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Why the CEO of $160 billion Citizens Bank is turning to digital in a bid to compete against industry titans like JPMorgan Chase and Bank of America

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  • Citizens Bank was poised to release a new, mobile-first customer application early this year, but delayed it amid a massive change in consumer behavior from the coronavirus. 
  • The new app — now scheduled for wide release in the coming months — is part of a broader digital vision from CEO Bruce Van Saun to blow past rival regional banks and better compete against industry heavyweights. 
  • "You can see the digital adoption that's taking place from COVID-19. I think it's going to have staying power," he told Business Insider. 
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Citizens Bank was hoping to release its new, mobile-first customer application in February.
The launch marked an important milestone for the company.
It was a central part of an end-to-end digitization plan that CEO Bruce Van Saun is hoping will propel the company past its regional counterparts and put it in closer competition with industry titans such as JPMorgan Chase and Bank of America.

But once the coronavirus hit and consumer behaviors changed drastically, Citizens Bank had to quickly pivot.
Its existing digital platform saw such a surge of usage that Van Saun and the team opted to delay releasing the new system for fear that it would buckle under the demand.
"You can see the digital adoption that's taking place from COVID-19. I think it's going to have staying power," he told Business Insider. "The last thing we want to do is roll out a whole platform to the mass customer base and have any kinds of issues."
The application is one part of a sweeping program — referred to internally as the next-generation technology initiative — largely aimed at transforming most, if not all aspects of the business, both internally and externally.
Van Saun estimated the initiative could ultimately lead to as much as $300 million in benefits for the firm.
On top of new platforms for its consumer and enterprise clients, Citizens is also pivoting to agile teams — or cross-functional groups tasked with a specific goal.
That covers the 3,000 of its 18,000 employees that are involved in the "change the bank" efforts, said Van Saun.
The goal is to "create some persistent funding so those groups get to work together on a relatively permanent basis," he added. While it's still early in the initiative, the teams that already pivoted to agile "tend to get the projects done in at least 30% less time."
And with a bigger tech team on the horizon, Citizens Bank is hoping to get even more responsive to customer needs and roll out new features much more quickly than it has in the past.

Beefing up on tech talent

The company's IT team will end up looking vastly different.
Last year, the company hired 60 digital engineers to help build-out the new consumer-facing application — part of a broader push by Chief Information Officer Michael Ruttledge to reduce the bank's reliance on contract workers.
Overall, Citizens has hired over 200 engineers and plans to continue to build out that team, as well as the architecture and digital groups, according to Van Saun.
While its tech spend is unlikely to come near Chase's annual $12 billion budget or 50,000-person IT team, the hiring is a clear sign that Citizens Bank is hinging its future on digital and sees it as a key way to differentiate itself from small rivals.
Apart from the new, mobile-first consumer application, for example, the company also rolled out a new cash management platform last year for its enterprise clients.
The payment system was necessary as Citizens Bank "bumps into the megabanks more," said Van Saun. "That makes us very competitive as we move upmarket into banking bigger companies in the big corporate space."
And the firm has also branched out in other ways.
It's decision to begin issuing student loans, for example, put it in closer competition to Silicon Valley startups like Earnest.
Citizens Bank also joined with Apple to serve as the point-of-sale finance partner for its upgrade program. Now, it is also partnering with firms like ADT and Microsoft's Xbox on similar initiatives.
"We've developed some very innovative ways for merchants to help finance sales to their customers and do it in a robust way that can handle very big volumes," said Van Saun.
To keep those innovation efforts alive, the company launched a $1 million program akin to Shark Tank, where employees can pitch ideas to a group of senior leaders, who then decide whether to grant seed funding for the project.

A timely test of the new model

The digital pivot was put to the test during the coronavirus.
Like other banks, Citizens was flooded with applications from small businesses for the new, $670 billion federal assistance program.
The company sought to build its own portal into the Small Business Administration's E-Tran platform — a relatively obscure website prior to the outbreak that congressional leaders tapped against the advice of the financial industry to process loan submissions.
What would have been a six-to-12-month project before Citizens began overhauling its organizational structure took just 11 days.
By the end of the first two-week application period, the company had completed roughly 25,000 loan requests — totalling $4 billion in funding.
"It took tremendous collaboration across the company," Van Saun said. "A real agile way of working with business people, and technologists, and operations people working around the clock."
SEE ALSO: Siemens USA CEO sees the 'digitalization of manufacturing like we've never seen it before.' Here's how the $38 billion tech giant is pivoting its operations to meet the moment.
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* This article was originally published here
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