“Flexibility” is a commonly used term when it comes to innovation in banking and finance, but the typical bank boardroom hardly evokes the image of openness to technological change.

Mike Sha, co-founder and CEO of B2B software firm SigFig, told Bank Innovation he’s seeing a changing of the guard, or at least a softening of mindset, that is slowly opening doors.

“We’re probably in a period of the cycle where you’ll find very few examples of banks that aren’t taking technology seriously,” he said, adding that’s a big shift from just ten years ago. He said while technology long ago proved its significance at a macro and cultural level, and broad awareness at the top is less of a rare sight, buy-in can still be elusive.

“What ranges, honestly, is how familiar and aligned with a software-oriented mindset the executives are,” Sha said. “There are still a ton of CEOs of banks and board members of banks who are really banking executives from 20, 30 or 40 years ago, and they’re kind of just learning about technology. They’ve got some people in corporate strategy, they’ve got some tech people, but sometimes these are executives who still don’t really even do email.”

Nonetheless, banks’ IT spend has steadily increased for years and is projected to be $115 billion in North America by 2021, according to consultancy Celent. But only a quarter of that spending is expected to go to innovation while the bulk will go to maintenance.

Emily Steele, President of North America for Temenos, told Bank Innovation that retail giants entering or dabbling in banking, as well as challenger banks and de novo banks, will increasingly present a challenge for traditional financial institutions if they don’t change how they spend on technology.

“They’re focused on quick time to market and technology that is affording them the opportunity to create very unique, thought-provoking, personalized and convenient services that are Amazon-like or Uber-like,” Steele said. “Meanwhile, traditional FIs are focusing their spend on legacy and maintenance and regulatory and compliance.”

But bank-fintech partnerships are helping close some of the gaps.

Sha said his company prefers bank partners with whom it can develop tighter relationships, rather than answering requests for proposals for select services.

Almost without exception, the company has found ways to expand its relationships with bank partners, said Sha. “Unlike a traditional customer-vendor relationship, where it’s very driven by a single need, we’re in some sense part strategy consultant, part product and engineering company, and part marketing agency, to help them drive customer adoption.”

He said a prime example of this is SigFig’s partnership with Citizens Bank.

“They’ve really allowed us to work very closely with their senior executives, to help them reimagine who they want to be,” Sha said. “That relationship started with the person who runs wealth management as a business and it expanded to the folks who run the retail and consumer business, as well as some of broader parts of the organization, like sales and distribution.”

He said Citizens quickly recognized that SigFig was not just a provider of robo-advice software. The company was, therefore, able to get to know the senior executive team and board, beyond just the business heads.

“There’s really buy-in all the way to the top, to fundamentally reimagine and invest in next-generation solutions,” he said. “That’s probably why you’re seeing them do things like Citizens Access and CoPilot, SpeciFi, and some of the other things we’re working on with them.”

John Rosenfeld, President of Citizens Access, said the digital-only bank, which launched last July and has already brought in more than $4 billion in deposits, stands pretty much autonomously from the traditional bank.

“It’s beautiful,” he said. But buy-in was far from automatic.

Rosenfeld previously ran everyday banking at Citizens Bank for about five years. About two years ago, he and his team approached the vice chairman of the consumer bank with the prospect of creating the digital-only bank in order to acquire deposits beyond the branch bank’s footprint. They also sold it as a chance to learn more about how to serve customers digitally, and to launch a brand new platform with which to experiment.

But it was a fairly sizable investment, and Rosenfeld and his team had to compete for investment capital like the many other parts of the bank.

“I think the reason we probably had a little easier time getting the backing was that growing our deposits base was a key priority for the bank, and growing our balance sheet,” he said.

In his new role, Rosenfeld still works for the vice chairman of the consumer bank, although the dynamics are a little different.

“We have mutual trust, extensively, and I also work very closely with the deposits team from the core bank,” he said. “But as far as design decisions, investments, and how we’re building the platform, they really did give me and my team full autonomy to build this thing–and run it, for that matter.”

The team has embraced this autonomy, even setting up a separate office.

“We rented space in a new building so we could almost have this startup mentality, and that has served us very well,” Rosenfeld said. “People love to come and visit us, even if they’re not part of our team, so we have no problem getting help when we need it. That’s one of the perks to having autonomy but not being far away from the parent.”

Join us at Bank Innovation Ignite 2019, March 11-12 at the Hyatt Olive 8 in Seattle. Register here.