There are numerous and significant barriers to entry in banking. Regulation, capital requirements, competition, and the concentration of customers at the largest institutions have all contributed to only one bank charter being granted over the past three years.
But I rarely hear of opportunity as a result of high barriers to entry in bank strategy sessions. I mostly hear lamentations and gnashing of teeth over the sluggish economy, aggressive regulatory environment, and irrational competition.
We are missing an opportunity, in my opinion. Here are the 10 strategic issues banks should address to position themselves to take advantage of high barriers to entry:
1. We have thousands of customers, but do we understand who they are and what they want? Don’t believe me, ask your head of retail or commercial for an analysis of your customer base, including trend. If you get it immediately, good for you. I have my doubts.
2. Do we have employees that grip old habits with white knuckles? And, if yes, have failed to move them forward or out?
3. We speak of relationships, but have we defined in detail what that means?
4. We spend tens of millions in operating expenses, but do we direct expenditures to strategic priorities? Or have we failed to identify strategic priorities?
5. We talk of service, but have we communicated service expectations?
6. We expect customer contact staff to reach out to customers, but do we train them to do so?
7. We speak of sales, but what percent of our staff have sales responsibilities?
8. We spend millions on technology. But breaking it down, does our budget look like we are more focused on replacing Windows XP than building the distribution network of the future?
9. Do we focus more on building the bank of the future or making budget?
10. Do we identify the bank of the future, and the bank we want to become? Or do we remain some slightly modified version of the bank we were in 1950.
It is time for bold thinking to break from our past. We can no longer be some slightly modified version of what we once were. If we don’t bust our business model, someone else will.
And hey, I need community banks to thrive. So do your communities. So let’s get to it.