Chief transformation officers are an emerging role at banks, and Regions Financial is one financial institution that is thinking through the meaning of that position.
The $164 billion-asset Birmingham, Alabama, bank recently named Scott Peters, formerly the head of the institution’s consumer banking group, as its first chief transformation officer. Peters’ central task is to oversee Regions’ core replacement, but he also will be considering the bank’s larger goals for improving the customer experience.
Overall, chief transformation officers are “relatively new” in the industry but there is a growing emphasis on this role that Regions and other banks need to consider, said Christopher Marinac, director of research at Janney Montgomery Scott.
“Regulators have wanted to see this whole topic [of technology] elevated at the board and then at the executive level,” Marinac added. “In the next couple of years, this will be a big priority for regional banks.”
Regions’ plan to overhaul its core system was first made public in October 2019. About six months ago, “[CEO] John Turner challenged us to look at a broader transformation that was focused on the customer, of being more business-led than just a lift-and-shift,” said Peters in an interview. “To think forward about the type of bank and customer experience we wanted to be as we transitioned to new systems with more modern technologies.”
That inspired the creation of the chief transformation officer role, which will encompass both the technicalities of core replacement as well as broader considerations about how to improve the customer experience — for instance, ensuring that different channels, from mobile to online to the branch, operate in sync.
“Sometimes it can be clunky when you move from channel to channel,” said Peters. Customers that initiate a request one way, such as on the phone, may feel like they are repeating themselves when they follow up in a branch. In other cases, the bank hopes to improve the quality of advice it gives by making more information about longtime customers, such as the services they use, available for employees when these customers have a question or seek a new product.
Another goal is to refine Regions’ ability to deliver proactive alerts and personalized guidance that can improve their customers’ financial lives. To do so, the bank wants to do a better job of amassing the existing information it has about its customers.
Between 200 and 400 employees will be dedicated to transformation at any one time. The project “purposely has a fairly long tail,” and could continue until 2027, said Peters. “We want to be methodical.”
“Regions is clearly making steps to invest in itself,” said Marinac. “This is all part of their strategy of, ‘As we continue to improve ourselves, technology has to be at the center of everything we do.’”
Marinac sees the chief transformation officer role as someone who rethinks how a company does business, both with internal processes and how customers interact with the bank.
“This has always been happening informally and it may just formalize the process,” he said.
Core transformation is one of several technological initiatives Regions is undertaking. The regional bank will replace its commercial loan system and general ledger system, and it is conducting a pilot to cut down on the amount of time it takes customers to get a home equity line of credit. The goal is to whittle a typical 40-day turnaround down to five days, partly by using technology to gather third-party data to make faster decisions without compromising credit risk.
It has also made several acquisitions, including EnerBank USA, an industrial loan company that offers digital and phone-based point-of-sale lending capabilities, and Sabal Capital Partners, a lender that specializes in small-balance commercial real estate loans and has a proprietary online platform for underwriting and funding loans.
In January, it hired three bankers from U.S. Bancorp to form an equipment finance specialization in technology solutions for business clients.
Marinac touts the lender acquisitions as a particularly smart move.
“Those businesses can help sharpen and hone the skills of the traditional Regions bankers across their footprint,” he said. “It’s a dual purpose of putting excess cash to work and earning a return, and getting very good intelligence from buying those businesses.”