Today was a great day at SXSW for me. I saw four great panels, and learned many great insights. But out of the four panels, the one titled: “Banks: Innovate or Die!” was by far the one which left me thinking. In my eyes, its purpose lies in the reinvention of banking as consumers know it today. The essence of the panel was about whether banks have become too big to innovate.

Banks: Innovate or Die!

The panel featured Anne O’Brien formally from Citibank, Joshua Reich from Bank Simple, Rob Garcia from Lending Club, Brett King from Bank 2.0 and Bob Weinschenk from Smarty Pig. Five very successful persons from the banking world who had strong opinions on what needs to change, and whether they in essence, can change.

The problem was, we never got to that conversation. It quickly detoured to be about customer service and how good or bad corporations and/or start-ups do in that space.The debate went back and forth with the position from Citi being that “we’re your bank, not your mother” and the start-ups claiming its absolutely the job of the company to assure the best customer experience and thus providing services such as warnings before any late fee would be added to your account.

At one point, a simple question was posed to the big bank of the group: What is the number one question fielded at your call centers? and the answer is “what’s my balance?”.

Now, to me, that’s the fundamental problem with brick and mortar chain banks. There are so many rules, regulations and hidden fees, that customers can no longer keep up and understand how to read their bank statements. It is why this generation of banking has shifted from the Chases, Bank of Americas, and Citibanks to online solutions such as ING and HSBC. Simplicity is key. Customers want to be able to quickly look at a statement and understand what is written.

Now, remember this panel is supposed to be about innovation. So the longer the panel went on, the more I began to wonder if in the mind of this panel, customer service actually MEANT innovation. And if that’s the case, what is the next step in getting the world of banking back to being a service driven industry versus a product driven industry. I kept thinking back to when my parents used the phrase “back when I was young, you knew who was in charge of your money, life insurance, etc.” And in my mind, that is the big disconnect in banking today. The intimacy of knowing your bank personnel is gone. Most people go into a physical bank on an average of less than SIX times a year and so there is no accountability or desire from your bankers to WANT to make your experience better and memorable.

So the ultimate question is how do we fix it? Do we completely eliminate brick and mortar banking? Absolutely not. It ultimately comes down to what this panel was supposed to be about… Innovation. Banks need to adapt and evolve their business model for the acceptance and integration of emerging technologies, and listen to consumer needs. I’m not saying it will be easy, but in order for banks to be trusted again, and stay relevant, they need to provide a service that consumers want and like.

OH… and in case you were wondering, the entire panel agrees that mobile payments are the next big thing in banking.