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Facing the New Financial Services Frontier

Published Date
Author Dean Jenkins

Q2’s 2022 BankOnPurpose executive leadership conference in Austin, Texas, was a great success. Besides having a good time with our financial institution (FI) clients, we received important input on what they will need to stay competitive and grow their banks and credit unions amid economic uncertainty.

During the event, I had the privilege of moderating a livestream conversation, Facing the New Financial Services Frontier. Crossing into 2023, the ideas and advice shared could be valuable for your FI.

Taking part in the livestream:

  • Kirk Coleman, Q2’s chief banking officer 
  • Sam Kilmer, managing director of Fintech Advisory at Cornerstone Advisors 
  • Susan Mlot, EVP and head of operations at Citizens Business Bank
  • Nikki Pflegar, EVP and director of Business Banking Solutions at Encore Bank

Important Takeaways IMO

Besides the opportunity to see me in a bona fide Texas cowboy hat (a rarity for a Cleveland guy), those watching took away a lot of food for thought. Here are some of the topics and thoughts expressed.

On talent, retention, and other labor pool challenges. Everyone agreed a diminished labor pool and attracting and keeping talent are top priorities. Even in a strong job market, finding the right person with the right qualifications to fill important roles within banks and credit unions is tough.

Encore Bank and Citizens Business Bank have seen greater growth, a better culture, and far less employee turnover by hiring team players with the personal attributes “you can’t teach” and then teaching them the skills to take on important roles. Equally important, they invest in staff and empower them.

At Encore, the approach has enabled branch expansion, not to mention a 100% approval rating of the bank by staff in a recent survey. Citizens is building employee loyalty through mentoring, with each employee responsible to “recruit in” and develop talent. The bank also brings recent college graduates in for walk-throughs to see the opportunities open to them, persuading them that a career in banking is truly worthwhile.

Sam Kilmer also brought up the need for specialization as consolidation within financial services takes place. In the context of digital banking, consolidation has led to FIs requiring user experience experts and enablement and integration specialists. Deeper expertise is also needed if an FI moves into vertical segmentation.

Differentiation in a competitive landscape. There was consensus that digital innovation—especially in treasury management, real-time payments, and personalization—is a means to differentiation. On the question of whether digital conflicts with relationship building, most felt technology helps to connect businesses more deeply with an FI and that partnering with trusted partners is critical to making this happen. Adding a bit of brass tacks on achieving differentiation and success, Susan Mlot stressed that building commercial relationships and gaining a referral is the most important way her FI stands out and grows. There’s no disagreement there.

Determining what to focus on amid uncertainty. Kirk Coleman offered some thoughts based on his extensive banking background. He recommended that FIs:

  • Stay close to customers—be intentional and understand your customers.
  • Focus on running a strong operation. A strong operation can “weather any storm.”
  • Stay true to your strategic plan but be reflective. Ask, “What’s the next best thing we need? What matters most?” Then, set a budget and execute—the opportunities will come.
  • And, just as important, you should move quickly to implement it. 

Speed is needed in just about every aspect of banking. Kirk and others agreed that staying close to customers and investing in them is important, but an FI must keep in mind “they want things fast” these days. Also emphasized: Being fast will define success in other facets of an FI’s business like deployment or acquisition.

When it comes to speed to market, Sam and others stressed that fintech partnerships will help. In helping determine the best partners, it was advised to do research and select those fintechs that can address “pop-up” requests.

Have a lofty goal, even in a downturn. Both Kirk and I believe having a lofty goal is important, no matter what takes place in 2023 or beyond. Focus on the things your FI does and does well, but have a strategy (albeit likely trimmed down) to meet client need and grow your FI. No matter if it’s good times or bad, this focused approach will make your FI more competitive and help it stand out from the crowd.

I recommend that you take a bit of time to watch and listen to the entire conversation. A lot of great information and advice was shared.