Evolve or Become Extinct

Introduction

We’re in an era when technology and data are transforming every industry, and banking is no exception. These changes are reshaping the commercial lending landscape, highlighting the importance of Gen-AI powered lending platforms. From changes in expectations to the race for talent, the market and its dynamics are pushing banks, at least some of them, to new limits.

In this insightful discussion, Amir Madjlessi and Jim Collins from Salesforce explore the transformative impact of data and technology on banking and explain to us why 1 plus 1 equals 3. As we learned, banks must either evolve or face extinction!

“People are expecting something different on a go-forward basis. You either evolve or you become extinct.”

Interview

Omri Yacubovich: Let’s start with the current banking landscape. How have you seen the commercial lending landscape change in recent years? 

Amir Madjlessi: One of the things I’ve noticed is the consumerization of the commercial client. Commercial clients now expect a consumer-grade experience with personalized recommendations based on their actual business performance, industry, etc. In addition to the changing expectations of commercial clients, I also believe that the commercial lending landscape today is highly competitive, pushing banks to strive for greater efficiency.

Jim Collins: Customers don’t just bank with one bank anymore; in fact, 30% of commercial clients have at least five banking relationships. In my opinion, beyond their need to diversify their wealth, they are simply not getting what they need from their primary institution. Their bank doesn’t know them as well as it should and is not providing solutions that will help them achieve their goals.

From a banking perspective, the interest rate environment is a significant factor driving decisions today. This environment pressures banks to ensure credit quality, highlighting the need for an efficient workflow and improved decision-making processes.

Omri: The fact that 30% of clients use at least five banking relationships is mind-blowing. I agree with your analysis; however, one could argue that the technology to achieve personalization and efficiency has been around for years. What has changed in terms of the technology, and what makes it different from what was available until now?

Amir: First, it provides bankers with the support to understand their customers’ needs. Data shows that 73% of clients expect their relationship manager to anticipate their needs. However, if you, as a relationship manager at a bank, have 20 to 40 different customers in your portfolio and still use notepads to follow up, it becomes even more difficult to personalize your outreach and anticipate clients’ needs. Technology can help bankers process an immense amount of data, distilling it down to very specific insights about each client’s industry, understanding market conditions and opportunities, and anticipating the client’s needs.

Second, today’s technology can help tremendously in adhering to the regulatory landscape, which has always been challenging. The standards are rising, and as we’ve seen with the upcoming 1071 regulation, expectations are shifting around what data you collect from your clients and how you collect it. This is where technology comes into play, making it easier to collect data, reuse it in various areas, make better decisions, provide reporting, and accurately depict who your borrower is.

Jim: It’s not only about changes in technology and platforms; it’s a change in the approach. In Salesforce, for example, we’re not just a CRM. Our approach is that we’re a data-driven platform. And then when we have a good data model we can add on the AI, whether it’s predictive or generative, we make that data smarter and easier to consume, which makes it easier for relationship managers to do their job. 

Omri: Indeed, many of the banks I speak with mention that they have a lot of data, but it’s often siloed, and they aren’t sure how to turn this data into insights. How are banks using Salesforce benefiting from making better suggestions for their clients?

Jim: When you’re able to bring data together into a true customer 360-degree view, it becomes 1 plus 1 equals 3. You’re able to cross-sell, upsell, develop, and deepen relationships across multiple lines of business through predictive AI insights. But the foundation once again is that data. I hear a lot of organizations saying they can’t get started with CRM until they clean their data. And I always say, “Well, then you’re never going to get started, right?” Your data is never going to be 100% clean. You have to get started. 

Amir: The banking industry accumulates more and more data every second of the day, and you’ve got to be thoughtful and cognizant of data governance. Regulators and internal audit teams want to know that you’ve got a strategy in place so when you ingest data, you can protect it but also use it in a way that can help inform decisions in a prudent way with proper reporting behind that. So the question is, what platforms or hyper-scale data engines are available for you to ingest all of that data? In Salesforce, it is something called Data Cloud. Banks use the hyper-scale data engine that allows them to ingest all that information, interpret it, and put it in the flow of work where it’s needed.

Omri: Having the right technology and tools is essential, but as you would probably agree, often the gap is cultural. Banks typically think about data as a waterfall. What pattern do you recognize that distinguishes banks that start with a lean data strategy while proactively fixing data problems from those that “waterfall”?

Amir: Banks embracing lean thinking understand that data readiness isn’t about waiting for a destination to arrive. Instead, they seize single use cases as opportunities to create proof of concepts. Being specific about these use cases makes it easier to build belief and confidence in available tools and technology within the organization. Additionally, it aids in attracting talent in the competitive race for skilled professionals.

Jim: CEOs of those banks also drive change management through their organization. You can have the best technology in the world to enable your strategy, but if your people aren’t driving change and don’t want to absorb change in the organization for the better, it’s not going to be effective. 

Omri: What are the top use cases banks are adopting to drive change in commercial lending?

Jim: Improving the loan process efficiency with automated workflows and digital loan onboarding systems. It allows banks to process large amounts of loans through their pipeline — and scale. Without improving that front, you need to hire more people. 

Amir: Banks are also trying to reduce the cognitive load from their relationship managers and boost productivity, while improving the customer experience. When you make it easier to work for your organization, and you’re easy to do business with, you’re attracting and retaining the best in the marketplace.

Omri: On the other hand, some of the banks we speak with (mainly community banks) often say they are relationship driven and don’t want to automate or replace that with technology. How do you respond to that?

Amir: Even though I had great relationships with my customers (back when I was a banker), they often told me, “If you don’t give me the best price and the best experience, I have a ton of options to choose from.” While personal relationships are crucial, clients today also demand the best price and experience. Technology and automation can simplify complex tasks like dispute resolution, loan renewals, and capital requests, making these processes easier and more efficient, and clients now expect this ease of service. Those moments in time should not be difficult, and quite frankly, people are expecting something different on a go-forward basis. You either evolve or you become extinct.

Jim: You also need to consider risk mitigation. Think about the old traditional commercial lender, with his briefcase and all these manila folders with all of his clients. That’s his data source, and the biggest risk to the organization is him walking out and leaving with that briefcase. With the proper technology, banks can mitigate that risk, because customer data remains with the bank, ensuring continuity and understanding of the customer base, regardless of staff changes.

‍Omri: I love both of your answers, but I have a third view. I would claim that we all have a relationship with Amazon despite the fact that we’ve never spoken with a particular person there. The reason is data. They know what we need and how we need it, and it makes us feel understood. Looking at the future, what will be the next frontier of differentiation for banks in 2040, once all have digitized and efficiently used data?

Jim: The next frontier will be driven by artificial intelligence. Banks that embrace AI will lead in technology and customer experience, which will drive their success, while those that don’t may become obsolete.

Omri: Speaking about success, that leads me to my last question. Both of you made the transition from banking to the tech sector. What do you recommend bank CEOs do to prevent losing great talent to the tech sector?

Amir: Make it easier to make decisions. Try to reduce bureaucracy. Acknowledge that working in a financial institution is about financial wellness and financial readiness. Take advantage of the new market players that are facilitating and creating banking experiences that are unlike the past. 

Jim: Understand the need to find true strategic partners like Salesforce and tap into the experience of other industry advisors that really can help them achieve their strategic roadmaps and their strategic goals. 

Omri: Thank you for taking the time and having this great conversation today!

‍

Amir Madjlessi - Bio

Amir Madjlessi is the Senior Director, Banking Industry Advisor at Salesforce. With over 34 years of experience, he's a strategic leader known for driving revenue growth and operational excellence in the banking sector. Amir previously served as EVP, Managing Director Business Banking & Merchant Services at Santander Bank, and as SVP, Head of Sales Strategy & Business Performance at Citizens Bank. At Salesforce, he continues to leverage his expertise to empower banking institutions across the US and Canada, guiding them through the evolving landscape of the financial services industry.

Jim Collins - Bio

Jim Collins is the Senior Director, Financial Services Industry Advisor at Salesforce. He is an executive with over 34 years of business experience, including 27 years in the banking industry. He previously served as Sr. EVP and Chief Administrative Officer of Customers Bank for 12 years. He is a strategic leader who fosters a positive working environment while focusing on building high-performing teams that focus on execution and results.

‍