ABA Banking Journal - March 2014 - (Page 6)

editor's column By bill Streeter Are you still relevant? N "One banker said 16 Of 19 New hires were non-customer facing people brought on mainly to meet new regulations" Bill Streeter bstreeter@sbpub.com 6| ABA BANKING JOURNAL | March 2014 ot a pleasant question, but a serious one, for two reasons: technology and overregulation. The question was prompted by the quote on page 11 from Microsoft's new CEO, Satya Nadella, in which he says that what concerns him most about running the company is relevance, not longevity. Technology, of course, is rife with the risk of irrelevance. Nadella recognizes that Microsoft, though still a profit machine, could quickly become irrelevant. (Remember DEC, the minicomputer giant?) By contrast, banks have an edge in relevance. As long as there is money and commerce there will be banking, although some of the specifics-checks, for example-could become irrelevant. As lenders, bankers actually have a good window into the matter of business relevance. Yet none of that guarantees an individual bank's continued relevance. In fact, despite the recent positive trends in bank profits, many bankers worry about their institution's future. That's largely due to the massive amounts of new regulations that hinder their ability to generate revenue and profits. It's hard to remain relevant when the government increasingly runs the show. Exhibit A for that point is the U.S. Postal Service, all but irrelevant now. (It is the height of irony and absurdity to have the Post Office propose to enter financial services to save itself.) The other big factor that impacts banks' relevance, just as it does Microsoft's, is technology. The arrival of ATMs didn't make branches irrelevant, but it was the start of a transformation, accelerated by online banking. But now, emerging electronic payments such as person-to-person (p2p)-many of which place nonbank companies in a central role-are on the cusp of diminishing banks' role in the payment system. A role that is a key part of their relevance. Relevance of course goes beyond how transactions are carried out. It's also a matter of attitude, image, adaptability, and innovation. If you don't adapt and grow, you die. In a way, the ongoing shift away from branches as transaction centers places more focus on acumen and relationships and offers a great opportunity to enhance banks' relevance. Seizing this opportunity requires at least three things: 1. Vision to see change and embrace it. 2. Willingness to invest in the human and technical resources to keep up. 3. Ability to attract, train, and appropriately compensate the right people. Many banks will do all this and more. But it will be a challenge because the burden and costs of unnecessary regulation siphons off so much human and financial capital. One banker at ABA's recent National Conference for Community Bankers told me that 16 of 19 new hires were non-customer facing people brought on mainly to meet new regulations. So the message here is two-fold: * Never lose sight of the need to remain relevant to your customers, and of the need to continually change to do that. * Actively and aggressively push back against the tide of overregulation. The ABA and the state bankers associations have marshaled many resources to assist in both of these areas. Take advantage of them.

Table of Contents for the Digital Edition of ABA Banking Journal - March 2014

Chairman's View
Editor's Column
The Economy
Bank Notes
Picture This
Basel III a bad fit for smaller banks
Tech Topics
Mortgage reboot
5 revenue ideas for the real world
Compliance Clinic
Compliance Inbox
ABA At Your Service
First Person

ABA Banking Journal - March 2014

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