I recently taught a graduate school banking class where, at its conclusion, a student said, “I just want to thank you for not being an alarmist.” But that comment puzzled me since most of my subject matter was about the rapid change in the industry.
In fact, in scores of speeches in recent years, I have worried that I might be putting off some folks with my preaching about the need to re-evaluate strategies and practices. My mantra to banker groups has been, “Evolution does not mean elimination. Failing to evolve, however, guarantees elimination.”
I inquired with the student why he thought I was not alarmist. He said he has felt immersed in doom-and-gloom talk about the banking industry. “It seems like some people believe that the key to success in banking is to get rid of just about all of our branches and most of our bankers.”
He added that he appreciated hearing a message about bankers continuing to be at the center of the industry — that banking will still be about relationships and working with communities — regardless of the technology banks are using.
His statement crystallized a thought in my mind. Much of the fear our teams experience amid the predictions of banking’s future derives from not understanding how (or for that matter, if) they will be a part of that future.
There have been fervent predictions for years that branches and branch jobs would not be long for this world. Most have been wrong, but there have been modest reductions in both in recent years.
One thing to bear in mind is that a nontrivial portion of branch closures (by larger banks) are attributed not to banks trying to do more with less, but realizing that they need personnel and real estate to make a branch strategy work. These banks exited markets where they had a relatively small branch presence and therefore less ability to operate an effective network. It can be argued that many closures were actually acknowledgment of the need for robust branch networks.
Meanwhile, stories of increasing automation in other industries also contribute to the tensions felt by some of our branch managers and front-line bankers.
An example was McDonald’s stock hitting an all-time high recently after announcing an aggressive rollout of automated ordering kiosks to replace many cashiers.
Shortly after that news, I was asked if the McDonald’s story was more evidence that technology will replace front-line employees in most businesses, including banks. I suggested that it is definitely likely there will be fewer folks with the title of “cashier.” It is probable that McDonald’s will need fewer total employees per restaurant to produce the output they provide now.
But I added this caveat: McDonald’s kiosks will not be preparing the food, serving the food, keeping the restaurant clean or managing the teams. Kiosks will also not be resolving ordering mistakes or stepping out to assist a customer needing help. Kiosks will not be assisting with children’s birthday parties at McDonald’s or chatting with the regular morning coffee crowds. Kiosks will not smile and thank customers.
What kiosks will do is turn over a few of the most basic tasks in a fast-food restaurant to customers. For easily understood and frequently repeated tasks, self-service technology may actually produce improved customer satisfaction.
Nevertheless, we will not be looking at employee-less operations in these restaurants. The business will still rely on competent teams of multitasking individuals in each store.
No, I do not believe that fast-food restaurants and bank branches are an apples-to-apples comparison. However, whether it is bank branches, restaurants, airport ticketing areas, Amazon-influenced grocery stores, or any number of businesses, talented and engaged employees will remain integral to their success.
I frequently suggest to managers of all levels that if they intend to “lead their banks” in the future, they need to “lead their bankers” into it. Our better employees are not as concerned about future staffing models needing fewer personnel as they are in knowing that there will be critical new or modified roles for them to fill.
Your best employees know and accept that evolution is inevitable. When you help them see that the future success of their bank will still rely on core groups of good people, they will be far more likely to remain engaged in building and fulfilling whatever new and improved business models you implement.
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