Is staff stifling banks' innovation?

The biggest obstacle to digital transformation at most banks isn’t the technology. It isn’t the budget. It’s the lender who has been doing it their way for 25 years and is very good at it. While leadership can often see the benefits of new technology or improved processes, some employees see only a burden..The people are what give community banks a competitive edge. The relationships each employee has and builds over time are essential to the bank’s success. It’s clear why no bank would want to risk losing its people. So, most banks are stuck in a loop of needing to modernize to serve customers better but not moving forward in the name of employee retention. Banks don’t have to choose between keeping their people and keeping pace with innovation. With the right approach to digital transformation, banks can modernize their operations and stop missing out on big opportunities without chasing staff away.Why employees don’t want changePsychology Today has documented what seasoned managers already know: When people have been doing something a certain way for years, that method starts to feel comfortable and correct. Psychologists call it the “moral force,” the tendency to conflate the familiar with the right. For a commercial lender who has spent 20 years building expertise around a certain workflow, changing platforms isn’t a neutral, operational decision. It feels like a challenge to their professional identity. New often means unknown. What if the new process is more difficult than the old one? What if a different platform is slower or harder to use? It often feels easier to choose the devil you know.Especially in certain areas, like commercial lending, staff have been in their roles for decades. The thought of changing now can feel nearly impossible. People have built their careers around certain platforms or workflows, and to change them feels like turning their careers upside down. What banks miss out onAdopting new technologies or adapting existing processes can bring significant benefits to the bank, namely, efficiency.For example, in commercial lending, there are many manual processes that take up lenders’ time. Reviewing documents and extracting data takes days of work. Then, adding all the data to a spreadsheet is another tedious task prone to errors. Finally, drafting credit memos or other documentation for the loan adds to the already heavy burden of reaching a credit decision for a single loan. Add up all this work, and it can take a bank a week or more to turn down an applicant. That not only costs time but also money, in the hours spent and deals lost.The ability to work more efficiently means handling more loan volume, expanding to new territories or serving new customer types—all without additional headcount. These growth opportunities could be transformative, especially for smaller banks, but they will only succeed if everyone is on board.How to get employees on boardMost employees aren’t resistant to improvement, but they are resistant to disruption. To promote retention, change should be incremental to demonstrate that improvement is real.The answer isn’t a single rollout, but instead a series of small, deliberate steps. Paradigm Advisors research on behavioral change consistently shows that incremental progress builds better habits, reduces anxiety around the unknown, and compounds into meaningful improvement over time. Forbes has similarly noted that for digital transformation specifically, an incremental approach is one of the most reliable ways to drive change without triggering resistance. Technology selection matters here, too. Banks need systems that are flexible and configurable enough to let them start slowly, using them where it makes the most sense first. A lender who sees the tools work on a single loan type is far more willing to adopt more change six months later than one who was handed a full platform migration on day one. Training is also important here. Staff need to be equipped to easily pick up the new process. The more complicated the platform, the more training they will need. Even with incredibly user-friendly solutions, education helps promote adoption and dispel fears about using them.The banks that will pull ahead aren’t necessarily the ones with the biggest technology budgets. They’re the ones whose people trust the process enough to take the next step. That trust gets built in small moments, such as a manual task that gets easier or a credit decision that comes back faster. Modernization isn’t something that happened to a bank’s employees. It’s something they carry forward. David Eads is co-founder and CEO of Vine, a commercial lending accelerator for banks and credit unions.