I came across a great article on BusinessWeek entitled “How Banks Can Do Better” that touched on the emerging topic of what large banks need to do to remain relevant. I’ve been preaching for quite some time now that large banks are so out of touch with customers, they’ve been focused on profits and surviving the economic downturn that they’ve alienated a large core of their customers. Don’t get me wrong, I’ve worked at two large banks and still do a majority of my financial business with large banks (to be fair, I also bank at a credit union), however, it has also given me first-hand experience on how these large institutions operate.

Like any business, success and failure depends upon profits and sales. In the financial industry, business literally depends on profits and money. Without “money” (deposits and more importantly loans) a bank would be worthless. So from a pure business perspective, it makes sense that banks focus on making more “money.” As the above article mentions, the way we conduct business and the way a consumer gives banks their “money” has changed. Unfortunately, banks are still staffed with outdated, out-of-touch, stodgy executives who are afraid of change and don’t understand innovation.

It used to be that smaller banks looked toward the “giants” as prime examples on how to increase loans and deposits. Now it’s time that these giants look toward the smaller banks and start-ups and embrace this new, mobile financial mentality.