Saddle up, GonzoBankers. We’re gearing up for Smarter Bank LIVE, and your 325+ RSVP responses to our upcoming online event make one thing clear: You want your bank to become more than the branch next door.
In a risk-averse industry, it isn’t an easy task to try the unknown, especially at a time when profits are under attack. It’s sort of like asking Taylor Swift to give up singing to take a job handling financial fraud instead. In our registration batch, a question from one banker says it all: “Can we actually differentiate?”
Short answer: Yes.
But here’s the kicker: It’s not a one-and-done kind of thing. Nor does bragging that your bank is a “fast follower” count as a differentiation strategy. That’s called copying, which isn’t a bad thing per se—at least when it comes to dropping (or reducing) overdraft fees. But You Stole My Look, Bank Edition, doesn’t set your institution apart from competitors. Your bank may now offer accounts without overdraft fees but so do plenty of others.
Just this week, Finovate host Greg Palmer surveyed the event’s audience on what the biggest challenges of digital transformation projects were for incumbents, according to Fintech Futures. The results? The vast majority (85%) cited overcoming legacy systems and—ahem—thinking.
But that doesn’t mean bank execs can give up. We’re in an era where competitors include Square, PayPal, Apple and Chime, and they’re guzzling up customers. According to Cornerstone Advisors research, 47% of consumer checking accounts opened in 2023 are at fintech companies or online banks (not traditional banks). Heck, Apple reported in August that it secured more than $10 billion in deposits with its savings product in partnership with Goldman Sachs. Wow.
Competing with these kinds of tech companies requires something bankers aren’t known for: imagination. But that gap must shift. As Ron Shevlin, our chief research officer, blogged: “Banks need to stop playing innovation charades. With the influx of new technologies, the challenge isn’t ‘innovation’ but ‘creativity’—how can banks, at an organizational level, make more creative use of data and technology than their competitors, and how can they help their people become more creative in getting their jobs done.”
The how, of course, is tricky. But here’s some promising news: As someone who has covered banking for well over a decade, I still find surprises in product development. Here are a few striking initiatives that caught my attention in the last couple of months:
Ex. B: Coastal Community Bank launched Coastal World, a virtual world designed to market the Everett, Wash., bank’s fintech partners.
It doesn’t end here, of course. It doesn’t end anywhere. But tune in to Steve Williams and Al Dominick on Sept. 27 for Smarter Bank LIVE. They’ll offer more ideas on how to differentiate your bank, among other things.
So what: Yes, it’s hard to try something new. Even harder when your employer is a bank. But the number of unsolved problems in financial services is many. Find one or two. Attempt to solve them. Then, do it again. And again. And again…