When Kevin Karrels first joined the digital team at First Tennessee, he knew a drastic overhaul was in order.

“I inherited a broken and weak digital platform," said Karrels, senior vice president and digital channel strategy executive at the $29.4 billion-asset bank.

Karrels had previously been at First Tennessee — the banking unit of First Horizon National — for 14 years and served as an executive in the bank’s retail segment before moving over to the digital team. He immediately noticed the length of time and amount of effort it took to make even the most mundane updates.

“It would take me three weeks to change one word in the online banking," he said. "And if you wanted to add a functionality for online and mobile banking, you basically had to do it twice."

Karrels also realized the online and mobile experience was not up to snuff, especially when it came to meeting the expectations of digital-savvy millennial consumers.

“It was fine for customers who didn’t know anything else existed,” he explained. “And the mobile app was decent, but lacked anything beyond the basic functionality. But now there are more and more mobile-only users, the segment of the population that is digitally centric. And we had to cater to them better.”

Karrels also said digital could have held back the overall bank if something was not fixed. “We knew we had award-winning contact centers and branches,” he said. (First Tennessee was one of American Banker’s 10 most reputable banks in 2017.) “Digital had to catch up with the rest.”

For that reason, First Tennessee ditched its multiple vendor relationships to revamp both online and mobile with D3 Banking, a relatively new entrant in the banking technology space; it was founded in 2008.

First Tennessee went live with D3’s online banking platform last summer, and the mobile platform in July of this year. The new mobile app uses analytics to help the bank target customers with offers that aim to anticipate needs. It also comes embedded with personal financial management tools and automatic transaction categorization that helps customers better understand their spending habits and financial positions, Karrels said.

“For us, we don’t look at fintech as a competitor; it’s more about how do we partner with them,” Karrels said. He added that D3’s agile, API-based processes made it much quicker to implement changes and add new functionalities to keep up with the latest digital innovations in a cost-effective manner. That is important as First Tennessee, like many midtier banks, often finds itself in an unenviable spot of lacking the resources of megabanks yet feeling the pressure of customer expectations to be more digitally advanced than community banks.

“We don’t have the budget to keep up with banks spending 10 or 100 times more than us per year [in digital],” he said. “But we still have to be competitive in digital."

That predicament is hardly unique to First Tennessee, said Peter Wannemacher, a senior analyst at Forrester.

“It’s not uncommon for regional banks to have antiquated digital services, even in 2017,” he said. “It’s common for a customer of a regional to also have a relationship with a big bank or direct bank, and a big reason for that is because the digital services are poor” at the regionals.

In fact, D3’s platform is designed to help regionals like First Tennessee compete with much larger banks, said the tech company’s CEO, Mark Vipond.

“First Tennessee recognized early on the need to implement a platform strategy that allows for quick adoption of new technologies and delivers a convenient, seamless experience to its customers on whichever devices they choose,” he added.

Forrester’s Wannemacher said more regional banks could benefit from First Tennessee’s actions.

“It seems like First Tennessee is being bolder than the average regional, which is a good thing,” he said. “We don’t know yet if this is a signal more regionals will move to a more open approach and platform [when it comes to digital], but if so that would be a good signal.”

Going with a less established vendor is always a risk, but one First Tennessee was willing to take because of the advantages D3’s open platform provide, said Karrels.

“We chose them when they didn’t have a customer live on this platform,” he said. “It’s a step out, and not something a bank our size would normally do. But now we’re able to respond to certain things more quickly. We can make [user-interface] changes lightning fast.”

First Horizon's pending deal to buy Capital Bank Financial of Charlotte, N.C., earlier this year is not expected to slow down plans for First Tennessee's digital platform in any way, Karrrells said. In fact, he expects digital adoption to grow even more with the addition of new customers.

Since going live with the D3 online solution, First Tennessee has seen a 5% year-over -year increase in online banking usage, and “we expect to see strong results from mobile as well,” Karrels said.

Bryan Yurcan

Bryan Yurcan

Bryan Yurcan is a senior writer with American Banker, with a focus on financial technology.