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Banking Hits an Inflection Point

By: Kari English

Although the overall theme of the Iowa Bankers Association Convention & Expo in Des Moines last month was a tribute to Iowa veterans, changes and reaction to those changes were also prominent themes. For example, the financial industry has hit an inflection point — a point of great change within an industry, according to Peter Sheahan, founder and CEO of ChangeLabs. Sheahan said it is how companies within those changing industries react to the inflection point that will determine how well they succeed during and afterward.

During times of change, Sheahan said people tend to make assumptions about trends based on history, which may be right or wrong. Those who exploit trends early during the inflection point thrive and those that ignore or make the wrong assumptions do not, Sheahan said. The biggest element of change right now in the financial industry’s inflection point is regulation.

Sheahan asked the audience, “What assumptions have you made? What is your mindset on regulatory challenges? Because you set the tone and mood of the bank with this mindset.”

Sheahan said the banks that more willingly accept and more aggressively comply with these new regulations will be the banks that outperform their competition now and after the inflection point has eased.

“A CEO’s behavior is the most powerful lever for transformation in times of change,” Sheahan said.

Sheahan also said that as compliance gets more complex, CEOs need to rely on themselves less. “You are not meant to know everything,” he said. Instead, he suggested institutions collaborate from within by talking to employees and asking for their opinions on ways to comply with new regulations and to improve efficiency.

Click here to view photos from this convention.

“It creates more vested interests,” said Sheahan. When employees are involved in a project or process they own it, and when they own it positive changes occur, according to Sheahan.

In a breakout session, Ray Adler, president and CEO of BTI Growth Advisors, San Diego, also discussed change in the industry. Adler said long ago banking was about consulting and advising clients; then it changed to the sales focus we know now. Currently, bankers tend to sound alike; tend to behave similarly; tend to sell in much the same way; and have been doing things the same for decades. The future of banking, however, is back to that of consulting and advising, Adler believes. And being successful in the future is going to require a change in how bankers train their employees.

“Developing people and improving performance is an ongoing process,” said Adler.

To become more of a consultative bank, when looking for new business, Adler suggested lenders ask their current clients for “warm introductions” as opposed to referrals and not to ask for introductions with customers but with the client’s colleagues instead. Once introduced, Adler said to talk to the colleague about his wants instead of his needs, such as vision and goals; the company and the industry in general; and goals met and not met. Adler even challenged the session attendees to sit through one prospective client meeting without even talking about the bank.

The reason for doing this, Adler said, is that pricing becomes less of a consideration when the potential client’s wants become the relationship focus as opposed to the client’s needs.

It’s Official

The IBA elected its 2012–2013 officers at this year’s convention. Steve Goodenow, chairman, president and CEO of Bank Midwest in Spirit Lake, will be chairman of the board; Tom Pohlman, president of Ames National Corp. in Ames, will be chairman-elect; Ron Hansen, president and CEO of Liberty Trust & Savings Bank in Durant, will serve as past chairman of the board; Joe Steil, president and CEO of KSB Bank in Keokuk, will begin his term as treasurer; and John Sorensen, president and CEO of the IBA, will continue to serve as secretary of the board.

IBA member banks also elected several new members to serve on the board of directors including Kent Rutherford, president and CEO of Security Savings Bank in Eagle Grove; Kevin Driscoll, president of Bridge Community Bank in Mount Vernon; Tim Wolf, president and CEO of State Savings Bank in West Des Moines; Bruce Kout, president and CEO of Farmers & Merchants Savings Bank in Iowa City; Dean Jacobsen, president of Northwest Bank in Spencer; and Mike Helak, regional president of U.S. Bank in Des Moines.

Kari English is senior editor of BankNews.

Copyright (c) October 2012 by BankNews Media