Feb 2 - The Independent Bankers Association of Texas recently hosted more than 200 bankers and 80 exhibiting companies at the Omni Fort Worth Hotel to seek and provide answers to the most pressing technology needs facing community banks today. Below is a recap of trends, key learnings and other hot topics discussed at this two-day, technology-focused event attended by industry leaders from Texas and beyond.
What are the most pressing technology needs facing community banks?
Without a doubt, technology has played a major role in the evolution of the banking industry over the last several decades. Bankers have, for the most part, responded well to these changes. However, it seems the most recent years have seen a fast-forwarding of technological impact, and many community bankers now feel like they are scrambling to keep up.
Branch transformation, remote deposit capture, mobile banking and personal financial management are just a few of the 900-pound gorillas that community banks are considering in their efforts to reach the next generation of bank customers. All the while, compressed margins and increasing compliance costs are limiting the amount of money that bank boards are willing to commit to new technology solutions, which often fail to produce the desired return on investment.
Is this a perfect storm for community banks?
The opening general session of TechMecca 2013 tackled this question head on. Joe Calloway, author of Becoming a Category of One and the upcoming Be the Best at What Matters Most maintains that the future is not so bleak for community banks as long as they do not forget the core value proposition of community banking. “All of the technology in the world will not make your bank the best at customer service,” Calloway said. “Technology is the icing on the cake of an organization, it’s not the most important way for you to show your customers that you care and are available to serve them.”
Jim Van Dyke, founder and president of Javelin Strategy and Research provided insight into consumer attitudes toward new technology channels. “Forty percent of customers surveyed between 2009 and 2012 don’t see the value in mobile banking,” Van Dyke said. Even more customers (44 percent) have concerns about the security of mobile banking that will keep them from embracing mobile devices to do their banking.
Van Dyke also pointed out that members of Generation Y (currently 18–34 years old) are more likely to prefer visiting a bank branch to monitor their primary accounts than other segment of consumers. Twenty-five percent of older Gen Y members (25–34 years old) prefer this method, nearly double the average (14 percent) of all other consumer demographics.
That is good news for community banks in the short term, but not a guarantee that they will not have to expand customer interaction channels in the future. While these statistics are bound to change over time, they support the claim that, currently, technology bells and whistles in the banking relationship are still a “nice to have” convenience, not a “must have” for most consumers.
Is there a universal answer?
If there is a single conclusion to be taken away from TechMecca 2013, it is that the waters of financial services are getting murkier every day. Old players like the megabanks and payments processors are looking to expand their footprints, while big data companies like Google are aggressively pursuing the holy grail of consumer financial data.
For now, community banks have one major advantage — consumer trust. Primary banks are still seen as having the highest level of trust for the protection of consumer data, far outpacing the non-financial institution companies like Amazon, Google and telecom companies, all of which have flirted with taking a larger role in our financial lives.
“Big data has big plans for financial services but it’s important for community banks to remember that, as the owners and trusted protectors of their customers’ data, they hold the cards,” Chris Williston, IBAT president and CEO, said. “It’s most essential that community banks gauge their technological expansions on meeting customer needs, not keeping up with the most cutting-edge innovations in the marketplace.”