Positive Vibes: Unwinding 2017

Positive Vibes: Unwinding 2017

In his international bestseller book “The Happiness Advantage,” positive psychology researcher, author, and “Ted-talker,” Sean Achor said “…give yourself an immediate competitive advantage by focusing on all the reasons you will succeed [and have succeeded], rather than fail. Remind yourself of the relevant skills you have, rather than those you lack.”

To switch gears on a dime, I don’t think it’s a stretch to say that many bankers are ready to put 2017 in the rear view mirror for a host of different reasons. As the industry rapidly morphs before our very eyes, we are left with unanswered questions and a sense of uncertainty as to what 2018 will hold. Are we adequately managing risk and are we prepared to change and adapt to rapidly changing customer needs prior to our competitors? Where do we stand in the economic cycle? What legislation changes are in store and how will they affect the industry? Could it be that we may see some regulatory reprieve in 2018? Demands: asset growth, then profitability. Rinse and repeat. As bankers, our jobs are to manage and mitigate risk so it’s no wonder why we generally tend to be “worriers.” As we turn the page on 2017, I will capitalize on Achor’s, “Happiness Advantage,” by recapping accomplishments that many banks and credit unions have worked tirelessly in making a reality:

  • Student Debt – As the cost of a 4-year college education has continued to soar, so too has the load of US student loan debt, now well north of $1 trillion.  In recognition, many community sized financial institutions across the US are rolling out student loan assistance programs. These assistance programs are structured in various ways, but most FIs are electing to partner with platform solutions such as Gradifi. These solutions allow employers to make direct contributions to the reduction of outstanding employee student loans. These programs are also available to existing employees aspiring to start or finish college degrees or even participate in paid learning/development programs. The FIs are reaping the benefits of a notably larger talent pool, employee engagement, and employee retention.
  • Philanthropy, Teaming Up, & Giving Back – Community banks and credit unions are practicing what they preach when it comes to giving back to their respective communities. Many institutions are encouraging employees to take allotted volunteer time to benefit the community or a charity of the employees’ choice. In return, employees receive additional vacation days on a one-to-one basis or work from home days on a two-to-one basis.In the wake of hurricane Harvey, community banks have rallied in unity, exhibiting overwhelming support for the communities impacted by devastation. Independent Community Bankers of America launched a relief fund dedicated to helping thousands of community bank employees, their families, and customers most impacted by the catastrophe. Texas community banks and credit unions are hard at work executing protocol per their independent post-disaster playbooks. One executive was quoted in American Banker saying, “You can’t serve the public if your employees are shell-shocked. You’ve got to take care of the employees first.” Executive brainstorming sessions have been in full action and include delivering groceries, providing laundry services, finding cars for colleagues, arranging and paying for hotel rooms, performing restorative work, and even funding interest-free loans of up to $20,000 for those impacted.
  • Culture & Work-Life-Balance – The industry is quickly acknowledging the importance of work-life-family balance. Several FIs have implemented programs that allot employees 3-4 paid hours a week to address personal needs/appointments, exercise, rest, or to attend family events. Others have expanded parental leave from 6 to 8 weeks at full pay. Furthermore, FIs are providing flexibility to both parents by expanding paid leave benefits to spouses, domestic partners, and surrogate and foster parents. City National is supporting employees with cash contributions to help employees with the purchase of a new home, the birth of a child, or even in difficult times such as a death in the employee’s family.
  • “The Human Touch” – Community sized banks and credit unions constantly battle the inherent competitive disadvantages they face relative to scale (ie, limited footprint, increased regulatory costs, etc.) In recognition, the industry has made tremendous strides in educating their clients, their communities, and their policymakers about the critical role that smaller financial institutions play in the market. This is evidenced by the recent American Bankers Association poll which determined the following:
    • 79% recognize that local banks play an important role in communities by sponsoring community events and providing financial education
    • 89% of Americans believe it’s important to the US economy to have banks of all sizes
    • 87% of Americans say it’s important to have a local bank branch easily accessible from their home
    • Over half of Americans are concerned by the vast decline in the number of banks over the last 10 years

Without doubt, smaller FIs continue to play to their competitive advantage by truly adding a personal touch to deepen customer relationships. In a recent U.S. News article, “Why a Small Bank Might Be Right for You,” Greg McBride, Chief Financial Analyst at Bankrate, emphasized this competitive advantage by eluding to the fact that the big banks “can’t have their cake and eat it too.” He said, “…You often hear large banks talk about themselves as a community bank, particularly as it relates to the customer experience where you feel valued and you’re not just a number. You don’t hear community banks saying that they operate like a megabank.” Simply put, several of the large regional/super regional banks try to position themselves as community banks because they know how important personalized, know-you-by-first-name service is to the customer. Big banks may say it, but community sized FIs are proving it with genuine personalized attention and tailored face-to-face assessment of customer needs. Lastly, they prove it by their commitment to their respective local geographies (where bank employees and leadership live and work), where deposits are reinvested back into the same communities, fueling the local economies in the form of community-based loans and other investment.

  • Technology & Project Management – Community banks and credit unions should recognize the amount of progress they have made with their investment in technology and dedicated project management resources. We are seeing community banks and CUs deliver seamless mobile responsive online presence. FIs are further capitalizing on technology spend by leveraging their nimble structures and ongoing employee training/development. BankDirector’s 2017 Technology Survey further highlighted the industry’s sentiment around leveraging technology:
    • 60% of respondents reported positive impacts to growth and/or profitability associated with technology investment.
    • An overwhelming 93% believe technology will play a more prominent role in bank strategy in the near future.
    • Over half of respondent bank technology budgets increased between 5-10% in FY17. About 10% increased tech budgets by 10% for the year and just over 20% of respondent banks increased tech budgets by 15% or more during FY17!

Lastly, many Baker Hill clients are benefiting from data analytics and business intelligence initiatives, recognizing that their data is one of their most valuable assets when it comes to strategic planning, profitability insight, and data-driven marketing campaigns. McKinsey Global Institute reinforces how powerful a data-driven culture can be; “Data-driven organizations are 23 times more likely to acquire customers, 6 times as likely to retain those customers, and 19 times as likely to be profitable.”

The Happiness Advantage points out “in the work world, as in our personal lives, we are often rewarded for noticing the problems that need solving, the stresses that need managing, and the injustices that need righting.” This way of thinking can often be quite useful, but it too can inhibit us from identifying and celebrating the positives. Remember, “Happiness is the precursor to success, not merely the result.” Happiness, optimism, recognition, and celebrating wins (big or small) provide the fuel for innovation, strong performance, and achievement. As such, let us reflect on all of these great industry accomplishments in 2017. Let’s celebrate them and let’s remind ourselves that whatever 2018 brings, we have “the ability to move up not despite the setbacks, but because of them.”