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What Type of Banks will Survive this Economy

Published 9/26/2012

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Survival for any business in today's competitive marketplace means placing customer service at the forefront. As part of an accelerated customer service strategy, each bank will need to adopt new ways of offering their loan products. To lessen their vulnerability to the whims of the financial marketplace, they could consider new strategies that involve, for example, restructuring their business credit and loan to value ratio policies.


There has been a shift in the last decade where consumer behavior has required companies to work much harder so that they can matter more. What this means for the financial industry is that the physical brick and mortar banking branches of the past have lost some of their value. Once considered a staple as part of the traditional banking model, branches have become less utilized, having been replaced in an era of hi tech banking products.

Mobile banking has been the fastest growing channel for the entire retail banking space. ATM machines led the way into what is now the digital financial landscape. As a result, people are always interested in new ways to save time by using their portable devices.

In order for banks to survive well into the future, they need to become familiar with all of the many ways to better serve customers from a technological stand point. This means being adaptable so as to cater to the expectations and needs of their customers.

Online Banking

When online banking began to gain traction in around 2005, most every local bank considered these services far beyond their reach. However, unlike the newspaper industry, bankers soon saw how easily they could lose out if competitors were able to outperform them in this regard.

The most successful banks from the smaller, independent lending businesses could see that online banking offered enormous opportunities to become major players in the very competitive lending arena, even with market volatility. Many banks were still hesitant to get into the game, since there was not as yet any proven ROI. This is part of the reason that online banking began as a paid service to customers. Since that time, most everyone with a bank account is familiar with and utilizes online banking.

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Financiers have been known to lend up to 75 percent of the face value of an account that is under 30 days old. Perhaps to stay competitive, lenders might institute new policies that are more lenient. For example, by instead offering customers who qualify to maintain accounts from 31 to 60 days old with a loan to value ratio of 60 percent. Accounts from 61 to 90 days could be assessed at 30 percent. more on accounts receivable financing


Technology has become so pervasive that many people cannot even remember what it was like to live without a computer in their homes. One major example of this is how the initial novelty of cell phones soon became a mini computer smartphone reality. Over the years, technology has transformed how society operates in every way imaginable.

Apple alone has invented new products and systems that have literally transformed the way that people communicate, conduct business and live their lives, in the broadest sense possible. The company has had such an impact that new products such as the iPhone, iPod and iPad have been duplicated by many other firms.


The shift of consumers absorbing their information online led to businesses such as publishing giant, Amazon, developing its Kindle, while Barnes and Noble released the Nook.

The public response and quick adoption of all of these applications resulted in notable consumer behavior changes. This has generated a consumer base that is far more sophisticated and educated. Because of this, any company that remains in the dark when it comes to online technology can expect to be very quickly forgotten about.

Bankers need to adapt to their customer's behavior by effectively communicating through platforms where they are actively listening. Otherwise, the competition surely will gain the market share very easily. Once that occurs, it may be very difficult to compete in any significant way.

Ultimately, in the ever changing world of technology and its unlimited access to data, financial institutions will either learn how to adapt quickly or risk fading into the background. All businesses must build flexible models that are designed for scalability enough to change along with the times. This requires a continuous re-evaluation of financial services such as credit and loan to value ratio business models.

Social Media

When social media started to become popular, the financial world mostly viewed it as a passing fad and an entirely social product. The most innovative businesses, however, instantly recognized the significance of social media. They quickly learned that the ability to communicate directly with customers and prospects gave them unprecedented access to consumer information. The marketing opportunities connected with this type of access are innumerable.

Along with other businesses, banks began to realize that if they wanted to be noticed, they would need to embrace social media as much as possible. Given the privacy and other sensitive issues that the financial industry deals with, it has been a challenge to implement such potentially problematic aspects to a regulated industry such as banking.

By the time that Twitter became as prevalent as Facebook, businesses everywhere were using it to connect with existing and potential customers in a variety of ways. From advertising special offers to offering a new method of customer support, social media was quickly becoming a staple of marketing.

Banks will need to overcome their fears associated with compliance, safety and the possibility of unaccountable ROI that is circulating in the banking arena, in order to move forward with their businesses. Social media implementation is necessary in order for financial institutions to be heard in the advertising and marketing space of digital media.

Not only have the most progressive banks embraced a social media strategy, but they have begun to develop methods to incorporate social media as a focal point of their business strategies. Banks that really expect to survive in the coming years must continue to blaze new trails, just as other businesses will be required to do.

Mobile Marketplace

To further their competitive edge, banks will need to take similar steps such integrating new media strategies such as blogs. Successful online marketing requires that a constant stream of new and fresh information is released to keep the public interested. Launching a mobile banking app with remote deposit capture would be something that banks could heavily leverage in the mobile marketplace.

These days, customers expect to have easy, constant and convenient access to their financial information. In addition, it will be the banks that provide continual live customer service that will see their businesses excel.

To stay in business, bankers need to survive. That means developing new and creative ways to provide business credit to get the economy moving. This might include assisting small businesses with generating working capital or meeting specific short or long term cash requirements.

One of the main challenges for the financial industry is that they can be hampered by outdated viewpoints due to the financial complexities they regularly face. However, by making an attempt to embrace new policies concerning business credit and loan to value strategies, their focus could evolve to attract a new base of customers.

The banks that will survive in this economy will be the ones that develop a strong relevancy. To accomplish that, they will need to develop systems and resources that adapt to the marketplace as it evolves. More than likely, this will require a combination of tried and true sensible financial acumen, along with enough ingenuity to remain competitive, and above all, continually relevant.

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