As young people increasingly turn to unregulated, nonbank technology providers for their banking needs, innovation in the banking industry is not just an option — it is an imperative, outgoing American Bankers Association Chair Julieann Thurlow said today at the ABA Annual Conference in New York City.
In her speech, Thurlow discussed the tsunami of banking regulation facing the industry, saying the regulatory environment “has made us all compliance officers and risk managers.” But she also stressed the need for banks to remain relevant to the next generation of customers. Today’s young people are turning to nonbank apps and other products for their money management, with banks serving as little more than “paycheck motels,” Thurlow said, quoting banking and fintech consultant Ron Shevlin.
“Tech companies have taken the friction out of our products and moved consumers and their money to their balance sheets, and that’s outside of the regulated industry,” Thurlow said. “At this rate, all we will have left on our balance sheets are high-cost deposits and commercial loans, and the regulators should be pretty afraid of that profile. I know I am. But it’s also a wake-up call for innovation.
“As bankers, we need to understand what the needs of the younger generation are, really listen to what they’re saying about their money, and how they’re accessing and using financial services,” Thurlow said. “I guarantee you’ll learn something surprising that will challenge your way of thinking. Innovation is a priority for ABA and its future roadmap. Innovation has the power to help us reach the next generation of banking customers in a different way, but we need to do the work to find out why customers are choosing other products and other organizations, and find out what they would like to see from us.”
