Traditional banking methods are under scrutiny as interest rates rise, prompting financial institutions to rethink their approaches to deposits and lending. With deposits no longer “free,” banks are focusing on deposit funding and building stronger connections between consumer deposit and credit needs. Some banks are offering incentives to encourage customers to consolidate their financial relationships. On the flip side, some are starting to reconsider mortgage lending. Jamie Dimon, CEO of one of the nation’s largest mortgage lenders, has suggested that the high cost of originating mortgages and complying with regulations — plus the lack of “a healthy securitization market” — have made the business unattractive, if not unprofitable. He has suggested that banks might do well to exit that market entirely.
A toxic organizational culture can significantly impact productivity, morale, and staff retention. Senior leaders are often unaware of the problem due to manipulative middle managers who control the flow of communication. These managers tend to focus on delivery details and create an authoritarian regime with a siloed structure, leading to a toxic work environment characterized by a lack of trust, fear, and reduced productivity. Consequences include increased staff sickness and attrition. To address this issue, organizations must adopt a human-centric approach to transformational change, incentivize not only the results but also the methods of achieving them, and effectively identify and challenge toxic cultures.
Banking leaders must change their approach to change management by motivating ‘movements’ – “sustained campaigns led by groups of people with shared purpose who create change together.” Five methods can be used to bring lasting changes to the banking industry: 1) Tap into customer and employee discontent as fuel for change; 2) Articulate a vision that motivates others; 3) Call attention to early wins to feed enthusiasm for change; 4) Build momentum with help from influential agents of change; and 5) Transform a desire for change into a mainstream movement. Adopting a leadership approach that fosters movements rather than top-down directives is crucial in a rapidly changing business environment, as seen in the banking industry.
Fintech firm Save offers a “market savings account” that provides deposit insurance along with upside returns similar to stock investments. The account pays a variable rate based on returns from Save’s portfolio of investments, with depositors guaranteed not to lose their initial amount. Save also offers a Visa credit card that matches customer spending with investments, allowing customers to keep the returns on those investments. The Houston-based company is seeking partnerships with US financial institutions to white-label its products.
Apple’s high-yield savings account is gaining popularity among affluent young consumers, with nearly 70% of Apple Card holders likely to open an account, according to a Morning Consult survey. The account, which has a 4.15% APY, is only available to Apple Card holders and is expected to pose yet another challenge to traditional banks. Apple’s interconnected financial products, including Apple Pay, Apple Pay Later, and Apple Cash, contribute to its “walled garden” strategy, keeping users within its ecosystem. Apple will likely continue to expand its financial services, but the company could face federal scrutiny and potential regulation as it increasingly resembles a bank.
