Tag: bank

When Arvest, a regional bank operating in Arkansas, Kansas, Missouri and Oklahoma, hired Laura Merling as chief transformation and operations officer in 2021, one of the first things she changed was its digital transformation plan.

The 60-year-old bank, formed from the successive mergers of 14 regional banks, was planning to launch a neobank, an online-only service with national ambitions, as a way to ensure its future growth.

When Merling arrived in October 2021, Arvest had already begun the transformation process: conducting the first in a series of annual “Driving Change” surveys of staff attitudes and experimenting with the new core banking software around which it planned to build the new bank.

But there were challenges.

“Everybody was creating a retail neobank,” says Merling. That made for a competitive market in which the cost of acquiring a new customer was around $1,000. “You’d spend all your money on customer acquisition and not on building infrastructure,” she says.

On top of that, there was a degree of resistance — or at least indifference — to change within the company. Merling summarized the internal survey findings about staff readiness to change as one-third “Sure, I’m in,” one-third on the border, and one-third “I’m not really ready.”

It’s hard for staff to support change when it’s not clear what that change will be, she says.

Study, study, study

To get a clearer picture of where Arvest was, and where it wanted to go, Merling’s first moves were to commission one study of the company’s entire tech stack, and another of its data landscape. “We looked at them in parallel,” she says. “They’re related but also different: how easy is it to get to the data, and what data do we have?”

At the same time, she says, Arvest also conducted studies of its vulnerability to customer defection, and of the strengths it could capitalize on to build its new strategy.

“We did a lot in the first few months I was here,” she says.

The upshot of all that corporate introspection was a change in direction for the bank — or, rather, a return to what it had done best before. The plan for a neobank was dropped, and instead, says Merling, “We set forth a new mission. We wanted to be the leading community-focused bank serving commercial and small businesses.”

That didn’t mean the bank was turning its back on retail customers. By supporting local employers, “If you’re successful there, you’ll get the retail as well,” she says.

That meant building new applications and processes around its commercial loans — and making some changes to its core IT infrastructure.

A move to the cloud

A few months after Merling’s appointment, the bank announced a five-year partnership with Google Cloud as it prepared to digitize its contact center and move out of its two data centers.

“We can’t scale and be innovative if we’re just all waiting for on-prem,” she says.

Around this time, the results of the second Driving Change survey rolled in. Some of the transformation skeptics had drifted toward the “on the border” middle ground, but in the IT department — one of the first to see the clear direction as infrastructure changes began to take effect — resistance actually increased.

“It was all fear factor,” she says. “‘I’m going to lose my job,’ or ‘I don’t know this technology and I’m not going to get a chance to learn it.’”

Staff comments on the survey showed they didn’t feel their skills were valued, or even known, by management.

That prompted Arvest to create a program to help staff upskill or reskill. “We actually borrowed it from one of our partners,” she says. “They created it for their company internally.”

The upskilling program, called me@arvest, began in February 2022 with training for the IT team on Google Cloud as the company prepared to move its on-prem workloads there. “We needed people to know those skills,” says Merling. But creating the next wave of learning journeys took longer than planned. By the time it eventually happened in July, people were getting nervous they weren’t going to get the education, she adds.

The turning point was a full day of training around Google Cloud in November, with 500 people in the room and another 500 online. “We had our executives there, the bank presidents, the whole technology team plus,” she says.

Initially offered to the IT team, and later to operations staff, me@arvest will soon open to the marketing department.

Along the way, Merling decided to hire someone within the IT organization to run the program, which previously ran through HR. This plan enables her to meet the IT team’s skills needs up to ten years out.

A new purpose

One part of the original strategy Merling kept was the new core banking software from Thought Machine that Arvest had already experimented with — but now instead of redefining retail banking, it’s underpinning the modernization of the bank’s commercial lending processes.

“We’re basically rebuilding the entire technology stack for the bank by assuming a banking-as-a-service construct, whether we choose to use it or not,” she says.

By that, she means drawing on Thought Machine’s cloud-native, microservices-based approach, building new products and services that can be accessed through its APIs.

With the move to Thought Machine just beginning, the old core banking software won’t be going away just yet, so Arvest is using Google Cloud to deliver a single view of its customers. “It’s a key part of being able to serve customers going forward,” she says.

Merling brought in external help to stand up Google Cloud, training her own staff in parallel to ensure ongoing maintenance. “The Thought Machine work we did ourselves,” she says.

Under her transformation and operations umbrella are the CIO responsible for the existing core software, and the CTO building the new software. The development team was initially small, but is expanding through a mix of new hires and, as people learn new skills, internal transfers.

“My commitment to them was to make sure to bring everybody along for the ride,” she says. “I didn’t want to create an ‘us versus them’ situation. That’s super important to be able to grow the bank for the long term.”

Money talks

It’s a truism, but “90% of change management is communication,” she says.

To that end, each month she holds skip-level meetings with the second-level managers in her team, as well as “transformation talks” where the changes are presented to staff. Alongside the slow burn of rebuilding the banking core, these talks are also a chance to discuss “quick wins”: smaller technology changes that make a difference, such as the recent introduction of pre-authentication for customers calling the contact center. “That saved a minimum of 200 to 300 hours a month in call time,” says Merling.