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Recipe for the bank of next month

The portrait of community banks is often painted with warm and comforting colors. The image is not wrong, but what it sometimes misses is that 1. Community banking is highly competitive, and 2. These banks are just as subject to social and technological changes as any organization. The banker-led committee that planned ABA’s 2012 National Conference for Community Bankers may have had those points in mind in lining up the meeting’s two keynote speakers. Amid sessions dealing with regulatory burden, these two presentations focused on competitive factors that could have as much impact—if not more—as the Dodd-Frank Act.

Recipe for the bank of next month

“The Holy Grail [in business] today is to make a cultural connection,” said Jeremy Gutsche, consultant, author, former banker (Capitol One), and head of, in his presentation.

He used the example of Smith-Corona to make the point that too much focus on what you do can lead to your downfall. The once flourishing typewriter company kept telling itself, “There’s still a market for our products.” Consequently, it kept improving the typewriters it made, striving to be the best typewriter company in the world—seemingly a worthy pursuit. Yet, said Gutsche, the company was not thinking of its customers’ experience and of how technological trends intersected with that. Legions of secretaries pounding away on typewriters—even high-quality electric typewriters—were being replaced by the word processing software of personal computers.

“What are you trying to do?” Gutsche urged bankers to ask themselves. Are you trying to be a better bank or to make money by helping your customers? The two are not mutually exclusive, but Gutsche said that banks put too much focus on what they currently do and regulations, and miss the bigger opportunities arising out of technological and social changes. He urged bankers to look beyond their industry for ideas.

“Think like you just graduated from college and had entered banking,” Gutsche continued. “How would you ‘eat the lunch’ of established banks?”

The points made by second speaker Scott Klososky dovetailed with Gutsche’s. Klososky—a consultant, entrepreneur, and author (most recently of The Velocity Manifesto)—observed that technology is a great leveler. “Never before could one person or one bank connect with two billion other people—without anyone in the middle—simply with the click of a button,” he said. He called this “frictionless communication.” He continued: “People share information with their friends, so if a bank provides information that is useful, people will pass it around, and earn you the right to offer an occasional product message.”

Another concept of the new business world is what Klososky called the “Recommendation Economy.” He said, “People will take time to talk about you. You need a formal reputation management system in place.” If you don’t please customers, your reputation “can get smashed in hours.” He also addressed user-generated content, crowd dynamics, and “rivers of information.”

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Bill Streeter

Bill Streeter has been a full-time business journalist for 40 years, 34 of them with ABA Banking Journal. During his time with the magazine, he rose from Assistant Managing Editor to Editor-in-Chief. He has guided the magazine’s editorial direction since 1985 and has been an observer of momentous changes in banking, from the introduction of ATMs to the 2008 financial crisis and passage of the Dodd-Frank Act. In 2012 Streeter became Editor & Publisher, responsible for the Banking Group overall including the magazine,, and related e-newsletters.

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