Breaking Digital GridlockImproving Your Bank's Digital Future by Making Technology Changes Now
Strategic technology strategy for smaller financial institutions Breaking Digital Gridlock empowers credit unions and community banks to make the shift to digital—even without a seven-figure consulting budget. From leadership, to technology, to security, and more, this book provides effective, real-world strategies for taking the leap without tearing your organization apart. With an emphasis on maintaining the culture, services, and features you have carefully crafted for your customers over the years, these strategies allow you to make your organization more resistant to digital disruption by adopting key technologies at key points in their evolution. Expert advice grounded in practicality shows how FinTech partnerships and strategic technology acquisition can foster new growth with minimal disruption, and how project management can be restructured to most effectively implement any digital solution and how to implement and leverage analytics. Specific implementation advice coupled with expert approaches offer the ability to modernize in an efficient, organized, financially-sound manner. The companion website features a digital readiness assessment that helps clarify the breadth and scope of the change, and serves as a progress check every step of the way. Access to digital assets helps smooth the path to implementation, and a reader forum facilitates the exchange of ideas, experiences, and advice. Identify revolutionary versus evolutionary technology opportunities Empower employee innovation, and stop managing all risk out of good ideas Understand blockchain, machine learning, cloud computing, and other technologies Forge strategic partnerships that will drive growth and success amidst technological upheaval It is widely accepted that digital is the future of banking, but knowing is not the same as doing. If your organization has been riding the fence for too long amidst uncertainty and budget constraints, Breaking Digital Gridlock provides the solutions, strategies, and knowledge you need to begin moving forward.
Foreword xi Preface xv Acknowledgments xxi Introduction xxiii Five Myths about Going Digital xxiii John’s Story xxvi Part I Processes 1 Chapter 1 How to Improve Internal Processes 3 Regulatory Gridlock 3 Regulatory Gridlock in Action 4 The Risk Spectrum 5 Flawed Bank Processes 7 Continual Improvement 9 Project Management 10 Waterfall 10 Agile 11 When to Use Agile versus Waterfall 13 In-house Staff and Outside Vendors 13 Process Management 16 Team Organization: Centers of Excellence 17 Cultural Considerations 18 Part II Technology 21 Chapter 2 Tech Evolution versus Tech Revolution 23 Evolutionary Technology 23 Evolution in Banking 25 True Revolution 27 The Financial Revolution 29 Chapter 3 The Cloud 35 The Financial Cloud 36 What Are You Afraid Of? 39 It Is Hard to Control 39 It Is Insecure 40 Data Will Be Shared with Others 40 It’s Unreliable 41 It’s Super Expensive 41 There Will Be Staff Cuts 42 The Internet Could Go Down 43 It Is a Direct Expense 43 What about Our Data Center? 44 The Cloud Won’t Conform to Regulatory Needs 44 The Cloud Kills Baby Seals 44 Types of Cloud Services 45 Infrastructure as a Service (IaaS) 45 Software as a Service (SaaS) 46 Platform as a Service (PaaS) 46 Major Players in the Cloud 47 Amazon Web Services 47 Microsoft Azure 48 Google Compute Engine 48 Commonalities between Each of These Platforms 48 How to Choose? 49 Capital One in the Cloud 49 Strategies for Moving to the Cloud 49 Note 52 Chapter 4 Artificial Intelligence 53 Computers Will Be Trainable 53 Machine Learning: Familiar Names 54 Artificial Intelligence versus Intelligent Augmentation 56 The AI Threat 67 Notes 70 Chapter 5 Application Programming Interface (API) 71 Why Create an API? 71 Getting Started 83 For the Technology Organization 83 For the Services Organization 83 The Second Step 84 The Third Step 84 Chapter 6 Blockchain and Cryptocurrency 87 Bitcoin: A Brief History 87 Decentralization 88 Security 90 Blockchain 91 Permissioned Networks 97 How to Use a Distributed Ledger 99 Part III Security 103 Chapter 7 Sovereign Identity 105 Trust Frameworks 110 Encryption and Data Security 111 Sovereign Identity in Practice 113 Weaknesses in the Current Identity System 115 Phishing 115 EMV 115 Consumer Privacy Concerns 116 An Opportunity for Financial Institutions 116 Note 123 Chapter 8 The Hacker Threat 125 The Artificial Intelligence Threat 127 Planning for the Worst 128 Operation Ababil 132 DDoS Attacks 133 Be Afraid When Things Are Down. Be Very Afraid When Things Are Going Well 134 Security as a Process of Innovation 136 The Equifax Breach 137 Scenario Planning 141 Scenario 1: NSA Backdoor 141 Scenario 2: Ransomware 143 Scenario 3: Cyber Infrastructure Attack 144 Scenario 4: Internet of Things Breach 145 Notes 147 Part IV People 149 Chapter 9 The Digital Change Is for Everyone 151 Human Resources 151 Remote Employees 151 Evaluations 153 Career Paths 153 Incentives and Compensation 154 Recruiting 154 Training 155 Dress Code 157 Facilities 157 Workspaces 158 Wi-Fi 159 Equipment 159 Meet-ups 160 Accounting: Software Depreciating 160 Chapter 10 Who Can Break Gridlock? 165 Common Symptoms of People Problems 168 Lack of Consistency 168 Cost and Time Overruns 168 Human Solutions 169 Chief Digital Officer (CDO) 169 Chief Analytic Officer (CAO) 170 Data Is Money 171 Part V Culture 175 Chapter 11 Culture and Innovation 177 Where Does Culture Start? 178 Culture Breakdowns 180 Contents ix Culture and Talent 181 Steps to an Innovative Culture 185 Collaboration 186 Communications 188 Rewards and Evaluations 191 Achievement versus Alignment 191 Notes 194 Chapter 12 Culture and Technology 195 A Tale of Two Cultures 195 Having It Your Way—BYOP 200 Part VI Strategy 205 Chapter 13 The Long View 207 The Problem: Banking and Financial Competitors 208 Threats: The –tions 209 Interchange Compression 209 Cannibalization 211 Digitization 212 Mobilization 212 Disintermediation 213 The Reality of Change 213 Changing Features or Services 215 Cost 217 Service 217 Security 217 Features 217 How Solutions Can Fail 218 Note 224 Chapter 14 Digital Governance 225 Review Proposed Products and Integration 228 Change Control 229 Review Security 229 Accountability 229 Business Continuity 230 Schedule Approval 231 Build versus Buy 231 Final Approval on Recommended Vendors 232 Data Governance 233 Data Quality 236 Data Security 238 Data Duplication 238 Data Engineering 239 Chapter 15 Using Data Analytics 243 Look Ahead 244 Credit Card Usage 246 Usage Monitoring 249 Digital “Why” 101 250 Digital Marketing 252 Chapter 16 Big Data and the Zombie Apocalypse 259 Apocalyptic Risk 261 Staffing in an Apocalypse 261 Creating Value 264 Digital Insight and Intuition 265 Data Is Valuable 266 Data Is a Discipline 269 Types of Analytics 273 Note 278 Conclusion 279 Cultural Issues 281 People Strategy 282 Process Changes 283 Technology 284 Security 286 About the Companion Website 289 Index 291
JOHN BEST is a thought leader recognized throughout the FinTech arena, with a particular affinity for credit unions. John is the founder and CEO of the financial technology firm, Best Innovation Group (BIG), which focuses on industry-wide code sharing and API prototype development. He speaks regularly at industry events, hosts a weekly FinTech podcast, and facilitates a highly interactive financial technology forum.
Everybody knows that digital is the future of banking, so what's stopping your institution from taking the evolutionary leap into 21st century banking and giving your members and customers the kinds of e-offerings and services currently available from large commercial banks? While the answers to that question may vary—ranging from resistance to cultural change, misconceptions regarding the cost and complexity of upgrading to a modern digital system, and even reluctance among hidebound board members—the outcome is always the same: stagnation and a loss of competitiveness. Don't let your fear of the unknown allow your more forward-thinking competitors to leave you in the dust. You can make the transition to digital, and, as you'll discover within the pages of this book, it's easier, less expensive, and far less disruptive than you may think. Written by a uniquely qualified author who has spent the past several decades leading technology change at smaller banking institutions, Breaking Digital Gridlock empowers credit unions and community banks to make the shift to digital—without a seven-figure consulting budget. Combining expert insight and advice, with practical, real-world guidance on leadership, technology, security, and more, Breaking Digital Gridlock provides the solutions, strategies, and knowledge you need to move your institution into the digital future. You'll learn to: Identify revolutionary versus evolutionary technology opportunities Empower employee innovation and be more receptive to good ideas from employees Understand blockchain, machine learning, cloud computing, and other technologies Forge strategic partnerships that will drive growth and success amid technological upheaval The companion website supplies you with a digital readiness assessment that helps give you a clear picture of the scope of the change you need to make, along with a progress chart that guides you through every step of the process. It also provides access to digital assets that help facilitate implementation, as well as access to a reader forum where you can exchange ideas, experiences, and advice with your colleagues at institutions around the world. No matter the perceived obstacles to upgrading your organization's digital profile, it all adds up to the same thing: institutional gridlock. Don't get left idling in the slow lane. You owe it to your customers to break through the digital gridlock, and this book shows you how.
PRAISE FOR BREAKING DIGITAL GRIDLOCK "As a science fiction writer I am interested in all aspects of the future, including the future of business, finance, and money. This book is a manual for that future, and it's a fascinating and insightful read." —Kevin J. Anderson, New York Times bestselling author and noted futurist "John Best does a brilliant job of breaking down complex topics such as blockchain, AI and machine learning into the what, the why, and the how for non-technical executives. It's the new desk-top reference for our executive team." —John Janclaes, CEO, Partners Federal Credit Union, Author of Doing What Matters "In such a fast paced and complex world in technology, John does a great job of breaking down emerging digital technologies. A must-read for any executive looking to digest topics such as blockchain, machine learning, and the future of identity." —John Ainsworth, CEO, CULedger
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