Business Models Aren't Sacrosanct — But Relationships Are

A bank president once joked with me that he sometimes waxes nostalgic for the days in which strategic planning mostly meant looking at maps and population data and deciding where and how many branches to open. In the present era, bank leaders must make decisions of a different order, including whether to close or reconfigure branches and how to bet on the right technological investments for the future.

It's fair to say that the facilities, operational and staffing choices faced by senior management now are a little weightier than they were only a few years back. And the pace of industry transformation has turned up a notch. Changes that industry experts breathlessly predicted to be imminent a few years ago are actually happening right now.

Think back to the primeval era of 2007 when the iPhone debuted. At the time I was even more excited about another development: it was the first year my household was able to deposit checks from home using personal computers and scanners. As big a deal as smartphones were, I remember predicting that scanning checks at home was the real game-changer for branch traffic.

Those devices and that functionality have since melded. I'll count that as being mostly right.

There's no denying technology's impact on banking. But some people seem to believe that since banking's infrastructure has yet to be transformed to the degree that the music or video store industries have, our decades-old business models will continue to hold up.

This is wishful thinking. The banking industry has historically been slow to change. We're the embodiment of the phrase, "It takes a long time to turn an ocean liner around." But eventually, even ocean liners turn.

When discussing the current landscape of the industry, I regularly cite a quote by science fiction author William Gibson: "The future is already here-it's just not evenly distributed yet."

My point to managers is that there will be amazing, yet-to-be-discovered technologies in our future. But we needn't wait for new ones to transform our industry. We already have tools that work well and make customers' lives easier. Even if not one new technological advancement emerged in the next five years, consumers' increased acceptance and adoption of current technology guarantees sea changes ahead.

Better and more convenient ways of conducting business will inevitably win out. Folks still greatly value physical branch locations that they can see and touch, even they use them less frequently. Yet they are now absolutely comfortable conducting every form of commerce imaginable — including banking — online.

Smart people can and do disagree on exactly how online and mobile banking will change banks' business models in years to come. But most concur the status quo will not hold.

It's understandable that this uncertainty could make managers and frontline teams anxious. But it's helpful to remember a mantra I've often shared: "Evolution does not mean elimination; failing to evolve guarantees elimination."

Bankers need to regularly remind our teams that the adaptations we're making, and asking them to enact, are not indictments of how they've done things before. Bank employees have done what managers asked them to do to grow businesses, and done it well. But when the requirements for growth change, so must our structures, strategies and practices.

The manner in which leaders clearly communicate what, how, and why their companies are transforming greatly affects how accepting and engaged the team members critical to the execution of the bank's evolution will be. The importance of that cannot be overstated.

The other quote I've shared lately is by the late publishing tycoon Malcolm Forbes: "Too many people overvalue what they are not and undervalue what they are."

A bank's goal should not be to become a different company. The goal should be to continually become a better company for customers. Adapting to changing competitive environments does not mean that we abandon what has brought us success: relationships.

And with all due respect to branches, customers do not have relationships with buildings.

Individual banks will find themselves ahead or behind the curve on any number of technological fronts over time. However, at the core of their success will be the relationships they sustain and the new ones they create and cultivate while going forward.

No, we won't see customers in our brick-and-mortar branches to the degree we did before. But the banks and bankers who thrive will blend new and old formats and technologies to stay personally connected with their customers and remain relevant in their lives.

Dave Martin is an executive vice president and chief development officer at Financial Supermarkets Inc., a Market Contractors subsidiary that offers design, construction, consulting and training services for retail banking programs. He can be reached at dmartin@supermarketbank.com and on Twitter @instorebank.