The digital age has irreversibly transformed methods and channels of customer engagement. However, banking was and remains a high-touch people business. Front line and service staff are engaged with and attuned to customers’ and clients’ demands for better investment returns and risk management, cost efficiency, good-to-great experiences and speedier transactions.
The customer remains firmly in the driver’s seat, and banks have the opportunity and ability to retain their current customer base and acquire more customers. They can use the data, infrastructure, technology, extensive knowledge, and talent base they already have and, where appropriate, collaborate and leverage each other’s capabilities.
“Innovate or Die”
Although the banking industry is established and highly regulated, it is still faced with the challenge to “innovate or die.” Building on a highly innovative past, it can leverage its technology and people assets now while heavily investing for the future.
“The future relies on our ability to develop the coolest, easiest channels for customers to access products and services when and how they want them,” Bill Demchak - Chairman, President and CEO of PNC Financial Services. With that objective in mind, PNC invests $1.8 billion annually in product and technology development enterprise-wide.
Let’s take a look at the PNC initiatives that are seeking to drive product innovation to deliver greater value and better experiences to clients and financial institutions. The leaders of these initiatives collaborate with PNC’s Innovation Lab (iLab) and the Corporate & Institutional Bank’s (C&IB) Innovations team.
Tom Lang, chief operating officer of PNC’s Treasury Management (“TM”) team and Amber Evanco, senior vice president and head of PNC’s FIG Derivatives business, share their perspectives and experiences in reimagining, defining through collaboration, and driving the application of digital technology to enrich and transform clients’ user experiences.
Treasury Management Innovation
As a national leader in the industry, PNC’s TM group consistently strives to improve products through technology and automation. Tom Lang executes on this strategic goal, having led the products and innovation team within the group and in his current role as COO.
“Innovation in itself is not useful unless it’s driving a business strategy [and] addressing our customers’ needs,” Lang explained. TM currently invests more than $100 million a year in its platform, products, and distribution in a commitment to implementing transformative technology.
Expanded Merger & Acquisition Capabilities
PNC has expanded its M&A capabilities with the addition of Fortis Advisors and PNC PAID.
Fortis Advisors (“Fortis”), acquired by PNC in 2018, is a leading provider of post-closing shareholder representative services to venture capital and private equity funds and private companies, with involvement in more than 900 transactions, including the largest venture-backed M&A transaction in history.
“Strategically, [acquiring Fortis] made a lot of sense for a few reasons. It fits alongside the set of M&A advisory capabilities that PNC already offered. Fortis’ services are critical at the closing period of a transaction involving a private company. They spend a lot of their time ‘quarterbacking’ the shareholders actually getting paid when there is escrow related to a deal.” Lang stated.
New Escrow and Payment Management Suite
Rounding up the product set, TM developed PNC PAID, an escrow and payment management suite for M&A transactions that digitizes paper-based documentation reporting and processing by giving transaction participants and administrators access online and via a mobile app. According to Lang, PNC is the only bank that provides escrow and paying agency services in a cohesive end-to-end platform.
“In terms of what we are doing with the technology platform as well as the full shareholder rep–to escrow agent–to buying agent process, we are unique,” he notes.
The Leadership Vision
TM’s executives, including Lang, are working towards the vision of leading the marketplace: “We are a top four provider of treasury management services and are growing quickly. Growth will require continued investments, both in talent and product development.”
The focus is to “use innovation and technology that is industry leading while relevant and useful to our clients in order to push the business forward,” he concludes.
PNC’s Financial Institutions Group: Reimagining the UX for X, Y, Z
Continually growing its platform and the scope of its business with nearly 100 clients, PNC’s FIG Derivatives group has grown through a client-first approach.
The Derivatives team is dedicated to assisting financial institutions with interest rate risk management solutions, including balance sheet hedging and PNC FIRST – a loan-level hedging program that provides financial institutions with a “turn-key” suite of derivatives products for them and their commercial clients.
PNC FIRST’s current online portal provides each financial institution client with a view of its entire swap portfolio including trade details, an online pricing tool and reporting.
With a market-leading pricing and structuring engine and a knowledgeable team dedicated to serving FIG clients, Amber Evanco, Head of FIG Derivatives, knew that the missing piece to an already successful business model was enhanced technology.
“We seek to set ourselves apart from our competitors due to our client focus with ready, hands-on support. Now we’ve complemented that with a state-of-the-art portal. We have the scale and resources to lead in technology, and we have clients who were willing to participate in the re-design process.”
Evanco and Capital Markets group (CMG) stakeholders collaborated with the C&IB innovations team, a group of technological experts with banking and finance experience. Evanco described her own experience with the Innovations team through a series of iLab workshops.
“We started out with a group brainstorming and then we had two full-day workshops with key people from the Innovations team and our team. They asked very specific questions. They have a process nailed-down for reimagining the user experience.”
The reimagining process meant less focus on current user experiences as widely understood by Sales/RMs/CMG technology, and more focus on designing a tool around three key users – X:“front office”, Y:“back office”, and Z:“borrower.”
A decision was made to build the portal outside of the e-channel application where it currently resides. With no tie-ups or constraints to that platform’s owners and development schedules, Evanco and her collaborators were able to freely design a more up-to-date user interface, taking advantage of newer, more cost-effective technology. The group could also be more agile in the development process, engaging with active client users to garner ideas on features and functionality that could be more suitable for specific needs.
The result is a new PNC FIRST portal that will launch later in 2019. Evanco believes that the new portal will deliver to financial institution partners the technical tools they need to help them better manage their derivatives sales book and business.
“Our FIG clients will be able to track their sales pipeline. If we do an indication for them, they can track it and all of the documents they’ve received in [addition to all] of the pre-close activities,” Evanco notes. ”Additional functionality will allow our clients’ customers or borrowers to access swap information through a private-labeled portal,” she notes.
PNC’s C&IB innovations team helped FIG Derivatives develop the technology tools needed to help the business reach a new level. In a dedicated technology lab environment and operating under an agile product innovation process, the business owners and working group were inspired to rethink and to reimagine the business’ digital strategy, resulting in a product that seeks to deliver superior customer experience.