For a moment, it was hard to tell if this was a session of the Exponential Finance conference or a meeting of “Bankers Anonymous.”
“I used to be addicted to these fees,” veteran banker Jay Sidhu told his audience. “I decided, never, ever again. I want to be part of the solution now.”
Perhaps this was as much a change of business strategy and concentration as a change of heart, though many commentators at Exponential Finance criticized banks for their longtime dependence on fees such as overdraft charges. Exponential Finance is sponsored by Singularity University, CNBC, and Deloitte.
Before making his declaration, Sidhu, chairman and CEO of $7.1 billion-assets Customers Bancorp, Inc., had been reeling off statistics about consumer fees charged by banks. This included statements that:
• 68 million Americans are unbanked or underbanked.
• Banks charge $32 billion annually in overdraft fees, which he said meant “allowing or creating over 1 billion overdrafts each year.”
• Those charges, plus $7 billion charged by payday lenders in fees, total to more than three times what America spends on breast cancer and lung cancer combined.
“Why are we doing this?” said Sidhu. “This should not be happening in America.”
“Disruption of banking is bound to happen,” Sidhu exclaimed. “It is happening right now!”
For an increasing number of financial institutions, customer satisfaction and customer experience are top-of-mind, and guiding their strategic plans. This is important, because new competitors, some from within the banking industry, and some outside, are offering up some creative banking products and services from with consumers can choose. Many of these options include some form of digital banking, which can circumvent the need for broad branch networks for some customers, and introduce relatively low barriers to entry for non-traditional competitors.
Overview by Ed O’Brien, Director, Banking Channels at Mercator Advisory Service
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