Data scientists have concluded at least half of all fintech articles contain the sentence: “Community banks are not known for being on the cutting edge of technology.”
I’ve written it many times, and it hurts a little when I do. It happens to be true, but I’m wrong to be glum. Maybe the community of community bankers at large has seen too many tech promises fail to deliver, and so they remain skeptical of the Next New Thing.
This could be true of tech deployed at the front- and back-end of the bank, though it is the customer-facing side that sees the most fads come and go.
The customer has no concern about the backroom SaaS suite of data robots culling the bank’s activity for marketing opportunities or increased efficiencies. As long as the money is handed over upon customer request, few care what’s gone on behind the curtain. But, the bank, at least to the outside, has to keep a fresh face.
Not long ago it was a focus on websites. Now the focus includes that full-service branch inside customers’ pockets. Commercial or retail, no one disputes the necessity of continually investing in the digital branch and making sure it meets customers where they are. But community bankers should embrace their tech skepticism.
When it comes to customer-facing tech, two examples come to mind that demonstrate unkept promises: Chip cards and social media.
Chip cards were going to dramatically cut credit and debit transaction fraud, remember? And the other was going to usher in all sorts of new customers through share-fests of daily activities — fun mixed with commerce connecting us to new friends (or friends from high school you lost contact with for a good reason … but I digress).
If I remember correctly (IIRC in tweetspeak), the Europeans, who are generally open to tightly-regulated systems, were early adopters of chip cards; and the returns looked good. I attended a lot of banker conventions at that time, and I wasn’t the only one a little confused by the promises. Sure, making the card “smarter” with a chip must offer enhanced protection opportunities! But if I’m not asked for a pin or password, how does it stop anyone from using it if I lose it?
In hindsight, the decreasing numbers of in-person card fraud had little to do with the chip. As commerce online increased, the added security offered by the chip was rendered useless. These days, fraud blossoms online. Today, the United States is No. 1 in credit card theft.
Who knows how much money the world spent converting to chip cards and a gazillion chip reader devices? Someone must have made a lot of money. The chip turned out to be as “secure” as making sure you sign the back of the card.
A friend of mine used to write “ASK FOR ID” on the signature line of his credit card. I think requiring some form of ID — a low tech and sensible solution — would have been a move community bankers would have been happy to champion! For the life of me, I’ll never understand why a pin, one not printed on the card, isn’t required for every single transaction we make with a credit or debit card.
The story of social media is still unfolding, but I think it’s safe to conclude bankers have little need for it and get nothing out of it. I’ll pick on Facebook, but Twitter works too. (Remember Myspace?) When these curiosities exploded, I covered how community banks were jumping in. If you weren’t on Facebook, you would lose untold opportunities! Boy, was it a struggle. I could sense the bankers’ reluctance to be on these mediums. Besides CD rates and a few pictures of the charity barbeque in the parking lot, there wasn’t much for bankers to say in this space.
And there still isn’t. When a company that is expected to be buttoned-up lets its hair down to fit in on social media, well you get the picture. I mean, who invited all these parents to the prom?
Sometimes you have no choice. Banks had to go along with chip cards because that’s the way it went. It was like Betamax versus VHS — and now you can guess how old I am. But other times, you do have a choice. Do you need to hire someone to run your Facebook account? Really?
Don’t worry about that funny feeling you get about the latest craze. You might very well be right.