Let the nail-biting and hypercompetitive teeth-gnashing begin, GonzoBankers, because the 2012 GonzoBanker Awards are here for your learned consideration. We’re recognizing the best and brightest, kissing banker butt, bashing vendor weirdness and waxing poetic on the state of technology in our industry. No huge preamble needed. You know the routine. Hit “Print” and head down the hall for your afternoon comfort break.
THE BANKING AWARDS
Banker of the Year – Sallie Krawcheck
This former Citi exec whose job was eliminated by Bank of America in 2011 has spent the past year being a vocal thought leader in the industry. She has tackled the challenges of too-big-to-fail and bank executive compensation head-on and positioned herself as one of the industry’s straight talkers with nearly 50,000 Twitter followers. Way to rise above the corporate B.S. of large financials.
[1]Bank Merger of the Year
M&T [1] takes Hudson City Bancorp and gets 135 new branches in its master plan to dominate the Northeastern banking market. This group has gotten some great franchise pickups in the past five years.
The Moral Fiber Award
Goes to Washington Federal [2] and its CEO, Roy Whitehead, for calling it like they see it when it comes to the FNMA- and FHLMC-driven mortgage industry we have created in the United States. Here’s a fairly forceful excerpt from the bank’s recent annual report:
“Today, some 96% of all mortgage loans end up in a government financing bucket of one form or another. Private sector originators extract large front-end fees and sell off the risk to the market, generally with an explicit government guarantee. This transfer of risk from the private sector to the taxpayer is a moral hazard we find impossible to support, even though it means that we forgo generous profits during periods of frenzied refinance activity. Sale of the loan also disrupts the mutual sense of responsibility between lender and borrower. For the borrower, default is less morally reprehensible if the party incurring loss is unknown to them. Likewise, loan servicers tend to be less caring and responsive toward the borrower if they have no principal at risk and no other relationship with the borrower. The ‘originate and sell’ model also requires a very aggressive approach to managing variable expenses, meaning staff expansion during times of high volume, followed by layoffs when volumes decline.”
College Commencement Address of the Year
Dr. Michael Burry, featured in the book The Big Short, delivers a blistering critique on the economics profession to UCLA econ graduates this year. This YouTube clip [3] is worth 20 minutes of any banker’s time.
[4]Credit Union High Performer of the Year
Idaho Central Credit Union [4]. Kent Oram and the team from Pocatello, Idaho, have worked intensely for more than a decade to create an organization that is growing loans at 20%, knocking out an ROA greater than 2%, and boasting an efficiency ratio of 55%. There is no magic bullet to how this credit union succeeded – it’s been ambition, tenacity, creativity and good old fashioned integrity. Bravo!
Most Ironic Channel Delivery Statement of the Year
A bank executive remarked to a Cornerstone consultant, “We haven’t created an online mortgage application because we still get 100% of our production today from originators.”
[5]The ‘Now That’s What I Call Margin’ Award
Goes to CapitalSource Bank [5], an institution that mixes specialty lending and retail deposits to knock out a net interest margin of 5% when most banks are tipping toward 3%. A fascinating new story in the banking industry
The Phoenix Job Title Award
Rising from the ashes of the financial crisis, the job title “Report Writer, long thought of as the Crystal Reports expert, has morphed into the “Information Professional.” Fluent across and down many data concepts, the CIP, or Certified Information Professional, brings Project Management Professional-like formality to the role of dealing with data.
THE STINKING FEDS AWARDS
Most Miserable Term of the Year
Basel III
Most Miserable Acronym of the Year, But Not a Bad Logo Award
CFPB
Most Ridiculous Regulatory Proposal of the Year
International remittance regulations from the CFPB. Nice work driving community institutions out of a service heavily used by the underbanked.
A Close Second for the Scratch Your Head Regulation Award
U.S. start-up Movenbank [6], which is executing a mobile-only, cardless, branchless bank model, was told by regulators that it may be forced to offer plastic cards to customers in order to be compliant. Rumor is that once it’s done with that, passbooks are next up on the agenda.
The Ironic Regulatory Simplification Award
The CFPB’s 1,600 page document describing the simplified Truth in Lending and RESPA form.
The ‘I Can’t Believe People Think They Know What They Are Doing’ Award
Goes to the Federal Reserve for “QE Infinity” behavior. Enough said.
The Glacial Regulatory Reform Award
Goes to our U.S. government’s highly unimpressive delays in dealing with the future of Fannie and Freddie. Come on guys. The two GSEs have been in conservatorship for more than four years now. Really?
The Inaugural Matt Taibbi Too Big to Jail Award
This one goes to HSBC [7], and it wasn’t even close. The Feds didn’t get it all wrong this year by a long shot. Thanks in part to some truly gritty work by the OCC, the arrogant scumbags at HSBC are staring down the barrel of $1.9B in fines, fees and other various civil money penalties for letting terrorists and drug cartels use the bank like their own personal money laundromat. It’s a shame that apparently no one will go to jail over this, but hey, what are a few violations of the Trading with the Enemy and Bank Secrecy acts among friends?
THE TECHNOLOGY AWARDS
Technology of the Year
Enhanced Multi-Factor and Web Security/Fraud Detection. Denial of service attacks on big banks and wicked malware like Gauss have reawakened bankers to hacker darkness – just when new Federal Financial Institutions Examination Council regulations regarding enhanced Multi-Factor Authentication go into effect. It will be a struggle for bankers to balance security with a simple customer experience, and the journey has just begun. Innovators like Silver Tail Systems [9] (recently acquired by EMC) are to be commended for their work to tackle this ongoing challenge.
The 12th Annual Update on ROI in a Data Warehouse Project
No progress to report.
The Best/Saddest Question Asked During Every Data Warehouse Demo
“Can I just export this to Excel?”
The P.T. Barnum Award
This goes out to all of the Web sites and apps that try to implore, trick, cajole and strong-arm consumers into saving more money. I even saw one that said they’ve gamified saving money because our lizard brains are designed to hunt and gather, not save. (Seems like gathering is kinda like saving, but let’s not split hairs.) Is it really that tough to set up an auto-transfer into savings, or are we missing something here?
The ‘Do We Really Need That Technology?’ Award
Controlling the ATM with a smartphone. Really? You can reach out another 11.75 inches to put your PIN in? You have to be cute Droid boy and slow the damn line down so I can’t get my blackjack money?
The ‘Do We Really Need That?’ Technology Award – The Extended Dance Mix
Personal biases aside, Cornerstone [10]’s bank and CU clients are yawning about mobile wallet.
The ‘We Don’t Know What It Is But We Can’t Live Without It’ Award
Single Sign-on
[11]The Remote Channel Acquisition Award
Goes to BECU [11] in Seattle, Wash. This innovative credit union blows away all other community financial institutions when it comes to driving market share and opening accounts online. While many institutions dribble in a few here and there, BECU consistently opens thousands of new member accounts online each month.
The Technology That Won’t Die Award
This one goes to the Teller Cheat Sheet. Despite every vendor in the land claiming to have gone code-free and 100% plain English, we still see the dreaded Old Code-to-New Code translation table making its predictable appearance nationwide.
The Software We Never Thought There Would Still Be a Need For, but Sadly There Still Is
Foxtrot [12].
Disruption of the Year Award
The nominees are:
- Denial of Service attacks on the big banks
- Visa’s PAVD
And the winner is PAVD. DoS’s are temporary, and if somebody can reboot fast enough you won’t feel the pain too much.
The Standard That is Coming to a Place Near You Award
EMV – Europay MasterCard Visa. Banks and merchants outside of large swaths of North America must surely be wondering what is next. Do drains empty anti-clockwise on your side of the pond?
THE VENDOR AWARDS
Core Deals of the Year
- Bank – $8B Bremer Bank selects the FIS IBS [13] core solution. And speaking of Bremer, what a cool story of this bank’s mission and how it is basically designed to fund the Otto Bremer Foundation to provide grants to nonprofit organizations within the bank’s footprint. This is worth a quick read [14].
- Credit Union – $6B American Airlines Credit Union [15] bucks the Acumen trend and selects Symitar [16].
The ‘Your New System is in the Mail’ Award
Goes to Fiserv Acumen [17] for its tremendous ability to create excitement around a new system and win commitments from large credit unions only to bring major delays to conversions and even a lawsuit from an early adopter. Acumen’s sizzle did freeze the market for a while, but the sun is starting to melt the ice.
The Heinz Anticipation Award
This one goes to “a lot of people” apparently waiting in line to become investors in Open Solutions [18]. The screening process must be rigorous.
The Swing-and-a-Miss Award
FIS [19], if you aren’t at the front of the Open Solutions bidding line to potentially pick up a product to reinvigorate your credit union presence, then … well … uh … geez, I guess we kinda get it.
The ‘Where’s Waldo?’ Award for a Core System
Fiserv Signature [20] – this banking system has so much potential when its leaders are engaged and the positioning battles with Fiserv Premier [21] are not distracting everyone. It’s gotten too quiet, and Signature clients surely wish there was more fire in the belly on new development and evolution of the product. Here’s hoping for a wake-up in 2013.
The Please Don’t Destroy It Award
ACI, please don’t destroy the former S1 [22]. Please.
The Invoice Item that Should Strike Fear into a Bank’s Heart
Per-user bill payment pricing with monthly minimums.
The Invoice Item that Has 100% Margin Priced In
“Terminal Monitoring.” Has anybody ever received a call that started with, “Hey, I just happened to be monitoring your terminals today and…………”?
The Biggest Vendor Beef that Nobody Can Argue With
Users who never went to training.
The ‘Planning Isn’t A Luxury’ Award
We give this award to Alexa von Tobel’s company, LearnVest [23]. This service looks, feels and is much more real than your garden variety financial planning site. It has standard issue self-serve planning tools that are free, but LearnVest also offers access to its network of 50+ Certified Financial Planners across the nation. Depending on how much access you want, annual fees for advice from their CFPs range from $90 – $600 per year.
The Big Mo Award
Goes to MeridianLink [25], our first back-to-back winner of the Big Mo Award. MeridianLink’s double play for consumer loan origination and account opening has many prospects jumping on board. The company’s focus on ease of use and cross-sales has paid big dividends. Managing the installation pipeline will be the biggest challenge near term as the company continues to expand. Congrats!
The ‘Integration? We Don’t Need No Stinkin’ Integration!’ Award
Finovate [26] vendors. One sneaky trend your friends at GonzoBanker noticed this year, especially from our visit to Finovate, is how the up and comers like to look down their noses at integration. They’ll whisper that their products are complete, they’re solidly stand-alone, and don’t need to be integrated with anything. They’re disruptive. We agree. Beware the vendor that tries to make you feel out-of-the-know for caring about integration. We’d file them away with the vendors that say profitability doesn’t matter as long as you’re sporting a pretty EBITDA.
The Big Moves Award
Goes to PayPal [27], which, in a 90-day window, announced two big initiatives: the Discover [28] deal and the pre-paid card program.
The ‘We’ll Take Your Gen Y Strategy and Double It’ Award
PocketMoney [29], a start-up company that has a stored value card program aimed at eight-year-olds.
The Golden Cufflinks Award
Maybe the most sought after GBA is the Golden Cufflink presented to the top product demonstrators from the vendor community.
- Core – This year’s Golden Cufflink in the core market goes to Kristie Peterson from Symitar. For seamlessly presenting by-far the best system overview of the year. Kristie has a great ability to present technical details to the masses without putting everyone to sleep after five straight days of demos. Plus, she doesn’t give you that all-too-common “I feel slimy and need a shower after that demo” feeling, an advantage for any presenter. Kudos!
- Ancillaries – Steve Korosy of Bartlett, Pringle & Wolf [30] takes this year’s prize. To anybody outside of the Accounting group, a one-day demo of general ledger and other financial systems can be about as exciting as a junior college lecture on Eastern European coal exports in the 1950s. Steve makes it interesting with deep knowledge, focus on practical applications/business benefits, and a good sense of humor.
Great Moments in System Demos
When you are sitting through the third day of a system demonstration on a hard seat in a hot room with a tired selection team, you start hoping for a great line or two to keep you going. 2012 did not disappoint:
- Now, that’s design! When asked about single sign-on to multiple systems, the presenter replied, “We deliberately write our systems not to integrate with each other so you don’t have to worry about asking that question.”
- Is there a sloth calendar? When queried about when a promised system enhancement would be in production, the sales rep replied, “Well, it won’t be in 2012 and it won’t be in 2013, but I can promise you it will be soon.”
- A “new fuzzy math” call-out to the presenter who, when pressed on the apparent lack of market momentum for a product, said, “The thing is, you’re using new client signings as a basis of your question and we don’t necessarily believe that’s the best indicator.”
- The “you can take this one of two ways” tip of the hat to the sales rep who was asked about the fact that the FI felt the vendor’s senior management team had fallen down on its commitments. Her reply: “Well, let me just say that I think you’re going to see some big changes on that front this year.”
- Do you think the mortgage was due? During a demo, one of the attendees asked the presenter, “Could you show me exactly what controls your system has to stop me from taking money from dormant accounts and whether there are ways I could get around them?”
The Gonzo Team would like to thank our readers and the clients of Cornerstone Advisors for your loyalty during a year of growth for us, but a difficult time in our industry. Uncertainty still stands sky high, and revenue growth will clearly be a monumental challenge for financial institutions in 2013.
Let’s face it, this New Normal kind of sucks, and our country’s lack of a long-term economic vision makes it harder for entrepreneurial financial institutions to play a leadership role in getting America back to work. Yet, like we say to Aunt Debbie the Downer at the Christmas banquet table: “At least we have our health.” The banking industry has capital, declining classified assets, an improving real estate market and now some of the toughest professionals that our industry has ever seen.
Cornerstone consultants spent nearly 2,000 days on the road in the trenches with bankers and credit unions this year. We have seen the hard work, leadership and refusal to give up in the eyes of so many GonzoBankers. We look into 2013 with a rugged optimism. The regulatory environment has reached a point of insanity and micro-management that simply deserves the outrage of everyone in our industry.
We’ll have to manage it, but we should also fight it. Bring the facts to Washington every day of 2013 and change the tone. A little economic daylight and a little regulatory sanity would give the community and mid-size financial institutions a chance to take the industry back and let us once again be the lifeblood of the economy. Here’s a toast to things much more sacred and important than Basel III and the CFPB, and here’s a salute to all of you who will fight to move things forward in 2013.
-GB