Memorial Day: Remember 1st Lt. John Fox

The biting December air, thick with the acrid scent of gunpowder and the chilling reality of war, clung to the shattered stones of Sommocolonia. In this small Italian village, nestled precariously in the Apuan Alps, a drama of extraordinary courage and selflessness unfolded on December 26, 1944. At the heart of this pivotal moment stood First Lieutenant John Robert Fox, a forward observer attached with the 598th Field Artillery Battalion of the 92nd Infantry Division – the famed Buffalo Soldiers. His actions that day, a testament to unwavering dedication and ultimate sacrifice, would echo through history, culminating in a posthumous Medal of Honor.

The 92nd Infantry Division, a segregated unit of African American soldiers, faced not only the formidable German forces but also the insidious prejudice prevalent from our own nation. Despite these dual battles, Lieutenant Fox and his battalion and the rest of the 92nd Infantry Division fought with remarkable valor and determination throughout the Italian Campaign. Their advance through treacherous terrain and against entrenched enemy positions was a testament to their resilience and commitment to duty.

Lieutenant Fox, born in Cincinnati and a graduate of Wilberforce University in Ohio as a commissioned officer, embodied this spirit. As a forward observer, his role was critical: to position himself strategically, observe enemy activity, and direct artillery fire to support the infantry's advance. On that fateful day in Sommocolonia, Fox found himself on the second floor of a house, providing crucial targeting information as German forces launched a fierce counterattack.

The enemy, intent on reclaiming the village, pressed their assault with relentless intensity. American infantry units, facing overwhelming numbers and withering fire, began to fall back. Lieutenant Fox, with his vantage point, remained steadfast, relaying vital coordinates that allowed Allied artillery to disrupt the German advance and provide cover for the retreating American soldiers.

As the situation grew increasingly bleak, and the enemy closed in on his own position, Lieutenant Fox made a decision that would forever etch his name in the annals of heroism. Recognizing the imminent danger to his comrades and the strategic importance of delaying the German advance, he issued a chillingly courageous order. Speaking over the radio to the artillery battery, he instructed them to direct their fire directly onto his own location, saying "Fire It! There's more of them than there are of us. Give them hell!" He knew what he was doing. He ordered artillery to fire directly at him.

The voice on the other end of the line, undoubtedly filled with disbelief and horror, questioned the order. But Fox, with unwavering resolve, confirmed his request. He understood that his sacrifice, though tragic, was the only way to effectively halt the enemy's momentum and allow his fellow soldiers to withdraw and regroup.

The ensuing artillery barrage rained down on the village, engulfing Lieutenant Fox's position. The devastating firestorm achieved its intended purpose. The German attack was blunted, the enemy forces were forced to withdraw, and the remaining American troops were able to escape the immediate threat.

In the aftermath of the battle, when the smoke cleared and the village fell silent, the grim reality of Lieutenant Fox's sacrifice became apparent. His body was found amidst the rubble, a stark testament to his extraordinary act of courage.

For decades, the full measure of Lieutenant Fox's heroism remained largely unrecognized. The racial prejudices of the time cast a long shadow, obscuring the valor and achievements of many African American soldiers who served with distinction in World War II. However, the stories of their bravery persisted, passed down through generations and meticulously researched by historians and advocates.

In the 1990s, a renewed effort to acknowledge the overlooked heroism of African American soldiers of World War II gained momentum. A thorough review of records and eyewitness accounts brought Lieutenant Fox's selfless act to the forefront. Finally, on January 12, 1997, President Bill Clinton posthumously awarded the Medal of Honor to First Lieutenant John Robert Fox.

The citation for his Medal of Honor eloquently captures the magnitude of his sacrifice: "First Lieutenant John R. Fox distinguished himself by extraordinary heroism at the risk of his own life on 26 December 1944, in the vicinity of Sommocolonia, Italy. During a German counterattack, Lieutenant Fox was serving as a forward observer. As the Germans advanced, Lieutenant Fox directed defensive artillery fire. Although the advancing enemy infantry and artillery shells came within 50 yards of his position, Lieutenant Fox continued to direct fire on the enemy. While doing so, he was wounded. Refusing to be evacuated, Lieutenant Fox continued to direct artillery fire on the advancing enemy. When it became apparent that the enemy had overrun his position, Lieutenant Fox called for artillery fire on his own location in a final act of self-sacrifice to save the lives of his comrades and to slow the enemy advance. First Lieutenant Fox's heroic actions contributed significantly to the ultimate defeat of the enemy."

The story of John Robert Fox is more than just a tale of battlefield bravery. It is a powerful reminder of the courage and patriotism displayed by African American soldiers who fought valiantly for a nation that often denied them their basic rights. His selfless act in Sommocolonia stands as a profound testament to the human capacity for sacrifice and the enduring American spirit to defeat despots. Though his life was tragically cut short, his legacy of courage, duty, and ultimate sacrifice will forever inspire generations to come. His name is now rightfully etched among the pantheon of American heroes, a shining example of valor that transcends race and speaks to the highest ideals of service and selflessness.

And a personal connection: I trained at Fort Devens in Massachusetts, nearly 50 years after Lt. Fox did so.

On this Memorial Day, please remember Lieutenant Fox for his selflessness, bravery, and heroism. And remember all those who gave their last full measure of devotion in defense of the ideal that is the United States of America. We owe it to them to continue, however imperfectly, towards that ideal.

Prior Memorial Day Posts

Jeff For Banks: Memorial Day Post: Honor Those Fallen During Our Afghanistan Withdrawal

Jeff For Banks: Memorial Day: Remember Sergeant (USMC) Rafael Peralta

Jeff For Banks: Memorial Day: Remember Captain Andy Haldane

Jeff For Banks: Memorial Day: Remember Maurice "Maury" Hukill

Jeff For Banks: Memorial Day: Remember Irv Earhart

Jeff For Banks: Memorial Day: Black Hawk Down

Sources:

Medal of Honor citation: John Robert Fox | World War II | U.S. Army | Medal of Honor Recipient

Seven Black WWII Heroes Receive Medal of Honor: https://archive.defense.gov/news/newsarticle.aspx?id=43307

War Heroes: First Lieutenant John R Fox: War Heroes- First Lieutenant John Robert Fox

John R Fox biography: John Robert Fox | World War II | U.S. Army | Medal of Honor Recipient

Google Gemini aided in the drafting of this article.

Is Your Bank Technology Leader a CIO or CTO?

I recently attended a banking conference. Hartman Executive Advisors, a technology leadership and advisory firm designed to bring executive-level IT strategy to financial institutions, presented a session called From Strategy to Success: Unlocking Technology's Potential in Community Banking.

I attended because I recognize this as a challenge for financial institutions. A challenge because community financial institutions want a CIO or CTO who not only focuses internally by creating a stable IT infrastructure that works and protects the bank, but also looks to the bank's strategic plan to determine the solutions, interoperability, and ease of use to create a frictionless experience for internal and external customers. During the session the presenters mentioned the numerous steps it takes to change a bank customer's address. The multiple steps, however, were likely develped to reduce the incidents of fraud, i.e. to "protect the bank" and its customers. This is contrary to the dual mission of creating a frictionless and easy-to-use experience for internal and external users.

I'm not sure we know what we want from our CIO or CTO. 

CIO to CTO

First, let's distinguish between the roles. Consulting firm McKinsey says this about the difference: "Broadly speaking, a chief information officer focuses on internal technology, while a chief technology officer focuses on emerging technologies and product strategy." Based on my experience, we want both from that one seat on our management team, be it a CTO or CIO. We can't afford to have two people!

Bankers are notorious for focusing on the things they need to do. In my opinion the definition of "needs" should be expanded. But first and foremost, I will stipulate that the head of technology "needs" to be that internally focused person. The one that creates a stable, secure and functioning infrastructure. To be more the CIO than the CTO. As the bank grows, the role must grow with it.

Because "needs" is often described by bankers as what is "required" by our regulators. But "needs", as I see it, are what the bank needs to be relevant, even important to its customers and employees.

In my presentation at the conference, I discussed the important role component plans in the bank's strategy are to its success. These include the HR Plan, Capital Plan, Risk Appetite Statement, Marketing Plan, and yes, the IT Plan. When we ask for the bank's IT Plan, we typically get a list of IT projects that have only a loose connection to the bank's strategic plan.

This is indicative of a bank that has a CIO. One that is focused internally. One designed to succeed in their IT audits, either by internal/external audit firms or their bank examiners. These IT Plans include things like "upgrade to Windows 11" or "replace branch redundant communications in the Northern Region." Important projects for sure but bear little resemblance to the strategic priorities identified in their strategic plan. There is a disconnect.

As the role grows and evolves from CIO to CTO, these "business as usual" projects remain. Heck, nearly all projects have a technology component. But the person occupying the CIO to CTO role would have next-level management fully capable of participating, even leading these important projects designed to keep the bank running and keeping information safe and secure.

The CTO, however, would participate in the development and execution of the bank's strategic plan. If the plan calls for a funding strategy that includes multiple facets such as business deposit products that are in demand and technology-driven, or standing up a virtual branch to serve customer segments outside of the bank's geography. Introducing options on how the bank can execute on these strategic priorities and to play a key role in both leading and participating in the success of those projects.

As the presenters from Hartman pointed out, there are no IT projects, only business projects. 

Hiring leadership in technology has been challenging in banking. It's not exactly a high-octane career that top technologists think to join. I'm not sure why since banks were the first to employ technology. Digital general ledgers came around in the 60's and the ATM came around in the early 70's. But it is highly regulated and therefore lacks the sex appeal of other industries.

In Conclusion:

The ideal technology leader for your community bank is not a pure CIO or a pure CTO, but a hybrid – a strategic technologist with a strong operational foundation and a customer-centric vision. They are a guardian of the present and an architect of the future, capable of translating your strategic aspirations into tangible technological realities. The challenge lies in identifying and nurturing this unique blend of skills and potential within a single, indispensable leader. The characteristics outlined above provide a framework for that crucial search and development.

What are the characteristics of the person occupying this most important role at your financial institution?

~ Jeff

The Case for Product Management in Banking

During a recent discussion with a bank CEO and Chief Banking Officer, a fundamental question arose: Why can't we leverage technology to create a smarter business checking account? Instead of the traditional "Analysis Checking" model, which often erodes potential interest earnings through transaction fees, why not design an account that pays interest based on a technology-determined average balance exceeding a certain threshold?

Given that Dodd-Frank permits interest on business checking accounts, this approach seems logical and customer-friendly. For businesses with higher transaction volumes, the average balance required to earn interest would naturally adjust upwards. This is a concept that is both transparent for the customer and operationally straightforward for bank staff. The average balance calculation could even be reset annually or more frequently to reflect actual account activity. Stuck in our historical paradigm, we don't ask ourselves how to create an easier to understand, more efficient, more transparent, and yes, more profitable business checking account.

The primary objection I've encountered? The bank would lose the fee income generated by Analysis Checking. However, a careful analysis might reveal that the lost fee income would be minimal given that we would charge fees if the account was under its interest-bearing threshold. And likely more profitable. 

This conversation sparked another critical challenge: How do banks profitably manage large money market deposit portfolios in a rising interest rate environment?

Consider a scenario with $1 billion in money market deposits. When the Federal Reserve raises rates by 100 basis points, the response isn't uniform. Some depositors are highly price-sensitive and expect their rates to move in lockstep with the Fed or just below. Others are "price-interested," perhaps seeking a beta of 50%, while some simply value the FDIC insurance and branch access for their cash accumulation, exhibiting low price sensitivity.

The core problem is the lack of clarity: We don't know who's who. The current approach often involves waiting for customers to inquire about rate changes. However, with technological advancements and the ease of funds transfer, many customers simply moved their money during the recent Fed tightening without a word.

This situation points to several potential shortcomings:

• Customers in the wrong accounts: Are some customers better suited for savings accounts than money market accounts?
• Subpar onboarding: Are we failing to identify the customer's reasons for opening the account and their sensitivity to rate fluctuations?
• Lack of sophisticated systems: Do we lack the tools to differentiate between price-sensitive, price-interested, and price-disinterested depositors?

The knee-jerk reaction might be to split the difference and proactively raise the money market rate by, say, 75 basis points. While seemingly fair, this could result in a significant $7.5 million reduction in net interest income.

I believe these challenges would be significantly mitigated by fostering a strong product management culture within the bank. This would involve establishing a dedicated head of product management and empowering up-and-coming middle managers with the responsibility for the continuous profit improvement of specific products.

Consider a retail money market product. Imagine assigning the VP or regional manager of the branch network as its product manager, directly accountable for its ongoing profitability. This individual could then actively manage various profit levers:

The product management committee meets quarterly to review trends in their products. They review the drivers to improve the profitability of the personal money market product. Some potential solutions from that meeting:

• Pricing Strategies: Dynamically adjusting rates based on customer segmentation and market conditions.
• Product Features: Introducing tiered interest rates based on balances or relationship status.
• Customer Segmentation: Identifying and targeting specific customer groups with tailored offerings.
• Communication & Marketing: Proactively informing customers of rate changes and highlighting product value.
• Onboarding Process: Implementing robust KYC Q&A to understand customer needs and price sensitivity.
• Process Improvements: To lower the amount of bank resources required to originate and maintain the account and lowering the OpEx per account.

Furthermore, the bank could consider developing new, differentiated money market products – perhaps something like "Money Market-Fort Knox" for price-insensitive customers and "Money Market-Wealth Builder" for those seeking competitive returns. This targeted approach would provide clearer insights into customer preferences and potentially prevent the significant outflow of deposits and decline in average balances experienced during the 2022-23 Fed tightening. Proactive engagement, rather than reactive adjustments based on customer complaints, would foster greater loyalty.

The fundamental hurdle, as I see it, is that many banks don't systematically measure the profitability of individual products. And even when they do, it's uncommon to assign dedicated product managers tasked with driving continuous profit improvement.

Should they? Absolutely.

While my firm offers outsourced product and organizational profitability services to banks, I firmly believe that all banks, particularly those with over $500 million in assets, should embrace this level of reporting, regardless of whether they partner with us. Consider this: a mere one basis point improvement in net interest margin at a $500 million bank translates to an additional $50,000 in net interest income. Scale that up if your financial institution is larger. The potential upside is substantial.

For further discussion on how a product management culture can benefit your institution, please contact Ben Crowley at bcrowley@kafafiangroup.com.