Digital Banking

The Allure of NEOBanking for Banking’s Elders Statespersons


NEO banking core value proposition rests on its ability to deliver innovative solutions that make traditional banking obsolete. Artificial intelligence, Web3, intermediary-less systems, robust APIs and increased security can all be engineered in a manner that lowers the costs of doing banking, and improves net costs of capital for companies and consumers alike. Adoption however is a multi-player, multi-shot game, where both customers and banking professionals have to cross the line.


Getting professionals to join the rank-and-file at NEO banks takes more than just the promise of a juicy paycheck, and requires commitment from senior leaders at those cutting edge organizations to accept that a lot of traditional banking inefficiency (e.g. governance committees, independent model reviews and approved-formula driven capital adequacy and stress testing) all need to be incorporated into the day-to-day processes to build trust and retain talent.


The tendency for forward thinking businesses to proactively address diversity, gender wage gaps and work-life balance in a more flexible manner than traditional, large-scale enterprises is an important aspect of 21st century personnel management. Subject matter experts (SMEs) that enjoy educating and implementing, as opposed to simply operating functions, within the context of a highly-regulated industry can find great satisfaction in seeing how traditional banking aspects can work in the context of NEO banking without obliterating the efficiency promised by this new way of doing business.


Beyond that commitment from NEO bank leadership, the career paths of traditional banking executives are influenced by luck and current employer recognition. Dislodging folks from the comfort of working at a traditional bank is as much a function of the candidate’s experience as it is the allure of leaving a predictable way of doing business for the flashing neon lights of U.S. banking’s future.


Being promoted to Manager within a banking group is often considered a pivotal career moment. Reach that level before 30, and the possibility of reaching the upper echelons of the bank’s ivory tower exists. Struggle to crack that ceiling, and while a fulfilling and lucrative career is still at hand, odds are that upper-middle management would be a more likely peak.


Promotions to that level come with a price beyond normal dedication to an employer. Banking executives often start their careers by shadowing the top performers on their own teams, and then growing with them. In the turbulent world of banking politics, “empire building” or gaining power by convincing higher-ups to aggregate functions underneath a key person, or through

tactics including holding competing meetings on similar topics to force attendees away from an adversary within the organization, are commonly accepted, if not spoken, practices.


Unfortunately, if one’s empire building efforts backfire, or you choose the wrong horse with whom to hitch your wagon, even with early career success, the result can be a career languished in the pool of dedicated folks with potential, but without opportunity to really make change happen.


For entrepreneurial minded folks, this relationship between career success and staying within the lines can lead to a breaking point. And for the close to two million people that work in U.S. commercial banking, this binary way of looking at career longevity and success in banking starts to wear on the resilience to participate in this centuries old way of doing business.


NEO banking offers an outlet for qualified traditional banking middle-managers and executives to impart their experience onto these novel enterprises. The power and influence of the existing few, large banking institutions in the U.S., pose challenges for smaller, traditional banks let alone banking organizations founded on stream-lined, mostly virtual presence. Every NEO bank function brings with it the legacy challenges of integration, product adoption and regulatory compliance.


These challenges, however, are an asset the NEO banks use to draw in talent. Often, executives brought in from traditional banking are rewarded for success tied directly to initiatives they see through to completion. And, it is the nimbleness and entrepreneurial culture of the NEO bank that offer a change of scenery for myriad individuals at traditional banks, reluctant to wait while they see if the mentors they have chosen in the traditional bank can excel and take them to the next level.


As the NEO banking market is poised to reach close to $600 billion in assets by the late 2020s, the number of traditional banking employees required to operate the up-and-coming challenger banks will only increase. As traditional banks, in a rising rate environment, continue to tighten spending and look to reduce operating overhead, the opportunity for those employees and subject matter experts at the bank to try on something new becomes evermore reality.


Lastly, NEO banks general forward-thinking mindset also means reduced wage-gap issues and greater diversity amongst its rank-and-file employees. Greater equality and diversity, along with wanting to raise the bar in service offerings to make the bank appeal to even the most ardent of naysayers, all generate an allure that’s drawing folks from traditional banking to this new frontier.

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