Truist tech execs detail how the super-regional bank plans to spend $1.8 billion on digital upgrades, including everything from a robo-advisor to the cloud

• Regional banking giant BB&T acquired SunTrust in 2019 in a $28 billion all-stock deal to form Truist. 
• Insider spoke to two top tech execs at Truist about its strategy for the digital future of the bank.
• 2021 plans include a unified Truist app and a new robo-advisor offering.
• Visit the Business section of Insider for more stories.

The $28 billion all-stock deal between North Carolina-based BB&T and Atlanta’s SunTrust in 2019 marked the largest bank deal since the financial crisis. But given the relative overlap of the two retail banks’ branch networks across the south, the move was never about grabbing market share through an expanded physical footprint. 

Instead, it was a way to confront the digital gap many regional banks across the US face relative to their supersized competitors. 

Smaller banks have often opted to partner with fintechs to offer new digital tools for their customers. But Truist — the rebranded name of the combined banks — took a different approach. Now the sixth-largest asset base in the US with $509 billion, Truist has the size to go about a wholesale upgrade of its digital banking offerings through both internal development and external partnerships. 

And with nearly $2 billion earmarked to make those changes, the bank has plenty of resources on hand to overhaul how things are done. 

“It’s one of the first mergers, if not the first merger in banking, that’s been done especially this scale in the digital age,” Truist’s Chief Information Officer Scott Case told Insider.

Case, who previously served as CTO at SunTrust works closely with Dontá Wilson, Truist’s chief digital and client experience officer. 

That pair are the dynamic duo behind Truist’s digital ambitions. Wilson, who previously served in the same role at BB&T, told Insider that upon meeting Case they’ve “been connected at the hip ever since.”

Both executives gave Insider a peak into how Truist is approaching its digital overhaul. 

Developing tech as branches consolidate

Wilson said the focus on a digital-first strategy was the result of the top leadership at Truist evaluating the bank’s strengths and weaknesses upon completion of the merger. 

“We were very good at offering the human client experience, really over delivering on that side of the equation, but there was an opportunity really to improve on the technology side or the digital side,” Wilson said.

In January, Truist reported in its 2020 fourth-quarter earnings that it expected to ultimately spend $1.8 billion on ongoing upgrades to its tech and customer service as a result of the deal. Those expenses are separate from more mundane costs usually associated with combining firms. The spending, Case said, on both the upgrades and integrations, should last through the end of 2022.

The tech spend is a combination of doing a lot of IT projects at the same time, CFO Daryl Bible said on the earnings call. Meanwhile, Truist CEO Kelly King described the spending as investments that would ultimately pay off for the company.

“I think about it like our capital allocation for future benefits, in terms of client focus and better systems and better processes,” King said at the time. 

As part of the effort to trim Truist’s physical footprint and instead focus on new tech, the bank plans to shutter more than 200 of its SunTrust and BB&T branches in the first quarter of this year. Truist is aiming to close an additional 600 locations across its branch network by the end of the first quarter in 2022. 

Currently, Truist customers still do their mobile banking through the separate BB&T and SunTrust apps. Merging the two is one of the primary goals of the integration. Truist customers can expect a unified digital experience by the end of 2021.

Much of the work so far has been the product of a distinct focus on integrating the banks’ front-end client interface ahead of the more behind-the-scenes technology — like merging deposit systems, for example. 

“We were creative and I think innovative in our technology architecture to create a path that actually allowed the digital interaction points to exist ahead of converting the back-end,” Case said.

Other digital offerings currently being rolled out to customers include a new, end-to-end mortgage origination tool that enables Truist clients to see every step of the mortgage process in one place. The bank is hoping to complete that tool for the third quarter of this year. 

In December 2020, meanwhile, King hinted at a new robo-advisor offering the bank will be rolling out in 2021, marking another entrant into the hyper-competitive space that has also seen the likes of Goldman Sachs’ Marcus Invest join the fray most recently. Both BB&T and SunTrust currently offer wealth management and investment-advisory offerings as well as brokerage services for their clients.

“For especially a certain portion of our client base, that is becoming an expectation, to be able to have their investment portfolios managed possibly in a more automated way, to have a different, more digital experience from a brokerage and investment standpoint,” Case said.

The robo-advisor is currently rolling out to existing SunTrust clients in waves, and Truist plans to push the new tool to the public by the end of this year.

Pursuing a hybrid-cloud approach

The “core conversion” of the two banks, meanwhile — essentially, all the back-end infrastructure that helps Truist run its day-to-day businesses — will happen by the first half of 2022, Wilson said. 

And while the process might sound like the simple integration of BB&T and SunTrust’s deposit systems, Case said the work involved has been much more intensive. It’s an opportunity to streamline all of the banks’ systems, even ones clients will never see. 

“It’s not just the outward digital client touch points, we tend to talk about those in terms of online banking and mobile. It’s going digital all the way to the core, meaning our processes are more agile. We’re more iterative. We can move with speed to the market,” Case said. 

A large part of that work has involved using the cloud. The bank has opted for a hybrid approach where it might keep its customer data on internal servers but use outside cloud providers for other services.

Truist currently has no plans to “move lock, stock and barrel our client data or holistically move to external public cloud-computing solutions,” Case said, a trend more and more banks and financial companies are embracing. 

Case declined to disclose the cloud partners Truist is currently working with or how much it plans to spend on the tech. For the time being, one of the first steps has been hosting the architecture underpinning the bank’s new digital offerings in the cloud.

Source: Read Full Article