How do you turn a 90-year-old bank into a product-centric organization?

Valley Bank knew it had to change.

Their customers were changing. The market was turning. And new competitors (especially from neo-banks) were emerging. They knew the way forward was to embrace digital, build new products and services, and go after new markets.  

The challenge was the “how”?

More specifically, how do you make digital the core part of everything, not just an afterthought? How do you put the customer in the center so that you can build digital services around them? And (more importantly) how do you stop delivering just outputs and start delivering business outcomes?  

In other words, how do you change the bank from being project to product-centric?

To share with us how the bank made this leap from projects to products, I interviewed Stuart Cook, Valley Bank’s Chief Product Officer.

Stuart Cook is the Chief Product Officer at Valley Bank, where he is responsible for building new products, turning around the product organization, and (most recently) running their new venture fund.

Stuart has over 20 years of experience in building platform businesses across mobile, internet, banking, payments, and commerce. He is passionate about creating great customer experiences, building growth, and leading teams through product discovery and delivery. He is also, as he calls it “a recovering CTO”. 

What follows below is a condensed and lightly edited version of our interview.

Stuart thanks for being our guest. I have been very much looking forward to our talk. Let’s start at the beginning, shall we? Can you please share what was your mandate when you joined Valley Bank?

Stuart Cook:  Mustafa thanks for having me. Glad to be here.

As for my mandate, well….when I first started talking to the bank’s CEO, the mandate really boiled down to three key imperatives.

The first was to change the way the bank built products. There was a recognition in the bank that they needed to change. But the challenge was how? How do you build products that would delight our customers? The current approach was not meeting our customer’s changing expectations. They needed someone who had built products, like you build products in Silicon Valley, and bring it to the bank. The goal was to create a more product-centric culture.

The second was to use technology to go after underserved markets within the financial ecosystem. There are a lot of customers that are just not that well served by the Chases of the world. That is where a bank like ours fits in. And we wanted to use that advantage to go after markets others might ignore.

The third. And this is not a mandate but much more of a guideline. Is that how we keep and leverage our strengths? I mean the bank has been around for over 90 years. There is a lot in our DNA that is great…like customer service, customer centricity, and embeddedness in communities. Yes, we want to build all these new products and go after new markets. But let’s not forget what made us successful in the first place. 

Wow…that is quite a large mandate. I am curious, how or where did you begin?

SC:  When I first joined the bank, there was a lot of buzz around going after the HOA market. It’s a $90 billion market that is mostly ignored by a lot of banks.

So the bank had been through some early design thinking challenges, and this concept had emerged, the CEO pushed it across the table to me and asked me to build it.  

And my response was, “that is an idea…not a product”. There is still a lot to do before we decide to go into development.

And that is what kicked off my journey with the bank.  

Agree. Way too often banks jump from idea to building. Which is the worst thing that you can do. So what did you end up doing next?

SC:  So at that moment, I went back to first principles.

First, was to define what are the jobs to be done by the HOA. What is it that they wanted and needed? And what are some of the potential ways the bank can meet these needs?  

Next, we prototyped. Which was an eye-opening moment for the bank. Prototyping was when we came up with these great insights on what solutions worked and did not work. How we should segment the market. Where were are sweet spots? Prototyping was a really powerful way of illustrating to the rest of the organization how we can get even closer to the customer. How we can get under their skin.

Third, I introduced the concept of funding gates. Like a start-up funding analogy. Where the team gets seed money for three to four months to figure out if this idea makes sense. And then they will come back with a recommendation if we should move forward or not.

And lastly, we did everything in small iterations. I did not want to be labeled as a project. I wanted to get things done quickly. We got to our prototype in just 10 weeks. Which set a record for the bank.

That is amazing, especially at a 90-year-old bank. So tell me what happened next?

SC:  Well the pandemic hit. So that cooled things down. But regardless, there was a lot of energy and excitement about what we were able to do. People now had a taste of what building a product should look like. Well, at least discovery. And there was a lot of excitement to bring this new capability to go after other revenue streams.

While we were doing discovery and learning about our HOA customers. I was also learning about how the bank was operating.

For example, during discovery, I assumed that there was a single account opening process. A horizontal solution that cuts across all the bank products. Or that the HOA customers could open an account online. Or that we had 360 views of the customer. Regardless if they were a mortgage customer or a business customer.    

But that was not the case. Since everything in banking is built in silos. Data was locked and it was not talking to each other. Or that we were using different technology stacks. Or that we had solutions across products.

I started to realize that the bank had a hygiene problem. And that instead of building new products we first needed to create these transversal solutions, and break the silos. So that we can build the next big thing.  

Which, by the way, is very typical in any traditional organization. So did you end up tackling these problems first?

SC:  Yes exactly. And I purposely focused on account opening first. Because if I could make it better then that would have a material impact on acquiring new customers.

Second, I focused on salesforce. Since we are heavy into the salesforce ecosystem the next step was to have all this data accessible. Each product had its data trapped in various siloes. So we decided to break that down so that we had a better view of our customers. Which allowed us to better upsell and cross-sell.    

And along the way, while we were executing the above initiatives, we started to slowly change the team from a project to a product mindset. Where we started to put customers in the center. Not technology. And where we wanted to drive impacts like easier customer acquisition or upselling. Not about the output of getting something done.  

Allow me to dig in a bit more about the whole output-to-outcome mindset. Can you give me an example of how you were able to manage that change?

SC:  Yes…let me go back to the account opening initiative.

It used to take some of our customers days to open an account. By putting the customer in the middle, we wanted to do it within minutes. So I changed the goal post for the team from building a horizontal account opening solution to how can we help our customers open an account in minutes.  

And just that reframing helped. When we launched it first, our customers were able to open an account in just 4 – 6 minutes. The president of the bank liked it so much that he sponsored its rollout to the branches. So now our customer reps in branches can open accounts for our customers in minutes, using the same capability enabling digital opening.  

And we are now rolling it out across other parts of the business.  

I love your transformation story so far. You first use the HOA prototype to show how to build products differently. You then tackled horizontal solutions not only to help digitize the bank but used it to transform your team to be more product-centric.

Where do you go from here?

SC:  Still working on this one. But I am currently toying with the idea of a digital operating model. 

Where I want to take all these new ways of working that we used in the above examples and start to codify them. I want to move us away from slow centralized decision-making committees to empowered teams. I want to start building truly cross-functional teams that can tackle some of our really big challenges.  

I want to do more around OKRs and outcomes. We are still too heavy on output, in my opinion.

I also want to do more around Agile and the technology stack. Part of it is because we need it. And part of it is because I am a recovering CTO. And I can’t stand the fact that we can’t predictably move code quickly into production.  

You are now talking about the holy grail (smiling). Allow me to switch directions. Tell me more about some of the new products that you are now building that have high growth potential.

SC:  For growth, we are exploring what we call partner banking. Where you are actually embedded with another business but we are the ones that take care of the backend. Where banking with us, is just a set of APIs.

Let me give you an example. If you are one of our business customers and have your own ERP. Where you are running your business but when it comes to banking you have to log into valley bank to move money, manage cash flow, or whatever. That is fairly cumbersome.

But how might we provide them with that capability so they do not have to leave their ERP system? All banking would be done within their own system. We would be embedded into the ERP with a set of APIs.

Now we have not launched it yet. But I think this is a fascinating space. There is a lot to do here.

Fascinating. It’s almost like you are turning your entire banking capabilities and services into APIs.   

SC:  Yes exactly. And this is where I think the financial services industry is moving towards. Why have a different layer or silo between your systems and ours? Just connect the two through the back end. By the way, even though this feels like we’re removing humans and relationships, I think you need to frame it differently. We are actually building this because of our relationships with customers and being close to their problems.

Stuart…one last question. How can this newsletter community help you? Is there anything that you are looking for?

SC:  In addition to building products, I am also helping to build out a corporate venture capability at Valley.

We have a $100 million fund. Where we want to invest in early-stage companies, particularly FinTech, but not exclusively fintech. The bank does a tremendous amount of commercial real estate and mid-market banking. And there are lots of exciting kinds of startups in Prop tech and in and around that space. 

So we want to find and invest in them. We want to create a win-win scenario. Where we want to leverage their ideas and they can leverage our customers, data, and distribution channels. Or we can even be design partners together.  

So we are basically looking to fund great companies where we can be strategically beneficial to them, more than just the check. So if anyone has an interesting start-up in the Fintech space and is looking for venture money, I would love for them to reach out to me.  

And is this fund active?

SC:  So far we have made ad hoc investments in a dozen or so companies. Think of it as my MVP. But we are officially going to announce the fund in Q1 2023.  

We have over $70 million in dry powder left. So if someone from this newsletter community has an idea or is in an early stage start-up. We would love to hear from you.

Stuart, this has been a fantastic conversation. Time just seemed to fly by. I would love to have you back and hear more about your venture arm and where you are investing.

SC:  Yes, can’t believe we talked for so long. It seemed so quick. And yes I would love to come back and share more of our adventures.  

This has been great for me too. Thank you once again for having me.