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Will A Bank's New Technology Help or Hurt Morale - ForStudents
Will A Bank's New Technology Help or Hurt Morale - ForStudents
Schlesinger
“If we grow too fast, we’ll break from the strain.”
“If we stop growing, we’ll be eaten for lunch by our competitors.”
Beth Daniels, the CEO of Michigan’s Vanir Bancorp, sat silent as her chief human resources officer and chief
financial officer traded jabs. The trio had founded their community bank three years earlier with the mission of
serving small-business owners, particularly those on the lower end of the credit spectrum. After getting a start-
up off the ground in a mature, heavily regulated industry, they were a tight-knit, battle-tested team. But the
current meeting was turning into a civil war.
James Donnold, the CFO, had just presented an update on Vanir’s aggressive goals: expanding to 15 branches,
with loans and deposits increasing threefold in five years. Having already grown to five branches and $180
million in assets, the bank was right on track. But, James warned, competitors were circling, and Vanir needed
to stay on the offensive. It couldn’t let bigger banks lure away the previously underserved customers that it had
brought into the financial system or let new “fintech” start-ups with digital-only banking services disintermediate
its business. Luckily, James noted, the company’s long-awaited new enterprise IT was nearly ready to go live,
and it promised to greatly reduce the staff’s workload—by, for example, using AI to automate tasks like
calculating pricing and credit lines for customers.
That prediction prompted Mariko Wang, the CHRO, to let out an audible scoff. She felt that aggressive growth
had already stretched Vanir too thin and that believing IT would lighten the burden on employees was optimistic.
“When was the last time a new technology created less work for anyone?” she asked sarcastically.1
But then her tone turned serious, and she delivered her familiar—compelling—spiel: Working with new or
underserved banking customers was extremely arduous. Vanir’s branches were open early and late to
accommodate customers’ schedules. To make banking less intimidating, tellers and relationship managers were
told to take as long as needed to answer people’s questions. They were trained to be unbiased, whereas some AI
tools in the industry had come under criticism for discriminating against minority applicants. And that human
touch was what drove growth; loan applicants often had such a great experience at Vanir that they transferred
their other accounts to the bank, opened new ones, or recommended it to other small-business owners.
Vanir’s associates enjoyed above-market salaries but also worked harder than their peers at other banks.
Considered “essential workers,” they’d even come in to the office during the worst months of the pandemic,
managing all the loans that customers had applied for through the U.S. government’s economic relief package.
But now employee engagement was down, absenteeism was up, and customers were starting to notice.2 Net
Promoter Scores had fallen, and comments in customer surveys included complaints like “hassled-looking teller”
and “unhelpful manager.”
“Our people are our strategy,” Mariko said, locking eyes with Beth. “Without them happily serving customers,
we’re just another bank.”
But building the enterprise IT had taken longer and cost more than anticipated.4 Meanwhile, associates had
become accustomed to doing the calculations and decision-making themselves, and an inefficient process had
become routine. The staff also enjoyed the autonomy the process provided: Lending officers were encouraged
to get to know their applicants and to combine objective criteria, such as credit scores, with subjective ones, such
as personal character. Still, the strain on the employees was starting to show, and Beth took Mariko’s warnings
about burnout seriously.
Would a shift to the new system help or hurt Vanir’s staff? Certain elements of the transition would require lots
of busywork. For instance, along with the lending algorithms, the IT team had built a customer relationship
management system that would allow a review of customer profitability across multiple products. Information
on that now was stored in loan officers’ heads and hard drives, and getting it into the system would be laborious.
As Vanir opened more branches, it would need to hire more associates, who would have to be trained (on, among
other things, the new technology) by its existing staffers, further burdening them. Beth hoped that the new
system’s birth pains would be short-lived and quickly lead to greater efficiency and lighter workloads. But she
also worried that in the long term, Vanir’s earliest employees would miss the algorithm-free autonomy they’d
become accustomed to.
Beth knew she needed to talk to “the wizard,” her white-haired, tie-dyed-T-shirt-wearing chief technology
officer, Bruce Richards. “What’s the update?” she asked as she entered his office.
“Do you want the good news or the bad news?” he replied, chuckling. Beth frowned and crossed her arms.
“OK,” Bruce continued. “The good news is that the entire stack is ready to go. We can roll out tomorrow.”
“And the bad news?” Beth asked.
“The bad news is that the pilot we ran in the Lansing branch uncovered some, well, resistance.”
“Go on.”
“The staff hated it,” Bruce said. “The feedback was that no one had time to learn a complicated new system.
Some people refused to attend the training. Others brought their laptops to class and worked the entire time.”
Chantelle sighed.
“What is it?” Beth asked. “Are you worried about the transition? There will be some work up front, but I assure
you that—”
“That’s not what I’m worried about,” Chantelle interrupted.
“Well, then, what?”
“Look, what makes this bank special is that we are run by people, not by formulas. We can make a human
connection with our customers. I just don’t think an algorithm can replace that. Truthfully, I’m worried that
we’re going to end up double-checking the algorithm all the time or, worse, that it will end up hurting our
customers.”
“Absolutely not,” Beth said. “I wouldn’t let that happen.”
“You know how you call Bruce ‘the wizard’?” Chantelle continued. “Well, have you actually looked behind the
curtain? Are you sure this technology won’t just end up discriminating against the very customers we strive to
serve?”7
After thanking Chantelle for her candor, Beth wished her a good night and headed for the exit. She knew she
faced the biggest decision of her tenure as CEO. Should she rethink the implementation of Vanir’s new IT
system, knowing full well that her employees were stretched thin but that a delay might allow competitors to
pounce on Vanir’s current and future customer base? Or should she risk her employees’ trust and dedication by
pushing past their concerns, sticking to her tech-enabled strategy, and forging ahead? She opened the door and
stepped out into the cold Detroit night.