When I sat down to write the first blog for the financial services practice, I wasn’t quite sure where to start. Do I want to focus on some of the top technology trends like Mobile Banking or Real-Time Data availability? Maybe I should focus on some of the legal and regulatory concerns the industry is facing with the sweeping overhaul that is sure to come when the changes associated with the Dodd-Frank legislation are fully in place? Perhaps I could put some thoughts around the progress banks are making to recover from the industry meltdown and provide some insights to how the weak economy is putting a strain on the industry’s overall profitability? The list goes on and on…so I struggled. With all that is facing the financial services industry, where does one even start?
The industry is a mess. Nobody fully understands nor can predict what a recovery will look like. Products and service offerings are a virtual cacophony of ideas that seemingly make little or no sense to the everyday person. This kind of reminds me of the Abbott and Costello routine ‘Who’s on first?”
One Thing is Certain, There Needs to be Change
So, after several attempts at staring at my keyboard, it hit me, keep it simple. The industry is complex, evolving and frankly confusing. For those of us fortune enough to study the Minto Pyramid Principle®™,we remember that the best place to start with any topic is at the top. A colleague of mine once told me that no matter how much you put on paper or talk about, the average human mind only registers 3 key points for immediate processing, so here we go, from the top, here are the 3-things, I think need to change about the financial services industry:
- Banks have got to win back customer confidence. I look forward to watching the news and NOT hearing about an industry scandal or a massive write-down. CEOs are resigning; banks are closing their doors. I can only imagine the rhetoric we are going to see with this election season heating up. It is rare to find someone these days that has confidence in their bank. The every-day consumer views banking as a commodity service, something we have to do, and banks can’t take that for granted. The financial services companies that are starting to get it right are focusing on value added services for their customers. Give us a reason to deposit, to save or to borrower from you. Dare I say it; earn the right for us to bank with you. It’s time to win back your customer.
- Financial Services firms must evolve their operating model. Banks need to make strategic decisions that will enable growth and restore profitability. They will need to re-train their employees to do business in new and innovative ways. Processes and policies will need to be adopted to reduce risk and lower costs. Fundamentally the marketplace is evolving for banks and financial services firms. No longer is the traditional business model going to keep them competitive. It’s time to evolve.
- Investment in technology is critical. After spending the last 15 years of my career in and out of banks, I know first-hand how antiquated many of the technology platforms at our nation’s banks have become. Too expensive and too risky to change, not enough ROI to migrate core platforms, these are the mantras heard time and time again. Faced with investment decisions, CIOs are often forced to defer costs in favor of critical changes to meet regulatory requirements. Sadly, when banks are faced with decisions to innovate and evolve their technology platforms, too often decisions are made to reinforce ‘business as usual’. It’s time to invest.
Win back your customer’s confidence, evolve your operating model and invest in your technology. The 3-things I think need to change in the industry. Seems simple and straight forward to me.
