The "It's Not My Job" Phenomenon

Heeelp1.png Editor's Note: Everybody, at one point in time during their career has heard the saying, "I don't know, that's not my job." As technology continues to evolve quicker than financial institutions best practices do, we see/hear this a little too often. In this blog, we discuss this very phenomenon, especially as it relates to the services provided to small businesses hidden within banks and credit unions.

That small businesses are one of the most underserved segments in financial services is not a secret. Recent research by Javelin's Jacob Jegher and similar work from Christine Barry at Aite documents the need of these organizations as well as the failure of banks and credit unions to meet these needs. Christine's most recent research suggest that 18 percent of small business owners are likely to change financial institutions if they find the services and products they want/need for their companies elsewhere.

I know from having spoken with Christine that she feels this attrition number is likely inflated a bit by the frustrations small business owners want to express to their current banks and credit unions. Maybe. Maybe not. One very digitally savvy financial institution recently shared that they are losing 10,000 small business customers a year because they do not offer products and services tailored specifically to their needs. That is a non-trivial number, especially when surveys of small business owners indicate they are willing to pay for offerings that improve their ability to manage their companies' finances. 

However, more than one banker I know has not been willing to accept these various findings. This position and the ongoing laissez-faire attitude many banks and credit unions have concerning small business customers' needs reflect a self-fulfilling prophecy that originates within their organizational structures. As Johann Dreyer, my boss at S1 during the days before the Evil Empire bought us to protect their larger accounts, used to say, "We have seen this movie before." In fact, a movie with the same plot played as a prelude to the online and mobile banking replacement cycle just underway in the United States. 

In 2012, when I joined D3 banking, the concept of developing a digital banking strategy to serve consumers was nearly non-existent - except perhaps in the institutions making up the Too Big Too Fail club. D3 Banking was the only one at the time talking about "digital" banking and typically we had to footnote the use of that terminology to make clear we were talking about something related to, but not the same as, the disparate, tactically-based online and mobile landscape in most banks and credit unions. Sometime in the latter half of 2013, and even more so by the start of 2014, we started to encounter a new species of organizational structures of financial institutions that changed how people thought. This new species of banker went by many names - Chief Digital Officer, EVP Digital Channels, etc. 

Once this new species of banker began to thrive, banks and credit unions began to talk about digital banking strategies, ubiquitous digital access regardless of device, consistent customer experience and the ability to use data to personalize services to consumers. It did not happen suddenly, and even now, three years later, the movement of institutions in this direction resembles more of a wave on a lake than a tsunami. However, the point is, as soon as it was "SOMEBODY'S JOB," things began to happen. Previously, it was "NOT MY JOB" in most banks and credit unions and, thus, no one had an incentive to care. 

Common sense right? Yes, but organizations seldom function in a way that produces a high incidence of this phenomenon. That is why small businesses remain underserved by banks and credit unions. Yes, there might be a small business loan officer who is trying to implement technology to facilitate the approval process required in this line of business. Typically, this loan officer is a specialist in their area and not thinking about how to monetize other services for use by small businesses.

In other institutions, the individual in charge of consumer banking may have the largest number of small business customers in his or her area of responsibility. Many small business owners, not finding services and products built specifically for them, will revert to using the digital banking services offered to consumers. Not only does this arrangement result in small businesses not getting what they need, but also, it is why so many bankers speak with confidence about small businesses not being willing to pay fees for services. The assumption is since consumers using digital banking services are reticent to do so, small business owners must feel the same way. Wrong.

Finally, in some banks and credit unions with commercial/treasury offerings, the individual overseeing that line of business will reach out to small businesses with some version of "treasury lite." Of course, even a stripped-down version of this type of offering is as useful to the small business owner as blueprints for a home remodeling project are to me. I don't get remodeling or blueprints, and small business owners do not get the "treasury lite." And, no, we aren't interested in learning as we barely have enough time to run our businesses as it is. In addition, if you or I ran the treasury/commercial banking business for a financial institution, would we spend our time on small businesses or with the large corporations whose needs and volumes generate a significant revenue stream? This is a rhetorical question.

I was recently asked in an interview: "What is needed to help small banks and credit unions meet the needs of small businesses?" Since I work in the software business, I wanted to say, "better technology" (like what is in the D3 Banking Solution!). But that would have been incorrect - as well as self-servicing. My answer was: "until financial institutions assign resources with compensation packages based on better serving this important part of the economic growth engine in our country, nothing will change."

Because, hey... "IT'S NOT MY JOB."