product or service, then yes, it's probably not a great partnership opportunity. But for many instances, think about companies like maybe a Truebill, providing bill payment analysis and negotiation services. How long is it going to take you to, as a bank or credit union to build those capabilities? A long time, and you probably could never make the case for it. But finding companies, FinTechs that offer that and partnering with them, those that provide, let's say, subscription management capabilities, I guess a bank could probably go off and build its own crypto investing in trading capabilities. But why do so when NYDIG is now partnered with every one of the big core vendors? So there's a lot of partnership that's going on, partnership opportunities. The FinTechs are creating either very narrow niche products that they need help in terms of getting scale to market, and that's why there's a great partnership opportunity, or you get the true competitors like a Chime, a Varo, Aspiration, who are attracting consumers on a national level and, to some extent, competing directly with the established banks and credit unions. So from a strategic perspective, it leaves the bank or credit union with a couple of questions to have to address at a very strategic level. Number one, where are we vulnerable from our market perspective in terms of reaching the target market we want to reach? How good or bad are the products that we are offering to our target market? And how do we best proceed? Do we partner? Do we build? Do we buy? The old build- versus- buy dichotomy is now a trichotomy. It's build, buy, or partner. Which way do we go on that? And so for many banks, and in fact, I just published a report on the state of the union and bank FinTech partnerships, and a couple of snippets from that. Number one, nine out of 10 banks and credit unions say that partnerships are important to their strategy and to their overall growth. But Joe, interestingly, in the one to 10 billion asset range, you want to take a guess at what the average number of FTEs in those institutions that are dedicated to FinTech partnerships are?

Joe Welu: It's small.

Ron Shevlin: Two and a half.

Joe Welu: I don't know, but... Two and half?

Ron Shevlin: Two and a half. Two and a half FTEs. Now let me ask you, how many partnerships can two and a half people identify, negotiate, vet, deploy, and scale? And the answer is not a whole lot of them.

Joe Welu: Maybe not even anything meaningful, right? Not even a meaningful one. Yeah.

Ron Shevlin: crosstalk On average, banks and credit unions are now at about two or three partnerships up from about one to one and a quarter from two years ago, but what they haven't done and I think was important is they need to recognize you need a capability, a competency in partnering. You've got your procurement department. They know how to buy. Where is your department that knows how to partner? And it's a different set of skills. It's not an IT skill. It's not a line of business functional skill. It's a new skill.

Joe Welu: It is a new skill.

Ron Shevlin: Yeah. And so for many banks and credit unions, the way to go about it is to partner with each other first. I've been a big fan of what Alloy Labs has been doing over the past couple years.

Joe Welu: Yeah. We crosstalk.

Ron Shevlin: They just launched the CHUCK network. Another consortium of community banks just launched a week or two ago called The USDF Consortium to establish and build a stablecoin and provide trading capabilities around that to get into the crypto world. So I think banks are actually learning that the better path to FinTech partnerships is actually first partnering with other banks to create-

Joe Welu: That's so interesting.

Ron Shevlin: You've got to create that resource-

Joe Welu: Say a little more about that. Yeah, say a little more about that, how you see these banks partnering with each other. I think this is really an important conversation for a lot of the people that we talk to and probably a lot of our listeners, but say more about that.

Ron Shevlin: Well, number one, it's a cultural shift. I don't think many community banks have been oriented towards collaborating with other banks, even if they're not in the same geographic area. But I think what's happened over the past couple years is that there have been some banks... I live in the Boston area. I'm just down the road from Reading Cooperative Bank, Julieann Thurlow there, and maybe it's because it's a cooperative bank and it's probably almost as much like a credit union than it is a true bank. But of course, it is a bank. But executives like her, like Jill Castilla from Citizens Bank Edmond, Chesapeake Bank, there's a number of them that have this mentality that, " Look, we don't compete with banks a thousand miles away. Why wouldn't we cooperate, collaborate with them to scale the resources we need because we can't hire 15 people to do it." But if I put up one or two, and you put up one or two, and we get six or seven more who put up one or two, now we've got the scale of resources we need to build that." And the consortium approach is important because you really do need somebody who takes control of it and manage across it. It can't be a free- form, " Hey, let's just all get together whenever we can." Somebody's got to make this a real thing. And I do think, to a certain extent, despite the fact how much banks despise credit unions for their tax exemption, I think they look at the credit unions and recognize, although they might not be too willing to admit it, " Yeah, those guys do a better job of collaborating with each other through QSOs and things like that than we do." And I think that mentality is changing in banking, Joe. I think the community banks are realizing.

Joe Welu: Yeah.

Ron Shevlin: One last point on that. They're also realizing that the merger approach to gaining scale isn't going to stop. Let's get real. That's not going to stop. But if you're a one billion dollar bank who's got designs of getting to the 10 billion dollar level, it's going to take a lot of acquisitions to get there.

Joe Welu: Yeah.

Ron Shevlin: I was meeting with the CEO of a local bank around here who's at about a billion and a half to two billion, and he looks around and says, " Yeah, I can identify three or four more two billion dollar banks in the area. But if I got to buy them all out and merge them all in, that's going to take me 10 years. I don't have 10 years to do that." The way to get scale these days is by having 10 one billion dollar banks in a consortium, and even though you're not a single legal entity, you now are approaching the scale you need to do some innovation things from a new product and service development perspective.

Joe Welu: So walk me through on the consortium. As these guys are building these consortiums, creating these consortiums, and I'm familiar with some of them, in terms of actually driving the initiatives, the process for evaluating where they're going to spend time and resources. So I'm guessing there's some alignment that has to happen upfront on what the priorities need to be. Is that how typically you're seeing it executed?

Ron Shevlin: Let's say you've got a consortium with 15 banks. Typically, what's going to happen is for any particular single initiative, you're going to get three or four who's really leading it, and maybe five or six who are actually in on it. Even though the consortium itself is bigger, they may have three or four initiatives going on at any one time. Not all 15 are actually going to participate in all of the initiatives-

Joe Welu: So you might only have-

Ron Shevlin: ... becausecrosstalk priorities.

Joe Welu: Yeah.

Ron Shevlin: And I think that's the way CHUCK worked with Alloy is that I think Julieann Thurlow at Reading Cooperative was really the driver of it with a couple other banks who were very active in it, but not all members of the consortium were necessarily involved, although all can benefit from it if they opt in. But I do think that it's generally led by a smaller coalition subgroup within the broader consortium itself.

Joe Welu: I want to just spend a little bit more time on the landscape and how it's changing all of the options that consumers have out there. How do you think organizations need to think about loyalty of their customer base? Let's say you're a five billion dollar bank, 10 billion dollar bank, right? Yes, I need to innovate on product. I need to improve customer experience. Even if I'm doing those things, there are, at least from our perspective, customer loyalty still becomes challenging because consumers are getting pulled in so many different ways. As you think about customer loyalty, what do you think the secret sauce is today on a go- forward basis?

Ron Shevlin: So let me preface my comment and answer to that, Joe, by telling you and everybody else who's listening that I've got an MBA in finance, in statistics. I'm a numbers guy. I don't like touchy- feely stuff. I'm not super emotional, any of that stuff. But it has taken me a long time to come around to the belief that loyalty is more of a qualitative measure than a quantitative measure. First of all, if you're measuring loyalty today by retention rate, you're really crazy. You're really off the reservation on that one because what reality today is that consumers don't close their accounts, especially from the deposit size. They just move on and move the money. So at the minimum, wallet share is a better measure of loyalty than retention rate or attrition rate. But-

Joe Welu: Yeah, because you can have... So just to be clear on retention, why you're saying that is because theoretically it still may show that I have an open account. They never close the account, but they're really not my... I'm not their primary institution anymore. That's why you're saying-

Ron Shevlin: No, and you might not even be their second or third account anymore.

Joe Welu: Yeah, yeah, yeah.

Ron Shevlin: And to some extent, that money is just sitting there. But I have, over the past couple years, heard so many banks and credit unions brag that their attrition rate is in single digits, and I am always thinking, " Big deal. Big whoop. Everybody is in that case, but you don't seem to be generating any more profits out of those accounts." So at a minimum-

Joe Welu: Wallet share.

Ron Shevlin: ...wallet share is better. But here's the other challenge to that one now. I did an article a couple weeks ago, which I called something like Consumers' Hidden Financial Lives. The belief in the industry is that, "Well, the typical consumer has six or seven different financial relationships." And my point was, no, I think they have 30 to 40. If you really look, I mean, yes, they might have one or two checking accounts, but Joe, they've got a health savings account that they're spending money on. They put money into their Starbucks app and their CVS app and their other app, and those become payment mechanisms. And then they're using Apple Pay in Venmo, and there's money sitting in those accounts. And yes, they have their traditional investment account at Schwab, but now they've got one at Robinhood and they've got a Coinbase account, and they're using Investor to play fantasy finance. And so you start counting all of this up, and it's not six or seven relationships. It's 30 to 40 relationships. So number one-

Joe Welu: Wow. That's amazing.

Ron Shevlin: You can't calculate wallet share anymore. It's nearly impossible to figure that out because there's so many providers. And so we're going with this, and when I started with the, " I got an MBA in finance and statistics," was first of all just to brag about the fact that I got an MBA in finance and statistics.

Joe Welu: I don't have one, so brag away. Yeah.

Ron Shevlin: But to make the point that it's really more of a qualitative measure. I think you have to look at engagement. How engaged are your customers? And it's a proxy for their emotional connection. Look, I've got a favorite cereal, Joe, and I'm very loyal to that cereal, and my wife is on my case all the time that I eat too much of it. But I don't just have one favorite brand. I've got a couple. And so the product manager for that number one cereal might get mad at me and think I'm being disloyal by eating my number two or number three cereal. But I don't look at it as being any less loyal. I just need a little variety.

Joe Welu: Huh. That's interesting and well said, Ron.

Ron Shevlin: And so look, from a banking perspective, I'm simply not going to go to one institution for every product I need, but that doesn't make me any less loyal to the ones I do use for what I use them for, especially if they're always in the consideration set the next time around. That's a really hard thing to measure. And yet, Joe, remember the report we did with you guys a couple months ago last year? What did we find? Was that in the mortgage space, what was really important was being in the consideration set.

Joe Welu: Yeah.

Ron Shevlin: If you're in the consideration set, then your opportunity to grow the relationship is the first step in that. So it's more than just trying to be at the right time, at the right place with a message. It's about building the relationship to be in the consideration set first.

Joe Welu: You have the trust and the relationship credit, the depth of the relationship, you've provided enough connection to where you've earned the opportunity to then have the seat at the table when they decide to make that next transaction or that next product that they might need. That's really what you're saying, right?

Ron Shevlin: Right. And it's not a science, Joe. It's not like I can say, " Here's the formula, and it works. Go do this." As a management team, you have to go figure this out for yourself. What does your best client look like, not just physically look like, but what do they look like from a behavioral perspective? What do they do? How do they interact with you? Where do they interact? How often do they interact? And please don't tell me, Mr. Ramirez bank executive, " Oh yeah, our mobile banking customers check their balance 17 times a week." That's not engagement. But tell me how they're using-

Joe Welu: How do you define it? I'm going to push on that.

Ron Shevlin: Okay.

Joe Welu: How do you define it?

Ron Shevlin: With a range of both transactional and interactional type of things. So for example, how many debit card transactions do they make on a monthly basis? If they're making a lot of debit transactions on a monthly basis, that's one sign of this level of engagement. Now, if you've got the data and can see their relationship, what percentage of their spending behavior is debit versus credit card because my bank would look at me and say, " Boy, this guy never uses his debit card," which doesn't make me disloyal. It just means that I'm more of a credit card spender than a debit card spender. So then after that, I would be looking at things like, " Do I make use of personal financial management tools? Do I have an account manager that I interact with?" This is not even digital anymore. It's, " How often do I interact with an account manager? When I go into the branch, what transactions and interactions do I have there?" You've got to look at the whole of the relationship, not just the digital behavior. You've got to look at the types of transactions and interactions that somebody's having with the institution and the frequency of those interactions.

Joe Welu: What you're describing to me is something that we're really passionate about in our parts of the partnerships that we have with organizations, and that is having an intelligent view of each and every human, each and every customer that is in your organization. It's incredibly hard to do, to have a truly intelligent profile that brings all those things together. But that's what you're describing, right? The only way to really understand it is you need to be able to have all of those data elements and be able to visually lay that out and decide, " Hey, what do my best customers do? What are the patterns with my highest profit customers?" Is that what you're describing, or am I off base there?

Ron Shevlin: No, I think it's exactly what it is. You've got to have a wide range of data sources, but it's an art. You have to come up with a proxy, maybe a formula for something, and it's going to differ across every institution, but the management team's got to set their data people off and say, " Go play around with this and come back." You use the growth in the relationship as the dependent variable in this equation. But the independent variables that go into it, you've got to figure out which are the right ones. And those are the ones you then measure and manage to.

Joe Welu: So fast forward 24 months, Ron, and walk me through the things that if I'm an organization, I'm a bank or a credit union, what are the things I'm going to regret that I didn't do in 2022?

Ron Shevlin: Number one regret would be not figuring out what ecosystem you play in. I think the days of the standalone financial institution that just has its little market, has its little geographic market that it focuses in on and provides its standard traditional financial products, is going to find... I'm not ever going to say they go out of business or fail or they're dinosaurs. It's nothing like that. But their growth rate will be challenged. So when I say ecosystem, I don't necessarily mean some very formal thing, but the interconnectedness, who are you partnering with? What distribution channels are you looking into? I'm a big proponent and fan of this trend of embedded finance and banking as a service. I think my colleague, Alex Johnson, and I are working on a report now looking into embedded finance, and we haven't published anything yet. But Joe, the consumer interest in getting financial products from non- traditional financial providers, from companies that they do business with every day, whether you're a Lyft or Uber driver, whether you're a gamer playing on the same platform all the time, if you're a gig worker using various gig worker platforms, these consumers want to get and are open to getting financial services from those providers. But of course, they need to partner with banks and other financial institutions to get it. From the banking perspective, this is a big challenge mentally and culturally, Joe, because they lose the ultimate connection to them being the face of the product to the consumer anymore. But from the bank perspective, it's simply a new distribution channel.

Joe Welu: I was just going to say, so you just hit a bullseye in my opinion on that one, because it's not a technology limitation really anymore. You can do it. You might not be set up right now to do it, but through partnerships and the different capabilities that are out in the market, you can essentially do that. It's not a technology limitation. It really is a mindset limitation for a lot of these organizations. Do you agree?

Ron Shevlin: Well, yeah, the mindset limitation is the first hurdle. But make no bones about it, Joe, the technology limitations are a huge hurdle as well.

Joe Welu: But they are available to them if they choose to make those adjustments, correct?

Ron Shevlin: Well, that's what's changing in the market today. Now there are banks that have been in this space for a couple years. They had the luxury, although they probably wouldn't describe it that way, but they've had the luxury of being the early buyers and building those technology capabilities themselves. For that next wave of banks that are going to get into this, they don't have the luxury of being able to spend two to three years to build it. But the good news for them is that there are companies like Synctera and Moov and Treasury Prime and Item that are coming into the market and basically saying, " We can do this solve for you and be that intermediary and help build that set of capabilities." So interestingly, Joe, just as we were talking before about the consortiums helping banks accelerate their partnership, these banking- as- a- service infrastructure providers help the banks accelerate their capabilities and entry into this banking- as- a- service market or embedded finance market. So I think the banks that don't take advantage of that and look at this from a strategic perspective, two to three years down the line from now are going to look back and go, " All right, we're not dead. We're not dead in the water because of it. But-"

Joe Welu: "Man, do I wish I would've listened to Ron Shevlin in beginning of 2022."

Ron Shevlin: Oh, man. They're going to say, " I wish I had listened to Ron Shevlin back in 1997." Well, I don't know. Actually, Joe, honestly, the first time I didn't have the foresight to it embedded finance, but I went back and I actually published a report in July of 2020 in which I said that we're going to see the emergence of non- financial providers as providing financial services firms inaudible. So yeah, I think I called this one back almost 22 years ago, a little bit before the time.

Joe Welu: Man, I've always been a huge fan of yours. Ron, thanks so much, sir, for joining us. Love the thoughts. Love the comments on the future and what some of these companies are going to regret if they don't do it. There still is a lot of opportunity. We both agree on that, and it's just an incredible time to be in this space because of the change and opportunity that we continue to see. So for all our listeners out there, thank you for tuning in. We'll catch you next time on another episode of Expert Insights.

Voiceover: Thanks for listening. Be sure to subscribe for new episodes each week and to learn how the Total Expert Platform purpose built for financial services can help your company drive three times growth and double customer loyalty and retention, visit totalexpert. com.

DESCRIPTION

Service is in banking’s soul. It’s a core part of driving growth. However, recent history in banking, especially fintech innovation, raises an important question: With fintechs winning so many new customers, does product innovation mean banking organizations can no longer depend on service to compensate for a commoditized product offering? Joe Welu is joined by Ron Shevlin to answer, is customer experience dead?

Today's Host

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Joe Welu

|Founder & CEO, Total Expert

Today's Guests

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Ron Shevlin

|Chief Research Officer, Cornerstone Advisors