Saul Bellow once said that "ignorance runs deep when the need for illusion is great." If I didn't know better, I'd think Bellow recently had lunch with a handful of bankers. Well, with the exception of a few institutions (and I mean a scant few banks), it's not that far from the truth-particularly when it comes to innovation in electronic banking.
Sure, lots of bankers scrambled to develop Web sites the minute Internet addresses starting turning up in every television and radio commercial nationwide. It's that old "build it and they will come" idea, right?
Wrong. They may come, but they won't stay, and, worse, they won't be back. Would you revisit a place where there was nothing to be gained? I doubt it. And neither will your customers.
The challenge with electronic banking is that it opens up the playing field to competitors far more adept at mastering change. And it requires execution of razor sharp strategy: Have you really thought about the risks and rewards of Internet banking? What about content; what can customers and potential customers do at your Web site? We all know that Wells Fargo is signing up a gazillion customers a week for on-line banking. Forget Wells; watch what everyone is doing-traditional and non-traditional competitors alike. What, for example, are Montgomery Securities, GE Capital, and American Express looking like these days? Have you ever taken a close look at Sonnet Financial? You may want to; they're offering foreign exchange services to small business customers that were once the domain of correspondent banks.
It's tough to process all of the information, but this is stuff you have to know-every minute of every day. It's a war out there; play to win. Winning is a lot about luck, but it's also about never counting out the competition.
Bellow has a soul mate in Intel CEO Andy Grove. Far more pointed in his message (or is it admission?), Grove has been widely quoted as saying that "only the paranoid will survive." Oh, Andy, how right you are. Certainly, he doesn't mean to imply that there is not vision, talent and opportunism involved when making strategic moves in the marketplace. But his point is well-taken: A healthy dose of "What's Morgan up to lately?" never hurt anyone. It's those players that aren't paranoid who risk facing their demise, or ceding control to an acquiring institution.
As the technology revolution takes firmer hold of the financial services industry, it's clear that information-more to the point, how you get it and what you do with it-is the name of the game.
Paranoia aside, it is information and analysis of the on-going changes in electronic banking and financial services that prove vital to industry players. As part of our own efforts to better serve readers, we, too, have been embracing change.
In April, FutureBanker, a new, monthly American Banker magazine, will debut. It's editorial mission is to analyze the strategy of players and implication of industry events and technological innovation as they relate to capturing new market and revenue opportunities fostered by electronic banking.
FutureBanker, the genesis of which was American Banker's FutureBanking supplement (the March publication marks the final issue), will provide analysis and commentary on the rise of the electronic financial services enterprise-broken out by line of business. Each month, readers will gain insight into the emerging trends, business strategies and technology innovations that are redefining how financial products and services are distributed to customers.
The fact is, the rise of banking's electronic frontier-the New Age of Banking, as I referred to it in days gone by-is on everyone's mind, even Jack Kemp's. Recently, while sidelined for several hours in San Francisco International Airport due to bad weather, I sat with Kemp in a bar; we talked about life after the presidential race, his old, glorious football days (man, can he tell football stories) and growing racial tension in America.
As we were talking, I glanced down at the book he had been reading. It was a book on the transition of money from paper currency to digital cash, and its implications to the economy, society and, of course, the Federal Reserve. Kemp's point of view: The Fed has to take a stand on this, emphasizing that his greatest concern is that not just anyone be able to issue electronic cash, a phenomenon that could threaten the stability of the banking system.
The comforting thing about change is that it's constant. I tell myself that every night; that way, I know what I'm waking up to each morning. That's my competitive advantage; I absolutely bank on change. So should you, lest you wake up to find your illusion of banking shattered.
- sraeel tfn.com
