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August 19, 2015 by Sam Kilmer Sam Kilmer

Don’t Be a Cold Fish


Ladies & Gentlemen, What you are about to hear is based on a true story of two mid-size banks, but names, numbers and key aspects of the story have been changed to protect the innocent.

This is a tale of growth at Warm Pulse Bank and Cold Fish Bank. Warm Pulse and Cold Fish are both mid-size community banks very similar in most ways, including:

  • Roughly same asset size
  • Situated in slow growth markets
  • Extensive branch networks
  • Aggressive tech spending on similar systems
  • Conservative lending risk
  • No regulatory problems
  • Full commercial banking/trust/investment product menus
  • Competitive rates/fees and compensation

Warm Pulse and Cold Fish are like many of you out there: duking it out largely on sales productivity … converting favorable customer impressions with solid products to get revenue pumped through the pipeline. Not a new story … in banking or just about any other industry.

The BIG difference between these banks is performance driven by organic growth. Warm Pulse has 5X the loan growth and 3X the return on assets of Cold Fish. And, loan growth explains most of the ROA difference. So, what explains a huge growth gap?

Mind the Gap

Warm Pulse credits much of its loan growth to recruiting top-notch loan officers. The human resources folks must be super recruiters, eh? Not exactly. Most of the loan officers come from a network of known high producers that the executive management team has personally cultivated over years in the community and industry. Interestingly, executives say that LinkedIn has helped them with this.

Cold Fish, on the other hand, points to a high number of low-producing loan officers. Cold Fish’s main difficulty attracting and developing high producers is – now here’s a real shocker – those lenders want to be paid more than the bank wants to pay.

So, how can we look into the cultures of Warm Pulse and Cold Fish to better understand this difference? Here again, LinkedIn comes in handy. There, Warm Pulse and Cold Fish are also more similar than different as both have roughly the same number followers and employees on the platform. However, there is a big difference in the senior leadership team.

Warm Pulse’s chief executive officer has 300+ connections and the chief lending officer has 500+ connections. The CEO and CLO both use LinkedIn not just to tell the bank’s story and to generate loans, but also to recruit loan officers.

Multiple times a month, the CLO personally posts about growth developments, top producers, awards and recognition. When combined with other posts from throughout the bank, anyone following it would see an inviting and attractive growth story. Warm Pulse is genuinely excited about its growth helping their community. And while I’m certain the topic of compensation comes up, the bank is primarily competing for loan officer talent on relationships, energy and future development.

Cold Fish’s CEO, on the other hand, has zero connections on LinkedIn. While Cold Fish’s CLO has 200+ connections, the CLO’s profile only says “Vice President” – hardly descriptive or distinguishing anymore in banking, if it ever was. The words “loans” or “lending” are nowhere to be found in the CLO’s profile. You would never know this executive leads a team of lenders, much less that you could actually borrow money there. More importantly, neither the CEO nor the CLO have ever posted a single development about the bank. In fact, they don’t even have their pictures in their profiles. They seem somehow unapproachable. And the bank finds itself competing for loan officer talent primarily on compensation.

Reality Checks

  • I’ll stipulate that the differences between Warm Pulse and Cold Fish aren’t only about LinkedIn, but the network impact is more than symptomatic. It’s at least partly causal.
  • This is NOT a LinkedIn endorsement or a shill for its paid services. Hey, I’d love to be comparing the three to four competing platforms like it, but have you heard of one? And, for all I know, Warm Pulse gets 80% or more of the value without paying LinkedIn a dime.
  • LinkedIn is NOT emerging, but totally mainstream. According to a Pew Research Center study, 50% of college graduates use it and the age 30-64 segment is more likely to use it than those age 18-29. While founded only 12 years ago, one of its first projects was working with American Express to promote offerings to businesses – the profitable backbone of most community banks.
  • Making non-IT-driven apps like LinkedIn work well for a bank is not easy stuff. I get it. It’s part of a broader tech complexity problem. Read more about that here.

While we are on the topic of LinkedIn, it’s been a fun journey at mid-size banks over the years …

4 Stages of LinkedIn at Mid-size Banks

Eddie Haskell Connection Stage: Techies, headhunters, vendor account reps, airbrushed-beautiful realtors, snot-nose consultants and that-kid-you-met-at-summer-camp-during-the-Reagan-administration all united to slam your inbox with “since we trust each other” connection invites.

If-HR-Builds-It-Recruits-Will-Come Stage: HR departments began using LinkedIn to recruit and worked to get LinkedIn pages for their companies, if just to protect the recruiting image of the company. Realizing the power of information, references and targeting capabilities, nearly all bank HR execs now use the platform every single day. This is where Cold Fish Bank is likely still swimming.

Show-Me-the-Money Stage: After initially networking for their jobs, loan officers saw the marketing value within their personal networks. Some commercial and mortgage lenders really took this to new levels and LinkedIn began fanning the flame with industry exposure and promoting some services. Some fintech vendors also started to realize the origination and underwriting integration possibilities.

Cat’s-Out-of-The-Bag Stage: CEOs and other senior leaders outside of HR got into the action, with personal recruiting of management and specialized talent. Banks realized the power of personal over corporate LinkedIn dialog. Banks including Warm Pulse pushed to better leverage their teams’ collective personal networks.

So, join me down at Benihana next week to celebrate Warm Pulse’s profitable growth and the contributions of its top performers. There will be a full spread of tempura, hibachi shrimp, and – after photos are taken and shared on LinkedIn – a round of umbrella drinks and sake shots for all. But the only cold fish will be at the sushi bar.

If you want to continue the growth discussions…

GonzoBanker Credit Union Marketing Executives RoundtableJoin industry peers along with Cornerstone's Sam Kilmer, Ron Shevlin and Ryan Brogan for a discussion about growth strategiesOct 19-20
GonzoBanker Credit Union HR Executives RoundtableJoin peers along with Cornerstone's Terence Roche and Jim Burson for a healthy LinkedIn conversationOct 5-6
GonzoBanker Bank Retail Delivery Executives RoundtableJoin peers and Cornerstone's Roche and Burson to talk about how retail delivery execs can successfully navigate into 2016 and beyondSep 14-15

Learn more about GonzoBanker Roundtables.

Filed under: Commercial Lending, Consumer Lending, HR & Training, Loan Ops & Collections, Marketing, Mortgage Banking, Strategy, Web & Mobile Banking

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August 11, 2015 by Scott Hodgins Scott Hodgins

Brock Thorpe Vol. III – ‘Accountability … with Extreme Prejudice’

Brock ThorpeGonzoBankers, we’re now knee-deep in strategic planning season, and senior managers everywhere are registering Pucker Factor readings in the high 90s.

This week, we take you back to the viral Brock Thorpe, Badass CIO series to see how Brock and the team are handling the pressure of accountability. There may even be a bit of fair-play turnabout for our hero.

Find out the details right here.

–Hodgins glasses


More from Brock Thorpe:

Meet Brock Thorpe
Brock’s got a lot on his plate, and, well, his patience for vendors is waning.

Brock Thorpe Revisited
A visit from Brock’s new vendor rep tests his patience.



Filed under: ???, Information Technology, Strategy

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July 28, 2015 by Ron Shevlin Ron Shevlin

You Don’t Know Jack!


I was telling a friend of mine–a senior executive at a mid-size credit union–why many banks and credit unions deceive themselves when they say their competitive advantage is their superior level of service (if you want to know why, see this and this).

My friend said:

“You don’t get it. We do have superior service. It comes down to knowing our members better than any mega-bank could ever know them.”

I looked at him and said, “You, my friend, don’t know JACK! Or Jill, or Jim, or Jerry, or Jeannie, or any of your other members whose names start with the other 25 letters of the alphabet.”

I explained to him that his credit union knows just a thin layer of who its members are. Sure, when a member walks into a branch, employees know that it’s Jack Jones, that his wife’s name is Jane, and that they have two wonderful kids, Jenny and Jeffry who attend Jefferson College. I told him, however, “Your credit union doesn’t know:

  • How much money Jack has. You only know how much he has with you. And if he’s got any money, it’s a good bet he doesn’t have much of it, let alone all of it, with you. So you really don’t know his investment needs or risk tolerance.
  • What Jack’s financial goals are. Oh sure, you have a PFM app that has a goal tracking capability. But PFM users account for what, 10% of your overall member base? What’s the chance that Jack is one of those members AND uses the goal tracking feature?
  • How Jack makes his money. Oh sure, you might know how much he makes because you can see that direct deposit coming in every month, but you don’t know if that stream of income is safe and stable, or if Jack works in an industry that is on the decline.
  • How Jack spends his money. You’ve got a piddly percentage of your member base using your online bill pay platform, and it’s a good bet you didn’t issue all the credit cards he has, so you really don’t know where the money is going. And worse, you’re not even doing anything to analyze the debit card spend data you do have.”

Sensing that I had won yet another debate regarding banking, I eased off the gas pedal and said to my friend: “So you see, you don’t know Jack. And as I look around the industry, it’s the mega-banks and fintech startups–not the community banks and credit unions–that are doing something about it.”


“Yeah, but where and how are we going to get that data?” asked my friend.

“Sit down, grasshopper,” I counseled, “and I’ll tell you the secret to member data collection, but only if you promise not to share the secret with anyone.”

“Tell me, or I’ll kick your snarky @ss out of my office,” he replied.


“Hold on a minute here, you yourself said that consumers aren’t using PFM tools like goal-setting features, let alone account aggregation that would give us that kind of information. And consumers don’t like to have all their financial eggs in one basket, nor do they trust financial institutions with all their data,” he retorted.

“Listen, pal, all I’ve heard from you credit unions over the past five years is how your Net Promoter scores are through the roof–and that the big banks’ scores are in negative territory–and how every consumer survey finds that credit unions are so trusted by their members. If your members really do trust you–and are so likely to refer you to their friends and family–then why wouldn’t they share personal financial information with you?”

“So, that’s all we have to do–ask them?” he inquired.

“No, you have to use your transaction and interaction systems to capture the right data points, and then analyze that data to make judgments and assumptions about your member base.”

“But we don’t know how to do that,” he admitted.


If you don’t have the right data about your members (customers), aren’t capturing the right data about your members (customers), and don’t or can’t analyze the data to figure out what the right data is and make assumptions and judgments about your members (customers), then:

  • How in the world can you say you know your members (customers) better than any mega-bank could? and
  • Your so-called competitive advantage isn’t much of a competitive advantage, is it?


Over the past two years (or so), I don’t think I’ve encountered a bank or credit union executive who doesn’t want to improve his or her organization’s analytics capability. I also don’t think I’ve met one who really knows how and where to start to do that. Nor do I think I’ve met one whose CFO would be comfortable with the fact that, even if they had a plan for where to start and what to do, there is no calculable–or reliably calculable–return on the investment needed.

This is what strategy is all about–understanding your advantage, or deciding on what that advantage should be–and making the investments needed to build the capabilities to leverage that advantage. Even if you can’t put an ROI number on it.


Back in the late ’90s, a couple of really smart consultants wrote a book called The Discipline of Market Leaders in which they asserted that market leaders excelled on one of three competitive dimensions, while maintaining reasonable levels of performance on the other two. Those dimensions were: 1) operational excellence, 2) product leadership, and 3) customer intimacy.

The reaction of many firms was predictable:

  1. “We don’t want to compete on price and be the low-cost provider.” Which completely misinterpreted what dimension #1 was all about.
  2. “We’re in a commodity business, so there is no opportunity to compete on product leadership.” Which completely missed the opportunity to de-commoditize a commodity business.
  3. “We compete on customer intimacy, and knowing our customers better than our customers.” Which completely overlooked what intimacy really meant, and what investments were required to achieve and maintain that intimacy.


If you work at a community bank or credit union and tell me, “I don’t think we can compete on the basis of product leadership,” I don’t think I’d try to talk you into it. If you tell me that operational excellence isn’t for you, I might try to educate you on what that really means before accepting your answer.

If competing on customer intimacy is going to be your path to advantage, fine. But what does that really mean? It doesn’t mean knowing who your customers/members are when they walk in the door or log on. It means putting that intimacy to work by providing advice and guidance that other FIs can’t because they don’t know your customers/members as well as you do.

You’ll have to know Jack–or you’ll have to hit the road, Jack.


Successful customer relations start with smart strategic planning.

Cornerstone Advisors has helped hundreds of banks and credit unions develop customized strategic plans aimed at profitable, predictable futures.

Contact Cornerstone today to learn about our unique, best practice-based Strategic Planning Methodology.

Cornerstone Advisors


Filed under: Marketing, Strategy

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