Trailblazers Not Entrepreneurs! Four Key Ideas To Future Growth in Banking

In the early ‘90’s, Billy Beane, an advance scout - and later General Manager - for the Oakland Athletics created onesource : wikipedia of the most dollar-efficient baseball teams in league history.

He did this by using empirical analysis, an evidenced-based approach that helped him with a single strategy to gain competitive edge: finding value, where others did not.

It’s no secret that the world of technology and retail banking has flattened:

  • Customer retention has become a huge challenge
  • The meaning of growth has changed
  • And cash-flow has become precious

Similar to baseball in the late ‘80’s, competition has increased.

But where’s the value?

Banks are challenged with changing customer demographics and behaviors. What’s more, the brick and mortar branches are no longer the locus of a customer’s banking experience. According to a recent Financial Management Solutions Inc. (FMSI)  report, Branch transaction volumes in the US have dropped by 45% over the last decade.

Combined with the endangerment of the physical branch, customers are less trusting, now more than ever.  Ernst & Young reports that 40% of consumer banking customers feel they are losing trust in the industry and only 22% are gaining confidence.

To put it into perspective, if banks were candidates for office, they wouldn’t be re-elected with that level of support.
So, the question becomes: what do banks do when customers are trading banks like baseball cards?

For banks, operational efficiency is paramount – but the current environment calls for not just new business methods but also for new philosophies of customer interaction.

However, the way forward is through an evidenced-based approach – one that recognizes existing needs of the modern customer.

Here are four key ideas banks can use to forge ahead:

  1. Integrate interactions: By matching customer data with customer interactions, banks can tailor products that meet individual needs – rather than a one-size fits all approach.  
  2. Adapt to new behaviors: Mobile and multi-banking-customers now use banks more fluidly and electronically. With these frequent self-service interactions, customers have become more aware, and sensitive, to fees, usage charges and overall commoditization of services.
  3. Go digital: In order to reduce costs and increase efficiencies, move towards a digital environment that simultaneously decreases administration and operations processes while streamlining sales flow.
  4. Actively transform: Unseating old technology isn’t the only pathway for cost reduction. Growth needs to come from adapting to a rapidly changing environment – that means large-scale, multi-year programs that enhance current practices with a view forward.

Within many verticals, we hear a lot of chatter about innovation; taking current techniques and ideas and building on them.

But what about trailblazing?

What about taking a path that diverges from the pack mentality of the status quo?   

That’s where transformation really comes from: creating new pathways for success by challenging the standard, identifying the way forward and finding value – where others are not.

Let’s look at the facts and make something of them – just as Beane did.

Andy Orent is the Vice President for Oracle Banking Platform; he can be reached at Andy.Orent AT Oracle.com

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