Do Bank Management Teams Need to Change?

January 31st, 2017

technology-1-31-17.pngU.S. Bancorp’s retiring CEO Richard Davis said that just before walking on stage at Bank Director’s Acquire or Be Acquired Conference in Phoenix, Arizona, yesterday to give the keynote address, he had to check President Donald Trump’s twitter feed to make sure nothing had fundamentally changed about the banking landscape.

In a world when the president can change the rules of the game with a single tweet, sending a company’s stock price soaring or sinking in a single chirp, and where customer demands are changing in the face of game-changing technology, the management teams of the future may need to be nimbler than they might have imagined a decade ago.

Keeping up an environment like this is hard to do. But a growing recognition among many attending the conference was that banks were going to have to get more agile and accept changes to the way they do business.

Huntington Bancshares’ CEO Stephen Steinour said at the conference that he’s less worried about 10,000 fintech companies than by technology giants such as Apple and Google. “They have a capacity to invest at a level most of us in the industry can’t think about,’’ he said. “If we give up on payments, we have a huge challenge in the future.” Steinour said that online lenders have technology that banks can learn from. “Speed is important,’’ he said. “We are eminently capable of meeting those challenges and offering great customer service.”

Joshua Siegel, CEO of asset manager StoneCastle Partners, which invests in community banks, agreed that banks are probably more resilient than many people give them credit for. But he said that many banks have been slow to adopt technology and management teams are often a barrier to making changes.

U.S. Bancorp’s Davis said boards can have a role in this transition, by keeping up with changes in the industry and holding management accountable. Small banks have traditionally lagged big banks by a few years in terms of adopting technology, but in some cases this will no longer work, he said. “You can’t be OK with catching up two to three years later,’’ Davis said. “You can’t lag anymore.”

Some banks also are looking to hire workers who are comfortable with change, who are more comfortable with technology and could propel the bank forward. “We tell them the one constant here is change,’’ said David Becker, the president and CEO of the First Internet Bank of Indiana. “If you are uncomfortable with that, don’t waste your time or ours.”

But bank management teams might need to change how they operate, too. Younger generations are more racially and ethnically diverse, and they are more focused on having a career with a purpose, and more likely to leave when don’t feel their needs are met. Young people might be more receptive to banks as employers, despite the poor reputation banks received following the financial crisis, if they feel that banks are making a positive impact on their communities. Getting better at telling the story of how banks make a positive contribution to their economies is another way that bank management teams could influence the future of their institutions, Davis said.

Aside from being comfortable with a diverse workforce, Davis said he polled the executive team of the Minneapolis-based bank in terms of what they were looking for in future C-suite executives, and they came to the conclusion that a whole different set of qualities would be needed than what had been needed nine years ago. Back then, strategic thinking skills were a major requirement. Now, his bank also needs managers who are great communicators.

If you can’t sell your story, nobody cares,’’ he said. His bank is looking for highly ethical people who are lifelong learners, and are curious. “Do you care? Do you look forward to making a difference? Or do you just accept things?’’ he asked. “Well in that case, go away, because the world is curious now.”

nsnyder

Naomi Snyder is the editor for Bank Directoran information resource for directors and officers of financial companies. You can follow her on Twitter at twitter.com/naomisnyder or get connected on LinkedIn.