It’s been five years since the LehmanBrothers collapse, and only two years since the Durbin Amendmentwas enacted, prompting many changes in the banking industry.
Not the least of these changes is the profound impact on bankingchannels, and their increasing importance on the efficiency,productivity – and profitability – of banks and creditunions.
Five years ago, the number of FDIC-insured commercial banks andsavings institutions was at or near its peak of almost 100,000branches. Today that number is trending downward in many markets,with some financial institutions undergoing branch transformationsof one form or another, including the increasing use ofmini-branches and hub-and-spoke branch strategies.
Channels – previously unheralded and thought to be mature anduninteresting – have since become important and a key component infinancial institutions’ strategic plans. Process improvements andadvances in channels technology have resulted in increasedefficiencies and revenue potential at financial institutions.Channels are central to an evolving omnichannel strategy based oncustomer expectations of anywhere/anytime access to their accountsand deep knowledge of their goals and objectives.
Contrary to some viewpoints within the industry, branches remainimportant and relevant – perhaps more so in some instances. Evenwith the increased use of self-service channels, branches remain atthe epicenter of many consumers’ banking world because they need tobe able to speak and interact with knowledgeable tellers and otherpersonnel on important issues that can’t be easily solved throughself-service methods. Also, customers must still visit branches tocomplete account-opening paperwork, pick up instant-issue cards,and speak with subject matter experts on a wide variety oftopics.
The events over the past five years have certainly been turbulentand challenging, but have prompted many financial institutions tobe more creative, resilient, and stronger – characteristics thatare likely to continue over the next half-decade. As the old saying(and recent Kelly Clarkson song) goes: what doesn’t kill you makesyou stronger. Certainly an apt description of the recent andcurrent state of banking in the U.S.
Central to this strategy is the need for broad interoperabilityacross products, systems, and lines of business. This allowsvisibility into key information residing across diverse solutions,something not easily achievable-and in many cases not possible-inthe past.
With such capabilities, financial institutions will be embarkingon an extended journey toward superior customer interaction andengagement, with a 360-degree view of customers’ wants, needs, andbehaviors, and new ways to differentiate their products andservices for years to come.
Follow Ed O’Brien on Twitter @ed_ob.