By Bryan Clagett
Disruption in the banking industry has been a topic for decades. I can recall sitting in a board room at New Jersey National Bank in 1986 listening to an executive vice president speak about how ATMs will forever disrupt financial services. Tens of thousands of ATMs later, we’re still talking about disruption in our industry, this time at the hands of fintech start-ups and emerging technologies. I also remember in the mid-1990s at Summit Bancorp, hearing about how online banking will forever change the role of the branch. Yep, 20 years later, we’re still talking about the demise of the bank branch.
Technology is continually disrupting everything. It’s been somewhat of a slow slog in financial services because banking—for the vast majority of Americans—is a utility and chore. The consumer thirst for new banking technology has been lackluster because most consumers don’t give banking much thought. The banking industry has not been pushed by need. This said, don’t assume I’m downplaying the importance of technology. I’m not.
What really drives disruption?
Think about it. Break everything down to its essence, you’ll find there is typically one thing that drives disruption in any given industry. It’s information. Information that’s communicated through our shared economy, in which we all coexist.
There is certainly no shortage of information—and I could argue there is really too much. Pundits make a living building hype and creating a sense of urgency because it’s a great way to sell books and gain followers on Twitter or LinkedIn.
Is there a sense of urgency to “drive disruption” at your bank? Should there be one?
I’d suggest a measured response. Consumer needs are evolving. America is more diverse, younger, and now remarkably mobile. These can be seen as opportunities or threats, depending upon how you look at it. To survive, banks need to:
- Keep evolving
- Lead by management that is able to embrace change
- Develop a clear plan for the future
They also must have a way to put the bank on the road toward delivering on that vision. Innovation can’t be a team in the basement. Innovative thinking must be brought into every process in the organization, and this includes the need to reconsider every process in your bank.
We were told to fear the likes of Simple, Moven, and other neo bank challengers. But now Simple has been bought by a bank. And Moven—whose founder declared they’d be “the Facebook of banking”—now tries to work with banks through integration. Hey, if you can’t “break the banks” you might as well join them. Even venture capitalists are now looking at fintech players that work with banks, not against them.
The bankers have begun to disrupt the disruptors. While your real threat may not be a Simple or a Moven, it will be the bank or credit union down the street—or across the country—that is continually innovating, and making innovation and fintech part of its strategic DNA.
Disruption never changes, only the disrupters do.