“One of the things I pocketed away as a lesson that really applied last year was the ability to really disconnect from your perception of reality and embrace agility and change quickly.” -Kirk Drake
If there’s one thing that there’s been no shortage of throughout the past 16 months or so, it’s change. When faced with unexpected difficulties or new challenges, the financial institutions that have flourished have been the ones that have embraced this level of change and found ways to grow amidst the chaos.
James Robert Lay, founder of the Digital Growth Institute and host of the Banking on Digital Growth Podcast spoke with Kirk Drake about this idea.
Kirk is the CEO of both Ongoing Operations, LLC and CU Wallet, and is the author of the book CU 2.0, a guide for credit unions competing in the digital age, and a brand new book titled Financial: Helping Financial Service Executives Prepare for an Artificial World.
His insights on making the most of this period of change are worthwhile for anyone in the financial realm to stop and take stock.
Change is one of the most constant things that financial institutions face every day, yet it seems to be an idea that is met with anxiety and trepidation. Kirk credits his ability to disconnect from his perception of reality to embrace change more quickly as a key quality that makes industry “surprises” a bit easier to handle.
“When something crazy happens like COVID that disrupts all of your prearranged business plans and attempts to organize the world into whatever we think reality is, that really the quickest thing you can do is rip off that band-aid.”
Kirk continued, “Our human brains would tell us not to leave the house and never go anywhere and never take any risks. So, ignore all of that and lean into the facts and the information you have right then to make a different plan and change the future to be what you want it to be.”
Last year was truly a year to take this information to heart. The impact of the COVID-19 pandemic meant that banks and credit unions had to make immediate changes, then continue to reassess and readjust throughout the year. And for Kirk, this ability to see the writing on the wall and make quick pivots meant far greater success.
“One of the things I pocketed away as a lesson that really applied last year was the ability to really disconnect from your perception of reality and embrace agility and change quickly.”
But this is often easier said than done. After all, it’s going against that base, internal survival instinct. It requires muscle memory and conscious effort, and an internal belief or value system to ignore the instinct to stay safe.
There’s no room for growth where it’s safe.
Instead, when faced with change, Kirk explains that when he encounters moments of change and upheaval, he sees them as the perfect time to “hit the override button on what my brain is telling me and how I'm feeling to take a step back and reevaluate where I thought we were aware.”
Getting an entire team to organize around the idea of straying from the well-defined path in a moment of change or upheaval can be hard. It can take a massive amount of energy to unite a team to work in the same direction.
But why is this?
Whenever humans face large changes or when a crisis occurs, they go through the stages of grief: Anger, frustration, denial, and more. But the faster financial institutions can move through these stages and accept each one, the faster they can adjust to the present reality of what’s actually happening in the industry.
Kirk shared, “To me, the greatest companies are the ones that are able to do that consistently over time and adapt and change quickly. But to adapt to change, we really have to disconnect from our fears at the end of the day and conquer those. And the fears are really, at the end of the day, mostly unfounded. They're just our reptilian brain ratcheted back to caveman era where we're designed to react to certain stimuli in our environment that don't actually exist anymore.”
There’s an old analogy that fear is just false evidence that appears real and credit unions and small banks must hit the reset button in these moments and find a sense of awareness of the past, present, and the future. It’s about accepting the loss of the old sense of self or comfort that a financial institution once had to create the space and time for a new future.
The Need for Artificial Intelligence
So many industries have already embraced artificial intelligence (AI) wholeheartedly, yet most banks and credit unions aren’t even thinking about this technology yet. It’s easy to assume that there isn’t an urgent need or pressing threat requiring financial institutions to adopt this technology, but if the events of the past year have shown the financial industry anything, it’s the need to embrace emerging technologies.
But over the next five to fifteen years? AI is going to have significant changes for the entire financial industry.
Banks and credit unions only need to consider what has brought about the most digital transformation over the past year: The chief transformation officer, the chief experience officer, or COVID-19?
Because truthfully, COVID-19 was like a wrecking ball coming into the boardroom.
And for the banks and credit unions who had already started their digital transformation, the transition during the height of COVID-19 to a more digital-first process seemed far more effortless.
Kirk admitted that the journey with artificial intelligence may look much the same. “I think AI is going to be similar. You're going to see layers of things peeled off that don't feel particularly disruptive, but if you do nothing for 10 years and you look up at that point, it's going to be hugely disruptive.”
Adults today grew up being told they needed to be able to tackle mental math because they might not always have a calculator on hand. Now, those same adults carry smartphones in their pockets, each of which is a million times more powerful than the technology aboard the Apollo 11 space shuttle. Technology is accelerating at an exponential pace, and credit unions and banks need to anticipate this same shift in the technologies they implement, including AI.
When we look at AI in credit unions and banks, it will take a similar trajectory as the adoption of smartphones, which exploded onto the scene in a matter of just a few years. Wise financial institutions should be in the beginning stages of this now, as the latter stages aren’t that far behind.
The Growth of AI and the Future of Banks and Credit Unions
Kirk shared a new idea. “A common belief, I think and I realize this is a controversial one, but I think a common belief is that service matters. I feel very strongly that service matters. I also just think 99% of our consumers don't care. They've just accepted that the digital integration, the accessibility, the convenience, those pieces are more important.”
He continued. “Our definition of service is wrong.”
Kirk spoke of AI and facial recognition technology, which can alienate some customers or members if used incorrectly, say, to greet a customer by name without any prior relationship, for example.
In one way or another AI is going to change banks and credit unions. It's going to offer new tools, new methods, and possibly even new dangers, like the mishandling of AI technology.
Regardless, financial institutions have a few choices about how to react to these technological changes at this breakneck pace:
- They can let it grind them into obsolescence
- They can hang on to it, and jump on early and thrive
The truth is, there are dangers and opportunities with both options.
AI can be a remarkable tool for the back office, which allows them to be more efficient. It can also be something tagline for consumers to touch and feel. These options are paradigms, to be sure. Is AI a front-office feature? A back-office staple?
This technology can tell banks a lot about their consumers that they don’t already know, and create a fuller, richer picture, more efficient processes. But it also poses questions about what is fair and equitable. Based on the information financial organizations collect, there’s an ethical and moral conundrum about how to use this data in a way that is safe, secure, and fair to consumers; about how financial institutions and their teams make decisions that can potentially impact the entire course of a customer’s life, especially as diversity and equity factor into the picture.
Even with these questions, Kirk urges banks and credit unions to expand into the world of AI. “For us to succeed and have a seat at this table 10 years from now, we have to do something today. We have to take the first learning step that goes beyond machine learning that goes beyond predictive analytics and makes us uncomfortable—because it's through those sequential uncomfortable moments that we get to the truth.”
The biggest moments of growth, personally and professionally, happen in uncomfortable, courageous moments, and adopting AI is no exception.
The Innovator's Dilemma
It’s been said that failure is the fertile soil from which growth springs anew.
However, businesses are built on successful platforms. They have too much at stake to risk everything. But financial brand leaders must still find a way to overcome their past, deal with change in the present, and eliminate the fears that might be holding them back to create a brighter future.
It’s a self-fulfilling dilemma. Does one take the safe route or the risky road?
Kirk pointed to people working within credit unions and banks—those who have worked for years with the same institution. He compared their mindset to that of his grandfather, who refuses to learn to type or email, and instead suggested that Kirk fax him a letter because he wasn’t about to spend a year of his life learning to type, even though his grandfather himself at one time worked in IT.
Kirk shared that this perspective is common throughout a great number of banks and credit unions. And to remedy this roadblock requires a complete paradigm shift. Sure, this may feel like a safe route—to avoid email and opt for a faxed letter to a loved one, or to ignore the upcoming advancement of invaluable tools like AI—but it’s not one that will help any financial institution progress.
Change requires adaptability and emotional intelligence. Both together can create a truly transformative experience. Making a technological leap of faith requires emotional conversations, and it requires getting comfortable being uncomfortable. But it also paves the way toward a bigger, better, brighter future.
This article was originally published on July 27, 2021. All content © 2023 by Digital Growth Institute and may not be reproduced by any means without permission.