A customer's perspective: It's time to slay a few of banking's sacred cows

by Daryl Cornell, CEO, Triton Systems

We are in the midst of what appears to be a global revolution in banking. Pity the poor financial institution CEO struggling to make strategic decisions in critical areas such as branch transformation, staffing, security and ever-costlier ATM infrastructure. 

As if this weren't enough, now hordes of fintech startups are threatening to poach the next generation of customers. What is a bank to do?

Clearly customer needs and perspectives vary. However, some personal observations may at least help to advance the discussion and at best be broadly applicable.

Relationships matter

Let's face it, there is no shortage of banking options today. Taking deposits and making loans has become in many cases a commodity, fueled by internet apps providing near complete transparency.

I have two personal accounts and several business accounts, each established through a relationship with a banker and a bank. These folks have taken the time to get to know me, my business and my financial needs.

None of this has happened overnight but through years of what can be described as "polite persistence." Buildings, reputation, years in business and fancy logos matter not. I bank with people, not brands.

Physical presence is overrated

As a former Army officer, my first adult bank was one whose facilities I have never seen. This bank aggressively targeted me while attending university and has held on to me for 35 years with a culture of service.

A second personal bank was added as the result of relationships cultivated over the years. While this bank happens to be local, it is people, not the physical plant that earned my business.

Decisions regarding company banking have followed a similar path. Both personally and professionally, physical presence has never been the primary factor in my selection of a financial institution.

Bank branches should be strategic

A large percentage of young adults have never visited a branch. If that doesn't keep bankers up at night, it's unclear what might.

Branches are the single largest cost for financial institutions and to the next generation of customers they are largely irrelevant. Ouch!

In response we have seen heavy investment in interactive tellers, cappuccino machines, dogsitters and mood lighting. Will this really capture market share or is it throwing good money after bad? I don't pretend to have all the answers but I do know that even as an old guy, it's been a long time since I've been in a branch.

Technology has greatly reduced my dependence on branch banking. Remote check deposit, internet banking tools, white label ATM cash access and merchant cash recycling have all fueled the contraction in branches.

On those rare occasions when I do visit a branch, it's definitely to interact with a real person, not a kiosk. I would prefer that my financial institutions cut costs and rationalize footprints, even if that means a little travel when I do need a physical branch. 

ATM programs need to be scrutinized

Perhaps I have been spoiled by a bank that rebates my ATM fees every month, giving me the flexibility to use any ATM in the world. However, the number of installed ATMs bearing a bank's logo does not impress me or increase my confidence in bank stability.

Banks have been slow to react to the dramatic change in the ATM landscape over the last 20 years. The days of having to field a fleet of ATMs to keep customers out of bank branches are over. There are now an estimated 500,000 ATMs in the U.S. alone. Customers have long since been trained not to wait in teller lines in order to get cash.

Either a bank makes money operating its fleet of ATMs or it doesn't. If not, banks should switch to a lower-cost ATM model, rebate ATM fees or simply outsource their ATM program. A money-losing ATM fleet justified in the name of "marketing" makes little sense anymore.

None of these personal observations is novel or a magic bullet. However, there appear to be a few sacred cows out there in need of slaying as financial institutions attempt to differentiate themselves and crawl out of the commodity swamp.