Lessons for bankers from the Army Ranger Handbook
Author: Dave Foss, firstname.lastname@example.org
I recently attended a meeting of the Association for Financial Technology (AFT) that featured some outstanding speakers and included executives from many of the companies that provide technology and services to the banking industry. The roster of speakers included such diverse personalities as Matt Eversmann, a real-life hero from Black Hawk Down, Rich Oliver, executive vice president of the Federal Reserve Bank of Atlanta and Brett King, author of Bank 2.0 and a global banking advisor. I left the conference with several important takeaways that all of us in the financial services industry should consider.
1. Focus on simplicity and customer experience. Behavioral change and user experience are powerful forces for the industry. Brett King cited examples of how one upset customer can create a revolt (funny how happy customers don’t seem to have that same drive and impact). Disagree? Search YouTube for “DEBTORS REVOLT BEGINS NOW!” and you’ll notice more than 500,000 people have viewed this homemade video about their bad experience with a bank.
For some customers, how they interact with their bank and banking applications are more important than the banks behind them. If not the choice of attractive check designs or “free” checking, what are the compelling reasons people select one bank over another? Certainly a friend or family member’s recommendation does carry some weight, but beyond that we are left with the experience. Mobility, a slick online application process for new account opening and a relevant rewards program could all be factors in keeping a customer.
2. Non-bankers are innovating banking. PayPal, Square, Apple and Zopa are names that you don’t tend to think about as traditional banking vendors. They have the potential, however, to change banks’ relationships with customers and how payments are transacted. Peer-to-peer lending might seem a little silly on the surface, but consider Zopa’s bad loan rate is currently running at a surprisingly low 0.7 percent. Studying how non-bank companies operate might provide clues on how to win in today’s environment.
3. The rate of change is faster than most ever imagined (or imaged) – now what?
Rich Oliver shared some advance findings from the Fed’s payment study. For the first time ever, credit card usage has gone down in spite of total payments going up. Debit is approaching 38 billion transactions a year. Check usage is going down dramatically, except for businesses paying other businesses.
Payment groups in the U.K. are pushing for the total elimination of checks within their payment system by 2018. However, the lack of global standards and the U.S.’s current technology infrastructure may be what ultimately drives the pace of adopting new payment technologies. There are hundred’s of thousands of POS terminals that are not capable of accepting payments from my iPhone, and no one has nailed who is going to pay for the retooling.
4. Keep a cool head in this changing and competitive market. In closing, Matt Eversmann suggests the Ranger Handbook has some good lessons on leadership and Friedman’s book “The World is Flat” is also required reading for those interested in competing in the coming years. For those of us who expect to make a difference in the banking community, this summary seems appropriate, “…take responsibility for your actions; exercise initiative; demonstrate resourcefulness; and take advantage of opportunities on the battlefield that will lead to you to victory; accept fair criticism, and take corrective actions for your mistakes.”