Best Banking Reads of 2014

What a year it’s been for the banking industry! From threats from outside the industry by Apple and Wal-Mart, to questions on whether Colorado and Washington banks should work with legal marijuana businesses, to regulatory shenanigans at the New York Fed, 2014 has been memorable. As the holidays approach and I think back on the year that was, I thought I’d take a few minutes to share some of the banking-related stories I enjoyed in 2014.

Regulations

  • Banks given the go-ahead on working with marijuana businesses: Marijuana may be legal in some states, but that doesn’t mean banks are ready to work with marijuana businesses.
  • How to Punish a Bank: This is from National Public Radio’s Planet Money, so it’s more of a listen than a read, but delves into the problems of effectively punishing the big banks.
  • Bank of America Adds a Mortgage Settlement to Its Collection: Bloomberg’s Matt Levine (also cited in the NPR segment) provides the data on (at the time) Bank of America’s $68 billion in mortgage settlements, and asks how effective these penalties and fines are when they become business-as-usual.
  • Inside the Emerald City: Jack Milligan, editor of Bank Director, delved into the culture of the NY Fed following concerns that regulators got just a bit too cozy with the big banks they oversee.

NonBank Competition

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Financial Research: Grappling with Technology

Bank leaders want to know more about how to leverage technology to make their institutions more profitable, but don’t know where to start, reveals the 2014 Growth Strategy Survey. Bank Director and CDW surveyed 145 independent directors and executives in June and July to uncover technology’s role in growth strategy.

Growth-Survey-Group-1Bank leaders know that technology can make their banks more efficient, and know that customer demands are only growing. But less than one-third talk about technology at every board meeting, and one-quarter of banks lack the IT staff to grow the bank.

Growth-Survey-Group-4When asked about the top technology concerns for their banks, keeping up with the evolution of mobile banking is a concern for more than half. Data analytics is also top of mind, and the survey finds that big banks are better users of data. Forty percent of respondents overall use business intelligence tools and analytics within their organization, but more than three-quarters of banks over $5 billion in assets currently use data to support growth goals.

Growth-Survey-Group-2One-third are concerned that the bank’s core processor impedes the bank’s ability to innovate. Community banks in particular depend on vendors for their technological expertise, yet half say that their core processor is slow to respond to innovations.

Growth-Survey-Group-3It’s important to note that many of these concerns about innovation and the use of data tie into growing concerns about competition from outside the industry. Eighty-four percent of respondents say that today’s highly competitive environment is their greatest challenge when it comes to growing the bank, and 83 percent worry about nonbank competitors. Banks above $5 billion in assets reveal a heightened concern about PayPal and Amazon.

Full survey results are available online at BankDirector.com.

The Growth of the…Branch?

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The American Bankers Association just released survey results that say that the number of Americans that prefer to bank within a branch actually grew within the last year. Americans opting for internet banking fell by 8 percentage points, while the number who prefer to meet their banking needs through ATM or mobile each grew slightly.  The ABA theorizes that recent technological advancements made within bank branches have made the channel more efficient and therefore, more attractive to customers.

Reflecting the view across the pond, Accenture released a study last month, focusing on the UK financial services industry, with similar findings–online banking remains steady, while the use of branch and mobile channels grow.

There are certainly branch success stories for community banks in the U.S., and most of these involve a transition to self-service, whether through the use of image-enabled ATMs or video tellers. Kennebec Savings Bank uses image-enabled ATMs to handle one-third of the bank’s deposits, and the machines allow the bank to expand in its market through self-service branches more cheaply  than through a traditional branch. And Conestoga Bank opens two-to-three times more accounts each quarter through video tellers. (For more on how these banks are using technology in the branch, please read my contribution to Bank Director magazine’s innovation section, “Will Video Kill the Teller Line?“.)

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LOFTy Expectations

I’m a big fan of LOFT, the lower-cost little sister to the slightly more upscale Ann Taylor, but their most recent sale probably lost me as an online customer.

LOFT ran a big sale Sunday that offered a 70 percent discount off sale items. Who doesn’t love a good deal? The sale expired at midnight, so I started to browse late Sunday evening on my iPhone. Unfortunately, I couldn’t get past browsing–the website constantly crashed. This isn’t the first time that LOFT’s website couldn’t handle extra traffic during a big sale.

LOFT Response LOFT’s response to my concerns voiced on social media Sunday night came on Monday morning–hours after the end of the sale–and instead of addressing the issue through that medium, they directed me to call an associate. Around the same time, I received a tone-deaf email advertising a 60% off flash sale email.

LOFT Flash Sale 07142014

I should note that the social media team at LOFT seems to be responsive to customers on its Facebook page. It’s true that I was disappointed that, instead of addressing the problem through social media, LOFT directed me to contact them by phone–an extra step that I didn’t want to take–but their team is just doing their job.

The real problem lies in the fact that marketing, product delivery and customer service aren’t strategically aligned.

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Decline in Branch Banking, or an Evolution?

treesroadunsplashSeveral news outlets have picked up on recent data from Bankrate.com revealing that 30 percent of Americans haven’t visited a branch in at least six months, among them Time.com, which called it the one stat big bank CEOs are freaking out about.

Half of Americans visited a branch at least within the last month, 64 percent within the last six months and 73 percent in the last year. A request to Bankrate.com for past data on branch visits was not answered.

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Partnering for Better Innovation

Instead of viewing fintech companies as disruptive competitors, should the banking industry embrace these innovators as potential partners?dachschundunsplash

While writing my latest for BankDirector.com, “Three Things Bank Boards Can Do to Improve the Use of Technology”, I had the chance to speak with Ryan Gilbert, a board member at Sacramento-based River City Bank. In his day job, he’s the CEO of Better Finance Inc., a financial technology company that provides leasing and credit solutions to consumers and small businesses. As both a director of a traditional community bank as well as the head of a fintech company, he has a unique perspective on the intersection of banking and innovation. So I was curious what he thought about the impact of non-bank competitors, like Square (where Gilbert serves as an advisory board member), on the industry.

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Can Big Data Go Small?

BigDataGrumpyThe term “BIG DATA” implies just that – data, and lots of it. Typically it’s thought to be held solely in the realm of large corporations – something more for Bank of America than for your local community bank.

Yesterday I attended a teleconference by Intuit, in advance of the release of their report “The New Data Democracy: How Big Data Will Revolutionize the Lives of Small Business and Consumers”, co-authored with Emergent Research. Their premise is that “Big Data” isn’t just for big business, and technology has created a data democracy that will level the playing field for small business.

Intuit predicts that small businesses will have fully embraced data on the cloud by 2020, using products already available like Amazon Web Services and Intuit’s QuickBooks Online, whose “Trending” feature anonymously aggregates customer data so small business can compare themselves to other, similar businesses across the country.

Another key takeaway? All this technology means that the customer is more empowered than ever before. Via social media, consumers literally have access to the data they need at their fingertips – for everything from finding the best deal on a coffee pot to finding the most-trusted bank for their financial needs.


Pretty cool – the Intuit Loan Finder matches small businesses to banks.

As someone that strives to live a healthy lifestyle, I love this unique banking idea.

More bank M&A? Legal experts think we’ll see a slight bump in 2013.