In a blog post last month, I listed some of the major challenges facing smaller financial institutions. One of them is the fact that customers are demanding more and more. It is hard enough for community banks to meet regulatory requirements and battle reducing interest margins. How on earth can they keep up with the rapid changes in customer expectations as well?
A day in the life of the gentleman banker was once described by the 3-6-3 rule – accept deposits at three percent, loan money at six percent and tee off at the golf course at 3 p.m. The financial services industry can rightfully state that it has come a long way since then. It has implemented technological innovation and managed risk in a constantly changing economic environment over several decades. The gentleman banker has since evolved into a sophisticated financial risk manager who works within a complex framework of rules and regulations with tens of trillions of dollars of assets under management.
Community banks need to innovate. Most of us accept that. Too much is changing around us, too many other players are jumping on our turf. Regulators seem out to strangle us. And customers demand more and more.