What is the ROI of a Banking Conference?

Are conferences more than a vacation? 

Last week I attended two back-to-back banking conferences and it was apparent that attendance was down. This is the likely reaction to banks' profit challenges resulting from net interest margin pressures that are due to slowly repricing loans accompanied by ever faster repricing deposits. Let's tighten our belts to offset revenue decline. By the way, I'm off to a warm and swanky place next week.

I wrote most of this article early on a Saturday morning during the business session at one of the conferences. During the prior break, I struck up a conversation with a person from Lendio, a small business lending platform, that was there to promote their white-label platform to bankers. Back in 2015, almost nine years ago, I wrote an article about banks building their own small business loan platforms. Getting much needed capital into the hands of small businesses that can lead their economies forward. 

I still find this to be a challenge at community banks. They want to grow small business deposits. But they will only lend what fits in their credit box. And the hypothetical loan to the expanding engineering firm that leases their office doesn't fit the bill. So the engineering firm ends up at "Big Bank", and the community bank wonders why.

I described the problem to the Lendio guy, and we had a back-and-forth on how community banks can solve it. Using the Lendio platform of course, but that doesn't decrease the value of the problem-solving discussion that happened only because I met him at the conference and we got to talking. 

Who should call on the small engineering firm: a lender, branch manager, or possibly a small business banking specialist? His platform would have the borrower enter the information and the loan could be routed based on the credit appetite of the bank, and its partners outside of the bank if it doesn't fit the bank's appetite. This makes it more possible that a branch banker could be the relationship manager, as I often hear that fear of credit discussions keep branch managers from being effective small business bankers. How do I calculate that ROI?

I talked about the concept of pulling into the pits in my 2021 book Squared Away-How Can Bankers Succeed as Economic First Responders. It goes like this: when a race car enters the pits, it is losing time. If not to recalibrate, refuel, and re-tire, drivers wouldn't do it. If you compare bank strategy to a 500-mile race, banks would also enter the pits. But if you compare bank strategy to a few times around the track, you would be foolish to do so. Is saving the money by skipping conferences short-term track thinking? That is, if the conference was purposefully leveraged to benefit the bank, help solve its challenges, strike relationships with other problem solvers (either bankers or suppliers), or further develop employees. 

Here are ways that I think banks can leverage conferences to deliver long-term benefits to a strategically focused bank.

1. Solving a particular challenge at your bank. When we identify weaknesses in a strategic plan, we encourage bankers to only identify ones they wish to solve. Pick one or two of these weaknesses that are most conducive to getting a variety of ideas of how to solve by engaging with other bankers, particularly ones that don't directly compete with you, or suppliers that are anxious to talk to you at the convention. Many bankers avoid the suppliers because they fear the barrage of post-convention sales pitches that sometimes follow. But there is a reason why they are often called "solutions providers." My ideas on how bankers can solve the small business banking challenges are more informed because I had the discussion with a solutions provider. Once you are focused on finding ideas to your greatest challenges, you can bring ideas back to your bank for discussion and debate with your leadership team and implement a plan to solve them.

2. Purposeful Education. The conference agenda is set and you know the topics and speakers. Perhaps you influenced the agenda because you are on the association board or you provided input via survey. You know the blind spots of your management team and knowledge gaps with your board. Put together a game plan where an executive can amass information that can be presented to the rest of management to help reduce your blind spots or have a board member attend the relevant sessions to help improve board education. A trade association could make it easy for executives with perhaps a "blind spots" presentation tool that could be easily built in the convention app or another tool so an executive could drop slides from multiple presentations to create something unique to their bank's strategy that could be taken back, shared, and presented. 

3. Reward for a job well done. I recall being in a Pittsburgh bank CEO's office where he said he sends the director with the most customer referrals to the state association's annual convention. This is aligned with banks that want to establish a positive accountability culture, where they visibly reward employees (or directors) for moving the bank forward. Expanding on the concept, perhaps consider taking a high-performing, high potential next-level employee to the conference charged with amassing information (see Purposeful Education above) to present to either executives or the Board (or perhaps both) when they return. It will give that next-level employee exposure to the association, suppliers and other bank executives so they plant the seeds for relationships, and builds their presentation skills, knowledge base and confidence. What a great succession planning tool!

How else can bankers leverage conferences so they pull into the pits to refuel and move their bank forward?

~ Jeff

In Banking, Soft Skills Remain Blah Blah Blah

Weakness: Middle Management. I hear this often. Why is it so common in community banks?

I have opinions. Peter Principle is alive and well in banking. We elevate superior performers in their functional position to leadership positions to which they are ill prepared. We promote them to the level of ineffectiveness.

But that doesn't mean that the experienced and high performing loan servicing person cannot become a great manager of Loan Servicing. It means that the skills to motivate those under you to perform at their peak are different than pushing yourself to perform at your peak. But it takes more than revising their business card and giving them an office to get from here to there. It takes organizational effort.

My local newspaper featured the director of training and development at a long-standing construction company. In the article, she spoke of emotional intelligence and body language. Not skills that were critical to maximizing the tickler feature of your Jack Henry core. 

The construction company had $414 million in revenue. Enough to have a high level person that is the Director of Learning and Development. So what does a $40 million in revenue community bank do?

Do I Think Leadership Is Important?

I searched this blog for what I have written on Leadership. Here is what I came up with:

Lead Like Lincoln. Identifying attributes that made arguably our greatest president so great.  

Do We Care About Leadership? Discussing the military's take on leadership development.

Leadership: In My Own Words. My uninhibited opinions on leadership in a changing industry. 

Do you think I believe this is an important discipline?

What To Do

Back to middle management being a weakness. When I hear this in strategic planning retreats I look in the face of bank executives and quote one of my Navy division officers: "Careful pointing your finger, because the other three are pointing at you." To translate Lt. Proper's quote, it means that if your middle managers are not strong, perhaps it's because of you.

Here is what I suggest that you do about it...

1. Develop. Always develop high potential employees for the next level. If the next level includes supervising others, then their development plans should include how best to do that given your bank's culture. There are scores of programs out there to develop people into being great leaders and managers. Choose a reputable one that fits your bank's philosophy on maximizing the abilities of those that report to you. It doesn't have to be within our industry. The Positive Coaching Alliance program that I took when learning how to be a girls lacrosse coach has made a significant impact on me, for example. It taught me how to "fill the emotional tank" of those that report to me. Most college business programs have leadership and management courses, but the noise of college might have diluted their impact. So why not have the employee do a white paper on leadership and management best practices for re-enforcement? Don't just assume they get it if they went to college. But your approach may be different.

2. Empower. This means that you allow mistakes. But in so doing, create an environment that learns from mistakes. Nothing is more deflating than something going wrong and all that the employee does is defend their actions. That means that you have created an environment where they think they are in trouble. Instead, create an environment that when things go wrong, we look at why. Was the data used to make the decision incomplete? Did we miss on the execution? Allow mistakes, and reflect on them to make us better the next go round. Don't create the environment where mistakes lead to a stern discussion. So many cumbersome bank processes where born from a 'no mistakes' culture. And it stifles a high potential employee's development and the continuous pursuit of doing things better. 

3. Cheer. The assistant manager of Loan Servicing is so good that you are afraid to lose her. So in that ops meeting the COO gives kudos to automating insurance tracking, and you nod. Your assistant manager came up with the concept and led the execution. But you know that Loan Admin is looking for a new leader, and you don't want to lose your superstar. You got nobody in the wings! And you really didn't follow "1" above because you couldn't afford to have your assistant manager away for a couple days anyway. When I was in the Navy, a part of leadership's evaluations was how well your subordinates promoted. This led to unintended consequences like inflated performance reviews, but the concept was correct, in my opinion. If you are a manager and leader, then you should be advocating for your high potential employees' upward mobility. 

Those are only three ideas for building a stream of potential future leaders. Building the capability of developing high potential employees into future leaders is the best way to preserve and advance your culture. Because if you are forced to always go outside of your bank to fill leadership positions you will dilute your culture and deflate your employees trying to reach the next level.

You can do this.

~ Jeff

The Golden Age of Banking? Depends on Us.

Jerry Reeves, President & CEO of Sturdy Savings Bank of Cape May Court House in New Jersey and current Chairman of the NJ Bankers Association, penned an article The Golden Age of Banking in the NJBA's winter 2016 edition of New Jersey Banker magazine. He romanticized that more seasoned bankers might be reminiscing back to the "good old days", but newer bankers might see today as banking's golden age.

In that, I agree with Jerry. His optimism was palpable, citing the education levels of new bankers, technology innovations that can be implemented by large and small banks alike, and the stratification of seasoned and new bankers that can pave the way to future industry leadership.

His leadership transition comment brought to mind a comment by an industry FinTech professional, and my friend, Mark Zmarzly:

"We build moats in our industry... we need to build bridges."

- Mark Zmarzly, CEO, Hip Pocket

How does Mark's quote relate to the mix of seasoned and new professional bankers? Because there is tremendous friction in ushering in new leadership in our industry that weighs like a millstone around our collective necks that will likely lead to the continued shrinking of our ranks.

Some friction is sewed into our fabric and is largely out of our control. It relates to the regulatory scheme. A bank CEO recently told me that the CEO job at his bank could have only gone to an experienced bank CEO that came through the commercial lending ranks and his/her experience could not be with a troubled bank. Why the rigid criteria? Because regulators would approve no one else. Such attitudes bleed into the board room, as they create similar rigidity based on past bias or perceived regulatory preference. This ignores the fact that some of the most dynamic and forward looking bank leaders don't fit that criteria.

In other words, it is extremely short sighted. But it is the safe choice, as boards seek similar leadership to what they got in the past in spite of the rapid changes occurring before us.

Although some barriers to future leadership are beyond our control, most are within it. Humans protect what we have. Teachers ensure that only those with teaching credentials can teach. Even though there may be willing retired government officials available to teach Civics class, they couldn't break through the "teacher" barrier. Similarly, you can only practice law with a law degree. Three extra years of education and passing a bar exam. Abraham Lincoln practiced law with an elementary school education. We erect barriers to keep people out.

And so it goes in banking. What we need are development plans to turn our young bankers into future bank executives. Exposing them to multiple areas of the bank, formal training, and executive mentorship should be part of the transition. As executives near retirement, there should be multiple internal candidates to fill that role. 

Instead we turn to outsiders, or to the investment banker to help sell our bank. Successful banks of the future will purposefully hire, develop, and turn the keys over to their future leaders. Current leaders will have the resolve and humility to make it happen. Less than successful banks will call the investment banker and turn the keys over to someone else.

~ Jeff

Hire a Vet: Part Two

Five years ago I wrote that bankers should look outside the typical talent pool for our next generation of leaders. This week, an executive recruiter contacted me again for an "experienced banker" to be the heir-to-be CEO of a community bank. Problem: the last heir-to-be that this bank hired didn't pan out. I can only speculate why, but I told an industry friend that I suspected that the candidate probably had new-fangled ideas on banking that didn't jive with the old-schooler.

If the old-schooler comment fits you, let me tell you this: what brought you and your bank to success in the 1990's will not do so tomorrow. There were 14,000 banks in the 1990's. Only 6,500 today. Think about it.

But this post is about something greater than your succession issues. In April, my wife spearheaded a county-wide lacrosse community campaign to benefit the Wounded Warrior Project. I still believe very strongly that banks should dive heavily into recruiting veterans. But some veterans will return home broken. And the Wounded Warrior Project was formed to help them adapt and overcome.

Here is the address delivered before most lacrosse games during our Assisting Our Defenders week.

"Ladies and Gentleman,

Thank you for coming out and supporting our players. This week, nine Lancaster-Lebanon League lacrosse teams show their support for the Wounded Warrior Project. 

Today, as you listen to these words, defenders of our country are engaged in hazardous training, patrolling dangerous villages, and fighting battles and skirmishes in the world's most volatile countries.  As a nation, we asked them to go, and they heeded the call.

Not all will come back the same person that left. Some will return home with emotional or physical scars from the dangers we asked them to endure. Through your support of the Wounded Warrior Project, our lacrosse community shows our commitment to returning soldiers, sailors, airmen and marines.

With our players' and volunteers fundraising efforts, our collective community has raised over $12,000 to benefit our wounded warriors! Let's give a round of applause for the collective efforts of players and volunteers, and to send a loud message to our wounded warriors that WE ARE WITH YOU!" 

Because this post drifted from banking, I apologize. But if nothing else, you feel motivated to actively seek vets in positions of leadership at your bank or support a charity that helps returning veterans, then your attention would have been well worth it!

~ Jeff

P.S. Plus I'm pretty proud of my wife!