There are half as many small banks today as there were in the year 2000. If this trend continues, half of that number will not exist in 2030. The traditional banking model is being squeezed by alternative payment methods, interest rate compression, new lending models, and regulatory expenses. Large banks are significantly outspending their smaller counterparts on technology and marketing. Venture capital firms have recognized the opportunity and are spending billions on FinTech and blockchain technology startups. These FinTechs are consistently increasing their market share in payments, remittance, underwriting, investing, deposits, and lending every year.
For today’s small banks to remain viable, they need to quickly evolve, drive new efficiencies, and seek out new markets. They can’t continue to rely on the same technologies, skillsets, and manual processes. Like a small business, they need to be smarter and faster than their larger competitors. Small banks must start thinking like digital banks and embracing FinTech partnerships and new digital marketing opportunities.
Banks are sitting on a goldmine of customer transactional information, but they are not using it to better serve their clients. If customer receives a large checking account deposit, prompting them to open a CD would certainly be great cross sell opportunity while increasing customer loyalty and trust. Big technology companies are anxious to get into the payments space because they recognize the tremendous marketing value of this information…and they know how to use it!
Bankers tell their customers to “plan for tomorrow.” It’s time they took their own advice!