5 ways to increase confidence in the banking system is essential for a healthy robust base in the economy. In the past, the crisis of confidence during the onset of Great Depression was a contagion that spread through the banking system as the consumer lost faith in the banking system. The consumer was demanding their money in mass, and consumer bank run was widespread that banks ran out of money before meeting all the consumer demands. This event led to many bank defaults with many consumers being left penniless as banks ran out of money. The bleak situation of the Depression became dire as the core relationship of banker and consumer collapsed in the 1930′s.
As we fast forward into the future year of 2008, a repeat performance of a collapse in confidence was in progress between banking and consumer. Banks were exiting their localism roles in the communities. The banks began to abandon their unique relationship with the consumer and their community. The consumer was the center of the traditional bank’s focus and relationship, but the consumer focus was becoming less of a priority to the banking system.
As a result of the change in behavior, the consumer was a witness to the change of staffing, service, sales, and ownership to provide an environment not acceptable to an environment of value and excellence to the consumer . The consumer was a victim to change of their relationship partner, but instead of demanding change that is conducive to reinstating of a healthy relationship of banker and consumer. The consumer did react in a way that accepted the decrease in quality of service from the industry. Some consumers went from savors to debtors. They compromised ethics and financial prudence to obtain easy credit or funds with knowledge of the ability to pay was only temporary at best. Therefore, the consumer did not play well in the demise of the special relationship between banker and consumer. The blame is plentiful for both consumer and bank, but the standards of Personal Responsibility cannot be the scapegoat for the banking industrial with financial literacy crisis in America.
Furthermore, the consumer could use the power of unity and media attention to demand business practices that is customer centric and long term strategic business model that would bring consistent long term growth year over year by measuring the bank’s impact on the financial health of the consumer and community. However, the wounded consumer played a part in the game. The consequence of the buckling of the relationship between bank and consumer has had profound negative impact in the near collapse of the economy in 2008 to the current anemic recovery in 2013. The time is now for the visionaries and intellectuals in banking and financial services to step forward in a partnership with the visionary consumer to forge a better way. The importance of the relationship between banker and consumer is the catalyst to the spread of prosperity that made an economic superpower of the United States.
The collapse in confidence is clear in the consumer of financial services, and the alternative avenues to the banks will flourish under the technological revolution in process. The 5 ways to increase confidence in the banking system is as follows:
1) Focus on Traditional Elements of Banking as Top Priority
3) Battle Against Regulatory Environment Inclusive of Community Banking and Relinquish Tax Exempt Status Fight Against the Credit Unions
4) Provide Loan Services for all Clients and Business Owners to Promote Growth in Consumer Relationship and Profitability in the Bank.
5) Focus on a Financially Healthy Community in lieu of Fee Income to Insure Long Term Growth Strategy through a Financially Savvy Clientele.
- Top Ten Lessons from the Lehman Collapse (forexlive.com)
- The Art of Banking: How Financial Services Approach Great Customer Experiences (cmswire.com)
- Can Financial Institutions Make Banking Enjoyable? (thefinancialbrand.com)
- If you’re not rich, your bank wants you to overdraft (rippedenvelope.com)
- Increase Mobile Banking Adoption (hispanicbusiness.com)
- Tanya D. Marsh: Community Banks Are Failing; Pawnshops Are Growing (huffingtonpost.com)