ARLINGTON, Va. -- Comptroller of the Currency John D. Hawke,
Jr. said today that commercial banks must adapt to dramatic shifts in the U.S.
population if they are going to be successful in the future.
“The U.S. banking industry has enjoyed tremendous success in
meeting the needs of the America that we have been,” he said in a speech to the
Consumer Bankers Association. “It is no exaggeration to say that the industry’s
future success hinges on its ability to meet the needs of the nation we are in
the process of becoming.”
The Comptroller noted that the demand for financial services
in minority communities is often being met today by nonbank providers. Ten
million U.S. households – 10 percent of the total – do not have a banking
relationship and 60 percent of those are minority households. Check cashers
alone generate revenues of $60 billion a year from those households.
“It should go without saying that numbers of this magnitude
can be ignored by the banking industry only at its peril,” he said. “The people
who patronize nonbank fringe providers should be your customers.”
Mr. Hawke said that the banks that have been most successful
in minority communities are those that took time to research the market and to
develop local partnerships. Many of these bankers have found that trying to
market their entire product line may detract from effectively offering the
products these customers need most.
“I have long advocated that banks make wider use of
technology, especially through the promotion of direct payroll deposit and the
offering of electronic account access, to deliver banking services to
low-income Americans at prices they can afford,” Mr. Hawke said.
The Comptroller said banks should not underestimate the
willingness of low-income and minority customers to obtain banking services
electronically. Fully 45 percent of the Hispanic population in America consists
of children nine years of age and younger, and they are growing up with
computers, Mr. Hawke said.
“The banking customer of the future will already be experienced
at using the Internet for a wide variety of functions, and it is very likely to
expect that he or she will be able to conduct banking transactions by
computer,” he added. “Over-the-counter banking will be a horse-and-buggy
methodology to them.”
Bankers must be receptive to innovation in product
development and consumer relations, and must recognize that traditional
marketing and product delivery approaches don’t yield the same results in
minority markets that they do in traditional ones.
“They must work to develop and leverage strategic
relationships with organizations that operate in the communities they seek to
serve,” he added. “That’s particularly important in light of the distance that
the industry has to make up to be truly competitive in minority communities.”
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The OCC charters, regulates
and examines approximately 2,100 national banks and 52 federal branches of
foreign banks in the U.S., accounting for more than 55 percent of the
nation’s banking assets. Its mission is to ensure a safe and sound and
competitive national banking system that supports the citizens, communities
and economy of the United States.
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