It was a pleasure to join Neil McHugh, EVP, Managing Director, Deposit Strategy & Program at Univest and Chris Warren from Banking Dive for a recent webinar exploring the evolving world of deposits, digital transformation, and the power of AI in banking. The conversation really highlighted some critical shifts we're seeing in the financial industry, and I wanted to share some of my key takeaways, drawing insights from both Neil's perspective and my own.
Neil kicked off our discussion by underscoring the enduring importance of deposits for banks. While they've always been essential, the current environment has amplified their significance. We've seen significant swings in market liquidity over the past few years. This, coupled with customers now having access to higher interest savings rates—something we haven't seen in decades—means that securing "low-cost funding" through deposits is a major challenge. The takeaway here is clear: banks need to actively work to attract and retain these vital funds in an increasingly competitive landscape.
Both Neil and I strongly believe that personalization is the gold standard for customer experience. Neil articulated this perfectly: it's about delivering "the right products with the right positioning to the right customers at the right time". This isn't just a digital concept; it's the scalable, digital evolution of how skilled bankers have always built relationships in a branch. For me, this means leveraging existing customer data to pre-populate forms and ensure a quick, transparent onboarding process. Knowing your customer allows you to tailor experiences and build the loyalty that keeps deposits with your institution.
Digital transformation can sound daunting, but Neil and I both advocate for a practical, iterative approach. As Neil advised, "Keep it simple, keep it realistic. Don't try to boil the ocean and look for small wins." This means identifying areas where you can make impactful, incremental improvements, like streamlining a specific product's digital application process. My own observation is that these digital tools don't always have to equate to full automation; they can first serve to "augment your early, lower volume process or existing non-automated process". The key is to be ready to learn and adapt, because as Neil rightly pointed out, "I've never been part of any digital pilot that worked really well on our first try."
AI is a hot topic, and for good reason. I see its application in two main areas for banking. Firstly, in the "front office," AI can significantly improve customer interaction by providing 24/7 support through chatbots, helping users navigate questions and forms with ease. Secondly, in the "back office," AI drives efficiency in complex decision-making processes, such as loan underwriting, by intelligently summarizing and presenting data to human underwriters and driving a more intelligent workflow. But a crucial precursor to effective AI is a solid data foundation. As Neil highlighted, data is the "linchpin" to everything we want to achieve with digital evolution and personalization. A clean, reliable, and holistic view of customer data is essential for accurate predictions and truly impactful AI applications.
The banking industry is undeniably in a period of significant change. By focusing on customer relationships, embracing thoughtful digital transformation, and strategically leveraging AI with a strong data foundation, financial institutions can not only navigate these challenges but also thrive in the new banking landscape.