Marked by an accelerated rate of change and evolving consumer needs, the financial sector has undergone a digital transformation unlike anything seen before.
From small businesses reimagining their operations in response to the pandemic to the challenges larger corporations face in today’s uncertain economic climate, the financial sector is in the midst of a fundamental evolution. PaymentsJournal recently sat down with Chris Giamo, Head of Commercial Banking at TD, who spoke about the notable changes and challenges brought about by this digital transformation and shed light on the key strategies and technologies that are shaping the industry.
You spoke at Finovate Fall, and a lot of conversations that came out of that conference centered on the digital transformation the financial industry has experienced recently. What noticeable changes have you seen on your end?
The pandemic set the stage on how businesses behave and how they’re looking at their organizations. For the first time in a long time, businesses—particularly small businesses—had to reinvent themselves. If you recall, restaurants were doing DoorDash and were finding ways to have outdoor seating. Retailers were looking at ways to get products and services to clients without in-person interactions.
Small businesses are mainly entrepreneurially led, and those founders wear so many hats in the company. They can’t be an expert in every realm and have to rely on their banks, their accountants, their attorneys, and other third parties to guide them. And so I think the businesses that came out of the pandemic came out stronger and came out recognizing that they have to be present in not only delivering their products and services, but they also have to be forward-thinking. Large publicly traded companies have a lot of infrastructure and employees, and they have the ability to think ahead and plan in a way that sometimes smaller businesses don’t.
Now fast forward to today. The macro economy is challenging, and there’s a lot of uncertainty out there. Businesses are going back to the muscle memory that they had to get through during the pandemic. The pandemic accelerated the need for automated, digitized ways of consuming products and services. For us, it’s important to balance and prioritize investments. You have that innovative cutting-edge technology so businesses can self-serve themselves and they can have an automated way of doing their banking. But how do you balance that with subject matter experts and trusted advisors who are able to guide that business as well? That’s how we’re seeing it and how we’re looking at serving our customers.
It’s certainly a delicate balance. Leveraging technology, such as automation, has been a learning curve for many financial institutions. How do you make sure—especially in the commercial space—that you’re meeting customer needs?
Clients want customization; they can’t have a one-size-fits-all (approach). And it doesn’t mean every part of the functionality is customized. But we have seen the ability for businesses to customize, whether it be invoicing or payments capabilities, with some of these digitized and automated platforms.
We’ve spent a lot of time and money building embedded banking into clients, so when they’re conducting other non-banking services, they can click a link and get to their banking as well, with a single sign-on. We’re definitely spending some time there. And we found that’s resonating with clients, because they’re bookkeepers, treasurers, and CFOs who want the ability to do everything in one place if they can.
You mentioned customization. How has technology like AI changed the way financial institutions run their organizations? Does it help with personalization and creating more of that seamless end-to-end experience?
Banks have a tremendous amount of data, and we’re in the early stages of figuring out how do we leverage that available data. Outside of the specific application that the data is supporting, it may not always be usable. So we’ve worked on how do we get that data in usable formats, and then use third-party data to build models where we have a better idea of what solution a client may need. Because from there, we can predict, for example, that this cohort of clients may need this type of product or solution. And then we can personalize and arm our relationship managers with those lists that they can prioritize for their outreach with the client.
There was some recent survey data that TD collected at Finovate Fall, which found that outdated legacy systems in a fast-paced technology-focused landscape are the banking sector’s greatest technological challenges. Roughly 44% of respondents agreed. Can you speak to those findings?
Safety, soundness, and cybersecurity are critical. Making the necessary investments to keep systems current and updated—and develop functionality that can automate the process—is critical. It’s not just about the customer applications; it’s the back-office operations, too, and we have to look at things from an end-to-end perspective. So we can shorten the timelines, right? A client’s waiting for an answer and we want to make it easier for them to interface with us—whether that’s the ability to upload documentation, or it’s a tax return, or an e-signature is needed. You want to have that go straight through. That way, you improve both your customer experience and your client experience.
There’s a lot of work and focus on that, in addition to finding the new shiny object, whether it’s a new app or a new product capability.
Speaking of shiny objects, we’ve seen tech including AI, machine learning, and embedded banking really take off this year. Do you anticipate any new shiny object making waves soon?
I don’t think there’s anything specific other than further advancements and iterations of the tech you mentioned. With the advancements in AI, that’s moving at a very rapid pace depending on how you apply and use that. There’s a lot of white space out there.
As we head into 2024, what are you most excited about?
I’m excited to continue on our journey of improving our product offerings for our clients. The macro environment continues to throw unprecedented challenges at us, and the resiliency of the globe—but particularly U.S. businesses—really showcases their resilience.
(Most) businesses in the U.S. are small businesses, and that really drives our Main Street economies in the communities that we live in. We still have inflation, there’s still a tight job market, but I’m really excited and proud to serve as that trusted advisor to the customers.
