What is the “New Norm” in your industry?
Three years ago, none of you could answer that question. Last year when I asked all of you that question approximately fifty percent answered in the affirmative. Yes, you knew what the new norm was. Parts of the fifty percent that still didn’t know were the bankers . . . even the bank presidents didn’t know.
I think I’ve figured out what the “New Norm” will be in the banking industry. It will be AUTOMATION. Yes, exactly what the manufacturing industries have gone through for the past forty years or so. For the banks it will be all about containing COSTS going forward.
So what is automation in the banking industry? It is about the Internet. It is about closing branches and eliminating jobs. It is really nothing more than “cloud” banking.
Let me take you back to the early 1980’s in the banking industry. Deregulation hit in 1982 and it took the banks almost ten years to figure out the successful business model they had to be in that new norm because the old model was not going to work. Well, we’ve just come through a historic recession that for the bankers has piled on even more regulation and more cost to administer that regulation. You think Sarbanes Oxley was expensive? I’ve heard that for a bank to survive, it must have assets of no less than one billion dollars.
Okay, so let’s get back to the automation issue. Bank of America was one of the first banks to introduce the personal computer for online banking. The problem was that they were way ahead of their time in 1981. It was a generational thing to be quite frank. Not anymore. The millennial generation is going to drive the automation of banking. Back in the early 1980’s we all talked about the banks going paperless. It didn’t happen. Well again, in hindsight it is a generational issue. It will be the millennial generation that accelerates the paperless revolution already underway. Why is that? Because folks like me still are more comfortable with paper (and we don’t know how to file electronically). But this new generation is completely comfortable with it.
I had a meeting with a fellow the other day. He is 24 years old. I gave him my business card at the beginning of the meeting. I waited for his. Never came forth. So I asked him for one. His response was, “I don’t have a business card. I have a phone.”
So here’s what the consumers can all expect: consolidation of banks and elimination of brick and mortar (even more than what we’ve seen in the past and in other markets). For the bankers out there, be prepared. Your world is going to change. You need to get savvy from a technological standpoint.
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Good luck and good networking.