Great Products Aren't Enough, Citizens' New Digital Chief Says
Citizens Financial Group can't be accused of failing to try new things.
From its iPhone upgrade lending program, which has added more than $310 million to the bank's consumer loan book, to recent efforts to retool its branch network, the $142 billion-asset bank has capitalized on consumer trends to add business lines and cut costs. And there is no trend bigger than the continuing consumer shift to online and mobile banking.
Earlier this year Citizens, of Providence, R.I., decided to bring all of its digital operations under a single umbrella, in the process creating a new position — head of digital — to which executives appointed Lamont Young, a five-year veteran of the bank who had been running its digital sales and marketing teams.
Citigroup lost a big technology executive last week and hired another from JPMorgan Chase. Then word surfaced that JPMorgan had decided to replace that exec anyway and a successor was ready to go. It all shows scoring top digital talent has become vital to the largest banks as mobile becomes their future.August 16
Profits rose at Citizens Financial in the second quarter thanks to higher-than-expected fee income and loan growth, including improvements in mortgages and auto finance as well as a continuing surge in student lending.July 21
The bank, which operates in 12 states, is bringing customers in the door even as it cuts its retail square footage by half. The lure? The offer of a financial "checkup" that tens of thousands of people have accepted.June 3
American Banker recently spoke with Young after his first two months on the job to find out whether bots are going to replace apps, what he thinks of competition from fintechs and why it isn't enough simply to deliver great products.
What follows is a transcript of the interview, which has been edited for length and clarity.
Some people say we're exiting the app era and entering the era of bots. How do you envision customers connecting to your bank three years from now? Will it be through an upgraded version of the mobile app? Will it be through Siri, or a Facebook Messenger bot, or something else?
I think there's going to be a convergence of digital. Most banks today have separate mobile banking applications and online banking applications. All the platforms will begin to merge together. So ultimately you won't have multiple channels within digital; there will be one single portal where customers will bank. My prediction for the future is that you're going to see a total synergistic view of the connectivity between customer and bank, and it will all be on one standardized platform.
What form will that platform take?
Mobility is a trend in banking that will continue, so whether that mobility takes the form of the continued evolution of mobile apps, or where bots become the touchpoint, I don't know if that matters as much as the fact that you're going to find banks and other companies making sure that they're thinking mobile-first. And everything else will ride the rails of what mobile is.
Citizens' mobile app has only a two-and-a-half-star rating on the Apple App Store. How do you intend to fix that? What do you need to do to improve the mobile experience for customers, and how does it relate to the larger goal of building customer engagement?
Historically we've always had really good ratings in the App Store and in the Google marketplace. The last three years running we've won Javelin's award for best mobile banking app. I think the ratings that you're seeing most recently have less to do with the performance of our applications and more to do with the fact that we've just done a new quarterly release that has made some changes to the functionality.
With most technology releases, when you do something different, you'll see a short period where satisfaction scores go down because customers are used to a piece of software being one way. But once they get used to all the new bells and whistles, you'll see those scores go up. So I'm not concerned about the scores right now.
Do you see digital and mobile as a way to connect with customers who live in locations that are outside of Citizens' retail footprint? Or is it just a way to give extra functionality to people who are in range of branch locations?
It's a little bit of both, but our primary focus is on those whom we serve within our retail footprint. We do have certain businesses on the consumer side that are national businesses, so our digital capabilities — whether they be online or mobile — do give those customers that are outside of our footprint but still have business with us the ability to manage their accounts.
What do you think about banks opening up their APIs to third-party developers? Are you concerned about banks in the future possibly becoming simply the "dumb pipes" which transactions flow through while all the positive customer interactions are associated with fintech startups and apps like Venmo?
I see it almost the total opposite. I'm actually more excited than most about the advent of fintechs, particularly some of the new startups, because I see them less as threats for traditional financial institutions and more of an opportunity — an opportunity for us in some cases to partner, an opportunity for us in other cases to acquire, and in some cases just an opportunity to learn. I look at the fintech landscape more as a push in the right direction for us to be more innovative and put more focus on the experience side of servicing our customers rather than just delivering great products.
Does Citizens have any current or upcoming fintech partnerships that you're excited about?
We're evaluating a number of different options at this point in time. There's nothing that I would say today is definitive, but certainly we are looking at opportunities to partner where we think it makes sense to partner, and where we want to develop on our own we'll develop on our own. But again, just the innovation alone, the push to focus on the customer in that end-to-end experience, makes me excited as a digital guy — I get excited about the shift in mindset for financial institutions.
Yours is a brand-new position at Citizens. Are there any legacy tech issues or entrenched bureaucracy that you anticipate having to deal with? If so, how does that complicate your vision for the future of digital banking?
There is a real excitement across our organization about the future of digital. So I don't know if I would say there are legacy systems or legacy bureaucracy that concern me. For me, the biggest challenge is not roadblocks but prioritization. There's a real buzz about the convergence of digital and how it could help expand the solutions that we deliver for our customers. So my large concern is about making sure that we're prioritizing the right things, that we're focused on the most meaningful investments in digital and that we have the proper road map to really implement this stuff across our entire corporation.
Speaking of using digital to expand customer solutions, what percentage of Citizens' products and services are available online? Is it going to be a priority for you to offer more 100% digital experiences — loan applications and so on?
About 85% of our consumer products today are offered online — a customer can apply and get an approval through the online channel. The vast majority of our businesses revolve around consumer lending, and you can apply not just online but via mobile as well. With the exception of products that are underwritten, you have the ability to get an instantaneous approval. Our deposit products are the same. We want to be a very convenient bank that allows our customers to bank when, where and how they want to.
With that said, we have consumers who want complete, end-to-end digital experiences, but we also have a segment of our customer base that wants to apply for those products in branches and over the phone. It's really just about choice. For digital-savvy customers, we want to be able to be their provider. But we also offer services in the other channels as well.
What digital services does Citizens currently offer to its commercial customers? What are they asking for, and what needs to be done to build better products for them?
The structure is really twofold on the commercial side. You've got the part of our commercial business that is really focused on the advice that our colleagues can provide to their clients. So it's about making sure that we give our colleagues the digital tools two need to be able to give the right advice and provide the right products and services to their customers. And on the direct-to-customer side for commercial, it really is about making sure that we've got the best in terms of cash-management solutions and those things that our commercial clients need to manage their business on a day-to-day basis. So it's really a twofold process — enabling colleagues and enabling the customers themselves.
If 85% of your current consumer products and services are offered online, what new offerings do you think will be important in the future?
We're looking at a number of different options. Some are on the wealth management side, so that our customers have a view of what retirement might look like for them. Others have to do with everyday budgeting — saving for certain goals and that sort of thing. It really is about making sure that we've got good, basic tools to allow our customers to be able to make good, healthy, day-to-day financial management decisions. Certainly everyday budgeting and certainly long-term retirement planning.
When it comes to keeping accounts and financial information secure, with whom do you think the responsibility lies? Do banks need to get better at educating consumers about password creation and management and so on, or do banks have to shoulder the whole burden because consumers have proven they just can't be bothered?
I don't think it's at all that consumers can't be bothered with it. I think we as financial institutions have a responsibility to make sure that we've got the right security protocols on our end to keep the information of our clients safe and secure. But I also think that we have the opportunity and, to some extent, the obligation to educate our customer base about financial security and cybersecurity. So while I wouldn't give a stark percentage and say, "Hey, it's 80/20 on us versus consumers," we as financial institutions across the board are in a very good position to talk to our customers about these issues.
Give me an example of something banks could or should educate people about.
Anytime there's a new release, we talk to our customers about the rationale for any security changes that we've made within the digital channels. We certainly educate our customers through our dot-com site about the best way to do passwords. Much like the rest of the banking industry, we are very passionate about keeping information safe and secure. On our social feeds we've got information about how customers can make sure they have secure passwords, about not using public computers for certain transactions and so forth.
You mentioned earlier the need to focus more on the experience side of serving your customers rather than just delivering great products. What does this look like?
We have found that brand experiences in many cases mean more to the customer than the actual products and services of the brand itself. We have done a ton of work around experience-mapping and taking a look at where we are as part of the customer life cycle, what those touch points are, whether they engage with us in a digital channel or within our branch network or over the phone.
Let's say you apply for your credit card online, you get your credit line and so on. But the experience of using that card is everything that goes beyond that. It is, "Hey, when I swipe the card, as long as I've got credit available does the card work?" The experience includes the terms of the application. It is, "I applied and the application process was easy; they told me my credit line as soon as I was approved, right there online; they told me what my API was." It's the thing that most folks talk about with Uber, right? Uber, at the end of the day, is a cab ride — it's taking the customer from A to B. But what the folks at Uber did was they revolutionized the experience.
So at Citizens we've got to continue to create great products and services — continue to create world-class checking accounts, continue to improve our mortgage and our home equity office — but at the same time it's not enough just to improve the product. You've got to understand that that overarching experience matters just as much.