Focus remains on lightening regulatory burden, while practical matters like customer experience gain attention.
By Toni Lapp
March 20 – The Independent Community Bankers of America Community Banking Live! organizers could hardly have hoped for a more optimistic set of circumstances surrounding ICBA’s annual meeting March 15-18. The Federal Reserve announced an interest rate increase on the first full day of the conference, which came a week after ICBA leadership met with President Donald Trump; needless to say, the mood was upbeat at the event in San Antonio, Texas.
But there is work to be done for community bankers, and educational sessions dealt with practical matters ranging from mergers and acquisitions to enhancing customer experience.
Despite the improving outlook for community banks, consolidation remains the trend for the industry. M&A consultants Jeffrey Gerrish and Greyson Tuck with Memphis firm Gerrish Smith Tuck discussed strategies for remaining independent in a workshop titled “Fighting the Tide.”
Bank boards that want their institutions to remain independent must understand the importance of planning to enhance shareholder value, the presenters said.
Gerrish noted that since the election, some banks had taken a wait-and-see approach to evaluate whether there would be a “Trump effect.”
Tuck advised attendees to continue striving to improve profitability. He encouraged executives to view their banks the way an acquirer would. Although 80 percent of banks are in a holding company, that might not be right for every institution. Strategic planning can help determine the best structure, said Tuck, whether it’s going public (SEC reporting), private (nonreporting) or very private (Subchapter S).
Attention should also be given to the board. As part of an institution’s anti-takeover plans, often board members are required to live in the community, but a bank may want to add requirements, such as minimum stock ownership or age.
“Evolution of Banking” was the focus of a workshop on branch strategy and staffing. Gina Bleedorn and Sean Keathley from “experience design agency” Adrenaline, discussed strategies for creating a high-tech, high-touch organization that fosters interaction and collaboration.
Bleedorn led attendees through a series of slides depicting a remodel of a traditional branch dominated by teller lines into a space strategically designed to create a “journey,” mapped to create zones based on the intended customer experience. Rather than an imposing counter, round tables of varying sizes encourage a more conducive setting for universal bankers to help customers.
The session dealt heavily in the use of self-service technology; the presenters asked for a show of hands from the room of more than 100 attendees about whether any had adopted interactive teller machines, or ITMs, and only a couple of hands went up. When asked how the conversion had gone, the reaction from both was tepid.
“That’s been our experience, too” said Keathley, who suggested that such equipment should only be placed in areas to replace equipment, not a live person.
Perhaps the more important aspect of creating a universal experience is having the right staff, said Bleedorn, who noted that such a shift requires a cultural transformation within the bank. A special blend of skills is demanded of a universal banker, who must be a sort of jack of all trades.
“Not everyone is comfortable cross-selling,” she said, but the benefits are many, include a higher salary for a universal banker.
In a question-and-answer session that followed, an attendee asked whether “the definition of universal banker include mortgage origination.”
“That’s where it gets complicated,” said Keathley, describing one bank’s experience using the universal banker to begin the process and hand off to experts.
In a session on “Automated Commercial Lending,” Kristin Zell, product specialist for ProfitStars, offered a personal anecdote when she discussed finding the right blend between personal commercial lending relationships and automated/digital processes. She noted that she herself had switched accountants recently when she realized the new one offered an online platform enabling clients to upload documents rather than requiring her to load documents on a flash drive and deliver across town.
Commercial lending tools are rapidly evolving, and community bankers often struggle to embrace the new efficiencies along with their traditional hands-on approach, she said.
Myriad steps are associated with the application, analysis, underwriting, approval and eventual funding of a commercial loan. That leaves a lot of room for process improvement, Zell said. Meanwhile, marketplace lenders have gained prominence based of the ease of use associated with their application and underwriting processes as well as the timeliness of funding. But they have scored poorly on factors such as price, service, and transparency. There is clearly room for community-based institutions to excel against these market disruptors while maintaining their core strengths.
“Process improvement through technology does not have to be impersonal,” said Zell. “Effective technology simply shortens the gaps between personal interactions. It enhances the relationship between the lender and the borrower rather than replacing it.”
Of course, regulatory reform continues to be a topic of debate, and in a general session ICBA President/CEO Camden Fine told attendees that they must “keep pressure on Congress,” if they wanted to achieve meaningful regulatory reforms. Fine reminded attendees that the previous week’s White House meeting and opportunities to effect regulatory reform were the culmination of years of hard work from today’s community bankers and their predecessors.
“We have an excellent opportunity before us, but we cannot afford to waste it,” Fine said. “We cannot afford to look back some day and wish we had only done more.”
Also at the meeting, executive leadership was elected. R. Scott Heitkamp, president and CEO of ValueBank Texas in Corpus Christi, Texas, was installed as chairman. Joining Heitkamp on the ICBA executive committee are: Chairman-elect Timothy K. Zimmerman, president and CEO, Standard Bank, Monroeville, Pa.; Vice Chairman Preston L. Kennedy, CEO, Bank of Zachary, La.; Secretary Christopher Jordan, president and CEO, Farmers State Bank of Stigler, Okla.; Treasurer Derek B. Williams, president and CEO, Century Bank & Trust, Milledgeville, Ga.; immediate Past Chairman: Rebeca Romero Rainey, chairman and CEO, Centinel Bank of Taos, N.M.