An Optimist’s Dilemma

WASHINGTON, DC — At this time two years ago, optimism swept across the banking sector.  The change in administration gave us a steepened yield curve.  Investors predicted improved economic growth.  Many anticipated regulatory relief and the prospect of major corporate tax cuts.

The future of banking looked promising.

Now, pragmatism has worn that luster. Many have concerns about the growing divide between the biggest banks and everyone else. Throughout 2018, moderate loan and dull deposit growth proved persistent themes for banks.

The future appears far more challenging.

As the year winds down, I find the cyclical nature of banking of particular interest. While an optimist by nature, I fear we’re entering a harder operating environment.

  • We’re getting closer to a turn in the credit cycle.
  • We saw investors bail on bank stocks in October.
  • We see big banks closing rural and suburban branches—opting for digital services instead.

Against this backdrop, I take some comfort in a new book by Dorris Kearns Goodwin, “Leadership in Turbulent Times.”  Goodwin provides anecdotes about controlling negative emotions, like President Abraham Lincoln’s “hot letters”—his own missives of his frustrations he then put aside, hoping he’d never have to send what he’d written.

Leadership in Turbulent Times

So in that spirit, consider this my “Lincoln letter” to a bank’s CEO and board, albeit with an optimist’s take.

Please pay attention to the vast amounts being spent on digital advertising.
The Interactive Advertising Bureau (IAB) and PwC estimate U.S. digital ad spending will hit $100 billion by year-end. This number might shock those thinking about where and how they want to tell their bank’s story through videos, social media and other digital means. Nonetheless, considering what’s being spent to court the attention of your “loyal” constituents might spark new ideas for where to invest time and effort.

When thinking tech, intertwine conversations about talent.
With venture capitalists still pouring money into startups offering basic banking services, potential employees have even more options to spend their energy and creativity. For any bank, the demand for the talent needed to deliver new digital capabilities will significantly outpace the available labor pool. If you don’t have a team now, I worry your bank might be challenged to successfully create meaningful technology partnerships.

Culture is eating strategy (and new initiatives) for breakfast, lunch and dinner.
Many executives have talked with me about how they’re working hard to ensure the bank’s existing culture keeps pace with the evolution of the industry. We all deal with execution risk—but as that old saying goes, if all you ever do is all you’ve ever done, then all you’ll ever get is all you’ve ever gotten.

Windows of opportunity most certainly exist.  What those windows are, and how long they remain open, remains a moving target — one we intend to focus on next month at our 25th annual Acquire or Be Acquired Conference, Jan. 27-29 at the JW Marriott Phoenix Desert Ridge in Phoenix, Arizona.

*This first ran in Bank Director’s weekly newsletter, The Slant, on December 8.

What (Bank) Directors Think

Quickly:

CHICAGO — Guess what?  As institutions continue to seek out growth and efficiencies through technology, they in turn expose themselves to new risks and liabilities. Understanding the two-sided nature of this proverbial coin reflects just one of the many nuanced conversations that took place during our annual Bank Audit & Risk Committees Conference.  If you’re not familiar with this exclusive event, we invite bank leaders from across the country to take a broad and strategic view at the risk landscape, while also focusing on specific actions to improve a bank’s performance.

Indeed, our team put together an agenda filled with opportunities to improve existing audit and risk functions.  In addition, we surfaced new ideas around issues and topics such as cybersecurity, credit quality, blockchain, rising interest rates and financial reporting.

Personally, I was thrilled to welcome more than 400 men and women to the Swissotel Chicago — with over 300 participants comprising bank CEOs, chairmen, board members, CFOs, CROs, senior executives and internal auditors.  Throughout our time together, we took the opportunity to pose a series of questions to this hugely influential and knowledgeable audience.  As we discovered, the increasing level of U.S. debt proved the biggest macroeconomic concern for this group by a wide margin.  Yes, we polled this group using an audience response device and found 52% placed this issue as their top concern — far outpacing the 15% who cited a potential recession and 13% who pointed towards a political crisis.

Such in-person polling provides quite a bit of insight as to where we might be heading as an industry and an economy.  What follows are five additional survey results from this year’s event on how this experienced audience feels about various hot topics.

Q: What do you think is the biggest risk to the industry?

54% = Technology changes and FinTech
20% = Recession risk and loan quality
17% = Flattening yield curve
6% = Pushed out by consolidation
4% = Regulatory scrutiny

Q: What are your expectations for deposit competition in your markets over the next year?

78% = We face stiff competition; deposit pricing will be a key concern
13% = Our ability to compete for deposits will improve as rates rise
9% = Unsure

Q: As rates rise, are you concerned about loan terms within the bank’s existing loan portfolio?

50% = No
35% = Yes, but for a short period of time
10% = Yes, I’m deeply concerned
4% = Unsure

Q: What is your greatest concern about deploying RegTech within your bank?

23% = Updates to internal processes / infrastructure
22% = Cost of RegTech solutions
21% = Identifying valid solutions
17% = Vetting providers / third party management
15% = Internal skills
3% = Regulatory acceptance

Q: Do you believe the bank’s board has the necessary level of cybersecurity expertise?

78% = No
18% = Yes
4% = Unsure

I’ll keep my observations on these findings to personal conversations… That said, from improving risk oversight, mastering new reporting requirements and staying ahead on compliance, this year’s conference provided practical takeaways for participants to bring back to their banks.  Curious to see what we covered?  I encourage you to take a look at BankDirector.com or search for @BankDirector and #BDAudit18 on Twitter.

The Best of FinXTech’s Annual Summit

Quickly:

  • FinXTech’s annual Summit brought together senior executives from across the financial space to focus on new growth strategies and opportunities related to technology.

PHOENIX — I’ve spent the past few days with bank leaders, technology executives, investors and analysts interested to explore emerging trends, opportunities and challenges facing many as they look to grow and scale their businesses.  So as I prepare to head home to DC after some wonderfully exciting days at Bank Director’s annual FinXTech Summit, a few highlights from my time in the desert.

The 10 Finalists for 3 FinXTech Awards

For me, one of the signature pieces of this year’s program occurred on Thursday evening.  Under the stars, we recognized ten partnerships, each of which exemplified how banks and financial technology companies work together to better serve existing customers, attract new ones, improve efficiencies, bolster security and promote innovation.  The finalists for this year’s Best of FinXTech Awards can be seen in this video.

Winners of the 2018 Best of FinXTech Awards

We introduced these awards in 2016 to identify and recognize those partnerships that exemplify how collaborative efforts can lead to innovative solutions and growth in the banking industry.  This year, we focused on three areas of business creativity:

  • Startup Innovation, to recognize successful and innovative partnerships between banks and startup fintech companies that have been operating for less than five years.
  • Most Innovative Solution of the Year, to highlight forward-thinking ideas, we recognized partnerships that have resulted in new and innovative solutions in the financial space.
  • Best of FinXTech Partnership, a category to recognize outstanding collaboration between a financial institution and fintech company, we based this award on growth by revenue, customers and/or reputation plus the strength of integration.

The winners? Radius Bank and Alloy for Startup Innovation, CBW Bank and Yantra Financial Technology for Innovative Solution of the Year and Citizens Financial Group and Fundation for Best of FinXTech Partnership.  To learn more about each, check out this cover story on BankDirector.com

Favorite #FinXTech18 tweet

Well played with the ZZ Top reference — now we just needs to grow out that beard and drop a pair of RayBans into the shot.

Favorite picture

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Three timely (and paraphrased) comments

  1. COMMUNICATION is key…. said nearly every presenter.
  2. Make the tough call to kill bad tech or a bad relationship. You’ll lose customers if you don’t react quickly (h/t to our VP of Research, Emily McCormick).
  3. Change is the key to being valuable; start thinking and working like a startup (h/t @nabeelmahmood).

Video Recaps

During our time in the desert, we shared a number of videos on BankDirector.com.  The page with all videos can be found on FinXTech Annual Summit: Focusing on What’s Possible.  To get a sense of what these short videos look like, here is an example:

Thanks to all those who joined us at the Phoenician.  For more ideas and insight from this year’s event, I invite you to take a look at what we’ve shared on BankDirector.com (*no registration required).

3 Ways Banks Can Pick Up their Pace of Creativity

Quickly:

  • Financial institutions need a culture that allows for, and encourages, leadership teams to test & implement new approaches to traditional banking.

PHOENIX — Many financial institutions face a creativity crisis.  Legacy systems and monolithic structures stifle real change at many traditional banks — while newer technology leaders move quickly to pick up the slack.  During the first day of our annual FinXTech Summit at the Phoenician, I picked up on a few practical ideas to break down a few of the most common barriers to innovation inside financial institutions.

As our managing editor, Jake Lowary, wrote for BankDirector.com this morning, “the cultural and philosophical divides between banks and fintech companies is still very apparent, but the two groups have generally come to agree that it’s far more lucrative to establish positive relationships that benefit each, as well as their customers, than face off on opposite ends of the business landscape.”

So with this in mind, I invite you to follow the conference conversations via our social channels, where our team continues to shares ideas and information from Day 2 of this event using @BankDirector and @Fin_X_Tech on Twitter. In addition, you can search & follow #FinXTech18 to see what’s being shared with (and by) our attendees.

Banks, Make Your Move Into the Cloud

Quickly:

  • To deliver a truly end-to-end digital customer experience, banks need to figure out how and when to move into the cloud.

PHOENIX — As we kicked off this year’s FinXTech Summit, I found myself engaged in a conversation about how (and why) banks might “freeze and wrap” their data using their current core system while moving their customer engagement and analytics into the cloud.  While this was my first time hearing that particular description/approach, the underlying logic certainly applies for many of the bankers joining us at the Phoenician.  In fact, it inspired this short video shot during today’s lunch.

As a company, we’ve been writing about banks realizing that the benefits of cloud computing outweigh added security risks for a while now.  But it strikes me that interest in cloud-based platforms has been on the rise of late.  As our friends at Blend shared on BankDirector.com, “the cloud presents opportunities for enhanced efficiencies and flexibility — without any security trade-offs — so it’s no surprise that we’re seeing more organizations shift to the software as a service (SaaS) model.”

Interested to see what a move into the cloud might means for banks?  Take a look at these five cloud-based companies:

  • nCino – expediting loans and workflow on top of force.com;
  • Apiture – an API-banking joint venture between Live Oak and First Data;
  • Payrailz – an API-based payments platform “check-free killer;”
  • Defense Storm – where Big Data meets Cyber for banks; and
  • Greenlight – offering debit cards for kids.

I’ll check in later tonight to recap several presentations that explore what makes for a strong, digitally-solid bank.  Before that posts, I invite you to follow the conference conversations via our social channels.  You can follow me @AlDominick on Twitter — and our team shares ideas and information through @BankDirector plus our @Fin_X_Tech platform. Finally, search & follow #FinXTech18 to see what’s being shared with (and by) our attendees.

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FWIW, my reference to Amazon.com, Salesforce.com and Oracle in this video traces back to January 2, when Bloomberg reported the first two were “actively working to replace Oracle software running on crucial business systems with lower cost open-source database software.”  For more: Amazon, Salesforce Shifting Business Away From Oracle: Report

Kicking off FinXTech’s Summit

Quickly:

  • Technology continues to transform nearly every aspect of the financial services industry — from mobile payments to peer-to-peer lending to financial management.

PHOENIX — Tomorrow morning, we kick off our annual FinXTech Summit.  As I wrote yesterday, this annual event serves as our “in-person” bridge between banks and qualified technology companies.  Personally, I am so impressed to witness numerous financial institutions transforming how they offer banking products and services to businesses and individuals.  As such, I find myself eager to engage in tomorrow’s conversations around:

  • Partnerships, collaboration and enablement;
  • How and where banks can invest in cloud-based software; and
  • The business potential of machine learning, advanced analytics and natural language processors.

Joining us at the Phoenician are senior executives from high-performance banks like Capital One, Customers Bank, Dime Community Bancshares, First Interstate Bank, IBERIABANK, Mechanics Bank, Mutual of Omaha Bank, PacWest, Pinnacle Financial, Seacoast National Bank, Silicon Valley Bank, South State Bank, TCF National Bank, Umpqua, Union Bank & Trust, USAA and US Bancorp.  Long-time tech players like Microsoft share their opinions alongside strong upstarts like AutoBooks during this two-day program.  So before I welcome nearly 200 men and women to this year’s conference, allow me to share a few of my preliminary thoughts going into the event:

For those with us here in Arizona, you’ll find nearly every presentation explores what makes for a strong, digitally-solid bank.  So to see what’s trending, I invite you to follow the conference conversations via our social channels. For instance, I am @AlDominick on Twitter — and our team shares ideas and information through @BankDirector plus our @Fin_X_Tech platform.  Finally, search & follow #FinXTech18 to see what’s being shared with (and by) our attendees.

The Intersection of Ideas and Opportunities

Quickly:

  • In a few days, the lights come up on the annual FinXTech Summit, a program that explores ways for banks to delight customers, generate top-line growth and enhance bottom-line profits through partnerships and investments in technology companies.

PHOENIX — When I last stepped foot in Arizona, it was to host Bank Director’s annual Acquire or Be Acquired Conference.  The January event attracts a hugely influential audience focused on mergers, acquisitions and growth strategies & tactics.  While there, we noticed quite a few presentations explored how and where financial institutions might invest in, or better integrate, digital opportunities.  So, as a complement to Acquire or Be Acquired, I’m back in the desert to dive deeper into myriad ideas for banks to improve profitability and efficiency with the help of technology firms.

As we prepare to host our FinXTech Annual Summit at the Phoenician, take note: smart banks are investing and/or partnering with technology companies because they realize it’s cheaper and faster than building something themselves.  Further, the largest banks in the U.S. are rapidly evolving with advances in artificial intelligence across chatbots, robo-advisors, claims, underwriting, IoT and soon blockchain — all of which add another layer of potential to further shake-up traditional business models.  In fact, there was a palatable sense among bankers at AOBA about the evolution in financial technology.

Nonetheless, many banks, especially those between $500M and $30Bn in assets, are on the outside looking in — and this is where FinXTech’s Summit story begins.

From exploring data to leveraging cognitive computing to gaining efficiencies in backroom processes, this year’s event surfaces a number of potent ideas.  For instance, we shine a light on how bank leadership can truly unleash the potential of a technology partner.  Further, we pull current quotes and issues like these to discuss and debate:

One thing I love about customers is that they are divinely discontent. Their expectations are never static — they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’
Jeff Bezos, Founder and Chief Executive Officer

Likewise, we share our takes on key acquisitions — like JP Morgan’s acquisition of WePay — while identifying how institutions leverage newer technologies to improve efficiency ratios and in some cases, boost franchise valuations.

In a sense, FinXTech’s Summit serves as our “in-person” bridge between banks and qualified technology companies.  For those joining us, we’ll touch on various products and services for security, data & analytics, infrastructure, lending, mobile banking, payments and regtech while convening an exceptionally senior audience of 200+.  Throughout the event, I’ll share my thoughts via Twitter, where I’m @AlDominick and using #FinXTech18.  Finally, I’ll author a daily update on this site with my observations from the conference.

Shh, Disruption in Banking Continues

Quickly:

  • I spent yesterday afternoon at Capital One Growth Ventures’ inaugural VC & Startup Summit, an event that inspired today’s post.

WASHINGTON, DC — I’m hard pressed to find anyone willing to contest the notion that technology continues to disrupt traditional banking models. Now, I realize the “D” word jumped the shark years ago. Personally, I try my best to keep my distance from employing the adjective to describe what’s taking place in the financial world vis-a-vis technology. However, banks of all sizes continue to reassess, and re-imagine, how financial services might be structured, offered and embraced given the proliferation of new digital offerings and strategies.

As I reflect on the first quarter of 2018, it strikes me that we’re living in an industry marked by both consolidation and displacement. Yes, many bank executives have fully embraced the idea that technology — and technological innovation — is a key strategic imperative. However, few banks have a clear strategy to acquire the necessary talent to fully leverage new technologies. On the flip side, I get the sense that a number of once-prominent FinTech companies are struggling to scale and gain customer adoption at a level needed to stay in business. Nonetheless, the divide between both parties remains problematic given the potential to help both sides grow and remain relevant.

While banks explore new ways to generate top-line growth and bottom-line profits through partnerships, collaboration and technology investments, I have some concerns. For instance, the digital expectations of consumers and small & mid-sized businesses may become cost-prohibitive for banks under $1Bn in assets. So allow me to share what’s on my mind given recent conversations, presentations and observations about the intersection of fin and tech.

FIVE ON MY MIND

  1. With all the data issues coming to light courtesy of Facebook, how can banks extract the most revenue from the data available to them (*and how much will it cost)?
  2. As banks become more dependent on technology partners, what level of control —over both costs and data — should a bank be willing to trust to third parties?
  3. What does the arrival of new technologies, such as artificial intelligence, mean for a financial institutions’ current workforces?
  4. Amazon’s announced checking account partnership with JPMorgan Chase begs the question: how dependent should banks become on big technology companies?
  5. How many larger banks will acquire smaller institutions that cannot keep up with the cost and pace of technology in Q2?

Significant technological changes continue to impact the financial community. In the weeks to come, I’ll relay what I learn about these five issues in subsequent posts. If you’re interested, I tweet @AlDominick and encourage you to check out @BankDirector and @FinXTech for more.

10 Questions I Plan To Ask During Acquire Or Be Acquired

Quickly:

  • Despite improving economic conditions, the business of banking remains difficult.

By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech.

PHOENIX, AZ — For all the talk of bank consolidation, there are still 5,700+ banks in the United States.  But let’s not kid ourselves.  For many community banks today, earnings pressures + regulatory and compliance costs + the continued impact of technology = a recurring challenge.

While the number of banks in business will inevitably shrink over the next 10 years — perhaps being cut in half — I remain bullish on the overall future of this industry. If December’s tax reform spurs capital spending and job creation by small- and medium-sized businesses, many of the banks joining us here in Arizona stand to benefit. But will the recent tax cut induce companies to invest more than they already planned to? This is but one of a number of questions I look forward to asking on stage through the first day of Bank Director’s Acquire or Be Acquired Conference.

Below, ten more questions I anticipate asking:

  1. Are FinTechs the industry’s new de novos?
  2. What does it mean that the banking world is deposit rich yet asset poor?
  3. Why are certain credit unions thinking about about buying banks?
  4. In terms of technology spending levels, where are dollars being earmarked and/or spent?
  5. With respect to small business lending, do credit unions or FinTechs pose a more immediate challenge to community banks?
  6. What is an appropriate efficiency ratio for a bank today?
  7. Will big M&A buyers get back in the game this year?
  8. What are some of the critical items in due diligence that are under appreciated?
  9. What does an activist investor look for in a bank?
  10. Is voice recognition the next huge source of growth for banks?

We have an exciting — and full day — coming up at the Arizona Biltmore. To keep track of the conversations via Twitter, I invite you to follow @AlDominick @BankDirector and @Fin_X_Tech.  In addition, to see all that is shared with (and by) our attendees, we’re using the conference hashtag #AOBA18.

Three Things to Know About the Digital Delivery of Financial Products and Services

Quickly:

  • Technology continues to reshape what it means to lead, to innovate and to offer in terms of financial goods and services.

By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech.

WASHINGTON, DC — It is no secret that financial institutions are in a race to figure out how and where innovative technologies can help win and keep loyal customers, improve operational efficiencies and enhance their overall cyber-security measures.  While we might disagree on how fast changes will occur, can we all agree that the ever-expanding expectations for the digital delivery of products and services will dramatically impact banking’s future?

I put this not-quite-rhetorical question out in advance of our annual Acquire or Be Acquired Conference at the Arizona Biltmore.  Indeed, the technological shifts taking place in this industry are significant, and I anticipate quite a few conversations about what our “digital future” might look like.  In the spirit of sharing information and ideas prior to this Sunday’s presentations, this video surfaces a few areas I think a bank’s board needs to pay closer attention to.

If you’re interested in following conversations that focus on issues like these during Acquire or Be Acquired, I invite you to follow me on Twitter via @AlDominick, check out what the team shares through @BankDirector plus our @Fin_X_Tech platform and search & follow #AOBA18 to see what the social shares with (and by) our attendees.

*This video — which is normally available only through our special bank membership program — foreshadows several presentations at Acquire or Be Acquired.  It also tees up our FinXTech Annual Summit.  Held the past few years at the NASDAQ’s MarketSite in NYC, we’ve partnered with Promontory Interfinancial Network to best explore opportunities to generate top line growth and bottom line profits through partnerships, collaboration and investments. Held at The Phoenician in Scottsdale, AZ on May 10th and 11th, I invite you to take a peek at the recently updated agenda.

A Community Bank Can Build Innovation Into Its Growth Strategy

Quickly:

  • I’m at the Montage Deer Valley for the Association for Financial Technology’s Fall Summit.
  • “Who do we want to be when we grow up in this new digital, always-on financial services environment?” might be the most important question for a bank CEO to strategize on with his or her team.

By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech

PARK CITY, UTAH — For the technology companies looking to make a real difference in the financial services world, let me suggest a stronger focus on regional and community banks.  At a time when JPMorgan Chase, Wells Fargo, BofA and the like are investing heavily in digital engagement strategies to connect with digital-savy customers, there are significant pressures on banks not able to spend what the biggest banks do to develop or adopt digital strategies.

As I listened to an afternoon panel discussion on the need for banks to create sustainable, scalable and relevant business models, I went back to my notes on a newer partnership between First Horizon’s First Tennessee bank unit and D3 Banking.  Developed to overhaul First Tennessee using D3’s API-driven platform, I see this type of partnership as one that positions a strong regional player to better compete with much larger banks.

First Tennessee and D3 is one of a number of bank/fintech arrangements I think technology executives here in Park City should know about.  A smaller bank “doing it right” in terms of partnering with technology companies is Somerset Trust Co., a $1 billion asset bank out of western Pennsylvania.

Their COO, John Gill, participated in the panel that precipitated this post.  As we’ve written about at Bank Director, Somerset has learned to play the innovation game by partnering up with some impressive fintech companies.  For example, they teamed up with Malauzai Software in Austin, Texas, to develop a mobile banking solution that allows Somerset’s retail banking customers to securely check balances, use picture bill pay and remotely deposit checks from any location or device.  More recently, Somerset Trust partnered up with BOLTS Technologies to improve its mobile new account customer experience.

It strikes me that figuring out how to move ones business towards a foundation of flexibility is essential.  So too is being open to new ideas and partnership opportunities. Most importantly, just because a bank is small doesn’t mean it can’t build innovation into its growth strategy.

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As part of AFT’s Fall Summit, I shared a few stories about bank CEOs leadership styles, their team’s investments in fintech companies and ideas, and several innovative solutions that caught my attention.  Interested?  Here is a link to both my presentation and post.

The Intersection of Leadership and Profitability

By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech

Quickly

  • Key takeaways from one of my favorite summer banking events, Crowe Horwath’s Bank Leadership and Profitability Improvement Conference.

_ _ _

This morning, on the first of my two flights from Washington National to Monterey, California, I learned that Walmart customers might soon be able to get installment loans for big-ticket items through Affirm, a San Francisco-based FinTech I first wrote about in 2014 (For Banks, the Sky IS Falling).  Per the Wall Street Journal, the companies reportedly are nearing an agreement on a pilot program.  This potential partnership caught my eye as I prepared for today and tomorrow’s conference.  Indeed, relationships like these make clear that when it comes to growth and efficiency, the digital distribution of financial goods and services is a significant issue for the banking industry.

This idea took further shape when I walked into the conference center at the Inn at Spanish Bay.  Immediately upon entering the room, I found John Epperson, a partner at Crowe and Jay Tuli, senior vice president retail banking and residential lending at Leader Bank, sharing their opinions on partnership strategies involving banks and FinTechs.  From the stage, they touched on increasing net interest margins via improved pricing strategies on commercial loans, approaches to streamline mortgage application processes, ideas to reduce staff counts for loan administration processes and how to improve customer experiences through online rent payment solutions.

Their perspectives lined up with those we recently shared on BankDirector.com.  To wit, “many banks have realized advantages of bank-FinTech partnerships, including access to assets and customers.  Since most community banks serve discreet markets, even a relatively simple loan purchase arrangement can unlock new customer relationships and diversify geographic concentrations of credit.  Further, a FinTech partnership can help a bank serve its legacy customers; for instance, by enabling the bank to offer small dollar loans to commercial customers that the bank might not otherwise be able to efficiently originate on its own.”

Of all the difficult issues that bank leadership must deal with, I am inclined to place technology at the top of the list.  Banks have long been reliant on technology to run their operations, but in recent years, technology has become a primary driver of retail and small business banking strategy.  John and Jay simply reinforced this belief.

In addition to their thoughts on collaboration, this afternoon’s sessions focused on ‘Liquidity and Balance Sheet Management,’ ‘Fiscal Policy During Regulatory Uncertainty’ and ‘Managing Your Brand in a Digital World.’  While I took note of a number of issues, three points really stood out:

  • Yes, banks can make money while managing decreasing margins and a flat yield curve.
  • Asset growth without earnings growth is a concern for many because of loan pricing.
  • How a CFO sets a target(s) for interest rate risk may start with an “it depends” type response — but gets nuanced quickly thereafter.

Finally, I’m not holding my breath on the industry receiving regulatory relief any time soon.  I get the sense many here aren’t either.  But it would be nice to see some business people brought in to run various agencies and I’m looking forward to the perspectives of tomorrow’s first guest speaker, Congressman John Ratcliffe.

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My thanks to Crowe Horwath, Stifel, Keefe Bruyette & Woods + Luse Gorman for putting together this year’s Bank Leadership and Profitability Improvement Conference at The Inn at Spanish Bay in Pebble Beach, California.  I’ll check in with additional takeaways based on tomorrow’s presentations.