Of Barnacles and Banks

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Early in the 19th century, a young man was so taken with barnacles that he actually wrote books about them. One thing that captured his imagination was how easily changes in the water could wipe out most of a population. But he noted that sometimes a few barnacles managed to adapt and survive. These would thrive and overtake any space left vacant by their less fortunate siblings.

Perhaps you have noticed: banking waters are changing. Financial institutions that do not manage to adapt will find themselves losing ground to those better suited to the emerging environment.

Consider this recent report from Finextra.com: “At its investor day, [JPMorgan Chase] confirmed that the headcount at its consumer and community banking division will be cut by 8000 to 149,000 people this year.” That’s a wide spread as predictions go, suggesting an uncertain environmental future.

In another article, Finextra reports, “A third [of millennials] … think that they won’t need a bank at all in five years …” Where do they expect to obtain financial services? This telling statistic appears earlier in the same paragraph: “Nearly three quarters of America’s millennials … are more interested in hearing from tech firms about financial services.”

Note: not as interested in hearing from tech firms, but more interested. Today’s competition comes from the likes of Google, Amazon, Intuit, Paypal, Apple, and myriad others in or soon to be in development. I would be remiss if I didn’t add to the list retailers as well. Like, say, Starbucks, which boasts 10 million using its app for payment and tipping.

These are new waters, in which clients don’t require a financial services provider to have “bank” or “credit union” in its name. Indeed, at the moment, not having either seems to portend an advantage. Bank and credit unions, your branding challenge awaits you.

With 75 percent of millennials inclined toward tech firms, serving up relevant services in a manner that’s easy to access and intuitive to use is paramount. That, and—the newest water change—providing an enjoyable and complete experience. As demand for services delivered online grows, so does demand for extras such as live chat, prompt fulfillment, entertainment, information, discounts, privileges, useful helps, and more.

Happily, there is one thing a financial institution can do that a barnacle cannot. A financial institution can willfully change its DNA. It remains to be seen which ones will.

As for the barnacle aficionado, his father had hoped to make of him a physician and, failing that, an Anglican parson. It was not to be. Robert Darwin’s son Charles had a boat, the H.M.S. Beagle, to catch.

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