“All of us, at this point in time, have to question what’s our future?” says Doug Tippens, president and CEO of $184.1 million-assets Bank of Commerce, Yukon, Okla. “If you don’t care and you don’t want to find out, then you really are in the dark.” Tippens has attempted to shed light on what’s to come by holding quarterly focus groups with youth. “The reason why I decided to have these focus group meetings is to try to understand how they think about technology and how does that relate to the bank itself?” he says. “My fear is that one day, we will wake up as old, ‘codgy’ bankers and all my customers will be gone because I didn’t embrace technology.”
Tippens has rounded up participants under 40 years old from area colleges and businesses. He’s discovered technology is king and most transactions are conducted online: “They want the least amount of friction on the transaction as possible.”
Jean Scherrer, vice-president of retail banking at $83.5 million-assets Fox River State Bank, Burlington, Wis., also has noticed the trend toward transacting online. Her bank recently held a focus group with 17 year-old high school seniors. She discovered they use their phones for everything. “People are taking advantage of the technology and using mobile banking and online services,” says Scherrer. “I think, sadly, bricks and mortars will be going away over time.”
In response, Fox River rolled out mobile banking on Sept. 1, 2012. It’s also working on an option for opening an account online. One of the major hurdles: regulatory compliance. Bank of Commerce struggled with this, too, but already takes loan applications online.
At a recent focus group, Tippens timed participants as they opened accounts on larger banks’ websites. Some took just 15 minutes. “From a bank manager’s standpoint, I’m sitting there going, ‘Well, how did those people comply with CIP [customer identification programs], how did they comply with all the regulations that I’ve got to comply with?”
Tippens and other bankers recognize that, as he says, “Commercial banking is changing underneath us.” In a reference specifically to young people, he adds: “I feel like you’re two or three clicks away from being out of their life forever.”
But banks have some things to teach the young. One of the goals of Fox River’s focus group was to learn what teens are being taught about banking. The answer? Not enough. “This particular group of students all had bank accounts, but there was a lack of understanding of what they had or why,” says Scherrer.
To bridge the gap, Fox River employees spoke at a local high school about banking skills, and is developing classes on topics like budgeting.
“The younger generation is steering our ship,” warns Scherrer, “and if we do not connect with them, we will miss the boat!”