How Banks and Lenders Can Tackle Three Critical Innovation Roadblocks

Episode Thumbnail
This is a podcast episode titled, How Banks and Lenders Can Tackle Three Critical Innovation Roadblocks. The summary for this episode is: <p>The concept of innovation isn't new to financial services. Yet, the elusive innovation topic continues to be a top priority for banks and lenders. Joe Welu and James Robert Lay discuss three critical roadblocks to innovation and strategies that financial institutions can use to truly achieve innovation.</p>
Innovation Challenges
01:09 MIN
Change is Uncomfortable
00:29 MIN
Cave of Complacency
00:20 MIN
Innovation and Data
02:13 MIN
Data to Analytics to Action
00:53 MIN
Human-First Mentality
01:06 MIN
Touch Points of the Customer Journey
00:53 MIN
Automation and Human Touch
01:08 MIN
Making Progress
00:38 MIN
Banker Strategy
00:25 MIN
Right People in the Right Seats
00:53 MIN
Clarity, Courage, Confidence
00:51 MIN
Digital Transformation and Internal People
00:45 MIN

Speaker 1: 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: Hello, everyone. Joe Welu with another episode of Expert Insights, where we tackle the growth and loyalty playbook for modern banks and lenders. Something that is critical in this time of transformation is the ability for organizations to drive growth and create those lifelong relationships with customers. So someone who is deeply experienced and has a tremendous amount of knowledge in these topics, my guest today, Mr. James Robert Lay. James Robert is the founder and CEO of the Digital Growth Institute, where he has guided more than 560 financial brands on a mission to simplify digital marketing and sales strategies that empower banks and credit unions to generate 10 times more loans and deposit. Great to have you, buddy. Good to see you, James Robert. Let's get off to the races. How are you doing, man?

James Robert Lay: I'm doing amazing. And it's always good to see you, Joe. I'm looking forward to this conversation because whenever you and I get together, good things do happen.

Joe Welu: Today, we're going to talk about innovation, as we always do, but specifically, why it doesn't happen at least at the pace banks want it to, lenders want it to? Innovation in digital transformation has been a key focus for institutions, but what are the key challenges to making progress that you're seeing?

James Robert Lay: There's really three challenges that we're seeing, these reoccurring patterns that typically bubble up to the surface. Number one, no clear focus on what to innovate around. And oftentimes-

Joe Welu: So focus.

James Robert Lay: Yeah, focus. And innovative decisions are typically being made blind. They're not being guided by data to make decisions with confidence. And so what happens is we kind of just dabble. We do a little bit over here, we do a little bit over here, and then we tend to get frustrated, which is the second challenge, is there's not cultural support or buy- in for what I would call long term innovation because there's a fear of failure.

Joe Welu: It's also uncomfortable, right? I mean...

James Robert Lay: And I think that's the key that you're touching on. Big change is uncomfortable. And if we're going to change, if we're going to transform, we need to create space and time to do just that. And that's where the third challenge is, is we don't have time to innovate and we're so stuck doing whatever it is that we're doing. The future becomes the predictable past and we just keep repeating the same thing over and over and over again.

Joe Welu: So I look at our product organization, and I have kind of the privilege of being at a tech company, but also getting a chance to work alongside a lot of the great institutions and organizations that we partner with. And I know that when I look at our different parts of our platform and our product teams, the teams and departments that are really comfortable being uncomfortable, meaning they'll lean into the change. And it feels really strange and it feels really like some of those conversations, those feedback loops, the start, restart, iterate, it's just not comfortable. And so as I look at that in the organizations that we work with, how much do you think that plays into it from you got leaders and then people at different levels that it's just easier to kind of be more comfortable where you're not mixing things up? Do you think that's relevant?

James Robert Lay: I do. And it's what I write and speak about. I call it the cave of complacency. And the cave of complacency, it's almost a siren call to say," Hey, come into the cave. It's safe. It's warm," but it's actually not. It's probably one of the most dangerous places to be, particularly in the world that we're navigating through. And I think we'll see more changes at an exponential and also at a macro rate. So for me and for those that I coach, teach, and advise, I'm really encouraging them, and it sounds kind of cliche, but to get comfortable feeling uncomfortable. And the good news is you can train this type of behavior. AQ, adaptability quotient, is something that you can benchmark and measure against, just like you can EQ, just like you can IQ. And in fact, I look at things from a formulaic approach. EQ, so emotional intelligence plus AQ, the ability to adapt, is greater than just IQ alone.

Joe Welu: You always have really a great way to put these things into frameworks. And it's always interesting to hear how you think about these things. Do you think it's innovate or die for most financial brands?

James Robert Lay: At the end of the day, I would say innovation... And maybe we can also segue in transformation. If you're not innovating, if you're not transforming, what does that mean? You're staying the same. And if you're staying the same, you're not continuously growing. And, therefore, if you're not growing, what are you doing?

Joe Welu: Or maybe I should say innovate or slowly die, right?

James Robert Lay: I would say it's a slow death, because I do believe that we can learn from the ancient Stoics here. Memento mori, remember your death. And I think if we remember this, do we have the potential to be around five years from now, 10 years from now, based upon everything that's going on? Memento mori, if we remember our death, we can almost use that as inspiration to continue to evolve, to innovate, to transform, and to ultimately grow. But that inspiration can't just be self- serving. I think if we put people in our account holders as the memento mori piece of this, we will be able to grow at an exponential rate because we are truly not just transforming ourselves, but we're transforming to transform the lives of people in the communities that our financial brand serves.

Joe Welu: I want to shift gears into what I believe is the crux of a lot of lack of innovation. And I want your thoughts on this. So we think about data, and specifically for purposes of this conversation, the ability to take all of the information about your customer, really understand that customer and then be able to change how you serve that customer based on that understanding. We see a lot of organizations, their inability to innovate really starts at their lack of ability to work with the data, understand the data, activate data, enable the people taking care of the customer with the right data.

James Robert Lay: inaudible get a little philosophical here. What is data? Data is ones and zeros. So the-

Joe Welu: Sure.

James Robert Lay: ...multiple step process here is to turn data into analytics so that we can visualize what's going on. We can then turn those analytics into insights. Those insights then turn them into action. And if I think about the data that we as financial brands really have at our fingertips, it truly is a transformative opportunity because we probably know more about the lives, the habits and the behaviors of our account holders. Then they might even know about themselves. And we can use that data for good to make recommendations, to provide guidance, to provide advice, to help them get from where they're at in the present moment to an even bigger, better, brighter future going forward. But I think we have to roll this back a little bit and... Where do we begin? Because that data can feel so overwhelming. And I think that's one of the reasons. inaudible the challenge of innovation, it's the focus or lack of focus. We need to focus in on the few things that will create the greatest value going forward.

Joe Welu: Would you agree that the approach you take and your methodology about understanding and working with data matters? And I'll give you an example. Sort of, if you look at old school customer member engagement, which is, I have a list of customers, they're in these cohorts, I fire out offers at them or advertisements, right? That sort of old school. New school and what we consider the future is I am really looking to understand each and every human, right? Understanding that these are not account holders, they're individual humans, families, businesses, and they each have a different financial milestones that are impactful to them. I approach really innovating on products and how we serve those customers with a human first mentality, meaning I seek to understand and then really engage and act. We think that that is obviously the best possible path, but so many of the organizations that we see still have a transactional mindset. Give me your take on that and any progress you're seeing out there with organizations being able to take that human first, but still innovative approach.

James Robert Lay: We must move from the macro to the micro. I really believe, in the years to come, the micro is going to beat the macro. It is going to be this more one to one connection. People are longing for that. People are craving that. And it's the organizations, it's the brands that take the time to put together the systems and processes to not just transact, because any type of transaction can be easily commoditized. But to really look at the human and put the transformation of that person, of that individual, make a commitment that we're going to put their transformation over the commoditized transaction. And I think Issy Sharp, the founder of Four Seasons, he says it best. He says," We must automate the predictable so that we can humanize the exceptional."

Joe Welu: So if you think about how this translates into a lot of the organizations that we work with and just our privilege to get a chance to be in the trenches with a lot of times, it's really, how can you use automation to look at the... Just improving all of the little touch points on the customer journey, but then also, how do I have real and meaningful, valuable human connection where I'm doing the extra special things. I'm making a phone call, I'm sending a text, I'm giving them advice. Is that what you're talking about? Those extra special moments.

James Robert Lay: Absolutely. It's the micro. The small little things can make a tremendous and even an exponential difference in the relationship that we have with people. And what this means is... Once again, you talked about mindset of transaction and transforming that mindset to really be transformational from the lens of elevating people, elevating the account holder. It's about taking a proactive stance in their life. And I want to give a real example here. Financial brand, community bank, struggling with online conversions. They said," Hey, what's the problem?" Your abandoned applications, right? You've got 95% of people abandoning your applications. What if you had a person call those abandoned applications? What had an automated email being sent out? What would happen?

Joe Welu: What if you did both? What if crosstalk?

James Robert Lay: Exactly. What if you did both? And I think that's the point here. You start with one, start with the automation. That's very easy. You can roll that out in 90 days. Start that automated... Every person that abandons an application, we're going to send them an automated email. True story, 15 to 25% additional conversion by just adding one automated email. And it's basically something very friendly. Hey, we saw you started, we know life gets busy, what can we do to help you continue? Click here to continue the process. And 15 to 25% additional conversions because of that. Now add the human element into this, to where you're also adding outbound calls. And you're going to probably add another 10 to 15%. And so that's what I'm talking about, is these small, additional touch points that have been strategically thought out, they're applied. And then we come back, we review what we've done so that we can optimize and make whatever that experience is that much better. We don't get stuck in the cave of complacency.

Joe Welu: So for those of our audience that are listening that are thinking," Okay, this is great. I love kind of the theory and how you guys think about it, but where in the hell do I get started to actually make progress in my organization?"

James Robert Lay: Start small, don't try to boil the ocean. Back to your point, progress is definitely greater than perfection. And the way that we can measure that is by looking behind at what we've done. And we need a window. We need a horizon line for that. So I like a 90- day view, a 90- day lens. We review what we've done over the previous 90 days. And we are looking for quick wins. Wins that help to be build the courage and confidence of others on our teams, because when we build the courage and confidence of others, that allows for more commitment and buy- ins. So let's get really practical here. We need a framework that can guide our thinking. And what we use and what we teach is the banker strategy circle. Build an audience, attract leads, nurture leads, convert leads, expand the relationships, repeat the process with ratings, reviews, and referrals. Those six specific steps can be applied to different product lines. Once again, start small. Pick one of those elements. Maybe it's the nurturing piece, maybe it's the expansion piece. Pick one element of the banker strategy circle for one product line. Focus on that over a 90- day period of what you're looking to innovate, what you're looking to improve, what you're looking to optimize. And then at the end of that 90- day period, review the progress. What have you done? What worked well? What could be even better? Rinse and repeat.

Joe Welu: Yeah. For us, I mean, we've really worked with our sales team in really rethinking about how we initially partner and say," Well, wait a second, let's not start with all of these things. Let's focus on one or two customer journeys-

James Robert Lay: So smart.

Joe Welu: ...and improve it. And then let us create that value." And so we've really taken that approach as well. So I really love that mentality. If you think about the execution, how important is it to really have an honest discussion with yourself and with your organization if you're a leader on right people in the right seats?

James Robert Lay: Well, execution's everything, right? And the way that we look at this in digital growth Topia, there's acronyms because it's the only way that I can remember stuff. So for anything, we must act for growth. And what I mean by that is awareness plus commitment equals transformation. Otherwise, you can have all the awareness in the world, but if you don't have the courage to commit, you're not going to go anywhere. And that really comes down to having the right people in the right seats, because, otherwise, the bus is just going to stay there. It's not going to go forward. Or on the opposite end of the spectrum, you can commit to something, but if you don't have the proper awareness, you might be going down the wrong path and end up frustrated or even worse, stuck back in the cave of complacency. So it's a matter of awareness, which really comes from continuous learning, thinking about what you've learned and then commitment, applying what you've learned through doing. And then creating that space and time to review what you've done to then just repeat that process all over.

Joe Welu: With the awareness, meaning if I'm awareness, I'm doing an audit of my current organization, I'm doing an audit of how my data flows, on how my customers are experiencing our organization, right? That awareness comes with sort of that auditing of those current situations. From there, I can get accurate information and then I can get a plan, right? Which is what you're saying.

James Robert Lay: Yes.

Joe Welu: And then as you mentioned, the commitment. And one of my favorite questions is, hey, if I'm partnering with an exec and we've gotten to have good rapport... My board always asks me this. Like," Hey, are you interested, or are you committed?" Right? Because interested means that, well, I'm interested in innovating and actually leading over this next three to five years versus kind of slowly dying. I'm interested. Interested means that the first few obstacles, your team's throwing back this is why it can't be done. You sort of go off track, right? If you're really committed, then you're leaning in and you're saying," It's not an option for us to transform. We must modernize." Right?

James Robert Lay: I'm going to roll this back because you're talking about commitment, but there are two things that precede commitment. First and foremost is clarity. And clarity comes through learning, it comes through the diagnostic work that you're talking about. It comes from that awareness piece. And then clarity thinking can transcend to courage. And what does courage come through? It comes from developing that plan, developing that strategy. This is where we're going to go. And then from there, we have the clarity. We have the courage. That's where the commitment then comes in. And once we commit and we apply that, we get those quick wins. What happens next? Confidence. We build our confidence to continue down that journey together.

Joe Welu: And that last part, that's super important as well, is when you start getting positive outcomes, and we call it winning, right? Where if the organization feels like they're winning, the teams that are working on it, that is just so exciting. And winning just feeds a great culture. And if you can feel like you're getting short term wins, even those, as you know, like the innovation, this isn't a one time project.

James Robert Lay: No.

Joe Welu: That you're going to do a digital transformation project and then you're good for the next 10 or 20 years. That's maybe how things worked 30 years ago to where you could upgrade to new systems. It's constant and never ending iteration improvement that is driving just continuous innovation across the entire industry. And I don't see it stopping. And I see just these stakes getting higher and higher to where if you're not doing these things, so... Any sort of last thoughts, James Robert, on advice to organizations that really want to still drive impact and win this year? You mentioned starting small, committing, getting clarity around, hey, what do we really have going on here with our data, with the customer journeys? And those types of things.

James Robert Lay: It's so easy to think digital transformation, but we forget the people internally who have to apply this thinking. And so transformation starts with the self, then moves to the team, then to the organization, and ultimately, from that and to the lives of the people that we're serving in the community. So the two questions that we can always ask ourself, our team, our org, number one, how do you want to grow? What are your goals? What are the roadblocks that stand in the way of those goals? And then what are the opportunities that are available to overcome those of blocks to move towards those goals? And it's a question that we can ask ourself every 90 days, because the world is changing at an exponential pace. COVID showed us that. It's not going to change. I think that cadence is kind of the" new normal." At the end of that 90- day period, we can come back and we reflect on the question, what went well? What were our wins over the last 90 days? What are we excited about right now in the present moment? What did we learn through this experience? And then what are we looking forward to doing going forward? Which then translates into the question, how do you want to grow next?

Joe Welu: James Robert, thank you so much my good friend for joining me again today. Always love getting your perspective. Man, congrats on all the great work you're doing out there too. I hear so many amazing things about the work you do for some of the organizations that we keep in touch with, some of the banks and lenders and the credit unions out there. So keep up the amazing work. For all the listeners out there, thanks for tuning in. We will catch you next time on another episode of Expert Insights.

Speaker 1: 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.


The concept of innovation isn't new to financial services. Yet, the elusive innovation topic continues to be a top priority for banks and lenders. Joe Welu and James Robert Lay discuss three critical roadblocks to innovation and strategies that financial institutions can use to truly achieve innovation.

Today's Host

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Joe Welu

|Founder & CEO, Total Expert

Today's Guests

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James Robert Lay

|CEO, Digital Growth Institute