Follow on LinkedIn | Printer-friendly version (PDF)
New Year. New Format.
The new, new thing. Business people, bankers included, love to chase the shiny new toy. Right now, that’s AI. During my career, there have probably been 20+ of these shiny new toys. And there exists a plethora of consultants and IT specialists who are panting to help make this new toy your top priority. For some banks it may be more of a distraction, allowing management to avoid addressing bigger issues that may be looming over the bank (for example, credit quality, personnel issues, succession planning.). Of course, the use of AI needs to be incorporated into a bank’s tool kit, but AI is not the Holy Grail.
What is? A targeted strategy, internal discipline, strong credit culture, excellent internal communication, and a real rather than a PR-based focus on customer service. Those items and others like them are difficult to achieve. Viewing digital or AI to answer your issues seems an easy path but one that may turn out to be delusional.
Priority vs. priorities. Banks dilute their effectiveness by putting one priority atop another, bouncing from one new initiative to another. The priorities list changes frequently because banks often fail to determine and address their one key priority. That one priority may be addressed in the bank’s mission statement but is often pablum meant to satisfy anyone who reads it. This is where the five-second elevator speech comes in handy. What is your bank’s key priority? What do you stand for? Then, you can use your digital, AI, and other actions needed to support that priority.
Courage. Why are many bankers afraid of change? Woodrow Wilson said, “It you want to make enemies, try to change something.” In a stronger comment, he offered a deeper perspective: “You are not here to make a living. You are here in order to make the world to live more amply, with greater vision, with a finer spirit of hope and achievement. You are here to enrich the world, and you impoverish yourself if you forget the errand.”
Those are strong words. Bankers who automatically say, “That won’t work here” when they are presented with a new idea are cheating both their bank and, maybe even worse, themselves. They’re acting like hedgehogs rather than leaders. But why? Many perceive doing something new as threatening to their way of life; others take offense at the suggestion that they have not already been operating to the max. Still, others are putting in their time counting down the year or few years left until they can slip away into retirement. Again, bad for the bank and the person.
Culture. Culture is as fundamental to a company’s success as any of the other items mentioned above. Yet, we see acquirers of banks often give lip service to culture and overlook this area. After an ownership change, one bank we know brought in bankers from some big banks who may have lacked an understanding of their new bank’s secret sauce, resulting in performance problems and some morale issues.
DEI, ESG, and other Support Groups. Right now, the DEI movement seems to be in descendance. It’s not hard to imagine DEI consultants now quickly rebranding themselves as AI consultants, hoping to ride the next wave. Just as university staffing has increased in support areas so too has the staffing at many banks. These areas should be a central focus in 2024 for several reasons: cost reduction, simplification of internal processes, enhanced culture, among others.
Consultants. Consultants need to sell and consultants at big firms need to sell multi-million-dollar projects to meet their goals. This creates a potential conflict with the client. Someone I know who works at a big firm confided that they would never hire a big consulting for a project at a company they owned. But too often executives fall for the brand, albeit today, brands like McKinsey have been tarnished. During my career, I’ve witnessed the overuse and underuse of consultants. Underuse may involve implementation; the bank says it can implement a recommendation, but in fact, cannot do so effectively.
Finally, a question: Why is it that Amex can replace a hacked credit card overnight, but Citibank takes two weeks? And why did the Citibank person fail to tell me I could access my new card number online?
More thoughts next time.
——
FIC works with senior management and Boards on issues that are critical to a bank’s sustainability and growth. We emphasize practical solutions that we customize to a company’s capabilities and culture. Reach FIC at cwendel@ficinc.com.