Tech, Touch, and Trust in Commercial Banking

Cheryl Brown

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Joe Cody joins us on The Purposeful Banker to talk about three important focus areas for winning and keeping commercial business in the current financial landscape.

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Transcript

Cheryl Brown

Hi and welcome to The Purposeful Banker, the leading commercial banking podcast brought to you by Q2, where we discuss the big topics on the minds of today's best bankers. I'm Cheryl Brown. Welcome to the show.

Today I'm talking with Joe Cody, a principal digital solutions strategist here at Q2. He'll be joining some of our customers on an upcoming panel discussion with Bank Director to talk about tactics that are helping them find commercial banking success. That webinar will be at 1p.m. Central on April 8, and you can register at hub.q2.com/webinars. And I'll also put a link in the show notes. Joe, welcome to the show.

Joe Cody

Thanks, Cheryl, very much for having me. I look forward to talking with a few bankers on the webinar and certainly hopefully meet lots of you out on the road.

Cheryl Brown

Great. Yeah, we're happy to have you. You're a first-timer, right? I think this if your first time on the show.

Joe Cody

It's my first one.

Cheryl Brown

Great. So one thing I always love to do for our first-timers is let's just get to know you a little bit better. So to start off, can you just tell our listeners a bit about yourself and your role at Q2?

Joe Cody

Yeah, sure. So I'm Joe Cody. I've been at Q2 seemingly forever, about 18 years. Well, a little bit over 18 years. As I like to say, I'm working on year 19. I've been here since just about the beginning. We were 20-something employees when I started, and in my time here I think I've done just a little bit of everything, but always around product and sales, a little bit of implementation on the side, I would argue, and primarily focused on our commercial side of the business.

I get involved in a lot of retail opportunities for greatness, as well, but generally speaking, spend most of my time on the commercial side, which really drives well with my background, where I've spent a lot of time in cash management operations and product and stuff at SunTrust, which is, of course, now Truist. But my background here, I've worked most of my life in some way or another in commercial banking so hopefully we will have a great webinar. I look forward to using some of that experience and hopefully bringing it out for all the listeners.

Cheryl Brown

Yeah. Your experience makes you a perfect person to moderate this webinar. It's called The Commercial Banking War Room: Tactics That Win. And in a previous conversation we laughed a little bit about that title. What exactly are we talking about when we talk about the commercial banking war room concept?

Joe Cody

So I always chuckle every time we start talking about war, right? We're going to war over this, that, or the other thing. Let's be clear, nobody's getting shot and there's no bullets fired and no bombs being dropped, right? But it is slightly … maybe hand-to-hand combat might be a better way to put it, right? But the commercial banking in that market is very saturated. Everybody wants a piece of that business. It's highly competitive.

And listen, it's really simple when you boil it all down. It's obviously very complex, but at the end of the day, the result is simple. If you don't get deposits in, you're going to have a hard time making loans. And you’ve got to go get broker deposits, very expensive, but getting deposits is going to help fund the commercial arm of your bank. And without those deposits, the loans aren't going to come because the bank's not able to loan the money that it doesn't have, at least not in a cost-efficient way.

So is it a war? That might be a little strong, but it is definitely a battle out there and everybody's chasing the same deposits. So how you go about doing that is what really makes you differentiate yourself in the market.

Cheryl Brown

Well, and to keep up with the metaphor, we'll talk about … we'll keep the war room theme going here. The webinar is going to focus on three strategies, including intelligence, as in data-driven insights, weaponry, which is your cutting edge digital solutions, and strong defenses, such as fraud protection. So why are these three elements particularly critical in the current commercial banking landscapes?

Joe Cody

Yeah. Listen, anybody would tell you, right, that all three of these things are what's going to drive, help really drive your success in the marketplace. Whether it's data-driven insights—who are the customers, where are they located, what types of services do they need, what types of services aren't they using today that they could need—data is going to help drive all of that for you.

The weaponry, if you will, right? It doesn't matter what kind of rate you can pay on the deposit if you don't give the customer the tools to be able to manage those deposits effectively, whether it's cutting edge sweep-like technology— which there's nothing cutting edge about sweeps. They've been around forever. Whether it's easy-to-use integration with your ERP system so you can initiate payments all from there, those cutting-edge digital capabilities for them to manage their money.

And of course, strong defenses is particularly important. Again, you can have the shiniest, best online system of all time or the best, shiniest products of all time across the bank, but if you don't have solid fraud protection, money's going to leave the bank, and the customer nor the bank wants that to happen. So all of those are really foundational or fundamental to having a good commercial banking practice.

Cheryl Brown

And I don't want to give away too much of the panel discussion because we've got some great customers who are going to be on that panel with you, but let's just maybe give a little bit of a sneak peek into a couple of the themes from the conversation that you guys are going to have. One is around this idea of innovating to meet ever-changing needs. Operating a business in 2025, the needs are different than they were before. So can you just give just a little sneak peek into the discussion around this relationship between technology and the human touch and why it's important to balance these two things for business customers in 2025?

Joe Cody

Yeah. Listen, you're right. We don't want to give away too much because this is the heart of it as far as I'm concerned. Everybody is going to have technology. Some is better than others, but everybody's going to have decent technology, right? Whether it's the core bank, whether it's your online systems, whether it's your wire systems, whatever. Everybody's got pretty good systems in 2025. How do you distinguish yourself in the marketplace?

I would argue that a couple of things. Number one, I would say that the human touch is as important today as ever. Everyone's worried that AI is going to push us all out of business and we won't have any employees left, and none of us will be here anymore, right? At 62, I'm not as worried about that as, say, my 20-something-year-old children. I'm pretty comfortable with it at this stage. But what I will tell you, and you'll hear more about this from the bankers themselves, the human touch is just as important as it's ever been today.

It's one thing in a sales process to have the human touch, but where people tend to forget it sometimes is everything doesn't always run as smoothly as we want it to every single day. And how your organization responds when I call it the wheels fall off, or that opportunity for greatness appears that human touch becomes particularly important. And it's, again, all about balancing it. If you go too far on the technology side or too far on the human touch and not far enough on technology, you're going to fall behind. If you go either way, you've just got to learn what balance works for you, for your institution and for your marketplace.

Cheryl Brown

Yeah. I think it's just one of those things that's older than time. Ever since technology was invented, it's the balance between in-person and online and how much do we use technology to drive and how much do we abandon the human touch? Funny, Carl Ryden, who is the founder of PrecisionLender, we like to quote him all the time. One time he said, "AI is not going to steal your job. People who understand and know how to use AI are going to steal your job." I just always think about it any time anyone ever talks about AI, Carl Ryden, his words come into my head.

Joe Cody

Listen to him. He knows what he's talking about. So yeah, there's that.

Cheryl Brown

He knows a little something about AI, I think. So another discussion point will be the current focus on deposit growth. We're always talking about deposit growth. But specifically, how to drive deposits through partnership inside the bank, between your treasury team and your lending team. What kind of sales structure should banks be considering to drive deposit and loan growth? And that'll be a topic of discussion. Can you just give a little sneak peek into that?

Joe Cody

Yeah. So this is a really, to me fundamental but important part of our discussion. Just to take us back in time, if you went back 25 years to when I was at SunTrust and we had lending associates or whatever, we called them relationship managers, but the relationship managers had very high goals. They had to hit X amount of bookings every year. And we as the cash management sales team wanted to tag along because if they're going to be talking about it, it makes our job easier. The most valuable time to get, or the most easiest time to get a customer to change their deposit relationships is when you're moving their loan over as well. Once you've moved the loan over, it's a much harder conversation to get those deposits with it.

But our lenders weren't compensated or did not … they viewed cash management as get-your-hands-dirty, ugly stuff, and they wanted to keep it clean and get their loan done. Essentially, what they would say is, "Yeah. You can come talk to them as soon as the loan is signed." And so that probably worked in 1995. In 2025, 30 years later, that's a very different conversation we're seeing happening in the marketplace. And you'll hear from these institutions how working hand-in-hand, the lenders partnering with their cash management associates to really begin to not only price a better deal. And there are tools out in the marketplace to help with that, but it does help create a better synergy between the two and helps create a better value proposition for the financial institution and ultimately for the customer.

Cheryl Brown

Yeah, absolutely. Again, that's just one way that banking, I think, has evolved. The problem was still there 25 years ago. It's just that now there's more technology to help ease that along. Right?

Joe Cody

That's right. And as much as anything, I would almost call it evolution, where we've all seen … Again, we go back to the first thing we talked about, the ability to get deposits is absolutely critical to continue to fund those commercial loans. And I think the commercial lenders have begun to understand so much better that it is in their best interest to help get those deposits.

Cheryl Brown

Yeah. Well, and so one more that I want to call out, because you can't have a conversation about commercial banking—you can't have a conversation about banking in general these days—without talking about fraud. So you guys are going to talk a little bit about fraud on the panel discussion. So navigating evolving threats, specifically the importance of strong defenses against fraud. What are some of the key evolving threats that commercial banks need to be aware of and what constitutes a robust security strategy?

Joe Cody

Yeah. Yeah. This is going to be a topic where we probably beat it close to death, right? Because everybody cares about fraud. Fraud has been around since there were banks, right? Fraud was around before there were banks even, right? Where there's money, there's fraud, ultimately. And since the banks have a lot of the cash, there's going to be a lot of the fraud.

It's really interesting, and we'll talk about this certainly in more detail, but let's call it seven, eight years ago when the current fraud threats of online and taking over your account and sending out wires and those types of things were really prevalent. Well, those things are still prevalent today, but a lot of the providers like Q2 and a lot of—almost all providers—have made it a lot harder to compromise somebody's account and get money out electronically. And it's really gone back from a commercial standpoint to really the age-old, let's write a check off of their account.

And we're seeing, I'm sure every financial institution in the United States, just about every Q2 customer is reporting a significant increase in check fraud. And so my point here is that we're going to talk about fraud in general, and things that people do, but at the end of the day, we've got to be nimble. We've got to be on our toes. And we have got to, quote the line above, meet our customers’ ever-changing needs specifically around fraud. This is a topic that is very hot, and lots and lots of good nuggets of information. You'll hear from our banker panel from VeraBank, Farmers & Merchants and Rockland Trust around how they're dealing with this.

Cheryl Brown

It's funny, anytime somebody brings up check fraud, when I first heard that, I was like, why? Why is check fraud-

Joe Cody

You're thinking 1992, right? Are we in 1992?

Cheryl Brown

Right.

Joe Cody

Yeah.

Cheryl Brown

Right. Exactly. But then we decided to do a reno on our home, and my contractor will only take checks. He will not take any kind of electronic payment. I've offered him every one that there is. “Zelle, Venmo, PayPal, whatever you want. I will send it to you." Nope, he wants a check. I had to go to my bank and get checks. I did not have them, Joe. I had to go get checks just so that I could pay my contractor. So yeah, whenever I think about it, I'm like, it's my contractor. He's the example. I think it's some of the small businesses especially are still … they're just operating that way and that's where they're comfortable.

Joe Cody

Where consumer checks are almost gone away, but the total number of checks being written is relatively flat the last few years. It's all business checks, right?

Cheryl Brown

Yeah.

Joe Cody

Because the retail checks have gone to Zelle, Venmo, all those services you reeled off. We just don't use them anymore except for the occasional stray home improvement person, right?

Cheryl Brown

So you mentioned the customers that you're going to have on the panel, and it's a great lineup. I encourage everyone to go listen to this panel discussion because these folks have some great perspectives. But so what are some unique, real-world experiences that you're expecting this panel of customers to bring to the table?

Joe Cody

As we sit down and talk about each of these topics, whether it's fraud management, whether it's cutting-edge digital solutions, whether it's data-driven insights, each one of these representatives from, again, from VeraBank, Farmers & Merchants, and Rockland are all deploying these types of things throughout their organizations, specifically around the commercial side of the business. And, listen, just like everybody out there in the audience will hear and is doing the same thing, they're going to share some of their tips and tricks about how they're able to work with their customers and work with their prospects to get them to become customers and how they use data, how they use technology, the digital solutions, and how they use fraud to protect those customers and prospects.

Cheryl Brown

Yeah. I think it's going to be, again, like I said, it's going to be a great panel. And it's one thing to hear those things from you, Joe, or from Q2. It's quite another to hear it from your peer banks and find out what's working for them and hopefully get some good tangible takeaways.

Joe Cody

Listen, I can tell you this unequivocally. My job will be to frame the conversation. People don't want to hear much from Joe, the sales guy. They want to hear from the representatives of the banks. And we'll make sure that you've got a tight leash on me and that we do that in the webinar.

Cheryl Brown

Well, Joe, thanks for joining us today. I can't believe … you said you've been at Q2 almost 19 years, and I cannot believe this is your first time on The Purposeful Banker. I hope it will not be the last.

Joe Cody

Oh, awesome. Thank you for having me.

Cheryl Brown

So again, that webinar is coming up on April 8 at 1 p.m. Central. You can register at hub.q2.com/webinars, and you can also check the show notes for our link.

And that's it for another episode of The Purposeful Banker. Just a reminder to our listeners to go to q2.com/podsurvey and give us your thoughts on our podcast content. We want to make sure that we're giving you the conversations and content that are helpful to you, and your input is so valuable. I'll put the link in the show notes, as well. And as always, you can subscribe to the show wherever you're listening to podcasts, including YouTube, Apple, and Spotify, and you can see our archive of podcasts at hub.q2.com/podcasts. Until next time, this is Cheryl Brown, and you've been listening to The Purposeful Banker.