TREND #1: The tail has started wagging the dog
Fintechs growth and grip on the financial landscape
We (community banks) used to be the department store of financial services. From cosmetics to kitchenware, whatever you needed could be found under the same roof. So, we really didn’t mind much when, one by one, niche providers started to siphon off specific lines of business.
It started with Rocket Mortgage, picked up speed with business payments via Square, and got downright serious with the advent of SoFi, Dave, and Chime.
The impact on overall bank performance while this was happening was tempered by the fact community banks still had a robust product menu and loyal customers, largely composed of the middle aged and older demographics.
But the Rocket Mortgage and SoFis of the world soon realized that in addition to their `a la carte service, bank product menus held lucrative potential, and they crossed the line into more traditional products, effectively transitioning from niche players to full-on competitors.
This leaves us (community banks) with an urgent need to backfill digital prowess in account acquisition, patronage patterns, and customer experience. The good news is, whether it’s home-grown or via partnerships, we can get there. But not at the generally accepted financial industry pace.
Directors must understand that new technology procurement and deployment is mandatory and must be accompanied by business modeling that adjusts branch and staffing efficiencies. We also need to realize that budgeting will look different, and a bifurcated “perform” versus “transform” cost/revenue model will be needed.
TREND #2: IQ, EQ, and now CQ have become the knowledge trio of choice
“We run this company on questions.” -Google executive
As bank directors, we expect a certain level of knowledge, capacity and professionalism on the part of the bankers we work with. We must also be discerning with our own ability and motivation to serve our banks. Intelligence (IQ) and Emotional (EQ) thresholds have long been established. Today we also must deliver a level of curiosity that invites forward thinking and critical analysis.
What are you curious about? Here are a few of my favorites:
How will we balance the importance of history and hindsight, data, forecasting, and insight?
What keeps our customers with us?
Is it true that cost of funds is an indicator of brand strength?
Where—and what—is our greatest opportunity?
How can we add value to our customers and communities?
How do we leverage our branches?
What resources do we need to monetize the strategies we create?
What is our “To Don’t” list?
How quickly and efficiently can we harvest our data?
What does our brand mean to our stakeholders?
And my personal favorite: What are we doing to fix the things we already know are holding us back?
The point is, being respectfully inquisitive is part of our job description and deserves a little pondering on our part.
There are a lot of trends that demand our attention today, but addressing these two will go a long way in creating sustainability for the future.
Becki Drahota is founder and CEO of Mills Marketing and Chair of Bank Midwest in Spirit Lake, Iowa. You can reach her at BeckiD@MillsMarketing.com.
