Bankers Need to Encourage, Even Compel Employees to Use Tech Tools

Chris Cox, the head of Regions Bank eBusiness unit, was quoted in Bank Technology News on how personal financial management (PFM) tools will soon be part of a customer's everyday interaction with their bank once they login. I believe him.

But will they do it through your financial institution? In a separate article, Jim Marous of The Financial Brand, opined that Mint, a PFM tool that "screen scrapes" financial information from various financial institutions and aggregates it into their tool, is a serious threat to banks, thrifts and credit unions. I believe him, too.

PFM tools have been dogged by low adoption rates. Woe to the retail banker or IT manager in convincing the CEO that PFM is a must-have . If it was so critical, why are so few people using it? I doubt this will surprise you, but I have my opinions.

First, the likely adopters of bank technology tools are probably younger customers. I'm 49 years old and I have not demanded that my bank have a PFM tool because I don't think I would invest the time to learn and use it. In fact, I don't know if my bank has a PFM tool. My daughter is more likely to want and use such a tool. And guess what? She doesn't have any money... yet. 

Bank profits are driven from balances, and expenses are driven by number of accounts and gizmos attached to those accounts. So effectively implementing a technology gizmo that is targeted to younger customers that currently generate little revenues does not make for a solid business case.

Secondly, I believe that PFM and other customer-facing technology tools have low adoption rates by your employees. Don't believe me? Why don't you poll them. Let me know how it turns out.

People sell what they know. When I was a branch banker, I sold the heck out of home equity loans and retail checking accounts. Why? I knew them much better than business checking or a commercial line of credit. So my branch had a lot of retail deposits and loans. It was what I knew and was most comfortable.

I read an industry article, and I apologize that I can't recall where I read it or I would link to it (although I suspect it was a Jim Marous piece again), that a bank required their employees to open accounts using the same online account opening tool that customers would use if they did it themselves in their pajamas. The employees didn't have to wear pajamas, but you get my point.

It forced the employees to know the tool that was available to customers. And why wouldn't you do it this way? You invest the money in developing or purchasing an intuitive online account opening tool and then saddle your employees with opening accounts using a clunky core processor user interface (UI) or tool? Why do we need both? 

And if choosing, you should choose the one available to customers so your employees are subject matter experts on it. Imagine a customer calling the nearby branch for help using an online tool and the branch employee guides them through it, instead of transferring them to your call center or eBanking unit.  

Don't stop at account opening. Transfer the logic to other customer tools, such as PFM. First, get your employees on it and using it via their own personal accounts. Only by repetition will they achieve the subject matter expertise to enroll their clients into it, train them on how to use it, and answer "how-to" questions about it. 

And don't stop at retail banking tools. Many if not most community banks are focused on the business segment, and there are plenty of available tools to help harried business owners make their financial lives simpler. Since employees are typically not business owners, this will take a little more diligence in giving them the needed training and repetition to be fluent in the available tools. Perhaps you can set up a "test account" at a "test bank" and require employees to use the tool a certain number of times prior to crowning them "cash flow management" qualified.

Mint, Yodlee, Moven, and other technology platforms are working hard to win the loyalty of your customers via their "cool" platforms. Many, such as Geezeo, focus on helping community financial institutions offer cool tech solutions and yet retain customer loyalty through the FIs own brand. To win the loyalty of those that demand such technologies now, and when they have the wealth to drive profits, financial institutions must develop front line staff to be fluent in what is available. Only then will they enthusiastically demonstrate the technology (go into an Apple store and have a "genius" demonstrate the Apple Watch and you'll know what I mean), describe features and benefits and their own experience with the tool, get customer adoption rates higher, and build greater loyalty to your brand.

Or you could let Mint do it.

~ Jeff

Grow Your Own Business Bankers

Commercial loan growth is difficult to come by these days. Some is a result of anemic economic growth and an uncertain business climate. These factors are beyond a banker's control. But what is within your control is the number and quality of business bankers deployed into your bank's markets.

Nearly two years ago I wrote a job description for a business banker based on what I heard from bankers on the qualities they value most from people occupying this position. How rare is it to find an exact match between people and expectations? Do your business bankers build well-rounded relationships, or bring you deals? Do they bring value to the customer relationship with expertise in cash flow management, inventory financing, and liquidity needs? If so, can they consistently bring loans that are priced appropriately for the risk, or do they need to shave rates or terms to get deals done?

The answers to these difficult questions makes me wonder why we keep relying on "experienced lenders" to move our institution forward. Perhaps populating our ranks with long-tenured lenders married to price-driven deal making is holding us back from becoming the institution we strive to become.

Maybe there is another way. When bankers comment that they can't find experienced lenders to add to their staff, I frequently ask what they are doing to grow their own business bankers. What is your answer to that question? Show me the curriculum you have in place to turn the recent hire into the business banker you envision?

There are plenty of high quality training opportunities out there. Both the American Bankers' Association and Risk Management Association have formal training to teach bankers the skills needed to become the business bankers of the future. Beyond formal training, is a plan, a process if you will, to create bankers capable of flawlessly executing your bank's strategy and give you a competitive advantage. How can you achieve a competitive advantage by developing business bankers to your exacting standards? Because so few are doing it.

Brokerage firms and insurance companies troll college campuses for their next "big producer". Most

recruits flame out because they see themselves as the "Wolf of Wall Street", only to find out that they make little money and get little respect from customers and coworkers at the outset. The "eat what you kill" variable compensation structures don't pay back the student loans, in most cases.

Banks, conversely, hire with the majority of employee earnings coming in the form of salary. This is a key differentiator to bring your next rising star on board from the college ranks. Entry level professional positions could include the assistant branch manager or branch manager, which was my entry point. Or it could be a credit analyst or portfolio manager. A continuous plan to populate these ranks with recent college graduates with great attitudes and a willingness to learn will breath fresh life into your institution and provide a solid base to build business bankers into the future.

But you need a plan, and have to execute it. If not, good luck on your hunt for experienced lenders.

Do you have a development plan to build business bankers?

~ Jeff

Note: This post first appeared as a guest post for Sageworks in March.

Banking School: The ivory tower could be yours.

I am sitting at Gate 124 in Orlando waiting for my ride home from a long journey. Prior to Orlando, it was Dallas. In Dallas, I taught bank profitability and strategic planning at the ABA School of Bank Marketing Management. The school is a two year program designed to transform up-and-coming marketing professionals into well rounded bank leaders.

I have written a post on these pages regarding training programs (see Are your employees ESWS qualified?). My firm asked Are you training for the gold? in one of our quarterly newsletters. Clearly this topic remains on my mind.

Much like the Kansas City Athletics was the training ground for the New York Yankees, large banks served as the training ground for community bankers. Those big bank training programs are long gone. In strategy sessions today, senior leaders are wondering how to replace aging bankers that benefitted from those programs.

I have a few suggestions.

1.  Get your own training program. Lack of resources is the most often cited reason for community FIs not training their own. Their are several resources outside of your FI with outstanding and targeted curriculum taught by qualified instructors. National trade associations are a great resource for training your employees to be the leaders of your FI. See the ABA, ICBA, CUNA, and other trade associations to review what they offer and the relevance to your institution.

2.  Develop a curriculum by functional position. In my experience, many if not most FIs develop ad hoc training programs that reward high performing employees for a job well done by sending them to a school or conference in a nice location. But if execution of your strategy is largely in the hands of your employees, perhaps you should be serious about giving them the tools to execute that strategy. What skills do they need? How much can be accomplished in-house or via on-the-job training (OJT)? Are we teaching them to supervise, coach, communicate, and/or build a book of business. I perceive a training curriculum to be a focused mix of OJT, in-house classroom, coaching, and outside training (either industry training or academic training).

3.  Recognize high potential employees. One way to do this is to send them to a conference or school in a nice location. But another clear recognition is to prepare them to be leaders at your FI. Train them for the next level, or for another functional area. One risk we have in banking is keeping high potential employees in one functional area, developing a myopic view of your institution and our industry. Perhaps a controller or CFO should go to marketing school because they speak such a different language. In fact, there was a CFO at the ABA marketing school. Imagine that!

4. Recognize that training goes beyond the curriculum. Bankers that don't directly compete with one another openly share best practices with their colleagues. I saw it in action at the marketing school. Another benefit is developing lifelong industry contacts that you can call on for different perspectives. See the photo for a visual of the camaraderie that goes on at these schools. This not only builds morale, it can help your FI by expanding the knowledge base outside of your walls.

This may be the fourth or fifth time I have written or spoken about industry training. I intend to keep working the subject because there is not any other initiative you can undertake, in my opinion, to build a competitive advantage and to sustain your institution for future generations.

~ Jeff

Do We Care About Leadership?

On a recent plane ride I sat next to the Commander of the NCO Academy at Fort Jackson, South Carolina (see picture from one of last year's classes). He is a reservist, and had interesting perspectives on how the military operates versus private industry. In his "real life", he is a sales manager for a pharmaceutical company.

One form of training I fondly recall from my Navy days was Navy Leadership Development school, or NAVLEAD. We have acronyms for EVERYTHING in the military. I have not come across anything like it in my civilian life working with community financial institutions.

The commander, however, worked for a large company and said they do incorporate leadership, management, and supervisory training to employees. He spoke of the company hiring psychologists to develop the curriculum and provide instruction, and actors to do role playing.

When we talk of the cost of regulation, we often think of cutting back on number of personnel, technology, and branching to bridge the profit gap. But one fatality is likely to be personnel development. Community FIs do not have large training budgets to prepare future leaders to take the next step, to manage, to supervise, to lead.

Aside from the cost, part of the reason may be our attitude towards "soft" disciplines such as leadership and supervision. We promote top performers and assume they can also take on additional responsibilities, such as employee coaching, without effort. But in my experience, this is not so. Prior to me taking the NAVLEAD course, I will put to you that I was ill prepared for such a large responsibility of leading other sailors.

The Navy understood this, and prepared me to succeed so I may prepare those under my charge to succeed. See a portion of a 2006 message sent by the Chief of Naval Operations (CNO) as to the importance of leadership development to the effectiveness of our Navy. I do find it interesting that these Navy dispatches look very much like the ones I recall over 20 years ago.

In an era of uncertainty, increased regulation, and competitive pressure, do we have the foundation to lead us into the future? When I write foundation, what does it mean to you? Does it mean the technological infrastructure, the branch footprint, or the special niche? Or can it also mean that we are developing the type of leaders that ensures those under their charge are performing to their potential?

If people are important to your FIs success, what are you doing to develop your people?

~ Jeff