When BB&T and SunTrust announced their $66 billion merger earlier this month, both financial institutions cited technology as a major driver fueling the decision. While together they stand to become the sixth largest bank in the US based on customer assets, what sealed the deal may have been the need to come together to remain competitive in today’s increasingly digital world.
The reality is that around the globe, banks are investing huge sums of money to fuel their digital transformations. In 2018 alone, for example, J.P. Morgan Chase allocated $10.8 billion to technology, while Citi earmarked an impressive 20 percent of its budget for the cause. What this means is that big banks are doubling down on digital technologies in a major way, leaving smaller players scrambling to keep up. For any bank looking to not only upgrade its legacy technologies, but also eke out a competitive advantage, that poses a major challenge.
Growing Competition Drives Partnerships and Tech Investments
While digital transformation isn’t easy, by working together, BB&T and SunTrust will be able to automate existing systems while making key investments in cyber defense and mobile. They’ve also allocated an additional $100 million for technology enhancements to compete against the outsized investments of some of their competitors.
What all of this suggests is that banks face a difficult choice: they either need to figure out ways to disrupt their industry or confront the inevitable prospect of being disrupted themselves. Practically speaking, that means that they need to stay relevant by demonstrating they have an innovative and visionary approach. And while the major banks have the luxury of being able to do so on their own through massive technology investments, we can anticipate a number of smaller players creating strategic partnerships in an effort to tackle the problem together.
Further complicating things is the emergence of a growing number of fintech companies, which are collectively adding more competition to the sector. In 2018, the venture capital industry invested $39 billion into fintech startups, more than double the amount they invested just a year before. While such companies represent great potential partners, they also pose a threat because they can easily work against banks to erode parts of their business. Banks therefore face the difficult task of finding the right partners while getting ahead of would-be competitors.
Making Smart Investments in Technology
So where exactly are banks spending all of their money? Or better yet, where should they be making their investments? Even banks with large digital transformation budgets need to make strategic choices about how they’re allocating their funds. With a long list of priorities that range from streamlining the back office and reducing costs to developing innovative new products and putting their customers first, banks have a lot on their plate.
To remain competitive, first and foremost banks need to find ways to work smarter and more efficiently. That means eliminating the kinds of highly manual tasks that eat up precious time and that keep highly skilled and costly professionals from doing more meaningful work.
Investing in a sales enablement tool is one such example. Sales enablement is the process of removing traditional barriers between banks’ relationship managers and the people who support their marketing efforts. It does this by improving the entire content process, increasing collaboration, enhancing alignment, and unlocking insights that lead to better-informed business decisions.
While sales enablement is just one of many aspects of the digital transformation journey, it’s an important piece of the puzzle that every bank needs to be thinking about. Whether you’re one of the biggest players in the industry or a smaller one looking for a strategic partner, you’ve got to disrupt or be disrupted. Adopting the right technology is the best way to do that in today’s digital world.