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April 30, 2011 by Scott Hodgins Scott Hodgins

Whatcha Thinkin’?

050211aLast week, a rare week away from client sites on the road, I had the opportunity to take the 45 minute Party Flight from Phoenix to Vegas to check out the goings-on at Fiserv’s Focus 2011 client conference.  

It was a great chance to talk with future, current and past clients and find out what is on bankers’ minds. (This article will focus on the more PG-rated thoughts coursing through bankers’ brains while on a three-day bender in Las Vegas.) Yes, the Fiserv folks and I had our share of mutual stare-downs and frank feedback sessions (I still don’t think I’m at the top of their corporate Christmas card list), but the people were super hospitable and put together a pretty damn nice conference.

You definitely get your share of senior managers who are there solely to corral vendor execs into one room to talk. You get the prognosticating CIOs who want to see what’s just over the horizon. And you’ll find your IT and Ops diggers, deeper in the org chart and seeking a more pragmatic look at what’s coming in the next Fiserv release. Those are all givens – it’s a freakin’ user conference after all.

But I was able to utilize my best William Gibsonesque megadata distillation skills and find some common themes and worries on the minds of CEOs and CIOs. I’ll make references to a particularly strong CEO Panel session moderated by 2 Fiserv honchos – Don MacDonald (EVP/CMO) and the ever-affable Jim “Don’t Call Me Tom” Sizemore (SVP). Fiserv client CEOs on the panel included:

This panel was dominated neither by large Fiserv client CEOs nor obvious Fiserv shills who felt obligated to gush over Fiserv’s greatness. As such, they brought instant credibility to the mostly community banker audience.

What follows is a summary of conversations I had with countless bankers in Vegas and ideas thoughtfully discussed on the CEO panel. “What’s on your mind, and why are you here?”

050211bThe Rebirth of Strategy – Maybe the most encouraging theme I picked up on is that many, many bankers can again start thinking about strategy. While there are some – maybe even many – obvious exceptions, bankers are finally getting to the point where they can put aside the fire extinguishers that have for so long been aimed at asset quality, capital raising, risk management tools and other heady but pesky problems. While BSA, portfolio quality migration and ALLL software are still top of mind with the sub-VP level staff, senior execs are finally becoming free to focus more on strategy and differentiation. Ideas and questions that I heard commonly include:

  • How do we address and leverage Internet/mobile, social networks and other geeky kid stuff to differentiate ourselves?
  • What am I (and the banking industry in general) gonna do about payments and the real threat from the PayPals of the world? How do I organize to devote the warranted attention to payments?
  • Is every dollar I invest in my branch structure putting me a dollar closer to losing my job?
  • Is free checking dead, and, if so, how do I break the news to my customers who clearly don’t understand that yet? Great quote from Mr. Wilson at the CEO Panel: “People are willing to pay $4 for a cup of coffee or $100/month for cell phone service. Why won’t they pay for good banking service?”  
  • Durbin. No explanation needed.

Now, these are not Earth-shattering, stop-the-press topics to be sure. What is noteworthy is that, after several years of risk management policies and procedures, portfolio concentration reporting and the blood/sweat/tears of asset quality trench warfare, bankers are beginning to enjoy the luxury of worrying about good, old fashioned strategy again.

Are We Really Still Debating Whether Internet Banking and Mobile Banking Are Must-Haves? – No sessions were more highly attended or booths more popularly rushed than those dealing with Internet/mobile. There was a lively debate at the CEO Panel discussion regarding the merits of mobile/Internet/social networking. OK, social networking at banks by and large has been ineffective because banks tend to run out of ideas and fresh content before customers even know the bank has a Twitter account. (And to be fair, I’ve had my share of struggles with content. See The Oldest War.) But seriously, there remains a legit, spirited debate about whether banks really need to be thinking strategically about these new delivery channels. Quotes I heard at the CEO Panel include:

  • Wilson: “We can’t be all things to all people. I don’t need the Facebook and Twitter kids if I can’t make money on them …. You won’t get a relationship on an iPad.”
  • Ganz: “It used to be that the customer opened up a checking account, and the bank gave him a toaster. Now, a customer goes to Target to buy a toaster and walks out with a checking account, too.”
  • Wilson: “We have conversations with our customers, and we differentiate with service.”

Truly, I thought this debate had been put to bed years ago. Surely, we all know that online and mobile are the paths of the future, and to argue is to sound like a 1980 argument against using ATMs because they would depersonalize our customer service, right? Incorrecto! The debate raged on in the Panel, and I heard its echoes on the vendor floor, in the educational sessions and at happy hour.

Some of Mr. Wilson’s decidedly old school comments drew the occasional snicker from the audience. But in fairness, no one on the panel had much by way of concrete example of how they have used Internet/mobile to reduce costs, mine a niche, increase customer retention, etc. But still, are we really going to keep arguing about this?

“Enterprise-Wide” is a 4-Letter Word – I can’t even remember how many CEOs and CIOs told me they will punch the face of the next person who suggests to them any kind of “enterprise-wide” project. “Enterprise-wide” is the new instant eye roller, taking the place of “open architecture,” “paradigm shift” and “offshoring.” It’s the six-month VW restoration project that resides unfinished in the garage 13 years later.

050211d

Be it sales/referral management, contact management, reporting/data management – you name it – the enterprise-wide dream is dying. Wanna know why? Because enterprise-wide projects Do Not Work. They don’t. Small banks can’t afford the technology, and large banks are too complex and political to execute, leaving maybe 90 banks nationwide between $800 million and $900 million that actually have a shot at enterprise-wide success.

To my fellow consultants out there, the banks have called our bluff. Bankers know that when they hear the following advice regarding an enterprise-wide project… …

  • Start out small and targeted.
  • Get early, cross-functional buy-in.
  • Try like hell to get your CEO to bang her fist on the table and force end-user acceptance.

… they also hear, “This crap will never work.” The technology and potential are there if done picture-perfectly, to be sure, but CEOs and CIOs are starting to see that efficiency-enhancing, enterprise-wide projects more often than not lead to early IRA withdrawals in an executive’s near future.

050211eThe Skynyrd Effect – I tell you, my head was flooded with the cool and the new in bank tech and strategy – Twitter, cross-generational consumer trends, mobile payment trends, Web-enabled account reconciliation. I visited booths chock full o’ tech sweetness – workflow management, business analytics and dashboarding, instant A2A payments. I was soaring with the bank tech eagles. So, my head bursting with the new, new knowledge, I hear Jim Sizemore ask his final question to the CEO panel: “What is the one killer app that would make your bank leap forward?” Check out the responses:

  • Wilson: “Use technology to make account opening very fast (and get rid of Washington, DC).”
  • Blossman: “Automating consumer, commercial and small business loan origination to get us more paperless.”
  • Ganz: “Make account opening faster.”

I couldn’t make that up. Knee-deep in relational databases, Web-enabled document output, SOA, mobile payments, etc., and three very smart bank CEOs just want to be able to open a mother-lovin’ new account in under 45 minutes.

“And this bird you cannot change
Lord knows, I can’t change
Lord help me, I can’t change
Lord I can’t change”
Freebird, Lynyrd Skynyrd 

That’s right, I’m quoting me some Skynyrd, Chachi. Tread lightly, GonzoBankers.
glasses–Hodgins
(Twitter: @VendorDirt

PS – A personal note to Mr. Dana Carvey: It’s Fiserv, not Friserv!

 

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5 Responses to “Whatcha Thinkin’?”

  1. Joshua Parker says:

    I was at the conference and had many of the same reactions that you did. The CEO panel was very eye opening and made me feel sorry for the banks represented on the panel. My CEO was sitting next to me during this session and after hearing Wilson say that his employees were not “smart” enough to handle technology changes (I’m paraphrasing) – I leaned over to my CEO and said “thank you from all of your employees for not thinking we are too stupid to handle change”. It was infuriating that in this day and age we are still debating whether or not technology in the non-banking market has a place in our world and whether our customers are going to want it. “Our” customers are going to be someone else’s customers if we don’t give them the channels they want. If you are reading these comments and you think I am way off base, read Bank 2.0, it will open your eyes.

  2. Rule Loving says:

    I don’t think that is a VW, I had a 1967 bug. looks more like a Porsche.
    Check out Stonehambank.com, Optimum Banking. We think future means fewer but more powerful products, account is a can into which you pour core and cloud products.

  3. Bonnie says:

    I agree – the car in the photo is a Porsche and not a VDub.

    Also – if you want quick account opening, the main stumbling block is going to be opening the VERY FIRST account for the customer. But once you have that account opened, you should be able to open additional accounts in under 2 minutes with the exception of a mortgage loan, SBA loan, commercial real estate, or any kind of foreign trade account.

    And does is the initial account take longer? In one simple word – FRAUD. Or actually two words – FRAUD PREVENTION. Yeah – make it real easy for anyone to open an account, and then watch when all of those impressive account opening numbers are wiped out by the half-dozen fraud accounts that wipe your profits clean. It’s a lesson that gets learned the hard way again and again and again, but CEO’s have such short memories.

    If you want to take a look at a bank that effectively uses social media and on-line access effectively, look no further than ING. Heck – they’ve managed to pull me in for a few accounts, and I am salivating for the day when my current IRA CD comes up for renewal so I can transfer it to ING. I just wish they would market that little Orange Ball into something fun that I could get after racking up some “loyalty” points or something. Maybe they should consider a co-marketing project with My Coke Rewards. No joke – that’s what it is called – I enter codes for every Coca-Cola product I consume and I can get all sorts of trinkets and trash – OR a Certificate from Restaurants.com for half-off my next dinner party.

    Frankly, the biggest thing standing in the way of the “easy access” and “easy account openings” are the consumer disclosure regulations and more recently the safety and soundness enhancements. Frankly it’s our own damn fault that we have them. If a few “cowboys” were not so eager to make a boatload of cash by ripping people off or making damn fool loans, we would not have half of these regulations.

    The common denominator is FRAUD – or FRAUD PREVENTION. If we could figure out a way to quickly filter out fraudulent activities (both on the part of the customer and on the part of the institution) then we could be free-wheeling in style!

  4. Scott Hodgins Hodgins says:

    Thanks to you all for taking the time to write in!

    The most frequent comment so far has concerned the VW restoration project pic. I’ll take everyone’s word for it – it’s actually a Porsche. That’s what happens when you trust the results of a Google Image search and don’t know enough about cars to tell you’ve been duped! Great comments by the way! Scott

  5. Wendy says:

    I think everyone is right about the car. It looks like a porsche speedster kit car which is made out of a VW undercarriage! My dad had one.

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