It feels like banking is about to reach an inflection point. Credit distress has largely subsided; the new regulatory order, if not entirely favorable to banks, at least has become clear; reputational issues have begun to repair themselves; and important new technological advances like mobile banking capabilities have been widely adopted. So where does the industry go from here?
To hear bank executives tell it, the sector is probably headed toward a model that is part Apple and part Amazon.com, with an emphasis on consultative service, clean delivery, and innovative ideas that delight customers and secure their loyalty. (Spend 10 minutes with a bank CEO or at an industry conference; I guarantee you'll hear references to one if not both of these stalwart brands of the new economy.)
I definitely get the allure. Who wouldn't want to have the kind of impact Apple has had on consumer behavior? Who wouldn't wish for the near-flawless execution of Amazon.com, which fulfills customers as brilliantly as it fulfills orders?
But there are a couple of important distinctions between these companies and the banking business that must be addressed first. For example, while a focus on cross-selling makes perfectly good sense as a general business strategy, it doesn't hold up very well in an Apple business model context. Notice how when you visit an Apple store, nobody ever says, "Well, sir/ma'am, I see you have one of our phones. Have you considered trying one of our tablets?" There's no need to push products on us because we already know that we want them. We'll even line up around the block to get them. (Whereas a line around the block is never a good sign for a bank.)
Banks can refurbish their lobbies to look more like Apple stores; they can (and do) make bank products available at any time, through any channel. But until they get their offerings truly in sync, and care less about whether employees will make the cross-sell and more about what would make customers actually want to cross-buy, the Apple model will be tough to emulate.
Standards set by Amazon.com pose similarly high hurdles for financial institutions. When Jeff Bezos founded the retailer in 1994, he named it after the world's largest river by volume. Seems a little grandiose for an online bookseller, which is all Amazon.com was back then. But now that it sells just about anything under the sun, the name really fits.
Like millions of other shoppers, when I go online to research or buy a product — be it a book, a pair of sneakers or an area rug — I wind up at Amazon.com. If I don't go directly to the site from the outset, search results are likely to point me there. Does any bank have this kind of prominence with consumers?
The good news is, there are lots of other strengths to Amazon.com and Apple that are within banks' reach. Customizing offerings looks possible in the era of big data; the infrastructure for quality customer service is there and just awaiting improvements in execution; and even though banks are challenged on delivery now, I think they'll solve for this eventually.
Other gaps with Amazon.com or Apple will be tougher to bridge, but don't be deterred. After all, the whole point of having goals is to help us get from where we are to where we want to be.
On a personal note, this column is my last for American Banker Magazine, as I will be starting a new adventure in journalism this summer. Thank you for sharing your stories, comments and time with me over the years. It has been a sincere pleasure.
Editor in Chief
American Banker Magazine