banks

Follow The Leader

Ka Small — Mon, 12 May 2008 19:20:12 +0000

There are plenty of books, experts and opinions on leaders today. I'm not going to attempt to join the fray. I would prefer to challenge your ideas and definitions of what constitutes a good leader. Will you follow along for a minute?

I believe that right and wrong is inherent to man's nature just as purpose is. We want to achieve, to believe in something, maybe not at the same time but we want to fulfill a purpose, to feel like we matter or can at least make a difference. In order to fulfill a purpose or grasp a goal we must have knowledge - we must learn. Our mind requires it, processes it, needs it, and even demands it. Our spirit requires hope to move forward and keep fighting when it seems we can't. We may claim fame to individualism but it is society that collectively moves the country forward. We are under the influence of those who would stand above average and cause us to question our purpose, goals and reasons. They challenge our best. They frustrate us or motivate us. They make use want to be them or get far away from them. They make us proud or they embarrass us. They help us trust or they instill distrust. They inspire dreams or they crush hopes. Successful leaders understand the human potential and how to tap into it in order to perform not manipulate. They help us achieve and in their wake leave an imprint of accomplishment, pride and purpose. Understand leadership and you will understand the human potential and ultimately how to serve it.

Transactional, authentic and transformational leaders are among the most effective. Allow me to explain.

Transactional leaders are more likely to approach the business as a strategic planner, meaning the sleeves get rolled up with an eye on results. A leader possessing these qualities may ask what tasks need to get done and develop a plan to get them done. This is a position high in control, organization, responsibility (and accountability) for actions and effective communication of plans. Rewards are dependent on results and tend to be successful in the short-term. A transactional leader looks at what components are right for the organization and help achieve results.

Authentic leaders are best described as those who have a well-developed self competency. They exhibit ethical behavior and understand how to communicate. In other words, they know their strengths, weaknesses and act upon their personal values and belief systems in business decisions. They can direct or encourage participation as necessary to move the business forward. Authentic leaders influence follower attitudes and behaviors with performance standards that may be higher to attain but employees believe can be reached. Authentic doesn't mean easy but translates into the ability to relate, create hope, build trust, and remain positive when the going gets tough. These leaders don't believe it is themselves that improve the situation but individuals. Authentic leadership is empowerment and optimism not control and manipulation. This leadership type believes that diversity in ideas, solutions and human capital can improve a situation that helps individuals feel better about themselves.

Transformational leadership is the crème de'la crème. These leaders understand how the future impacts the company and inspires employees to embrace new possibilities. Transformational leaders focus on developing others to lead or become better leaders. They encourage employees to learn through reward and challenge. These leader types are most often described as assertive risk-takers who seize upon new opportunities and shake off old processes and practices no longer relevant. Transformational leaders are creative, thoughtful, and understand how technology, culture, investors, and external factors impact the company. Most importantly, these leaders use every available power source to communicate a shared vision and goals.

If you're thinking that style is overrated and leadership doesn't matter like it used to, why do words from these leaders matter still today?

"Some people wonder all their lives if they've made a difference. The Marines don't have that problem." Ronald Reagan
"For even the Son of Man came not to have service rendered to Him, but to serve, and to give His life as a ransom for many." Jesus Christ
"Management is doing things right; leadership is doing the right thing." Peter F. Drucker
"The very essence of leadership is that you have to have vision. You can't blow an uncertain trumpet." Theodore M. Hesburgh
"It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on." Sun Tzu, The Art of War

Take a moment to examine your leadership. Be honest and be willing to make the changes necessary to become relevant. Follow the leader becomes much more than a childhood memory, it becomes a fulfilling reality of purpose.

Expect More

Ka Small — Mon, 12 May 2008 18:55:45 +0000

Most companies develop tag lines to differentiate themselves from the competition with a catchy phrase or word. Everyone recalls Nike's Just Do It. But I would be willing to bet that most consumers take a cynical view of tag line promises based upon the common service experience that rarely delivers on the promise.

If you've not seen the Regions Bank commercials recently then it's probably due to the fact you're outside its current markets. The ads feature customers riding lime green bikes to their financial destinations. The closing tag is "Expect More". Skepticism goes into high gear at such promises; however, a recent experience with a Regions employee shifted my revved up reaction into neutral.

If you are the parent of a college student then you are familiar with the inevitable call for help when the checking account balance takes a torpedo-like dive into negative territory. Mistakes happen, although not often with this particular student. Regions, like other financial institutions, pays the larger items before the smaller ones. The result are cascading fees for the five dollar midnight food raids at the corner convenient store or late hour drive-thrus. My advice was to visit the closest branch manager to discuss the situation.

I remain firmly grounded in my customer relevance theory. Larger financial institutions struggle with this simply for the fact that size makes it difficult to monitor every decision unless it can be traced financially. Fee refunds are contained out of necessity but in doing so creative solutions are limited. The offer to reverse one fee out of six didn't surprise me but please read on for a lesson in customer relevance.

For the consumer that doesn't abuse the checking account, the rungs on the customer satisfaction ladder aren't used much. This means one doesn't have to go far up the management structure to obtain satisfaction. In this case, my call to the regional manager, Sherrie Addington, was amazing! She listened and then she delivered a creative solution that delivered Regions promise. The fees were reversed and put into a savings account. Since our son doesn't normally overdraw his account this was a win-win for everyone. Sherrie's solution jump-started his savings, kept the fees in the bank along with his direct deposit, increased the relationship and grounded his loyalty.

Folks, this isn't common. It's much easier for employees to say no. I offer this advice to the executives at Regions Bank - hang on to Sherrie. It wasn't your advertising that made me believe I could expect more, it was Sherrie.

Cha-ching!

Ka Small — Wed, 12 Mar 2008 15:59:49 +0000

I've said all along that debit card cash rebate programs are the way to go. During my tenure as a regional market manager for Teachers Credit Union I was part of the creative team behind its Debit Card Rebate program. Now at seven years old, the program has continued to grow in popularity. More than $1 million has been paid out to members in cash, or upon a member's request, applied to other credit union services such as mortgage, travel and TCU foundation donations. When applied to TCU services the credit union will match the rebate amount up to a specified amount (see TCU terms and conditions).

In the most current issue of Banking Strategies, Bob Grothe, senior managing consultant for Loyalty Solutions Worldwide, writes an interesting cash rebate article about consumer preference for cash. He makes several good points about how competitve advantage and the customer profile affect rebate perceptions. It's a must-read.

For the skeptics out there: I stand vindicated.

Taking your business to business

Ka Small — Wed, 26 Dec 2007 21:04:07 +0000

As banks and credit unions seek alternative income sources, their focus shifts significantly to business services. Fee income sources from consumer banking appear to be limited
to courtesy pay privilege or overdraft privilege fees, ATM charges and
NSF charges (others may deserve mention but let's simplify for now).

Deposits are at the heart of any business relationship so most financial institutions have a product base on
which to build. Since these relationships represent the initial contact
for the bank or credit union, I'll offer a few reminders but stand by
my belief that ancillary products and lending services offer the best
opportunities to grow the business services channel. I prefer to leave portfolio risk management to the
CFOs, CPAs and credit committees, and look instead at opportunities
missed in sales, technology and marketing strategies.

My People, Process and Technology analysis yields ideas and opportunities to gain business from your business customers while attracting and retaining valuable human resources.

People reality

I hope there is no need to emphasize the importance of hiring
experienced people or educating to grow relevant experience. I've been
in a few financial institutions where a branch manager or senior loan
officer has been shuffled into the position of business banker/commercial lender without any training, education or skill set
-- just because customers "know them" or they've been a loan officer
longer than the average employee at the financial institution.

Business customers have unique needs. Cash flows are as different as the services they offer. Business
checking and savings products most often requested are online access
(remote management included), automated transfer and ACH options, debit
cards, credit cards, payroll management, lines of credit, Sweep
options, group banking benefits for employees and dedicated call
queues. Did I mention the need for someone to explain the analysis
statement? Talking to customers intelligently about a loan request to
finance receivables or cash flow slow sales months is completely
opposite of decisioning an auto loan for a consumer. Inexperienced
bankers/lenders can create a credibility crack that widens with every
mistake.

So hire right. Educate right. Don't skimp on new resources if you're starting a new business channel. Business bankers/lenders or third party providers cost money. Invest
appropriately and you'll see results. Invest poorly and you'll see a
rate of return that reflects your commitment.

Recruitment sites (NBFSN is one example) reveal that commercial lenders and business bankers are a commodity in today's business
financial realm. Community banks are in a feeding frenzy among the pool
of experienced lenders and bankers within their territorial boundaries.
Never have the Rolodex size and networking skills been more critical
than in this arena. Hiring banks realize the dollar potential these
individuals represent. Credit unions are just beginning to dip toes
into commercial lending and business
banking waters and will soon join the fray. Side note: Up until now
most credit unions providing commercial loans outsourced expertise to
strategic business partners like Newtek Business Services, Inc. or credit union service organizations (CUSO) such as Credit Union Business Capital, LLC and Members Business Services.
These companies partake in culling commercial lenders and bankers from
the industry pool and add to the ebb and flow among institutions.

As you ponder direction for business services or select candidates from the deepening pool here are a few ideas to keep in mind.

People Reality Check #1: Establish an efficient organizational structure for the business product vertical. Do you want deposit products handled by the branches and lending by lending personnel? Do you want all business products handled through the business banker? How does this fit within your business development plan for both branches and business banking? Special note: If you're using a third party vendor to work business loan applications, make sure employees receive thorough training via
on-site sessions, Webinars, and collateral. Everyone should know when
to call, who to call and what to have for the call. Your vendor should establish response standards and follow-up protocols for the customer and you.
People Reality Check #2: I suggest conducting skills assessment for any new individual being considered for a business banker position (actually, I suggest skills assessment testing for anyone considered for a position within your organization). Check out MAPP or Profiles International. Once training is completed, include testing to benchmark product knowledge. If you are relying on your own training resources or department make sure they understand business banking products and how to sell the right product to the customer.
Trainers should also explain the organizational and contact flow for business products.
People Reality Check #3: Define accountability for your employees. Establish communication standards internally and establish dedicated call queues or phone numbers for business customers. More importantly, define goals. Every employee should
already understand and acknowledge retail growth goals for consumer
banking. If you're investing in and expecting business services to represent a large percentage of overall goals for the financial institution, every employee should understand that fact.
People Reality Check #4: Make sure your IT department understands business
solutions and their impact to the organization. Their commitment is
critical to ensuring systems function as expected and any issues are
dealt with promptly.

Technology Reality

Consider this fact:
Over 700,000 new businesses were started in 2006. Of that number
585,000 closed or declared bankruptcy leaving 115,000 open for business, at least for 2006. Competition for business accounts continues to mount as does the hunt for the right commercial portfolio manager and business banker. Armed with this information, I became curious how financial institutions were promoting their business solutions and making it easy for customers to say yes to services. Business accounts represent significant growth potential and business
bankers/lenders are highly sought positions tagged with higher
compensation needs and bonuses based upon portfolio size and
acquisition. I would expect most financial institutions to promote
these services, bankers and areas of expertise to customers, right? And
wouldn't most of these individuals want the advertisement? Apparently
not.

Web sites revealed an overabundance of categorical information for account types, services, miscellaneous business products, and locations but none I came across offered lender or banker profiles or areas of expertise. BB&T Asset Management
was the closest example to what I was looking for but the information
was limited to asset management teams. Somehow, somewhere, commercial
lenders, business bankers and business solutions need to be introduced. Technology solutions today allow this to be a reality.

Here are a few suggestions to try.

Tech Reality Check #1: Set up a link under the Business Services page of your Web site with a picture and brief bio of each banker/lender. Be sure to include office address and contact information. Phishing is a concern so I would be hesitant to list e-mail addresses unless your entire site is on a secured server with processes in place to help identify and limit fraudulent activities. Defer to your IT department or hosting provider for a decision.
Tech Reality Check #2: Consider developing a Web contact form (look at ours as an example) that allows potential customers to reach your business bankers based upon area of expertise or need. Each category can be
directed to a particular individual or group. This method completely
hides staff e-mail addresses from end-users, which helps hold down spam.
Tech Reality Check #3: Introduce your bankers through Webinars specific to business owners' needs. It's a great way to capture leads for your bank or credit union. Most Webinars can be recorded and provided to attendees via CD or e-mail link. All can be posted to your Web site as educational tools and resources. Intercall, WebEx, and ConferencePlus are three companies that offer a wide choice of reliable conference solutions.
Tech Reality Check #4: Partner with the local SBA office and put a link on your Web site. It's a great referral source for your business bankers and lenders.
Tech Reality Check #5: Fly fishing in the competitive experience pool comes with a heavy price. Customers should understand they are relevant not only to the banker but also to senior executives and boards. I strongly encourage quarterly "get-to-know-you" meetings for your customers that include bankers, executives and credit committee/board members. Even personal calls to the business owners by executives can go along way when the Pied Piper plays the customer pipe to a local competitor.
Tech Reality Check #6: Blogging has become the latest fad. It's sure to continue it's evolutionary route. Bank of America
has been successful at establishing this resource/tool but smaller
institutions can also join the movement and enjoy the benefits. Special
note: Be sure your customers are happy.
Tech Reality Check #7: Add value to your
customers with online advertising. Before you throw up the "phishing"
barrier, this venue is not intended to allow customers to buy. RealPeopleRealStuff can be branded for you in a separate link. It is a great way to promote your business customers to a targeted audience - your customers. And it can be a valuable tool for referring customers to your financial institution. One last major point. It's a great source of fee income. For a flat monthly fee your customers can upload a video promoting their business or service at rates competitive or below other media advertising rates.
Tech Reality Check #8: In the lists of priorities, this ranks 1 or 2. Does your data processor or core system provide business banking solutions? Have you looked at a third party vendor for business solutions? Who does your
data processor integrate with for solutions? How well do they work with
you to implement complementary solutions? If not, you're behind the
8-ball and have a lot of catch up work to do.

Look for solutions for Merchant Capture, Mobile Banking, and Online Banking. Check out Harland Financial Solutions' new business banking suite through Cavion. Let me know if you need a contact name. Several resources for vendors and suppliers
are BAI, Credit Union Times, CUES, American Banker, or Banking Strategies magazine.

Wireless networks, broadband cards, portable printers and Tablet PCs help banking become much more convenient for bankers and harder for the customer to say no.

Whether you're a newbie to business banking or a positioned player, there is room for improvement in sales and marketing strategies, hiring practices, business development plans, training programs and technology tools utilization. Meet your business customers where they are today and you'll see them again tomorrow.

It's relevance, not differentiation, that matters

Ka Small — Sun, 25 Nov 2007 20:19:38 +0000

Financial industry leaders talk about competition with an emphasis on differentiation. Add to the conversation the many threats to survival of small financial institutions, and in that context we hear rhetoric that has bombarded the industry since the mid-1990s merger boom and upsurge in start-up community banks.

Recently a friend and mentor, herself a senior financial executive, confirmed that today's financial industry conferences frequently focus on how to differentiate. So I conducted a bit of research.

Merriam Webster Online defines differentiation as: 1 : to obtain the mathematical derivative of; 2 : to mark or show a difference in : constitute a difference that distinguishes; 3 : to develop differential characteristics in; 4 : to cause differentiation of in the course of development; 5 : to express the specific distinguishing quality of : discriminate.

But it's not that easy. Let's start with the basics of competition.

Momentarily put aside the top two competitive factors most often touted: location and convenience. Banks and credit unions can offer only so many different products and services. Each has access to the same delivery options. It’s the consumer who has to wade through products, services and promises to make a decision on who, where, what and how to conduct their banking services.

When you add in competition from insurance agents, investment houses and big box retailers (is everyone saying Wal-Mart?), consumers have the daunting task of digging further into the pile. When they search on the Internet, the results are overwhelming -- check out the number of Google results for commonly searched financial terms:

Money Market: 238,000,000
Banks: 150,000,000
Investments: 124,000,000
ATM: 87,500,000
Online banking: 78,000,000
Free checking: 63,000,000
Branch locations: 5,160,000
Savings account: 2,710,000
Credit unions: 1,870,000

That's a lot of information for everyday people to wade through. And it's a lot for any given financial institution to try to stand out from. When you think about differentiation, do you:

Get a deer in the headlights look
Shrug it off as not applicable to you
Start thinking of ways to add products and promises
Redefine differentiation
None of the above

I chose No. 4 because it's not about differentiation at all. It's about relevance. It's about the issue or matter at hand. It's the ability to provide information that satisfies the needs of the user. Better yet, relevance is practical, socially applicable and simple.

It isn't about making your service relevant. It's about making the customer relevant. Once your organization is aligned with this approach, service will become relevant and result in an effective alignment of strategy, people, process and technology.

I set aside discussion of locations and convenience earlier. Here's why.

Relevance is largely a local state of mind. This is validated by the employees you hire and the customers you serve within each community. Community is defined as city or suburb, not region or state. Analyze rural vs. metro performance any day of the week and you'll understand why. Simply having more locations will not guarantee success if your customers do not feel or believe they are relevant to the organization. Financial investment in branch locations is significant, so why not focus on matching the customer with the right mix of employees, products, marketing and community involvement?

The most important component of relevance is knowledge. The circle of knowledge includes customers, employees, and boards. You have to connect the dots with people, process and technology. Success requires an understanding of not only the products your customers want but why they need those products. You then have to make sure that your entire financial organization understands the "why." You can never invest too much in educating your employees, nor too much in "marketing knowledge" -- both what they can learn and what you have learned -- to your customers.

So consider taking a few initial steps toward creating relevance.

Look at psychographic data and customer satisfaction surveys for communities served, both current and future -- not just the buying trends for your customers.
Examine current and future product selections and performance to compare and align with the data.
Assess employees to align their strengths with the right job. Don't try to fix their weaknesses. Focus on their strengths. Be willing to make decisions to move or replace.
Educate, educate, educate. And that's not just your employees, but your customers. Marketing messages always promise but fulfillment happens when the customer interacts with an employee. Don't underestimate the importance of education in your financial institution or try to scrape by with the training department personnel. The wrong person in the wrong job can devastate morale and create havoc in service delivery.
Make sure that organizational structure supports customer relevance. For example, does it take a VP or non-branch department to approve refunding a fee? Avoid territorial battlegrounds and establish a hub-and-spoke approach to serving the customer. This allows departments such as accounting, marketing and lending to support the retail branch system instead of creating procedures or strategies that are easier on employees than customers.
Make sure organizational strategy supports customer relevance. Executive management and boards must be mutually committed to growth through relevance. Comparing your $200 million financial institution to the $2 billion powerhouse down the road is not effective or relevant. Develop a strategy that focuses on the customer and you’ll see results faster.

Create a customer-centric organization with knowledgeable employees that know how to listen and offer solutions and service that are exactly what the customer needed and expected.

Then your customers will know they matter. They will know they are relevant. And your products and services will be relevant to them.