For almost 20 years bankers in the United States have focused on a strategy of successfully positioning a bank as a one-stop shop for financial services. This strategy, however, has not yet been successfully implemented. Could the reason for this be that one of our core competencies -- risk aversion -- is the cause of the strategy’s demise?

By law, banks must exercise extreme diligence to protect depositors. The environment created by this requirement is one of risk aversion. Bankers practice the simplest form of risk aversion in their daily credit decision-making processes. But the philosophy is at the core of a bank’s existence and is therefore embedded in bankers’ thought processes. As a result, aversion to risk has grown well beyond just making credit decisions. It has eroded bankers’ ability to execute entrepreneurial strategies.

Bankers should try to focus on the root cause of the failed strategy. Wells Fargo CEO Dick Kovacevich said in a recent interview that the past one-stop shop failures resulted from attempts to "simply bring companies together and run them as if they were investments." Bankers likely structured the business this way in order to avoid risk. The unwillingness to accept or at least mitigate business risk makes it hard to change the way bankers do business. Bankers recognize that change is required but they just can’t bring themselves to change core beliefs.

Kovacevich strongly believes that customers want a one-stop shop rather than financial commodities, even though recent strategies by Internet banks, brokerages, insurance and credit card companies have fragmented the industry’s product line. If this is true, then bankers must take the short-term risks necessary to bring ultimate long-term rewards. Being inherently risk averse has not allowed, and will not allow, banks to attain those rewards.