In the banking sector, we have weathered financial crises of varying degrees of magnitude and now we face a pandemic crisis the likes of which have never been encountered. Such temporary crises (and they are temporary, no matter how disruptive) cannot allow us to take our eyes off the elephant in the room—our ongoing crisis of diminishing relevance.
We can all bear witness to market needs that are changing and to consumer attitudes, preferences and buying habits that are changing. Our historically unassailable business model is under threat.
Worryingly, markets are evolving away from the need for traditional financial services providers like community banks and credit unions. The role that we have played in society since the inception of the banking industry—that of a financial intermediary—is simply not as needed as it was in the past. In every developed country around the world, as financial markets become more efficient, the traditional financial services players are experiencing the disruptive phenomenon called “disintermediation.”
Data from the Office of the Comptroller of the Currency show that in 1970, traditional financial services providers extended about 60% of all credit in this country. We were the financial engines that drove the wheels of the economy. Today that number is less than 20%.
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