FI Tip Sheet: Strong Board, Strong Bank

As the banking industry continues to regain its health, efficiency and productivity are key elements in positioning a bank to grow.  Still, the reality remains there is an overcapacity in the US banking industry and the consolidation trend that brought the number of bank charters from over 14,000 to under 7,000 over the last 25 years will continue.  So let me sum in up in word letters: OTSS… only the strong survive.  Today’s post builds on this idea and offers a few takeaways from day one of the Bank Board Training Forum.

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Don’t Cry For Me

Yes, a more demanding regulatory and business environment has placed a substantial burden on bank directors and their boards. However, nearly every conversation/presentation focused on what’s possible — and not what’s broken.  Here are a few characteristics of successful “growth” banks:

  • They have a history of executing accretive transactions that are supported in the market both post-announcement and in terms of performance over time.
  • They tend to under promise and over deliver

While mergers and acquisitions is the principal growth strategy for many of these institutions, don’t sleep on building organically.  Indeed, many of the banks in attendance look at M&A as a complement to their growth plans.

An appetite for technology
We welcomed 117 bank officers and directors to the Hermitage in Nashville yesterday (and I’ll be getting up on stage in a few minutes to do so again this morning).  We went old school and put pen + paper in front of these men and women and asked a few true/false technology-specific questions.  47% have responded so far and here’s what I’m finding:

  • T/F: Our executive team has two people with strong technology understanding/experience…  43 responded true and only 12, false.
  • T/F: I would describe my bank as innovative… 40 responded true and 15 false
  • T/F: Mobile banking is an important part of our strategy… 46 responded true and 8, false

Growing Through Innovation
I heard one bank is consolidating some 200 different software packages, while another introduced concierge banking.  Interestingly, 11 bankers wrote on the survey above that the most innovative “thing” they are doing right now involves mobile banking.

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I’ll try to post more later today, as several of the afternoon conversations tied growth into risk and audit concerns, two topics I’ve covered earlier this week.  Aloha Friday!

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