Future of Banking

So Marcus aka Goldman Sachs, is the same firm Rolling Stone magazine described as, "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. " Now they are going full bore into retail bank deposits and soon lending and other turf of community banks. A new generation of young workers who barely remember the 2008 financial crisis are being lured by the ease of opening an account on your phone in 2 minutes. If you run a bank you should be at the least concerned and more likely scared.

The business model of community banking was built on the foundation of relationships, local knowledge, community involvement and personal service. What happens to those competitive advantages in cyberspace? How do you transition a community bank to a community that could be the entire country or the world? In an age where more growth is coming from mobile than any other delivery channel, how does the community bank stay relevant?

I hope no one was expecting an answer to those questions! I have heard about the demise of community banking since the early 90s. The one thing that the larger banks could never get right was the personal touch. The advantages mentioned above. But how many people want to go to a branch to open an account? And sit there for 20 minutes? If they're lucky? I'm not even talking about millenials. I'm talking about the billions of people that own a cell phone. None of them. Lets not even get into the loan process that is the same at most banks as when I entered the industry in the 90s - paper intensive, slow, mysterious and not in any way a quality user experience.

So how do community banks advance in the future?

1. Embrace technology but remember who brought you to the dance - relationship banking
2. Add board members with tech experience. Most boards of community banks are lacking this key board member.
3. Explore partnerships with fintech companies that have technology but don't understand the regulatory morass that we bankers have had to master in order to have the tremendous benefit of low cost deposits. (The only reason to be a bank)
4. Identify your core competencies and use technology to enhance them - dont try to be all things to all people. There a a few trillion dollar banks doing that already.
5. There are advantages to being small. The big institutions may have tons of money but they also are saddled with tons of legacy costs in real estate, outdated technology and people. There are advantages to being new and without the outdated infrastructure.