Fostering Trust Economy

By: James P. Hanlon, SVP & CTO, Dedham Savings

James P. Hanlon, SVP & CTO, Dedham Savings

The setting is a barbershop in Baltimore circa 2004 and two men are having a conversation.

“We’re talking about money here, this is business.”

“Business is where you are sitting but what got you here is your word and reputation. With that you still have an open line to New York, without it you’re finished.”

If you recognize the dialogue then you must be a fan of HBO’s The Wire as well as the two characters involved: Brother Mouzone and Avon Barksdale. If not, I won’t bore you with all of the details but they are discussing some business that went awry and Mr. Barksdale is trying to remedy the situation with money and Brother Mouzone is not having any of it.

So the bigger question would be: Why would a bank CTO reference the dialogue in a cable TV series about the drug trade in Baltimore that’s been off the air for nearly a decade? How does this pertain in any way to Information Technology or Banking? How does it pertain to the current regulatory environment or anything else for that matter?

Economic theorist and author Jeremy Rifkin has talked about the next paradigm for the economy, that we are transitioning away from—both wholly capitalist models and the information economy to something entirely new, which I wholeheartedly agree with. We are transitioning to something that has been explained as the ‘trust’ economy.

We here at community banks have made enormous transitions over the last half decade in regards to the information economy. We as organizations went from being viewed as the stodgy old institution to ones that began providing the breadth and depth of services that customers yearned for that only larger banks had the resources to provide. Online banking, remote deposit, mobile banking, instant issue debit cards and various other technology based products and services could now be had at the local community bank. The one with big columns out front and dark paneling inside, something more relative to Edwardian England than the information age.

Yet we did it. We weren’t pioneers but we’ve been close followers. Our staff is armed with the latest and greatest. Our infrastructure is private cloud based and we are doing more with less. Who knew that a mere decade ago? I remember attending a conference and one of the sessions was about cloud computing. This was back in 2010 and the presenter asked a simple question: “Who in the audience believes cloud computing is a fad or who thinks it’s the real thing?” More than half of the audience raised their hands. Well, we all know how that turned out.

So the last half-decade has been a blessing for those of us that manage IT infrastructures in financial services. Yet, it has also been a curse. Our regulatory burden has increased by leaps and bounds. All of that time that has been freed up due to the advent of cloud computing has only been replaced with audit and regulatory requirements and then some. We as managers spend more of our days not only identifying potential threats and documenting them but also discussing this whole process with our regulators and auditors.

If you ever want to witness the biggest gripe session in all creation, throw a group of Bank Senior level IT managers in a room to talk about regulators. I’ve been there before and it ain’t pretty. We expend a large part of our time complaining about the requirements placed upon us with folks that frankly, have never walked a day in our shoes. So what do we do about it? Gripe some more? Take our ball and go home?

Absolutely not! Now I know what you’re thinking, when do we get back to that whole ‘Trust’ economy talk. Well right now we will because I believe community banks have a unique opportunity to thrive not only in the new economy but also in this new regulatory environment. Why do I think that? Well, as I mentioned before, we have taken of the great leaps in technology over the last few years and have applied them to make our institutions more secure and our customer’s information safe.

We have an opportunity to share with our customers that we are doing so much in the way of technology to protect them as we have always done. We are apprised of current technologies, we communicate security issues, we are well regulated and we aim to protect YOU.

Just explaining this or advertising it would be a very subtle approach and many may not pick up on it. Just saying you’re the safest place in town is very delicate. Yet asking the customer, “Who do you trust with your most private of information?” and giving them reasons why they should trust is the first step, but not enough. We need to provide guidance to customers on how to protect their information, which activities may leave them vulnerable and who to turn to when they’re not sure; and that would be us. The community bank they have been relying on for generations to provide all their needs.

Call your banker to discuss concerns about identity theft. Download free security tools from the bank’s website to protect your home PC. Small business owners trying to set up small networks take advantage of bank IT staff knowledge to learn security best practices. Referring bank customers to quality vendors that may be able to assist with their needs. Do the tasks necessary for our customers to trust us. Use the burdens imposed by the regulatory environment to put in systems and procedures that can benefit us all.

We are getting to the point where all banks and for that matter non-banks can provide all the products and services our customers need. We can all provide good customer service as well. Yet we need to place that question to our customers continually, “who do you trust?” Is it the large box retailer or is it the place that you’ve come to as a child that has fulfilled your needs and protected all your most personal of information. This is the trust economy. Knowing and understanding who is on the other end of that transaction looking out for you and not the bottom line. An organization that knows YOU and wants to protect you and your future generations as it has done in the past.

So I say embrace the burdens. Make them work for you and your customers. Explain it to your customers that you will always be there, you will always protect them and you take it seriously. And remember what Brother Mouzone said, what got you here isn’t your business but your word and reputation.

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