Reaching For The Summit

When you say the word summit, what do you think of?  For me, it is a book; specifically, Let My People Go Surfing by Patagonia’s founder, Yvon Chouinard. I was reminded of Yvon’s thoughts while flying home to DC from last week’s Bank Board Growth & Innovation conference in New Orleans.  While there, I had a chance to share time and ideas with some 150 bank CEOs, board members and executives. As most banks wrestle with the concept of banking a generation that doesn’t necessarily see the need for a bank, I think Yvon’s opinion that “how you climb a mountain is more important than reaching the top” is a strong reminder for bankers that the little things really do count with customers today.

By Al Dominick // @aldominick

Having been on numerous airplanes over the last few weeks, I have enjoyed the luxury of time without phone calls and sometimes emails and instant messages.  This digital solitude afforded me a chance to really dive into a number of thought-provoking white papers, analyst reports and research pieces.  Three, in particular, stand out, for looking ahead to what banking might become, not merely stating the obvious that bankers are being challenged as never before.

The World Retail Banking Report (from Capgemini Financial Services and Efma)

Abstract: Retail banking customers today have more choices than ever before in terms of where, when, and how they bank—making it critical for financial institutions to present options that appeal directly to their customers’ desires and expectations.

Growing the Digital Business / Accenture Mobility Research 2015 (from Accenture)

Abstract: The emergence and adoption of digital technologies has rapidly transformed businesses and industries around the globe. Mobile technologies have been especially impactful, as they have enabled companies to not only streamline their operations, but also engage more effectively with customers and tap into new sources of revenue.

Disrupting Banking: The FinTech Startups That Are Unbundling Wells Fargo, Citi and Bank of America (from CB Insights)

Abstract: Banks run the risk of being out-innovated and may lose their edge not because of their incumbent, large competitors, but because emerging startups inflict upon them a death by a thousand cuts.  And because a picture is worth more than 1,000 words:

source: CB Insights
source: CB Insights

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Finally, a welcome to our friends at KBW who just hopped into the Twitter pool yesterday. With so many talented men and women working there, I have no qualms suggesting a follow of their handle – @KBWfinthink (h/t to our Emily McCormick for the heads up)

Three Observations from the Bank Board Growth & Innovation Conference

Select news and notes from the first day of Bank Director’s annual growth conference at the Ritz-Carlton New Orleans.

By Al Dominick // @aldominick

I mentioned this from the stage earlier today… every January, Bank Director hosts a huge event in Arizona focused on bank mergers and acquisitions.  Known as “AOBA,” our Acquire or Be Acquired conference has grown significantly over the years (this year, we welcomed some 800 to the desert).  After the banking M&A market tumbled to a 20-year low in 2009 of just 109 transactions, it has gradually recovered from the effects of the crisis. In fact, there were 288 bank and thrift deals last year, which was a considerable improvement on volume of 224 deals in 2013.  As our editorial team has noted, the buying and selling of banks has been the industry’s great game for the last couple of decades, but it’s a game that not all banks can — or want to — play.  Indeed, many bank CEOs have a preference to grow organically, and its to these growth efforts that we base today and tomorrow’s program.

Key Takeaway

To kick things off, we invited Fred Cannon, Executive Vice President & Director of Research at KBW, to share his thoughts on what constitutes franchise value. While he opened with a straight-forward equation to quantify franchise value over time — (ROE – Cost of Equity) × Market Premium — what really stuck with me during his presentation is the fact that a logo does not create franchise value, a brand does.  As he made clear, it is contextual (e.g. by industry’s served, technologies leveraged and clients maintained) and requires focus (e.g. you can’t be all things to all people).  Most notably, small and focused institutions trump small and complex ones.

Trending Topics

Anecdotally, the issues I took note of where, in no particular order:

  • Banks must be selective when integrating new technology into their systems.
  • The ability to analyze data proves fundamental to one’s ability to innovate.
  • When it comes to “data-driven decisions,” the proverbial life cycle can be thought of as (1) capture (2) store (3) analyze (4) act.
  • You don’t need a big deposit franchise to be a strong performing bank (for example, take a look at County Bancorp in Wisconsin)
  • We’ve heard this before, but size does matter… and as the size of bank’s balance sheet progresses to $10 billion, publicly traded banks generate stronger profitability and capture healthier valuations.

Picked Up Pieces

A really full day here in New Orleans, LA — with quite a few spirited discussions/debates.  Here are some of the more salient points I made note of throughout the day:

  • Selling services to large, highly regulated organization is a real challenge to many tech companies.
  • Shadow banking? Maybe its time I start calling them “Challenger banks.”
  • CB Insight’s has a blog called “unbundling the bank” — to understand the FinTech ecosystem, take a look at how they depict how “traditional banks are under attack from a number of emerging specialist startups.”
  • A few sidebar conversations about Wells Fargo’s incubator program, which the San Francisco bank began last August… interest in how the program involves direct investment in a select group of startups and six months of mentoring for their leaders.

To see what’s being written and said here in New Orleans, I invite you to follow @bankdirector, @aldominick + #BDGrow15.

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