Innovation in the financial industry is now an expectation. However, for small and mid-size financial institutions, this can be a fine line to negotiate. A bank that focuses too heavily on digital innovation can see its budgets run thin, and its customers become overwhelmed. Refusing to digitize interface features could lead clients to flock to larger institutions in search of faster processes.

There is a real race to provide customers with digital tools, Marc Butterfield, senior vice president of enterprise digital solutions at First National Bank of Omaha, told Bank Automation News. “Large banks are positioned to be able to do that, digital giants are positioned to be able to do that.”

FNBO, a subsidiary of the $24.2 billion First National Bank of Nebraska, is striding the fine line as it looks to offer its Midwestern audience a traditional experience, while simultaneously providing revolutionary automation technologies. FNBO has a seven-state footprint with banking offices in Colorado, Illinois, Iowa, Kansas, Nebraska, South Dakota and Texas.

One of the major differences between mid- and large-scale banks is the focal point of an institution’s focus, according to Peter Wannemacher, principal analyst of digital banking at Forrester Research.

“Smaller firms have to be more judicious in their implementation and utilization of automation, they simply don’t have the resources to throw automation tools at everything –— not to mention the legal and compliance costs that can come with early automation efforts,” Wannemacher told BAN.

The three horizons

Butterfield’s technology and automation team at FNBO will turn 4 years old this summer and, since its 2017 inception, the bank has introduced online account opening platforms and money movement features through external fintechs as well as enhanced fraud monitoring services, he said.

However, regardless of the bank’s digital trajectory, all innovations must correlate with his team’s strategy, which he calls “the three horizons.”

The first horizon, H1, refers to the bank’s current operations or any existing digital processes that help consumers, Butterfield explained. H2 entails finding minor new ways to launch digital systems that pursue a slightly different market or consumer, and H3 focuses on market disruptions — new markets, technologies and business models. The idea is that FNBO’s technology team always starts at H3 and works backward, while the bank itself starts at H1 and works forward, he said.

“From day one, we talked about the three horizons of innovation,” Butterfield said. “At its core, it’s always been about how our team is supposed to be looking way out there, out at the macros,” while also ensuring there are short-term values and goals in mind.

‘Faster than getting a Big Mac’

While it is quickly becoming an expectation that banks provide digital onboarding, only about 65% of the top 20 banks in the nation offer mobile app account opening, according to an October study by biometric technology firm iProov.

Customer onboarding is one integral element of First National’s strategy, Butterfield said. In 2019, FNBO enlisted nCino, a bank operating fintech software that automates and expedites account openings. The fintech provides services to more than 1,200 FIs globally, ranging in size from $30 million to $2 trillion, and includes five of the top 10 banks in the U.S.

Prior to upgrading its technology with nCino, the time to open a new account through FNBO digitally or in-person could vary. If a customer filed an application through the bank’s website, it would be sent to a back-office employee, maybe taking several weeks to process, Butterfield said. Even if an individual applied in person, and was able to provide all necessary documentation, it could still take an hour or longer.

Now, the entire process should take less than five minutes, nCino’s Chief Revenue Officer Josh Glover told BAN. “FNBO once shared a great anecdote with us that their clients can now open an account faster than getting a Big Mac.”

Regardless of digital growth, providing a human-to-human experience is still a top priority however, Butterfield said. Clients crave speed in the account opening process, but they also look to build rapport with their personal banker.

“We put [account opening] in place digitally,” Butterfield said. “Now, we need to figure out how we integrate that with our current process in the branch. If they want to come into the branch, it should be more personal.”

Once customers have their accounts in place, technologies like alerts, notifications and messaging will be great additions to a bank’s digital platform, Wannemacher added. “The technologies that enable better alerts experiences aren’t particularly sexy, but they are incredibly powerful for driving better customer experiences and business outcomes for banks.”

Wilmington, N.C.-based nCino plans to roll out a new flock of features to its existing “nCino IQ” platform in 2021, Glover said. One solution, called “automated spreading,” will cut loan underwriting manual processes by 50% to 75%, he said.

A greater need for fraud monitoring

Another essential ingredient in FNBO’s digital game plan is automating security management as the bank roleplays as both a financial institution and the 15th-largest credit card issuer in the country, according to Butterfield and Wallethub.com.

Fraud mitigation was top of mind in 2020 as financial institutions industrywide flocked to disburse funds and compensate for pandemic-spurred security concerns. For one, Mastercard’s reported its AI tech blocked nearly $20 billion in fraudulent transactions in 2020 as it announced plans to carve out a budget for its new cybersecurity Trust Center for small and medium-sized businesses.

First National was prioritizing security even prior to the pandemic-related branch shutdowns of last March, utilizing a stack of fraud- monitoring softwares through third-party fintechs that anticipate fraud activity for both banking and credit card clients.

The key, Butterfield said, is designing systems that work primarily on the back end so customers do not have to think about fraudulent transactions. “Customers just want to be left alone. They don’t want these problems of having to reissue a new card, or identity theft, or any of those things.”

While he did not name any specific fintechs the bank currently works with, Butterfield said his team will continue to invest in technologies specializing in cybersecurity.

Fast-tracked, focused automation

After the coronavirus pandemic forced banks to shutter their physical locations, Butterfield echoed an estimate that digital adoption has accelerated about five to 10 years, with trends like advanced money movement dominating the space.

As FNBO makes progress on its various automation endeavors, it is also looking to tie new features into a singular and comprehensive experience.

Butterfield compared it to buying a car with features like heated seats and cruise control. While the individual perks matter, it is the integration of them as one product that makes customers satisfied with their purchase.

“Banking is no different,” Butterfield said. “I look to the future of how does a bank stitch all these together into a really great experience.”

Bank Automation Ignite, taking place March 2-3, 2021 as a virtual experience, is the event for inspiring automation initiatives and investment in financial services. Formerly the Bank Innovation Ignite conference, this new focus creates an event where financial services professionals can discover new use cases and technologies that are accelerating automation in banking. Learn more and register for the event at www.BankAutomationIgnite.com.