I was recently able to chat with Roger O. Goldman, chairman of American Express Bank, FSB, a subsidiary of Amex, and lead director of Seacoast Bank*, to get his perspective on our rapidly changing digital world and how it's affecting the financial industry. Part 1 of our interview covered his perspective on how to manage the pace of digital transformation and disruption in today's business world.
In Part 2, we discuss ways companies can quickly leverage technology in order to better serve customers. We also discuss the possible impact of digital and crypto currencies.
JA: So, speaking from experience with Centric Digital, I find that many companies are hesitant to embrace the latest digital technologies and innovations. But the unfortunate reality is that we're living in a world where "change or die" is becoming a common theme. In your opinion, what would you say to the leaders or board members who are hesitant to explore digital options?
RG: Lots of people talk about how destructive innovation is, but I say that innovation done well adds so much more value. It drives more customer choice. It drives new competitors and new benefits to consumers.
To me, you shouldn't be afraid. You should welcome it. But if you're still not sure how to innovate using today's technology, then you need to find a business or agency that can steer your company in the right direction.
For companies that are very traditional or not in the tech space, trying to understand digital can feel like trying to learn a foreign language. So, who is going to help you understand this language and give you lessons? Having the right translator can make all the difference. And there are two elements - the technology (bright shiny objects as it were) and the human resources with the desire and capabilities to use innovative technology. One without the other is a non-starter!
JA: Do you get the sense that there is fear around digital in the banking industry?
RG: Banking, as we know it today, will be going away. And while I know that sounds like a radical statement, if you look back at history, you'll notice that consumer and small business banking in many parts of the world--until about the mid 18th century--was not a separate industry. So, I find it amusing that there is resistance around the fact that commerce now wants to get back into banking when, traditionally, banking as a separate industry is relatively new.
The other thing about banking to keep in mind is that up until the Great Depression, it was a kind of secondary activity. The banking system we know today started less than 100 years ago. There was no FDIC insurance until there were widespread bank failures after the Depression.
JA: And do you think the banking industry today is going on away because of digital currencies?
RG: I think that's a part of it, but that's only one part. Banking--and even health care for that matter--are underserved from a consumer point of view. In biotech, when it comes to research, development, and innovation, the mantra is: "You're either quick, or you're dead."
But this just shows that it's more than technology--it's about change management. The problem is that it's change management happening at a much faster pace than most boards and management teams are used to managing. That's the real issue here.
JA: Yes, that's dead on. The issue isn't technology--it's that technology is speeding up the pace of change.
RG: That's exactly right.
So, let me give you a real-world example of fast-paced change that I've experienced firsthand. If you have flown Delta in the last month or two, it's a different airline than it was six months ago. Apparently, the new CEO decided Delta was going to become a customer friendly airline. From what I can tell as a customer, the company did three major things.
First, they did an inventory of tech that would make it possible to put information in the hands of the employees who interact with customers. Next, they enforced a new rule that is something along the lines of "be nice to customers." The third thing they did was improve the customer experience, starting at the gate. But the major takeaway here is that the initial tech inventory showed that every flight attendant owned some sort of mobile device. So, the company leveraged the technology that was already available and gave flight attendants access to necessary customer information. On three flights, I've had an attendant know my name, my connections, and where my bags were. They even showed me the airport map so I could make my connections in time.
I also called Delta's customer service line at one point. Not only was the wait time short, but after a fantastic representative handled my inquiry, I was asked to answer a one-question survey. The question was, "Would you hire the person who just helped you if you ran a customer service company?" I thought, wow, now that's a great question.
I recently flew American to see how they were responding. And the answer is, they're not. They might not even know what Delta is doing.
Now when I get to meetings where people have flown, they're talking about the current changes at Delta. And all it took was for the company to realize they already have the technology--how can they leverage it? That's a big piece of this puzzle--using information or data for the benefit of customers. And that's only a subset of digital innovation. If you want a quick hit to get digital investment to pay for itself, then that's it.
JA: Agreed. Okay, so speaking of digital innovations, cryptocurrency is rocking headlines right now. In your opinion, is that really going to be the currency of the future?
RG: Honestly, I'm not that smart. But whenever the issue of cryptocurrency comes up, I always go back to history for guidance. It wasn't so long ago that currency was livestock or land. So, today's issue isn't really about Bitcoin or Ethereum--it's about what is the purpose of currency and trying to figure out how to develop a medium of exchange that really helps consumers.
It's a little bit like the issue big box stores are experiencing with online sales. Overall, online sales are still less than 10%. The good physical stores aren't the ones that are in trouble--it's the physical stores that were complacent.
Again, all of this goes back to the change or die theme. And even cryptocurrency is all a matter of generic change. So, a generic change in payments is going to happen no matter what. Remember traveler's checks? A couple of years ago you needed those when you went overseas but when's the last time you used or even saw one? Another example is Hilton points--did you know you can now buy anything on Amazon using your points? So, in that sense, Hilton is a currency. Change is already happening. It may not be happening with cryptocurrency--yet--but it's happening.
JA: So, the major credit card and banking institutions will have more than enough opportunity to evolve and change, but it will all be about that race to change.
RG: That's correct. And in a capitalist society, it's about the consumer. It's already happening and been happening for a while. It's now a pacing issue. Change has always been a constant--it's just that with technology the pace of change has sped up.
I'd like to, again, thank Roger O. Goldman for his time and invaluable insight into the banking and business world. When technology and disruption are shaking up our immediate realities, it helps to take a step back and remember that it's all just change and risk management at a faster pace. The key, however, is to not shy away from change but equip yourself and your business with the right tools to navigate the waters.
This concludes Part 2 of my interview with Roger O. Goldman. Part 1 covers how to manage the pace of technology and disruption. Read about it here.
*The opinions expressed in this article belong to Roger Goldman and are not those of American Express Bank, FSB or Seacoast Bank.