Size, scale and reach — once a competitive advantage in banking — has now become a major hindrance to delivering quality customer service. Over the past decade, the U.S. banking industry has been committed to expansion at the expense of better technology and infrastructure. In the meantime, more nimble competitors have emerged such as Simple and Movenbank and they have changed the landscape forever. Banks that were "too big to fail" are now too big to move and something needs to be done.

To be blunt, the banking industry has suffered from an addiction to "short-termism." Boards and investors focused on expansion and profits ahead of building for the future.

Growth became king and technology budgets were cut. Manual processes, Band-Aid solutions and corner cutting were frequent and this resulted in an unsustainable operating model. Because of this, the major U.S. banks can't keep pace with the changing needs of their customers. They have become another manifestation of the "standing still is moving backward" proverb that resulted in the demise of Kodak and Blockbuster.

A key indicator that U.S. banks have got it wrong is the sheer number of employees they have. The five major U.S. banks have over 1 million workers among them. In comparison, the top five U.S. technology companies have fewer than 200,000 staff. Sure, most of the tech companies don't have retail stores like a branch but even if they did, they would still not be in the same ballpark.

Where the major tech businesses have focused on lean processes and technology to improve performance, banks have focused on more people. More importantly, all of these tech companies are beating the banks at their own game — making money.

In comparison, Umpqua Bank, which only operates in three regions and has fewer than 4,000 employees, has embraced agility and innovation to redefine its branch channel. Umpqua has designed its branches to be a channel for communications rather than transactions.

This allows it to provide a unique customer experience with a smaller number of in store assistants. The smart design also allows branches to be built in 45 days compared with the industry average of 120. Umpqua realized it couldn't compete on size and scale and instead focused on speed and innovation.

U.S. Bank, at only 60,000 employees, has pioneered a number of payment and loyalty products over the past two years. The bank has initiated a groupwide strategy to explore new technology.

Last year, the bank released a first of its kind "tap and go" wristband with MasterCard that uses a secure payment chip. In October U.S. Bank partnered with the retailer REI to deliver an instant in-store credit card approval process. All customers had to do was download a mobile application, apply and see if they were accepted. REI was able to increase the number of credit cards issued, and shoppers benefited from being able to use rewards instantly in store.

So why have Umpqua and U.S. Bank been able to succeed where others have failed? Both banks have used the constraints of their employee base as a mechanism to drive a culture of innovation and communication. Keeping employee numbers low has provided greater control over company ethos and culture. Umpqua consistently ranks in the top 25 places to work in the U.S. on the back of its "Connect" employee program. U.S. Bank has also received plenty of plaudits for its innovation training program. To make it easy for staff to engage, share ideas and develop relevant networks they have both implemented their own social network for staff.

Over the next couple of years, the big four banks will need to significantly alter the way they allocate their budgets. Changes are required for two reasons. With branch transactions in serious decline, the amount of money allocated to this channel has become lopsided. It has also become apparent that employees don't have the tools to collaborate and communicate seamlessly across regions and functions. It has become too difficult to manage and it is impacting efficiency and productivity. With time-to-market such an important consideration, banks can no longer afford to expect their staff to work their way around it.

We are already starting to see the first signs of change. Last month, Bank of America announced its intention to close around 750 of its 5,700 branches. Citigroup announced its plan to cut 4,500 jobs this quarter. It's time for banks to invest in downsizing and new technology, then decide their next move.