Today’s vast superbanks are organizations that seem to operate by their own rules and trample their Main Street customers. BANKRUPT reveals what afflicts today’s biggest banks, and shows how they nickel-and-dime the average customer even as they hold trillions of dollars in assets and government bailout funds. It’s not about creating nostalgia for a golden age that is long past. It’s about how today’s banks can transform themselves to redefine banking. It’s a call for leadership that lives by the motto “Do the right thing.”
To chart a path to the future, Realini draws upon her extensive personal experience in India, and reveals the amazing revolution in grassroots banking that is taking place right now. BankRupt is an optimistic book. It uses the crisis we are experiencing as a way to look forward to a very different kind of future for banking – one that will benefit both the banks and their millions of customers.
CAROL REALINI is a successful Silicon Valley executive and expert in financial service innovation. She has worked with leading financial institutions including MasterCard and Citi, as well as numerous multinational and regional banks, to change the way banking is conducted. In 2011, as a Technology Pioneer attending the World Economic Forum, she led discussions on alternative banking at their meeting in Davos. A serial entrepreneur, she has been recognized as one of the 50 Top Women in Technology by Corporate Board Member magazine.
Just like in the 1946 movie It’s a Wonderful Life, today’s superbanks act like slumlord Henry F. Potter, conspiring to reap only short-term profits and using the advantages of wealth to get more wealth. Consumer loyalty is low and Main Street banking customers are fed up. This chapter discusses how banks treat their everyday customers and mortgage holders is too often characterized by arrogance and greed. Declining customer service is a significant issue. Rising fees are targeted at the average customer. For many consumers – who are also taxpayers – the management of the recovery was the straw that broke the back of banking credibility.
This chapter revealxs the Four Pillars of Decay in the banking industry; One – the Decline in Customer Service, Two – Bank Fees – Death by a Thousand Cuts, Three – the Banks’ Role in the Financial Crisis, Four – The Recovery from the Great Recession.
In 1999, Congress passed the Financial Services Modernization Act. Also known as the Gramm-Leach Act, it represents a huge change of policy – and some say a disastrous reversal. We reveal systemic problems with banks today including internal fragmentation, lack of connection with the Main Street customer, cozy relationships between banks and oversight agencies, regulatory forum shopping, crony board composition.
Today, banks in the US spend billions of dollars a year on information technology that supports extensive functionality but is extremely complex and, once in place, difficult to change. In this chapter we reveal the burden of the legacy technology infrastructure. If you have a credit card, bank account, mortgage, and savings account with the same bank, they might all have separate data files about you with your phone number, social security number, transaction history, and address. Fragmentation increases costs, degrades service, slows down development of new features.
We take a walk with you down Main Street USA. We’ll meet some of the people who live there, and discover how they are coping with the reality of the Great Recession. Three true stories of how the average mortgage customer has been impacted by today’s banking industry.
The banks increasingly fail to offer Americans the products and services that fit their lifestyles and financial needs. Yet it is not far-fetched to say that within five years, every person could have access to financial services that empower their life and work. This book reframes banking to be about bringing a new level of service to all customers.
The revolution in banking that is happening in India is being orchestrated by more than just the banking sector; it is being created through multiple industries, emerging innovators, regulators, and government agencies working together to make fundamental changes that will transform India. They are leapfrogging traditional banking infrastructure and implementing state-of-the art solutions. Although half way around the world, we can learn a lot from India that could apply to our challenges.
Three technology areas have great promise for banking; Big Data, Cloud Computing, and Mobile. All can add value and help reshape banking. But this next phase of innovation will need to be bigger than the bank. Banks need to start thinking like Apple and create great partnerships with application providers to bring more innovation and value to their customers.
Innovations in Chapter 8 will get banks back to where they should be, but will not fix all that ails the banks. This will come from disruption – change that is discontinuous. This chapter discusses disruptive changes that are needed. We have so much at stake – global leadership in financial services, financial access for all, empowering entrepreneurship. Let’s get uncomfortable – it’s worth it.
Transformation must begin with tackling the most fundamental problems. We propose action steps to transform banking: get back to focusing on providing value to customers, leveraging new technologies, create breakthroughs in cost, simplicity and security, and federal government programs that help build the most advanced banking infrastructure in the world.
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