An interview with Mary Kate Loftus, SVP of Digital at M&T Bank
While lots of investment has gone into neobanks and embedded banking solutions, we believe there is a massive opportunity to enable the long tail of existing credit unions and community banks to elevate and expand the services they are offering their consumers. From wealth management, to lending, to credit, we think there is an open opportunity to redefine the ways that these services have been delivered across 5,000+ credit unions serving 120M+ members in the US alone.
In the interview below, we chat with Mary Kate Loftus, SVP of Digital at M&T Bank, about changing consumer preferences for digital solutions, the areas they are excited to see innovation, and things to think about when piloting and partnering with banks like them.
Let’s start off by talking about your role at M&T and your quick background.
I have 20 years of experience in the financial services industry, always in various roles that come back to the customer. I’m currently the Senior Vice President and Director of Digital for M&T bank. I’m responsible for our end- to- end digital strategy for our consumer and business banking. This means digital marketing, digital originations, and our online and mobile and website.
Given your time and experience in the space, I would love to get your take on some of the most dramatic changes in consumer banking demands over the last 20 years.
The biggest trend I have seen unfold is the changing customer mindset towards digital. There is now a tremendous amount of trust among consumers in digital. Customers understand how data is used, and have expectations around what they should be able to do through their phone.
We used to think that how customers think about banking was driven by their age, but we now know that is not the case. You really can’t judge what a customer will or won’t do by age alone, it’s dependent on their mindset.
The pace of change has also changed. It used to take a very long time to deliver unique experiences to customers. Now it can happen really, really quickly. A great example is what happened last year with PPP – banks were able to quickly spin up ways to apply and receive loans to fill this urgent need. Customers now expect this type of quick response.
Have you seen a big difference in branch traffic in urban versus rural areas? Has it decreased less dramatically in smaller, local communities?
We have found that regardless of geography, customers expect to come in for the most complex needs. If someone wants to get the feeling of trust with larger transactions, they will want to come in and look another person in the eye. We also haven’t seen a difference in these preferences among ages. Customers across the board have gotten really comfortable doing routine banking deposits on mobile. The transactions people come in for today are complex – loans, mortgages, wealth management. Customers often want to talk through the financial impact of major life events like changes in their family or employment.
What areas of banking technology do you think have lagged in the pace of innovation? Where have you seen slower movement?
In general, how banks leverage data and AI has not yet lived up to what we talk about. It’s not about the availability of capabilities; it’s about how ready people are to understand the power and apply it to their work. A lot of emerging investments are focused on figuring out how to build relationships with our customers. What this means is making sure we understand the customer’s full breadth of their financial needs so we can meet them where they need to be met and invest in ways that we can build to service their needs in a new way. This might mean making a platform that extends from customer’s mobile app to customer- facing teams (i.e., a branch rep) directly in the app to provide real- time support. There is a lot of investment in these connected experiences.
On the data side, what do you see as the primary barriers to deploying new technology?
I think the problem is not lack of data, it’s orchestrating and categorizing it in a way that is manageable. People need to be able to understand the richness of the data and how it can be applied to an actual customer problem. That challenge of connecting all of the discrete data points together into something meaningful truly takes a level of expertise that is hard to hire for. Banks are trying to hire data scientists and people that have non-traditional talent to solve these problems in a new way for the customer, but there is lots of competition in the market.
What are the core pillars of innovation you are excited about investing in?
We are really focused on business banking right now, specifically tooling to help get a business up and running. There are a lot of unmet needs for these clients.
We also see opportunity in the mortgage space. At this particular point in time we have a tremendous opportunity to try to get customers into a new home and do it quickly. It isn’t just about the initial application but about the efficiency behind the scenes to close. We are a customer of Blend, who helps us in this area. Blend also helped us co-create products to help our PPP response. This is a good example of a partner taking advantage of an opportunity to expand the relationship into other product areas.
What are some KPIs and how do you think about ROI when you are evaluating a new partner that you might work with? How should founders pitch someone like you?
A common KPI for us is reaching a certain number of new people (customers) and having a high NPS in those interactions. Whether it is breaking into a new market, or growing a customer base, it’s really important to be crisp on what you want to achieve. It’s important for founders to ask about these things and make sure there is a match to help provide support in getting to one of those milestones. Working with the bank to understand where the gaps are is key.
Getting to the right people who understand exactly what you are building and how it works is really important. There could be barriers within a tech stack that could be difficult to work with. You have to understand what those barriers might be, before going into a partnership.
Can you speak to a particular vendor partnership that was successful, and what made its deployment successful?
MX is a relatively large fintech at this point, and a great example of a partnership that has really worked for us. It’s really because we are on the same page about what we are trying to achieve and ultimately it is not about anything other than improving customers’ lives. If they need financial literacy, the ability to better manage their money, or anything else, we will work together to achieve it. They are really helpful in leveraging our data to make this possible.
An example of a smaller company that we have a successful partnership with is Magnus Mode They provide support for people on the autism spectrum in their day-to-day banking. There was a connection between our CIO and a local accelerator that got us connected to them. We put it in front of disability ERG and it really started a conversation about what we should be doing in this area. I hope more financial institutions make tools like this more broadly available.
What tips would you give founders about running a successful partnership with a bank?
I really do think it’s about trust and building a deep relationship. Personal referrals go such a long way. Communicate openly if you aren’t on time with deadlines.
The other advice I would give is don’t be afraid to be candid with the bank and tell them what you observe about them. Give them feedback on their strengths and weaknesses. We often want to hear what you have seen other banks do to be successful, and where we might be behind. Don’t hold back here.
What is a contrarian opinion you have about how banking technology might evolve in the next 5-10 years?
I think banking will continue to become more ubiquitous in a customer’s daily life. We will also see the re-emergence of banks that are community first. I think this will start to happen this time more from a digital perspective. If the organization is grounded in purpose and a mission much bigger than the bank, it can create connections with the customer that will make them succeed.
If you are building something in this area, please reach out to kyra@twosigmaventures.com. We would love to hear from you!
Check out other posts from the operator interview series: