The Easiest Part of Banking: The Banking July 26, 2010
Posted by nichebanking in Future of banking, Niche banking, Problems with traditional banking, The Long Tail of Banking.add a comment
Every industry, every business, has aspects that are challenging and difficult, and others that are easier. If your business is making movies, getting people excited about your product is relatively easy (because people love movies!). But crafting a unique and compelling story, and getting it funded, produced and distributed within budget, is the harder part.
In banking, it’s the exact opposite: ongoing banking operations are pretty easy, while attracting customers in a way that allows you to optimize your net margin and grow both sides of your balance sheet is the harder part. Most bank and credit union CEOs I know don’t spend much of their time on questions like “how are we going to get these transactions processed? or “how are we going to process these loan applications?” Instead, their focus is on issues like growth and management–the more truly challenging parts of the business.
Yet when bankers sit down to answer a question like “how are we going to grow?”, the solutions they arrive at are, ironically, all about improving the “banking” part of their business. Their answers tend to be things like “we will enhance our online service delivery,” “we will innovate our products and services,” and “we will provide the greatest customer service in delivering our products to customers.”
In other words, “we will improve the banking part of our banking.”
This is not where the energy should be focused.
The hard part of banking is not the banking itself–that’s the easy part. The hard part is creating something that people care about, breaking through apathy, and creating engagement that will drive the business forward.
That’s why the future of banking will be owned by banks that figure out how to address this hard part, and stop spending so much energy fixated on the same things the rest of the industry is obsessed with. They will understand the difference between “extreme customer satisfaction” (the typical goal) and “actually caring” about the bank (a yet-to-be-reached achievement, which should be the real goal). They will create huge separation between customers who can “gladly tolerate” doing business with them (like most community banks and credit unions), and customers who relate so strongly to the brand that they feel incomplete without it (like Apple’s customers).
A long tail bank is all about achieving exactly those goals: addressing the hard part.
