As I come off of a great week in Chicago and Bank Director’s annual Chairman/CEO Peer Exchange, today’s post takes a look back at the first three months of the year. Yes, certain discussions during this time focused on tepid loan growth, higher capital requirements and expense pressures & higher regulatory costs hitting banks today. Nonetheless, many more conversations focused on growth, innovation and “what’s working.” So, to wrap up this week, three points from the past ninety days that inspired me.
Some of Banking’s Best
To kick off the year, I put together a two-part series on some of the top CEOs in our industry. Inspired by my coach and an article entitled the “Best CEOs of 2013” that ran on Yahoo Finance, I reached out to a number of colleagues that work for professional services firms to ask their thoughts on the top CEOs at financial institutions — along with why they hold them in such regard. Part one shared various thoughts on some of the best CEOs in the business today — broken down into three categories: the “biggest banks” with $50Bn+ in assets, those with more than $5Bn but less than $50Bn and finally, those in the $1Bn to $5Bn size range. Part two built on that piece, highlighting three exceptional CEOs that lead publicly traded banks before shifting to the thoughts and opinions of two very talented colleagues.
Eat or Be Eaten
As the President of Bank Director, I’m lucky to lead one of the industry’s biggest (and dare I say best?) M&A conferences: Acquire or Be Acquired. Let me first offer up big time props to my many talented colleagues for everything they did to make this year’s the biggest and best yet! One of the cool new things I did at the Arizona Biltmore this year? Film a 90 second or less video each evening that summarized the day’s salient points. As much as I shared big takeaways in written form on this site (e.g. what if I told you that by December 31, 2018, we’d witness a 25% decline in the number of institutions between $500mm and $1Bn), I’m proud of these two videos from the desert that relayed what caught my eyes and attention on two of the three conference days.
The Innovator’s Dilemma
In my role, I find myself talking with Chairmen and CEOs about their strategic plans. This year, quite a few shared their thoughts for leveraging financial technology to strengthen and/or differentiate their bank. In a piece I shared at the end of February, I cited Clayton Christensen’s “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail.” His book inspired that Friday’s FI Tip Sheet title – and first point. If you’re not familiar with his work, the Harvard professor writes about two types of technologies: sustaining and disruptive. Sustaining technologies are those that improve product performance. As he sees it, these are technologies that most large companies are familiar with; technologies that involve improving a product that has an established role in the market.
Most large companies are adept at turning sustaining technology challenges into achievements. However, large companies have problems dealing with disruptive technologies — an observation that, in my view, does not bode well for many traditionally established banks. While risk is inherent to banks of all sizes, taking chances on emerging technologies continues to challenge many officers and directors… a theme I anticipate covering in greater detail over the next 90 days.
Whether this is your first time or 78th time reading About That Ratio, let me say thank you for doing so. It is a real treat to share, each Friday, three short stories about what I’m hearing, learning and talking about as I travel around the country. Being that I meet with so many interesting people — be it a bank’s CEO, board members or executives at professional services firms and product companies — I find it tremendously rewarding to share anecdotes and insights that might interest others. As always, Aloha Friday!