ABA Banking Journal - March 2014 - (Page 6)
By bill Streeter
Are you still relevant?
"One banker said
16 Of 19 New hires
were non-customer facing
people brought on mainly to
meet new regulations"
ABA BANKING JOURNAL
ot a pleasant question, but a serious
one, for two reasons: technology and
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
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
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ABA At Your Service
ABA Banking Journal - March 2014