Has there ever been a time when you and your bank face such incredible changes? FinTech. Mobile banking. Bitcoin. Regulation. Mergers. Millennials. You name it. And the result: Over the past decade, the number of small banks in America has gone down by twenty-seven percent to fourteen percent since Dodd-Frank alone. More changes are ahead, so what’s the solution?
The solution, of course, is innovation. But not in the way you might expect. You and your bank probably have some online and mobile projects underway — but you may be wondering is this enough? My background is in helping businesses in a wide variety of industries profit from change. I’ve written seven books on innovation and work with banks and financial firms all over the world, including Bank of America, Citibank, Mastercard and many others. Today my focus is on community banks, the lifeblood of our economy, and helping them navigate these turbulent times and find new pathways to growth.
During the past 12 months, my team and I at The Innovation Resource in California have gone in search of innovative Main Street banks and what we are finding is truly inspiring.
We’re discovering community banks that are creating whole new revenue streams, dramatically reducing costs, and finding the right FinTech partners to help them grow. We’re discovering community banks that are going after adjacent markets that were hidden in plain sight.
One community bank in Mississippi — they’re going after the unbanked. They took a fresh look at the 46 billion dollar payday loan industry and said “we can do better.” They started a program that offers low interest loans of up to a thousand dollars to unbanked consumers. To participate they must agree to open an account at the bank and enroll in three hour financial literacy course. But here’s what they found: Many of these people turned out to be police officers and teachers and healthcare workers. Gainfully employed people who have since become loyal customers.
Other banks, they aren’t just talking about Millennials and Gen Xers — they’re taking action. They’re innovating. They’re introducing programs that target young consumers. They’re using low-cost crowdsourcing methods to gather market intelligence on Millennials to better understand their changing needs and as a result they’re building strong relationships that could last a lifetime.
So what we’re really talking about here is innovating how you innovate. As one executive said to me “we looked around at some point and we realize we had a process for everything else around here. why not for innovation?” Because of the relentless pace of change in banking today, you need an ongoing, systematic, all-the-time process. A process for innovation. But it doesn’t have to be overwhelming. One bank we know of formed an innovative team. They’re going to search for new opportunities. They do customer-of-the-month sessions every month, where they go out and talk to different customer groups and hear about their problems. They have a magnet team to vet ideas and allocate resources and manage risk. They have an innovation leader to coordinate the entire process
In today’s world it’s easy to get left behind and sometimes it’s hard to know where to start. But if you’re ready to stop talking about innovation and start practicing it today — in your job, your work, your bank and in your life — you’re ready for my keynote Leading Ahead of the Banking Curve.