Best Banking Reads of 2014

What a year it’s been for the banking industry! From threats from outside the industry by Apple and Wal-Mart, to questions on whether Colorado and Washington banks should work with legal marijuana businesses, to regulatory shenanigans at the New York Fed, 2014 has been memorable. As the holidays approach and I think back on the year that was, I thought I’d take a few minutes to share some of the banking-related stories I enjoyed in 2014.

Regulations

  • Banks given the go-ahead on working with marijuana businesses: Marijuana may be legal in some states, but that doesn’t mean banks are ready to work with marijuana businesses.
  • How to Punish a Bank: This is from National Public Radio’s Planet Money, so it’s more of a listen than a read, but delves into the problems of effectively punishing the big banks.
  • Bank of America Adds a Mortgage Settlement to Its Collection: Bloomberg’s Matt Levine (also cited in the NPR segment) provides the data on (at the time) Bank of America’s $68 billion in mortgage settlements, and asks how effective these penalties and fines are when they become business-as-usual.
  • Inside the Emerald City: Jack Milligan, editor of Bank Director, delved into the culture of the NY Fed following concerns that regulators got just a bit too cozy with the big banks they oversee.

NonBank Competition

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I have thoughts on the “USPS Bank” issue that I hope to share later, but this piece from Time’s Martha C. White takes a pretty balanced view.

Business & Money

Go to the post office, send a package, pick up some stamps and deposit your paycheck or pay a bill? That’s the newest idea for rescuing the cash-strapped USPS floated in a report published by the U.S.P.S. Office of Inspector General. 

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Last month, Al Dominick looked at the top CEOs in banking in a two-part series. But missing from the list?
Women.
It’s a big issue in corporate America, and a big issue for banks too. So go over to Al’s blog (or tweet to him @AlDominick) and let him know:
Who are the top women in banking?

about|that|ratio

Clearly, there aren’t many female CEOs of major corporations.  According to Spencer Stuart, an executive search firm, the number of women serving as the CEO of an S&P 500 company increased to 22 in 2013. Nonetheless, this represents a mere 4.5% of the companies that comprise the index.  I share this statistic as a preface to this morning’s post, one that asks for your help and feedback on “the best” female CEOs in banking today.

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Background

Last month, inspired by a piece that ran on Yahoo Finance (“the Best CEOs of 2013“), I reached out to a number of colleagues that work for professional services firms to ask their thoughts on the top CEOs at financial institutions — along with why they hold them in such regard.  I subsequently shared their thoughts (along with mine) on some of the best CEOs in the business today — broken…

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Walmart in the Mortgage Race?

pinewoodcarsI blogged here not too long ago about Walmart’s Bluebird. The response from one banker when I shared that post within a LinkedIn group? Bankers don’t need to worry about Walmart. It isn’t competition for us.

With the results of a recent survey by Carlisle & Gallagher Consulting Group showing that ⅓ of Americans would be willing to go to Walmart for a home mortgage, I wonder. You know there’s a team at Walmart right now evaluating how they could offer mortgages, and what partnerships to build to make it happen. Walmart does offer small business loans via Sam’s Club stores, so a Walmart mortgage isn’t that far-fetched.

But it’s not just Walmart. 80% of those surveyed would consider a mortgage with a non-bank, period. Why the dissatisfaction? What’s frustrating consumers?

Three of the big reasons given come down to one very simple thing: COMMUNICATION.

56% of consumers believe the mortgage process is too slow. Can your bank responsibly speed things up for the customer? If not – are loan officers communicating with the customer so they know the bank’s on top of things?

32% find it difficult to communicate with their lender, and – I feel this is related – 31% are unable to track the status of their mortgage application. Communication difficulties with a lender should, I feel, be rare – yet a third of those surveyed cited just that frustration.

And – ouch! – 26% don’t trust their lender’s advice.

As stated in Carlisle & Gallagher’s press release: “Consumer attitude is driven by three things, price, service and trust,” said Doug Hautop, Senior Manager and Lending Practice lead for CG.

Do I think Walmart as a lender is anymore trustworthy – or prone to be a better communicator – than a bank? No. But Walmart or no, if trust continues to diminishes in banking, it looks like 80% of consumers don’t feel a need to rely on banks.

Banks: Mobile Apps vs. Social Media

Video Banking: Folly or Foresight?

Be Prepared to Go Back to Basics

Sandy has devastated the East Coast – and with a Nor’easter hitting the affected areas yet again, times are tough for the people of these areas. Sections of New York and New Jersey were reduced to cash economies, and with cell service impaired, mobile wallets and mobile banking became useless. Robert Werner, COO of Two River Community Bank, informed Fox News that the bank was doing business the ‘old-school’ way – with ledgers and written records.

Sandy serves as a stark reminder to us that – despite the rise of technology, the demand for it, and the conveniences it provides – when disaster strikes, banks need to be prepared to go back to basics. Disaster can strike at any time. When Nashville was hit by devastating floods just a few years ago, no one anticipated the amount of damage and heartache it would cause (you don’t call it a thousand-year flood for nothing). You can’t predict when a tornado will touch down in the Midwest, or an earthquake will shake California. Is your bank prepared to serve your customers through a disaster? Do you have a plan?

Banks in the Northeast: How did your bank fare through Sandy? Is the Nor’easter further complicating recovery? Comment below, or contact me at emccormick[at]bankdirector.com.

Community Banking PR Can’t End with Free Gas

Made me grin last Friday: this article from Chattanooga, TN, detailing a popular “free gas” effort sponsored by local community banks.

Not local community bank. That would be banks. Plural. This was done across the U.S., in 20 cities, highlighting that community banks can be a vibrant part of their communities.

Banks have a public image problem that as an industry extends down to community banks. Credit unions gain, it’s thought, because the public believes that credit unions are member-driven, while banks, since they’re shareholder-owned,  don’t necessarily care about the customer. Of course, if any bank is worth it’s salt, it’s going to think of the customer first, but the fact remains – in the view of the public, if credit unions are Jimmy Stewart, then banks are seen as an industry of Potters.

It shouldn’t be this way. Sure, it’s easy to rag on the big banks, but many community banks are as invested in their communities as any credit union. Anyone that’s served on a local civic or non-profit board will likely attest to the vibrant role bankers often play in the communities in which they live.

This is an industry issue folks. And events like offering “Free Gas” – where community banks, despite being competitors, team up to educate the public that community banks can focus on the “COMMUNITY” – are a good way to boost public perception. But it cannot be a one-shot deal – the news in the papers on  the latest “big bank” scandals aren’t going to stop, and unfortunately, when the general public sees the latest bank fiasco in the news, they lump the industry together as a whole, big banks on down.

So get creative and think strategically. How can YOUR bank further reach out to the community (or team up with the competition to do so)? How about a financial education booth at the local career fair? Or turning your bank’s Facebook page into a community resource, like First Niagara Bank? Think about what will be right for your bank and your community, and commit to it. People want to trust their bankers – but bankers have to create that trust.

In the news:

Safest banks in the World? U.S. doesn’t even make the top 25.

Credit unions raising fees too.

BofA eliminating more branches to “streamline expenses and better serve customers’ changing banking habits”.

What’s Hot – and What’s Not – in financial marketing.

Oh. The ‘Bad Guys’…

someecards.com - I'm really concerned that bankers are starting to give pirates a good name.

I had just left the Arizona Biltmore, hopped in the cab headed for the airport. My talkative driver inquires of my time in Arizona – was I here on vacation?

“No” I reply. “Work. A conference. For bankers.”

“Oh. The bad guys.”

If you read or watch the national news, perhaps that’s the impression you could come away with. Fees. Mistaken foreclosures. I, of course, enlightened my talkative cabbie – the bankers attending our conference were quite lovely and focused on doing the best at what they do best – banking. Many of them were community bankers.

After meeting these bankers in Phoenix, I was pleased to read this by Tom Wilbur, President/CEO of BANK VI in Salina, Kansas. I encourage you to read it; here’s an excerpt:

As a community bank, my team is mostly made up of neighbors and friends of yours—people who have the same aspirations and dreams that you do. They want to raise a family here. They have an interest and a passionate commitment to improving the quality of life in this area. They are homeowners. They are dads and moms, grandmas and grandpas, sons and daughters. People on my team are board members in local non-profit organizations, often involved in outreach to feed people who are hungry in our community, and they sing in the local church choir. Many of you recognize me as an entity that supports your little league baseball team, or helps our area with volunteers who work with seniors. I’ve walked the highways picking up trash, and I donate money to area arts, civic, and education programs.

If you want to meet the President, Vice President, or Manager of my community bank—you can generally walk in and say hello. Any of these folks will be happy to see you, and listen for opportunities to serve and help you. A community bank is generally a small business—a small business trying to grow in direct partnership with our town, improving the quality of life for everyone. As a partner, we depend upon building lasting and ongoing relationships.

As circulation head for Bank Director, I pay attention to where our readers are, and echo Mr. Wilbur’s thoughts. These bankers are not the bad guys – typically their boards are comprised of leaders within the community – local realtors, doctors, businessmen. People vested in community growth.

Next time you think of your average banker, don’t think of Mr. Potter. Think George Bailey.