Banking on Digital Growth
Banking on Digital Growth

Episode · 11 months ago

63) #ExponentialInsights: Preparing for the Wrecking Ball in the Boardroom w/ Kirk Drake


Every FinTech uses AI.

Some gain competitive advantage. Others solve old problems in new ways. All see better results than their non-AI competitors.

FinTechs are creating the future. Yet most banks and credit unions aren't even thinking about AI. Why is that?

In this episode of Banking on Digital Growth, I talk with Kirk Drake, president and CEO of Ongoing Operations and author of CU 2.0: A Guide for Credit Unions Competing in the Digital Age.

We talked about:

  • Why you need to disconnect from your perception of reality to embrace change
  • How fast AI is going to disrupt everything
  • The opportunities AI presents to financial brands

You can find this interview, and many more, by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

One of the things I kind of pocketedaway is a lesson that really applied last year was the ability to reallydisconnect from your perception of reality and embrace agility and changequickly. Right? You're listening to Banking on DigitalGrowth with James Robert Lay, a podcast that empowers financial brand marketing,sales and leadership teams to maximize their digital growth potential bygenerating 10 times more loans and deposits. Today's episode is part ofthe exponential insight Siri's, where James Robert interviews the industry'stop marketing sales, and Fintech leaders sharing practical wisdom toeexponentially elevate you and your team. Let's get into the show. Greetings inHello, I Am James Robert Ley and welcome to the 63rd episode of theBanking on Digital Growth podcast. Today's episode is part of theexponential insight, Siri's and I'm excited to welcome Kirk Drake to theshow. Kirk has more than 20 years of experience designing and implementingAdvanced technology solutions, systems and strategies for financial brands. Heis the CEO of ongoing operations as well a C U two point. Oh, Kirk is alsothe author of the book See 2.0, A guide for credit is competing in the digitalage, as well as his new book that's now out and available on Amazon titledFinancial Helping. Financial Service Executives. Prepare for an ArtificialWorld. Hello, Kirk and Welcome to the show. Good Morning, Great to See you.It is good to be here with you today. Absolutely. You know, one of the thingsthat I've been thinking a lot about is reflecting reflecting on the past,reflecting on 2020 and when When I think about that, what's been thegreatest lesson that you have learned coming out of 2020 and into 2021? Yeah,I think you know, it's interesting. Having worked with Paul Fiori, Etc.Wallet and hundreds of other entrepreneurs over the years inmasterminds and other type functions. One of the things I kind of pocketedaway is a lesson that really applied last year was the ability to reallydisconnect from your perception of reality and embrace agility and changequickly. Right? And so you know what? Back in the day, when I was workingwith fury, if something came up in the business, that was different than whatour expectations or maybe it was a market change maybe new competitors,maybe a client. Didn't, you know, go some direction that we wanted Hisability to pivot and change and go forward with the new journey was justbreathtaking. I mean, it was just so fast. And, you know, I think it what itreally taught me over time was when something crazy happens, like cove inthat disrupts all of your prearranged business plans and attempts to organizethe world into whatever we think reality is, you know that. Really? Thequickest thing you could do is rip off that Band Aid. Ignore whatever your youknow, our human brains would tell us not to leave the house and never goanywhere and never take any risks. Right? So, you know, ignore all of thatand lean into the facts and the information you have right then to makea different plan and change the future to be what you wanted to be. And lastyear was the first year where I was really able to take six or seven yearsof those lessons. See covitz see the impact immediately. React, change, youknow, reassess and adjust and do that two or three times during the year andit just resulted in fantastic results. You know, across the board andeverything I was involved in, you mentioned a couple interesting points,pivoting and changing, moving fast and creating a new reality or creating anew future. And this is something that you've been doing and I would callpracticing to your 0.6 years. Was it...

...easier for you to do it Because you'vehad this practice. Is this in aid? And why do some financial brand leadersstruggle with this idea of accepting, embracing and really moving towardschange? I think s so I don't think it's easy. I think it it requires musclememory and on internal belief for value system that says, I'm gonna hit theoverwrite button, what my brain is telling me and how I'm feeling to takea step back and reevaluate where I thought we were, where I thought wewere going versus reality. And I think you know, if you think about strategicplanning or how you lead a team or any of those things, all of these thingsare designed to build coalescence or consensus around a theme or concept andget group buy in, and then you know, go off and execute something. And thereality is that takes a huge amount of emotional energy to get people on thesame page and going the same direction. And so when a crisis occurs, you know,I think there is. It's, you know, the usual stages of grief. You're angry,you're frustrated, your you know, all those sort of things. But the realityis, the faster you can move through those and accept each stage and moveonto the next one is the faster you can adjust the marketplace. And to me, thegreatest companies are the ones that are able to do that consistently overtime and really adapt and change quickly. But to adapt to change, wereally have to disconnect from our fears at the end of the day and conquerthose. And the fears are really, at the end of the day, mostly unfounded, right?Like they're just our reptilian brain ratcheted back to caveman era, wherewere designed to react to certain stimulus in our environment that don'treally actually exist anymore. Well, there is that old analogy of fear beingfalse evidence, appearing riel and your point. It is about hitting the resetbutton, and I think if I can encapsulate your thought, it all comesdown to one word. It's awareness. It's awareness of where we've been, wherewe're at and where we can go next and accepting that loss. And you mentionedthe stages of grief. It's accepting the loss of the old self to create thespace and time to create the new self. The individual, the team, theorganization, if you will. Which is where I'd like to take the conversationbecause you've got this new book out, financial, and you write. Every fintechuses AI. Some gain competitive advantage. Other solves old problems innew ways. All see better results than than their non AI competitors. They'recreating the future. Yet most banks and creditors aren't even thinking about AI.Why is that? So I think it's easier to assume it'snot gonna happen to us. And that and that we're not that there isn't anyurgent and pressing threat right from it than it is to accept, you know,because the reality is you could react really hard and go, so we're gonna doeverything in a I, and that's an outside reaction to write you know thewhole credit is not going to shift tomorrow to AI. But you can bet overthe next 5, 10, 15 years it's gonna have repeated significant changes inthat regard. And instead of you know it Z e think of it was a great comic I sawthat said, You know who had the biggest impact on digital transformation? CTOthe chief experience officer or cove it on and covert. It was typicallyvisualizes the wrecking ball coming into the boardroom. Yeah, but thereality is that trend was so underway for so long that the credit unions thathad made material progress on it have have. It's effortless. There it appears,effortless is they ride that next transition in. They're the ones thatare really, you know, put their head in...

...their sands and said, It's gonna be allbranch first human to human piece. They're the ones that have the biggestlift in that struggle and have the biggest short term pain in thatequation. And I think a I is gonna be similar. You're going to see layers ofthings peeled off that don't feel particularly disruptive. But if you donothing for 10 years and you look up at that point, it's gonna be hugelydisruptive and even, you know, I go one step further to me. I don't think it'sall that important that credit loans be, you know, investing hundreds of hoursinto a I right now, I do think if you look where the path is going to go tobe able to take advantage of AI, you're gonna have to be on cloud right. Totake advantage of that, you're gonna have to have structured data and andreally put your analytics not just into solving day to day problems, but makingit actionable on automated across everything robotic process, automation.And you know those things. And so if the credit isn't tackling cloud roboticprocess automation and analytics and investing heavily in those three trends,when the trend does occur on a I, and it's going to occur faster than anyother trend we've seen before, right, because once once it hits, it creates acompetitive advantage. It's unstoppable, right? You know, I think you look lookat Tesla right now is a perfect example, right? They have such a huge lead in aI that most of the other auto manufacturers have assumed that theyhave lost that back, right? That it is just It's not even the batterytechnology or the electric car piece of it or navigation or any of that. It'stheir long term valuation, to my opinion, is driven entirely aroundtheir AI model and whatnot. Well, you mentioned a story in the book andhearing you talk through that, it's almost it makes me think of like whatwe view is the overnight success, because you you mentioned, you know, alot of financial brands who have been making investments, making ProgressCove. It hit, and they've been able to really look like they've come out of,like, where did they come from? Why is this happening? Well, it's because theyhad been making the investments ahead of time, and this was an easytransition and to your point, like 10 years looking back and you shared astory which I felt like we're living parallel lives about the subject of oflearning and of math and the calculator. And, you know, you grew up hearing Oh,you know, you're gonna need to do math by hand because you're not always gonnahave a calculator. We'll look at where we're at. Look at where our kids are.And so when we look at exploring the past to understand the present so weknow where we need to go next in the future. Why is it important? Becauseyou wrote about these three timelines of human progress in the book. Why isit important to at least gain a sense of understanding about these timelineswhen it comes to a I? Yeah, I think the key. You know, if you look back at allthe you know, you look at electricity. It took 50 60 years for it to kind ofbecome ubiquitous. Smartphones took six or seven years, right? Um, Ai Chatbotstook two or three, right? And and so each one of these trends is happeningfaster, more disruptive. Lee, you know, in that regard a funny Segway. They'rehaving this conversation with my wife where, you know, she was trying to buysome pants for our kids the other day. And because, man, you know, the PayPalintegration isn't working. I can't pay for whatever it is. And five years agoshould be pissed off, right? And today she's like you know the pace of allthis technology. All this change is going so fast that there's not evenreasonable for big brands to be testing every single component of theirwebsites and payment integrations. And whatever she goes, I know it's notworking today. I know it'll probably be working tomorrow. I'm not going toredshirt complaint. I'm just accepting that the pace is going faster andfaster, faster, and it'll fix itself right And and I think, as consumers,Kimberly is a great litmus test for millennials in a number of differentways for May, a couple years younger and just see, she's always on the frontend of whatever the trend is for her...

...generation, and it just reallyhighlighted to me how I think we've all accepted the change rate right, andthis is the new norm. The new normal everybody talks about is that nothingis normal, right and then it all changed from now. And so I think,coming back to a I, the sequence of interactive changes in the learningthat a I is able to do. Look at Tesla's. Three months ago, they rolled out, youknow, the driverless, fully automation and really by the end of 2021 it willbe everywhere, right? That's a one year, you know, learning in that regard. Idon't think I mean, it's crazy because on one hand, test has been around 17years, right? So nothing they're doing today is really all that, you know,anything we wouldn't have expected. That was probably in their businessmodel 17 years ago. But we feel like Tesla's just like boom on the on thescene and making all of this adjustment. And so I think when we look at AI inour credit units, it's gonna be a similar trajectory where all of asudden it will feel like it's everywhere. And I think we've alreadyseen that with machine learning. You know the first phase of this. We'reseeing it in every aspect of what credit unions and index air doing. Whatwe haven't seen is stage two and stage three, but you can bet those air coming.Well, you know when when when you're talking about Tesla and I think aboutElon Musk. One of the biggest driving factors for him has been this idea offirst principles thinking, taking things down like like literally havingno assumptions about anything going back to zero and starting over. And Ithink that's what a I machine learning is going to force a lot of us to do.Which is why this perspective of a Q R adaptability quotient is going to befarm or important than I. Q. When we when we think about the future andgoing forward, because the machine, the AI is going to open up opportunitiesthat we can't even begin to wrap our heads around thinking about AI forfinancial brands, I'd love for you to talk through a common belief that thisindustry has, but you passionately disagree with so common belief, I think,and I realize this is a controversial one, but I think a common belief isthat service matters, and I feel very strongly that service matters. I alsojust think 99% of our consumers don't care. They just accepted that digitalintegration, the accessibility, the convenience, those pieces, arm orimportant, and I'll give you example. And maybe it's not even that servicedoesn't matter. It's our definition of service is wrong, right? Which is Ican't take any credit have been to that say, you know, trained for service andby the way, I don't actually believe I have any idea of how to actuallydeliver great service. So let me be very clear on that. But every credithave been who says great services? When the member walks in the branch, werecognize their name and I always go. Yeah, that's the weirdest thing ever.Technology has transformed our world, and digital has changed the wayconsumers shop for and buy financial services forever. Now consumers makepurchase decisions long before they walk into a branch if they walk into abranch at all. But your financial brand still wants to grow loans and deposits.We get it. Digital growth can feel confusing, frustrating and overwhelmingfor any financial brand marketing and sales leader. But it doesn't have Thiobecause James Robert wrote the book that guides you every step of the wayalong your digital growth journey. Visit www dot digital growth dot com toget a preview of his best selling book, Banking on Digital Growth, or order acopy right now for you and your team from Amazon. Inside, you'll find astrategic marketing manifesto that was written to transform financial brands,and it is packed full of practical and proven insights you can start usingtoday to confidently generate 10 times more loans and deposits. Now back tothe show. E ai and machine learning...

...give you that capability with facialrecognition? Exactly exactly. We find it creepy, right, because it's a t endof the day when I walked into a branch. If they go, Hello, Mr Drake and I havenot had coffee with this person. I've not had him over to my house for dinner.I've not been on a phone call that was Mawr than transactional, right? Theimmediate thought is this person is either trying to get something from me,or they believe there is more of a relationship here than that actuallyexists. I gotta tell you a funny story on this. My wife and I, I was doing anevent. Actually, this was years ago for the New Jersey credit in league, andone of my wife's dreams was to spend the night at the Plaza Hotel. So sheflew up there with me, and, uh, we took a car from New Jersey in tow, Manhattanand went up to the plaza and she was She couldn't believe it. She was like,Wow, crying so happy we'll get out of the car And they're like, Hello, Mr Lay.I'm like, how did they know my name? The story goes, I'm like, Did they havesome type of data on me or something? My wife, they opened the door for herfirst. They asked who the name of the reservation was, and I was like, I waskind of let down. I was let down by that experience, I thought it was gonnabe some type of cool data integration that I didn't know about. But yeah,you're right. You're right. It is it It provides that kind of that creepinessfactor. But at the same time, it also provides some opportunity as well,which, you know, you write one way or another, AI is going to change banksand credit unions is gonna offer new tools, new methods and to this possiblenew dangers, we have a few choices about how to react to thesetechnological changes. In the pace is that with which they come, we can letit grind us into obsolescence or we can hang onto it try to survive it and jumpon early and thrive. I wanna look at both sides of the coin here with you,the dangers and the opportunities. First, let's look at the opportunitiesthat you see with a You've given a couple of good examples, but let's divedeeper into some of the opportunities for financial brands. Yeah, sure. So Ithink the first one is there. And I think there's two schools of camp onthis, one of which is this is a tool for back office, right that allow us tobe more efficient there. And the second one is this is This is something we armour consumers with and allow them to touch tangibly and feel. I thinkthere's risks and rewards on both sides of that. I don't know that I have agood answer for that, I think just like you know, if we look at Vaxxers andanti vaxxers, there's economies both of those things and belief systems thatboth that that benefit that. And I think you know, the pace of change inand how it's impacting us as humans is causing a great deal of societalfriction right now, and it's going to get worse and your steam this kind ofbizarre backlash, you know, against Twitter or Facebook, you know, and thisfurther polarization of our society because we believe these technologycompanies have all this bizarre power in some way, shape or form. But by theway, as a society, we chose to give them right, Thanks that it's thebizarre piece of that, right. Um so I think when we look at it in thoseservice paradigms, we got to kind of build a philosophy around is this backoffice is at front office And then in that, looking at it from first off,what can it tell us about our consumers that we don't already know? Or thatseemingly disconnected pieces of data where we get all not just our existingdata around consumers. But all these other data points begin to create abetter picture and paradigm shift in that regard. The second piece, I think,is really looking at the efficiency side of things. And then the thirdpiece, I would say, is really looking at the fair and equitable conversationthat I think, you know, it was really uncomfortable for us as an industry asa society, etcetera. But and this is particularly challenging. I think incredit unions, which is we have pockets of similarity, right? We're a group ofchurch people Were a group of people that work at this facility. Affinity,right? That affinity bond by default...

...means all of our data is biased, right,that we not fault any national trend or peace. And we're gonna have thesepockets of bias and everything we're doing. And so then the question becomes,Do we lean into that and accept the bias and just try to make the bias moreefficient? Do we take a step back, try to insert some new data into thatequation to make it less bias, but that by its core, if we are a teacherscredit union, in some ways we should be biased towards teachers, right? Likeand and so that creates an ethical moral conundrum for us to go down. Andthen I think that service piece of the bias that's going to come out in ouremployees in on how we're making our own decisions and the diversity andequity and those pieces as another piece fit. So I think, and I would kindof went down a Segway there. I think all of those are really good questions.And then I think that the challenges, that's all great. But in order for usto succeed and have to see this table 10 years from now, we have to dosomething today, right? And we have to take the first learning step that goesbeyond machine learning. That goes beyond, you know, some predictiveanalytics and makes us uncomfortable because it's through those sequential,uncomfortable moments that we get to truth or we get to a trend or we get tosome level of normal. Well, if you think about it, and for the dearlistener, go back to the greatest growth that you've made personally thatyou've made professionally. It has always been in those uncomfortablemoments when you've had the courage to lean into that. So you know, when itcomes to adopting a I internally, you hit on a key point. This is anemotional conversation. What are gonna be the biggest roadblocks that holdfinancial brands from either a having that conversation to begin with in thefirst place because you talked about an opportunity here is back officeefficiency. I see the opportunities with that as well. You know, you know,humanizing, automating the predictable to humanize the exceptional greatlessons coming out of the Four Seasons experience and experiences, what welldefined systems and processes that have been defined applied. And here's thekey optimize over a period of time, resulting in a positive or negativeemotion. But let's talk about the emotional conversations that have toehappen internally we're here for I think the first one is that it's gonnabe perfect, right and that we're not going to get it wrong, right? We havesuch a quest to deliver perfection in this industry that we won't take andexperiment on something and admit that we got it totally wrong, right S. So Ithink the first point is just being comfortable that really you're betteroff plugging it, chat bought in and having to go terribly wrong versus notplugging a chat about it. You will learn more from the wrong, and you willimprove the credit boom or long term by failing abysmally than than by doingnothing. The second one is punishing those for failure and creating this,you know, bizarre system of the as if our leaders and our managers and ourfrontline people actually have any of us figured out right. We have attemptsand we have best practices. But their best practices, they're not. They'renot the only way to do these things right. And so there's, you know, beingaccepting that, you know, this is gonna be layers of onion and peeling in thatrespect. The third one that I think is the biggest one is that our internalfolks today actually have a shared alignment on vision of where this allis going. And I think if you look at the i t, some of the CTO is out thereyou look at you know, some of the people who've been in your credit for2025 years, I would argue they probably don't actually have all that muchvested interest in the long term sustainability of the financialindustry in your brand as much as their own personal, you know, career, shortterm things. That's a great point you...

...make about the I t. Side of thingsbecause historically speaking, what has I t been? Therefore it's been toprotect. It's been to secure. It hasn't necessarily been to advance and go onthe offensive side of things. So a couple of things I'm hearing you say,get comfortable being uncomfortable. Except that that that failure is thefertile soil from which new growth springs a new and one of the things youknow here in the book. And I think this was a great way toe to tie it all backtogether and and really bring the conversation Full circle is one of theconcerns about a I, you know, for financial brands is the innovator'sdilemma, which is that business is built on successful platforms. Theyhave too much at stake to risk everything to your point, even about it. How can financial brand leaders overcome their past to deal with changein the present and eliminate the fears that might be holding them back tocreate the future? I mean, I think the first pieces to really have thatdialogue and understand what people's fears are and to make sure they've gothealth healthy enough emotional intelligence and conversations asleaders to understand what those true fears R and a have. You know, the I t.The accounting personal living person who's been there for 25 years and isfour years away from retirement going. It brings me back to this conversationwith my grandfather. Thank you. And I have talked about this before, where hewas in his seventies and I said, Grandpa, why won't you email me? He'slike Kirk, You could just fax me. He was like, That's ridiculous. I'm notlike handwriting a letter and fax in it to like, What's wrong with you? Youhelped create Univac. You built, you know, control data like you're an I Tguy. Like I don't get this. He's like Kirk. I got, like, 5, 10 years left onthe planet. I don't really wanna bother spending a year, but learning to type EI was like, That's a great perspective and I think that's a perspective inmost of our credit. Ian's where we've got the person who feels that way right,and we've got to find a way to enable them to be successful and add value forthe final few years of their career without making them feel like they'vegot to go relearn the entire world, right? And I think what? That's whatwe're facing here is a complete paradigm shift. Yeah, and it reallycomes back to this idea of a Q adaptability quotient into what you'retalking about now. E que emotional intelligence. You add both of thosetogether. That's a transformative experience. But then I also hear DanSullivan in the back of my head. You know what I think? Always make yourfuture bigger than your past, and I think it's about giving people hope.You know that that that this is not the end, this is just the next chapter, anew beginning. We're turning the page, if you will, and let's let's lean intothat. And let's create that that future together. This has been a greatconversation, Kirk. I'm excited about the book. People can grab a copy onAmazon, and if anyone is listening, they have follow up questions they wantto connect with you. Continue the conversation. What is the best way forthem to reach out and say hello to you? Yeah, absolutely. You can, of course,find me on LinkedIn or you can email me at K Drake, etc. You dash to dot comalways available love chatting with people about this. I recognize this ismy best guess of things that we need to prepare for, but it's certainly not.It's interesting having comparing the two books. I feel like reading in twopoint. Oh was very much prescriptive. God, here's what to do. Here is thingsto try, and in this book, I have way less of that. I just feel like I askeda lot of really good questions, right? Yeah, And then you also you know,you've got some really cool things going on. Like, for example, themastermind. That's another way people can can work and increase, Um, thatit's not just with you. It's, I think, the neat thing it's connect makingconnections with others can talk about. Yeah, absolutely Thanks on your greatparticipant and supporter. That too. So I appreciate that. So the fintechmastermind my goal waas. You know, we have lots of pockets of conversationsthat are very industry specific, so you get 10 credit and CEOs together 10marketing, crediting people together. We have very few things where weintentionally bring in the disruptors...

...into that equation and make us reallyuncomfortable with our pace with our learning with any of those things. Sothe mastermind is, you know, we got about 75 80 people in it so far thatare probably two thirds fintech, one third credit union leaders. We likeMork reading leaders in it as we go. And it's really designed around havingconversations dealing with leadership challenges and keep growthopportunities on both sides. That helped the Fintech understand thecreditors perspective but also help the credit unions learn how tow beam oruncomfortable with our discomfort, or how to be more comfortable with ourdiscomfort of the pace of change in those things. And it's it's been doingit for six or seven months now. And every time I get on one of those calls,I'm blown away with the conversation, the thoughtfulness, the key expertisethat exists both in the industry and outside. Well, I think what you'redoing is very special because it is, you know, bringing this back fullcircle. You've created a safe place toe, have some a motive conversations to getcomfortable being uncomfortable and really toe learn, because you and I areboth big believers and masterminds. We both participated them and thenpersonally, and it's about a rising tide raises all ships together. So Iappreciate the work that you're doing there and once again for thisconversation. Thank you so much for joining me today, Kirk. Thank you onceagain and always until next time. Thanks for joining me on anotherepisode of banking on Digital Growth. As always. Be well, do good and washyour hands. Thank you for listening to another episode of banking on DigitalGrowth with James Robert Ley. Like what you hear. Tell a friend about thepodcast and leave us a review on Apple podcasts, Google Podcast or Spotify andsubscribe while you're there to get even. Mawr Practical in proven insights,visit www dot digital growth dot com to grab a preview of James Robertsbestselling book Banking on Digital Growth or order a copy right now foryou and your team from Amazon. Inside, you'll find a strategic marketing andsales blueprint framed around 12 key areas of focus that empower you toconfidently generate 10 times more loans and deposits until next time, bewell and do good.

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