We always strive to be first.  For some people it becomes an obsession.  It becomes their reason for living.  Their reason for cheating... nobody remembers second they reason.  This seems to be the way in most endeavours - except for banking.  The industry that invented the ‘fast follower’ concept has started to struggle.  The mentality to be first and win, when you have never had to, is a difficult one to alter.  It’s almost become a running joke amongst staff in banks that once another bank does it, the business case ‘stacks up’ and their bank follows.  Imagine if the US had said we will wait and see how Russia goes with that landing on the moon thing; one small step for man - one giant leap for feeble minds.  Banks need to move away from this ‘reactive decisiveness’ approach because it’s better to die on your feet than to live on your knees.

The attitude of big banks is not surprising.  Banks have been investing in the past, not the future, for years.  Since 2000, the year most banks launched their first Online Banking sites, the number of bank branches has risen by over 20% globally.  So what is the business case for more branches? Complacency and the fear of the unknown I can only assume.  Instead of seizing on the opportunity to evolve their operating models, banks have clung on for dear life.  I guess it’s not all their fault.  They have the right to be a little sceptical.  See, they have heard it all before.  Cards, ATM’s and telephone banking were all supposed to change the game.  Instead they found that business carried on in much the same vein. 

When the profits were rolling in there was no real need to change.  The good overall performance and growth of the global economy covered a lot of the cracks.  In actual effect, banking was on a downward spiral and has been for at least a decade.  The issue now is that the business of making money is not making that much money.  Since the global down turn the margins in banking have dropped rapidly and as a result profits have shrunk.  Bank reporting season is now often judged by who lost the least amount of money.  In Europe, analysts estimate that the big banks are losing money on about half of their customer’s accounts - half! Regulation also continues to come thick and fast.  It is now harder to sell and soon it will be easier to switch. 

The biggest opportunity for banking, the internet, has actually become its biggest threat.  This happens anytime you don’t capitalise on an opportunity.  You can guarantee somebody else gladly will.  The undeserved money making through the early noughties allowed new entrants and competitors to emerge.  New entrants were able to embed their brands and products because banks didn’t take them seriously.  They were complacent.  In most other industries PayPal would not have survived let alone thrived.  Banks were not proactive enough.  It was an accepted practice.  Wait and then follow.  Technology was risky.  Let’s continue to invest in branches because we know how they operate.  This led to a culture of reactive decisiveness. 

Being decisive is difficult when you are entering unknown territory.  You often have to make a decision on the little information you have to hand and your gut instinct.  History shows that great leaders are decisive.  They can make decisions and then move forward with it.  They understand that it is better to be decisive and wrong, than to agonise over a decision and take too long.  Too often in the banking industry, Senior Management reason that not making a decision is the safest option.  Seldom do they realise that they are doing more harm than good.  Whilst in the short-term they are not running the risk of doing the wrong thing, in the long run they just selling themselves and the organisation short.

One of the classical responses to indecisiveness in banking is the question – where is the business case? When it comes to propositions that no one has delivered then the fear sets in.  All of sudden no matter how much money can be made the business case doesn’t stack up.  It’s the classic case of using a process to bypass a decision.  When banks were first toying with the idea of mobile, the benefits didn’t stack up.  Once a few other banks had done it, it did all of sudden.  Every single bank in the UK was running around like headless chooks the day after Barclays launched Pingit.  There were stories of Senior Executives hastily arranging meetings with their mobile team to question the lack of progress on P2P initiatives most of them had initially blocked.

There are a lot of things banks need to work on to succeed and avoid the almost inevitable situation of being back end systems for a bunch of new players.  One thing for me sits at the top of the list – being decisive.  Being decisive will resolve the innovation, disintermediation and profit problems that banks are having and will continue to have.  They should no longer wait for others to gain first mover advantage.  I always shudder when I hear bankers say that there is no business case for what is clearly a compelling proposition.  Because I know what it really means.  We are not willing to make a decision.  I couldn’t think of anything more certain than making your customers happy.  Banks need to make sure they do this before and more often than their competitors.