Look At Who Is Attending Acquire or Be Acquired

In just 20 days, we raise the lights on our 23rd annual Acquire or Be Acquired Conference.  This is Bank Director’s biggest event of the year, one primarily focused on banking’s “great game” — mergers and acquisitions.  My team has spent considerable time and energy developing a spectacular event focused on growth-related topics that range from exploring a merger to preparing for an acquisition; growing loans to capturing efficiencies; managing capital to partnering with fintech companies.  To see the full agenda, click here.

Widely regarded as one of the banking industry’s premier events, we have more than 1,000 people registered to attend AOBA later this month — an all-time high.  We couldn’t do this alone, and over the course of these 2 ½ days, executives from many of our industry’s leading professional services firms and product companies share their perspectives on “what’s now” and “what’s next.”  I invite you to take a look at all of the corporate sponsors joining us:

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As I shared in a recent post, bank executives and their boards face some major issues without clear answers.  Before heading out west, I’ll share more about the banks (and 660+ bankers) joining us at the JW Marriott Phoenix Desert Ridge Resort & Spa.  Until then, I invite you to learn more about the companies supporting this conference by hopping over to bankdirector.com. To follow the conversations happening around this conference on Twitter, I’m @aldominick and we are using #AOBA17.

Banking Millennials

The Millennial generation comprises 80MM people, the largest in U.S. history.  Born between the years of 1980 and 2000, millennials range in age from 15 to 35 years and are just beginning to gain their foothold in the economy.

By Al Dominick // @aldominick

Do we really want to bank millennials? If I borrowed a crystal ball from one of the soothsayers out at Jackson Square in New Orleans’ French Quarter, I imagine this would be the question on most everyone’s mind that joined me at our annual Bank Board Growth & Innovation conference.  With many community banks making their money through C&I lending, the immediate concern (at least at the board’s level) is how do I grow right now?  While many conversations trended towards the opportunities to engage this demographic by leveraging emerging technologies with a bank’s sales and marketing efforts, I was not surprised to hear a concern about the investment costs of bringing new technologies into a bank.  The rationale, as I understood it, is by the time a bank gets a return from its investment, it may be too late.  I’m not saying this is my way of thinking, but I do think it reflects apprehensions by key officers and directors when the conversations comes to these future business owners, inheritors of wealth and digitally demanding individuals.  As shared in a presentation by Ingo Money, in the next five years, the Millennial generation will have the largest income in U.S. history, and any company that can monetize Millennial spending or data may seek to bank them.  Still, regional and community bankers wrestle with the type of client they might be — both now and in the future.

Key Takeaway

To kick things off, we invited Dave DeFazio from StrategyCorps to “look beyond the basics” in terms of mobile banking.  As he shared, over 75% of people in the U.S. own a smartphone in the year — and most everyone has some sort of addiction to their device.  With all of the big banks offering the “big five” today (mobile banking, mobile bill pay, mobile deposits, ATM/Branch locators and P2P payments), bankers should think beyond basic banking transactions to develop a mobile presence that is a “can’t live without” app.  Some of his tips: provide easy authentication, pre-login balances, voice recognition, budgeting tools and coupon and shopping tools.

Trending Topics

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

  • The four biggest banks in the U.S. are among the 10 least loved brands by Millennials.
  • Millennials want banking services designed for their needs that are instant, simple, fair and transparent… which is why new providers are beginning to emerge.
  • For those not familiar with Moven, GoBank and Simple… take a look at what each has to offer.
  • The cultural divide between banks and FinTech companies is getting smaller for bigger banks, but remains high for regional and community banks.  Nonetheless, these banks are in a better position to collaborate and seriously consider new tools and products as the decision making cycle is considerably shorter then at large institutions.

Picked Up Pieces

While today was “just” a half day, some of the more salient points I made note of:

  • Per Jennifer Burke, a partner at Crowe, “proactively identifying, mitigating, and in some cases, capitalizing on these risks provides a distinct advantage to banks.”
  • In terms of building value, the ability for a bank to grow is as important as a bank’s profitability.
  • It was refreshing to be at a banking conference where talk about regulation was at a minimum; in fact, it seemed that the regulatory environment presents more of a distraction than it poses a threat to bank’s looking to grow.
  • The corollary to this point: competition from non-banks is higher then ever before.

To see what’s being written and said as we wrap up our time in New Orleans, I invite you to follow @bankdirector, @aldominick + #BDGrow15.

Since You Can’t Own a Car Dealership

As my colleague Jack Milligan writes in our 2nd quarter issue of Bank Director magazine, just because a bank can’t own a car dealership doesn’t mean there isn’t “enormous flexibility in determining a bank’s strategy.” Curious what this means? Read on.

2Q14

A Sneak Peek at the Core Revenue Champs

Each year, Bank Director magazine looks at all U.S. banks and thrifts to identify the strongest growth banks. We rank the top performers across four separate categories: core deposits, core noninterest income, net loans and leases and the most important, core revenue. Since the magazine mails today, I thought to offer a sneak peek of the results:

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What I find interesting about the top two banks on this very strong list: both Customers Bank and EverBank Financial designed their business models around technology from their very beginnings.

Find Your Balance

As I read through an advance copy of the issue, it strikes me that many business areas that historically provided revenue growth are simply not growing fast enough to overcome new capital and regulatory requirements.  In this light, you can understand why many say times couldn’t be more challenging for growth in community or regional banking. The corollary to this? Balancing organic and external growth is a key focus area for bank management and boards.

Increasingly, I hear that growth-focused banks are considering (or implementing) strategies that create revenue growth from both net interest income and fee based revenue business lines — think government guaranteed lending, asset based lending, leasing, trust and wealth management services. Clearly, as interest margins and loan volumes remain subject to compression and intense competition, the “optimization” of fee-based revenue is becoming pivotal in enhancing shareholder value.

‘Sup Big Easy

True, a number of banks seek to extend their footprint and franchise value through acquisition. Yet, many more aspire to build the bank internally.  Some show organic growth as they build their base of core deposits and expand their customer relationships; others leverage product innovation or focus on their branch network. I bring these approaches up in advance of next week’s Growth Conference at the Ritz-Carlton, New Orleans. We designed this event to showcase strategies, structures, processes and technologies that a bank’s CEO and board might consider to fuel their own growth.

Unlike trade shows and other events, we limit participation to a financial institution’s key officers and directors to ensure those joining us are not just committed to distinguishing their performance and reputation, but also are appropriate peers to share time and ideas with. From companies like StrategyCorps, Ignite Sales and VerifyValid to PwC, Fiserv and IBM, we have a tremendous roster of companies joining us in Louisiana to share “what’s working” at the myriad banks they support. As I’ve done for our other events (e.g. the sister conference to Growth, Acquire or Be Acquired), I’ll be posting a number of pieces next week from the Crescent City and invite you to follow along on Twitter via @aldominick, @bankdirector and using #BDGrow14.

Aloha Friday!

On Fee Income + Staying Relevant

Cloud Gate in Millennium Park
Cloud Gate in Millennium Park

So I shared my excitement for the RedSox World Series victory earlier today… Before I pack my things for a trip to the JW Marriott in Chicago, let me share three things I learned this week that relate to bank CEOs and their boards, not baseball and beards.

(1) As our very talented editor, Jack Milligan, wrote in the current issue of Bank Director, when it comes to fee income, “drivers tend to fall into three general categories, beginning with a variety of consumer-based fees from such things as foreign ATM withdrawals, overdraft protection plans, debit card transactions and some checking accounts.”  I bring this up as Jack and the team at Bank Director magazine ranked the top 50 publicly traded banks based on their ratio of non-interest income to total operating revenue for 2011 and 2012. The totals for both years were then averaged, which determined the order of finish. All banks listed on the New York Stock Exchange and NASDAQ Stock Exchange were included in the analysis (which was performed by the investment banking firm Sandler O’Neill + Partners in New York). At the top of the ranking are New York-based Bank of New York Mellon Corp., State Street Corp. in Boston and Chicago-based Northern Trust Corp.  For a full look at the results, click here.  For the story itself, register for free on BankDirector.com to access the digital issue of the magazine.

(2) Clearly, banking’s profit model is going through a period of transition.  Here, companies like StrategyCorps play an interesting role in helping financial institution meet their needs for more fee income without upsetting its customers.  No one — at least, that I know — wants to  pay for basic, traditional retail banking services.  They resent when a new fee is added on to an existing free service or product with no additional value (case-in-point, Bank of America’s $5 debit card fee debacle).  So as Mike Branton wrote in the Financial Brand, “financial institutions must seek new ways to incorporate non-traditional services that connect with consumers’ lifestyles.”  StrategyCorps took to Finovate’s Fall stage in NYC in September to demo, in less than 7 minutes, how financial institutions can use an enhanced mobile experience to successfully bring in fee income.  Take a look.

(3) Finally, I will be tweeting throughout our annual Bank Executive & Board Compensation conference next week (using hashtag #BEBC13).  This year’s 9th annual event focuses on compensation trends, talent acquisition/attraction and retention strategies. In addition, it looks at how the next few years’ merger activity might influence incentive compensation plans and performance-based pay structures.  I intend to post a few “postcards” from Chicago throughout the week — the first (tentatively set for Tuesday) on how companies develop executives, attract leadership and approach compensation in today’s highly competitive and economically challenging world.

Aloha Friday!

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