15th July 2020
Stuart Cook describes himself as a grey-haired Millennial – born into Generation X but wanting to “do stuff that helps people.” To that end, he’s aiming to use his position as chief digital product officer at Valley Bank to shepherd in a new age of digitally-enabled community banking. If he achieves his ambition, he’ll put himself out of a job.
“The community banking ecosystem in the States is pretty interesting,” explains Cook. “The Banking Act of 1933, which was central to bringing the US out of the great depression, supported community banks that served the communities, knew the people and made human-centric decisions.” But banking has changed dramatically since Valley Bank opened their doors in the 1920s, and the sector has been completely transformed over the last few decades thanks to the introduction of the internet and mobile banking.
Cook has been at the centre of this digital transformation throughout his career in the financial services industry; he started out developing websites and SMS-based services for financial companies in the 90’s and then worked on internet banking solutions for RBS before joining Monitise in 2006 to develop their mobile banking products. Cook led the product team at Monitise to launch some of the first mobile banking services (running on devices like the Nokia 6230 and Razr V3) for the likes of First Direct, HSBC, NatWest and Lloyds. “Everyone thought I was nuts when I said that people are going to use their phones to manage their finances. It sounds so obvious now, but back then it wasn't, and even I underestimated quite how much of an impact it would make,” reflects Cook. When Apple released the first iPhone in 2007 and introduced the App Store a year later, mobile banking exploded, heralding a new age in the financial sector.
Just over a decade later, however, and now most banks have fallen behind other industries when it comes to the digital experience. “We live in a world where I can pull out my phone and push a button and somebody turns up in a car and drives me to a place without me having to say anything. And when I get out of the car the whole payment process is invisible and frictionless. That's the customer experience that we have to compete with,” says Cook. “And we take all of that stuff for granted; even though it's been around for less than a decade, it's completely normal. And then you compare it to banking, and banking hasn't changed.”
While challenger banks are more focussed on digital technology and have disrupted the way that banks think about acquiring customers and meeting their needs, Cook has reservations about their business models, commenting “If your opening gambit is to offer value without expecting people to pay for it, then it’s really hard to start introducing fees because you’ve trained your users to expect it for free.” Despite these reservations, Cook plans to adopt the challenger start-up ethos to transform Valley Bank into a technology company – at least in the short term. Although his team will initially operate as a separate division to the day-to-day banking operation, the digital products and services they develop will ultimately be decentralised. In the same way that digital transformation officers (once an essential position in any forward-thinking company) have become all but obsolete, Cook anticipates that his position will be short-lived: “The work we’re doing is going to look and feel very different to the way banks traditionally do things, the intent is not to have a department for digital products, but instead for technology to become completely ingrained into the organisation and how we do things.”
Cook describes the digital transformation as a race that the whole banking sector is competing in to stay relevant amidst massive social change – and COVID-19 has increased the stakes enormously. “Society is changing because of the pandemic. We’ve had a third of our branches closed, a third by appointment only and a third drive-through only, which means our customer’s behaviour has had to change. There’s now a real acceleration of digital utilisation by customers who perhaps would have just relied on the old channels to do some things, but now can’t.” This wouldn’t be the first time that a global event has had a major impact on the way we bank. Digital and mobile check payments are only possible in the States now because it became impossible to fly checks between branches when all air traffic stopped after 9/11. Congress passed the Check 21 Act shortly after this to avoid a backlog of checks that couldn’t be moved across the country. Similarly, could COVID-19 be the catalyst for the mass adoption of digital banking and potentially even spell the end of in-branch banking?
Cook believes that digital tools are also the key to more personal banking experiences, particularly for the small businesses that form the backbone of most economies. “In my experience, the best digital stuff has got this human centeredness to it – it isn't just shiny and clever. We’re really interested in how we help entrepreneurs, small businesses and growing businesses and with our DNA around the community we have a big ambition to create digital capabilities; not to displace humans, but to replace repetitive tasks and deliver information so that we can make time for humans to have interactions that add the very best value.”
Join Cook and other expert speakers from across the global banking sector for Paragon DCX’s webinar ‘Is the bank branch dead?’ on Wednesday 22 July at 16:00 BST. They’ll discuss the future of digital banking and the impact that COVID-19 has had on bricks and mortar banking institutions. Sign up here.