While chatting at a recent conference, a community bank executive shared with me his concerns about the evolving competitive environment in banking.
Specifically, he worried that banks of his size would never be able to keep up with the investments
I joked that I’m sure some big banks spend more on janitorial services each year than most banks’ income as well. I suggested that if spending a lot of money was all it took to succeed, few large companies in history would ever have failed. Large companies tend to have and spend large budgets.
As we continued talking, I shared with him a few relevant comments a senior executive of a regional bank recently made to me. He said, “The way I look at it, the big banks are spending that money for my benefit as well. Lots of technology is really expensive to create, but not to copy or buy if we find that we need to.”
Further into our discussion he explained that he and his team keep a close eye on what the competition is doing, and technology actually makes that easier than ever.
“It’s not hard to see exactly what the competition is doing,” he said. “I know exactly what my toughest competitors are offering in real time. Heck, they send me constant updates.”
Later into our conversation, he shared that he believes his bank needs to be “acceptable” in technology, but exceptional in other aspects of customer engagement.
I admired his perspective on taking on larger competitors. He wasn’t interested in entering a technology arms race he could never win.
It reminded me of an analogy I was fond of making to community bankers. I’d project a picture of a massive sumo wrestler behind me and tell them that I would have no fear of taking that guy on one-on-one but ... in tennis, or maybe a 5K run.
There would be no way I’d want to take him on in the competition of his choice! As groups would chuckle at the absurdity of the example, I’d point out that too many folks seem resigned to primarily compete by their
That said, as customer preferences for the manner and methods they use to conduct their basic banking evolve, banks must meet those preferences. Banks cannot expect their customers to go without industry-standard mobile banking tools.
The truth is, however, that the vast majority of banks today meet those thresholds. And sure, what constitutes industry-standard and industry-leading digital functionalities continues to evolve.
Larger banks will likely always be the first to rollout new and improved technology.
Whether or not that in itself, will give these players insurmountable advantages depends on whether competitors can — and will — differentiate elsewhere.
When discussing this topic, I don’t believe I’ve ever had a bank leader from a small-to-midsize bank not tell me that their strength is their people.
I’ve had hundreds of different bankers tell me that they strive to beat the big banks by offering better customer service, more community involvement or stronger local ties, etc. I tend to politely follow up by asking if those things would be clearly obvious to an outside observer. That’s not a trick question.
If bankers are not able to readily point to specific practices, programs or policies that support their “our people are our strength” assertions, do we expect that outsiders could ... or would?
Beyond that, can banks possibly become better where they are already very good or great?
Instead of looking at the technology reshaping the banking industry as an existential threat, proactive leaders are realizing that new challenges to old business models come with
The same digital technology that empowers customers also frees our teams to take on more hands-on, relationship-building activities. It enables banks of all sizes to better utilize and deploy the most important assets of their banks — their bankers.
I’ve often suggested to bankers that their banks may determine the price of their products, but they largely determine the value. Any new tools that provide bankers better information and more time to build and strengthen relationships increases their productivity, as well as their value to customers.
With the right leadership, our bankers will realize that most of the changes taking place in the banking industry are not happening to them, but for them and their futures.
