By Kate Young
This time of year, everyone likes a good old fashioned scary story, right? Well, maybe…as long as it’s not a scary story about banking.
Bankers these days have plenty to keep them up at night. From regulatory nightmares to tales of marauding fintechs, these bankers’ boogeymen aren’t all that unlike the creepy clown sightings that recently spread across the country. They’re definitely alarming. And everyone is talking about them. But it’s not always easy to sort out the legitimate threat from the hype.
Complicating matters is the fact that, despite all the hype out there, banks are in many ways under siege. So, what are you going to do about it? What good is scaring yourself if it doesn’t spur you to action?
Here at ABA, we’re big proponents of taking action. So face your fears head on. You’re safe with us—these three terrifying tales will point you toward the steps you can take to sleep better at night.
1. Who’s Afraid of the Big Bad Fintech?
They called it the Disruptor. It was a financial services platform so nimble, so agile, so innovative that no bank could defend itself or keep up. From its fortress in the cloud, the Disruptor converted consumers by the millions, starting with the youngest, and working its way up through the demographic segments, until at last it had the oldest and the richest in its robo-clutches. It transformed financial transactions from the inside out, making them unrecognizable. It even made currency obsolete. Banks languished, a slow surrender by starvation…until they went extinct.
We’ve all heard some version of that one. You can’t throw a rock in any direction without hitting a fintech prophet of doom. But have you ever noticed who’s making most of that noise? Mostly the fintechs themselves—and their investors.
Is technology rapidly changing financial services? Definitely. Should banks be concerned? Yep. Isn’t there anything you can do? Of course there is.
Many of us have a different vision of the future—one in which banks partner with fintechs, ultimately making the bank itself the innovative platform with a loyal following of digital customers. This isn’t a pie-in-the-sky fantasy. It’s something that banks are currently working toward, even the smaller ones.
ABA has just launched a fintech resource page, along with the new members-only ABA Fintech Playbook it produced in collaboration with Accenture. Use these tools to keep yourself informed—and to prepare your bank for the changes facing the industry.
2. The Little Bank That Couldn’t
There once was a small-town community bank that served for over 100 years as the center of the local economy. It gave its neighbors a way to safeguard and grow their savings. It helped them secure home loans and small business loans. It enabled the prosperity of the community. Sure, there were bigger banks out there, but the Little Bank was just the right size for what it needed to do. But then, wave after wave of regulation began to roll in. The big banks could bring on new staff to read, interpret, and implement compliance for that byzantine web of ever-changing rules. But the Little Bank just didn’t have the means. And so, it was buried alive under thousands and thousands of pages of regulation, never to be seen again. And no one cared. Until it was too late.
Actually, this story terrifies even us. It does hit close to home. But there’s one element that’s pure fiction, and that’s the part where no one cares until it’s too late. The advocacy arm of ABA is dedicated to giving banks a voice in the public policies that will make or break their ability to survive. Programs such as Power Up, Take Your Lawmaker to Work, and Bankers Speak Up give even the smallest banks ways to engage their elected officials, join forces with other banks, and make themselves heard at the highest levels.
3. Dead Branch Walking
The news was as unrelenting as it was grim: The branch is dead. If you dared to deny it, people would’ve said you’re naïve. Video stores and payphones had vanished. Taxis were high on the endangered list. With each passing minute, online and mobile banking was accounting for a larger share of customer transactions. It was inevitable that bank branches would be next. Reporters from CNBC, Forbes, and Money all but wrote the branch’s obituary. Then, as the bankers gathered to mourn the branch’s passing, it rattled back to life. But it was oddly different. And it would never be the same again.
We don’t have a crystal ball. But we are comfortable saying that there’s no such thing as zombies. Not even zombie branches. What’s happening here is what you might call a Darwinian moment in the history of banking.
As data pours in, two things are becoming clear: 1) Fewer people are turning to the branch as their preferred method of banking. 2) That said, many people—surprisingly, even millennials—continue to look to the branch experience as a way of obtaining face-to-face service and advice.
That’s why certain types of branches are dying off—they cost too much and they don’t focus on what today’s consumers are looking for. Branches that are efficient, tech savvy, and staffed appropriately will survive. Those that thrive will have learned how to provide the kind of in-person experience that even the staunchest digital consumers continue to demand.
We can’t tell you whether your next branch should look more like a community center, a Starbucks, or an Apple Store. What we can tell you is that if you pay attention to what your customers actually want and need—and put that at the top of your priority list—your branches will live on at the heart of your community.