Jeff For Banks

Disruptive technology will not kill banks

So said John Authers in a recent Financial Times article. And I believe him. Bankers have been killing banks for decades. We do it by dismissing change. We do it by implementing “me too” or business as usual strategies in a changing world. We do it by accepting mediocrity. We do it by relying on the payments system or the difficulty in switching banks to retain customers. We engage in hubris.
We don’t need no stinking disruptors to do it for us! 
But wait! There may be something to disruptors pillaging bank customers. I remember the days soon after leaving the military in the 1990’s that banks were hesitant to enter investment sales for fear of disintermediation of their deposits. Now the amount of money in US registered investment companies exceeds that in FDIC insured banks. Was Vanguard a disruptor?
The branch is king, and if you don’t have one in a market, you will not succeed there. But wait, ING Direct grew to $92 billion in assets until ING Group divested it to Capital One. Do you think your bank customers had an Orange account? Was ING Direct a disruptor?
Simple sold to BBVA, touting 120,000 accounts. Were any of them your potential customers? Lending Club funded $5 billion in loans since its founding in 2007. How many loans did you fund in that time? And Quicken Loans… don’t they appear at the top of mortgage and home equity rankings? No worries, I bet they’re somebody else’s customers.
Everywhere we turn we have disruptors pilfering our business. The other day I was in a strategy discussion formulating the tasks to execute strategy. The cash management specialist wanted to advance the product set so corporate customers could use their own interface with the banking core system instead of using the bank’s online banking tool. Aside from the cyber security of it, let’s think of the implications from a corporate accounting system that wants to interact directly with the bank’s core.
Is that testimony to banks not keeping pace with corporate needs? How long before those corporate accounting system providers strike a deal with some regional or national bank to provide seamless views to corporate customers? No worries, probably not your customers.
We are allowing our potential future customer base to be so narrow as to almost guarantee our extinction. 
I don’t want to be the doom and gloom guy. Just trying to jolt my readers into action.
As Auther says, banks still provide access to the payment system. Banks remain centers of communities and the number one source for capital for small business. They remain trusted by customers.
But it won’t last forever. And it may not last for long. So let’s disrupt ourselves!
~ Jeff