What do core data, core processing, your basic business operations, and your strategic plan have to do with digital currency and distributed networks (like Bitcoin)? Not sure … let’s take a look at how the digital and democratic transformation of money is threatening institutions still focused solely on the dollar business!
When money morphs beyond the electronic SWIFT/ACH dollar, will your institution still be positioned to steward local wealth, offer local and democratic financial services,, foster financial literacy, and advance local economies in the era of digital currency and value exchange?
Will your institution remain stuck in the dollar business; or, will you move your strategy, operations, and digital delivery into the era of online money?
What does relevance mean to your community financial institution?
If you tuned in last week, you know this digital revolution of money is not just DaLand philosophical ponderings or ‘what if’ scenarios. Just look at the data available to us---the U.S. Senate proposed Cryptocurrency Bill, the letter from CUNA expressing concern about local financial institutions being left out of this CBDC shift, the NCUA sanctioning the use of Distributed Ledger Technology. The current events centered on the subject of digital currency only continues to rise, alongside the growth of industries transformed and enhanced by the forces of digital innovation. Looking specifically at our financial services sector, it’s proving more and more difficult to argue (or ignore!) the obvious trend lines for increasing outflows of deposit dollars into today’s preferred, portable, decentralized (non-bank, non-nation state), deflationary, forms of money and assets: cryptocurrency.
While federal bureaucrats refine their position on digital currency, striving to maintain currency as a government-exclusive form of wealth, Bank Of America released a mind-bending survey revealing that 91% of respondents have already bought crypto in the last 6 months and another 91% plan to buy digital assets in the next 6 months. When was the last time you assessed a survey that returned similar affirmative response on any financial product or service?
The reality is many local institutions have only just begun to explore these digital realms. In fact, most of our industry has not even started to inform themselves on digital financial literacy; however, your members and your communities are paving the way, showing you exactly what they want. Today’s climate advocates that consumers would value their trusted, local financial institution in the crypto/digital asset markets. Given current events like instability of large exchanges and spikes in new crypto users and wallets with active balances, there’s an immediate (revenue generating!) opportunity for institutions to focus on vaulting your members digital assets; if you take the simple steps of preparing operations to safeguard these digital assets as a trusted, local, democratically structured decentralized institutional partner.
As an institution that prides itself on member experience, you hold an enviable position; your competitive advantage, defining relevance over generations to encourage community engagement and financial health, places you in the perfect position for the future of finance; and it’s now time to embrace that position.
Transform your legacy core processing to modern digital consumer interactions, maximizing the return on investment you’ve made into your core and eliminating the need to barter your valuable data for third party solutions!
But before we plunge into the details of your advantage, let’s set the stage and step out of the banking industry for a moment and visit another operation that’s been thriving since 1938, Toyota Motor Corporation. We all know that Toyota manufactures motor vehicles, but given the evolution or transformation of the motor vehicle industry in recent years, how can one of the world’s largest auto makers stay relevant? How does Toyota continue to manufacture vehicles aligned to the increasing demands of consumers?
In the book ‘The Toyota Way’ the company’s philosophy for production and manufacturing is summarized by their global vision for sustainable growth: combining software, hardware, and partnerships to create a unique value for their customers, employees, and communities. Everything Toyota does as a business grows from that global vision to support the strength and stability of their operations. At the heart of ‘The Toyota Way’ is the operational practice known as “genchi genbutsu”. Genchi genbutsu literally translates to “real location, real thing”. In practice it means “go and see,” collect actual data from the site. That go and see approach allows Toyota to keep data at the front of consumer experiences.
With operations built to support their vision, Toyota is able to use the data collected to extend their vision to consumers through their vehicles, creating a physical platform that enables the mobility of people and things; a flexible system that evolves alongside operations.
Shifting gears back to our financial services industry, these questions persist; how will local FIs remain relevant in the era of digital money and digital community? How will your products and services keep up with your members’ demands? If 91% of consumers surveyed by BOA have already or intend to buy crypto in the next few months, how can you ensure your FI is positioned to facilitate and steward the digital revolution of money in your community?
Our Next Gen CUSO has the formula for your institution to answer those questions. The global vision for FIs to contribute to community flourishing and financial literacy as those concepts continue to evolve.
The Formula for Relevance:
Modern Strategy; Operations Optimized; Frictionless Digital Interactions
Let’s start with establishing a modern strategy; one that commits to the control of data, maps the ability to analyze and assess that data in real time, and prepares for the rapid redeployment of that data to build lasting, interconnected digital relationships, making your products and services the easy choice.
With a Modern Strategy in place, the second component, the heavy lifting of the Relevance Equation, is Operational Optimization. With data at the core of your modern strategy, it’s time to prioritize understanding your data: what data you are looking for, where can you find it, how do you intend to use it, why? A plan to transform your legacy core processing to modern digital consumer interactions, maximizing the return on investment you’ve made into your core and eliminating the need to barter your valuable data for third party solutions!
The final component of the equation, the one too many institutions reach for first, before transforming operations, is Frictionless Digital Interactions. This is the result of all of your efforts, the synthesis of your strategy and the realization of your transformed operations, now seamlessly facilitating digital experiences, serving digital community in the digital age. (check out our C.O.D.E. Engine!).
Do you know how to use your core to drive your Modern Strategy and digitally interact with your community?
This collaborative, three-step sequence provides an effective and sustainable path to digitally anchor your operation as the nexus of commerce in your community. We know that transforming legacy operations as nearly everything becomes digital—including money—can feel like a fraught and daunting task. Know that DaLand’s internal strategy and products, our data defined, financial industry genchi genbutsu, will lead you towards responsible, sustainable, revenue generating relevance.
Check back next week as we continue to create a future where community-based organizations have the tools to build an entire Community Ecosphere (the name of one of our products!) of transaction, local incentives, community value exchange, and digital asset relevance.
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