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IBANYS President's Update IBANYS looks ahead to the new year
IBANYS Public Affairs Update
Technology, innovation and fintech are key to community banks and regulators landscape
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Help your customers conquer cybersecurity fears Issue Five | 3
IBANYS PRESIDENT’S MESSAGE | By John Witkowski
IBANYS Looks Ahead To The New Year
“Together, We Are Stronger”
That statement rings as true today as it when IBANYS was founded in 1974. We were founded to be the voice of New York’s community banks, to ensure they were represented in the halls of government where larger, more powerful financial institutions often commanded the stage. Forty-five years later, it’s still what we are about … and it always will be. The relevance of “stronger together” was on display this past state legislative session, when we were faced with a major challenge. Legislation in the New York State Senate and Assembly would have allowed tax-exempt credit unions -which are not subject to any community reinvestment (CRA) mandates -- to enter the municipal deposits business. The bills would have placed credit unions in direct competition with community banks, who pay our fair share of taxes and reinvest heavily in our local communities under CRA. How we responded together – as an industry and an association -- tells a great deal about how IBANYS strives to represent our member bank interests. As the only state trade association solely committed to representing independent community banks, IBANYS:
4 | Banking New York | November / December 2019
• Met with the two legislative Banks Committee Chairmen and their senior staff; • Testified before a Joint Assembly Hearing on the subject; • Conducted in-depth research and developed new proactive policy positions and realistic alternative solutions. This required the united efforts of our officers (led by Chairman Tom Amell of Pioneer Bank), directors and membership; our expert consultants (both former Tom Amell longtime community bank senior officials) ,and our IBANYS government relations team. The result? The legislation was held in committee in both the Senate and Assembly, and the Legislature will re-examine the subject -- and, our proposed alternatives -- in 2020. That’s not to say we are “home free” on this issue . . . but, it is proof
positive that by coming together and working hand-in-hand, we can achieve far more than any one of us could do alone. It is a perfect example of the very purpose of a member-driven trade association. But that was 2019’s news. Now, we are preparing for the coming year. In mid-October IBANYS held our final 2019 Board meeting. Our directors play a vital role in providing the leadership and guidance we need to represent the interests of New York’s community banks in our Albany and Washington advocacy efforts … by supporting our educational programs, meetings and conferences … and by facilitating access to products and services that can contribute to your profitability … and by approving new and innovative solutions. Our 201718 Tom Amell (Pioneer Bank), has done an extraordinary job. We thank him for sharing his time and expertise. Vice Chairman Mike Wimer (Cattaraugus Mike Wimer
County Bank) now takes IBANYS reins, ensuring we will remain in good hands as we build on the solid financial, political and member-driven foundation that we have built together. We are fortunate to have the commitment and support of these leaders of our industry! ••••••••••••• IBANYS has been hard at work preparing for the new year. Our philosophy remains unchanged: to advocate for, educate and provide value to our member banks. We will work to achieve growth in our membership. We are excited we will be expanding our footprint in the New York City area by offering two new one-day programs - Compliance Program in January, and a Directors Program in February. We also offer our programs to neighboring state associations. Legislatively, we will support proactive bills that put community banks on offense, and we will continue defending ourselves against the credit unions. It is a challenging political environment but one that we are ready to take head on with our legislativeand regulatory leaders. Maintaining and enhancing solid relationships with our local members of the State Legislature and Congress is vital to our success.
We need the active participation, support and engagement of our membership. IBANYS is YOUR association and survives and succeeds by remaining member driven. In all our plans and objectives, we need the active participation, support and engagement of our membership. It is paramount. We need your participation in our committees and peer groups (e.g., Government Relations, CFO, Compliance, Innovation); our seminars, meetings and conferences, and we need your banks to consider the benefits that our associate members, preferred partners and endorsed products and services can bring to your institutions.
As always, thanks for all you do for community banking in New York State. ■
John Witkowski is president and CEO of the Independent Bankers Association of New York State. He may be reached at email@example.com or (518) 436-4646.
IBANYS 2019-2020 BOARD OF DIRECTORS Chairman Michael Wimer Cattaraugus County Bank, Little Valley, NY Vice Chair Thomas Carr Elmira Savings Bank, Elmira, NY Treasurer Mario Martinez Catskill Hudson Bank, Kingston, NY Immediate Past Chairman Thomas Amell Pioneer Bank, Albany, NY ______________________________ R. Michael Briggs USNY Bank, Geneva, NY John Buhrmaster First National Bank of Scotia, Scotia, NY Anthony Delmonte Bank of Akron, Akron, NY Ronald Denniston First National Bank of Dryden, Dryden, NY Director Emeritus Christopher Dowd Ballston Spa National Bank, Ballston Spa, NY John Eagleton Steuben Trust, Hornell, NY Gerald Klein Tompkins Mahopac Bank, Brewster, NY Douglas Manditch Empire National Bank, Islandia, NY Paul Mello Solvay Bank, Solvay, NY Theresa Phalon North Country Savings Bank, Canton, NY Phil Pecora Genesee Regional Bank, Rochester, NY Anders Tomson Chemung Canal Trust Company, Elmira, NY Kathleen Whelehan Upstate National Bank, Rochester, NY Steven Woodard Alden State Bank, Alden, NY IBANYS STAFF John J. Witkowski President and CEO Stephen W. Rice Vice President of Government Relations and Communications William Y. Crowell III Legislative Counsel Linda Gregware Director of Administration and Membership Services
Issue Five | 5
PUBLIC AFFAIRS UPDATE | By Stephen W. Rice
Technology, Innovation, FinTech:
A Key Landscape For Community Banks … And Regulators Agree!
n recent remarks, FDIC Chair Jelena McWilliams warned community banks that their ability to survive and thrive depends on their ability to innovate and adapt to changing technology. She spoke about digitization, open banking, machine learning/artificial intelligence, and personalization, and stated that banking technology is advancing at a “relentless” pace. “We all must challenge ourselves to think about what that means for the future of the banking industry, and community banks in particular.”
Linda A. Lacewell
She noted community banks’ inability to keep pace with innovation is due to both cost and regulatory uncertainty. “The cost to innovate is in many cases prohibitively high for community banks. They often lack the expertise, the information technology, and research and development budgets to independently develop and deploy their own technology.”
6 | Banking New York | November / December 2019
Chair McWilliams suggested community banks partner with fintech firms that have already developed, tested, and rolled out new technology, and she emphasized her goal is for the FDIC to lay “the foundation for the next chapter of banking by encouraging innovation that meets consumer demand, promotes community banking, reduces compliance burdens, and modernizes our supervision.” That is remarkably similar to the message IBANYS received from New York State Financial Services Superintendent Linda A. Lacewell when we met with her this past summer. The Superintendent emphasized the importance on innovation and fintech, which she believes can help community banks maintain their viability. Superintendent Lacewell has announced the creation of a new Research and Innovation Division at DFS, which will be run by the department’s new Executive Deputy Superintendent Matthew Homer, a veteran fintech executive who previously headed up policy and research at Quovo, a New York data analytics company providing open banking functionality. In its first two months of operation, the Research and Innovation Division has already issued multiple virtual currency licenses. Our federal and state banking regulators are clearly on the same page on this subject. Banking -- including community banking -- is once again moving into new territory. This new landscape will present New York community banks with challenges and opportunities we could not have imagined a decade ago. The world and our industry continue to evolve in real time. IBANYS invites your comments, ideas and concerns, and will represent your priorities and interests as we move forward.
IBANYS, New York Community Banks Well Represented Among “50 Most Powerful People In New York Finance”
Witkowski, Fisher, O’Connor, Tryniski Are Honored “City & State New York” has published its inaugural list of the 50 leaders driving the banking and investment industry in New York State -- and IBANYS was well represented. The “Finance Power 50” list looks at who has the most influence on the political process. City & State publishes a weekly magazine covering politics and government in New York City and New York State that is distributed to New York State legislators, county executives, municipalities, the New York Congressional delegation, New York City Council members and other leaders in New York business and government. City & State also publishes on their website and sends out a free First Read daily email. Among those honored: John Witkowski President & CEO Independent Bankers Association of New York State “As President and CEO of the Independent Bankers Association of New York State for the past five years, John Witkowski speaks for more than 60 independent community banks across the state. The former National Football League quarterback went into banking after football, serving as executive vice president and retail banking executive at Five Star Bank. In his current role, he’s worked on reducing regulations on community banks and deploying technology already in use at larger banks.” Bob Fisher President & CEO of Tioga State Bank “Robert Fisher is a fifth-generation community banker who has helped his Spencer, New York-based institution expand to more than a dozen locations upstate. Active in the Independent Bankers Association of New York State, he also serves as vice chairman of the Independent Community Bankers of America. An ROTC scholarship student at the
University of Notre Dame, Fisher’s stint in the Air Force included service in the first Gulf War.” Kevin O’Connor President & CEO, Bridgehampton National Bank “Kevin O’Connor could teach seminars on how to handle job interviews. After applying for the chief financial officer position at what’s now called BNB Bank, he was offered the CEO job instead. President and CEO of the fast-growing community bank since 2008, O’Connor’s BNB Bank operates 45 branches in Long Island and the greater New York City metropolitan area. A Brooklyn native, O’Connor had been treasurer at North Fork Bank, where he spent 20 years.” Mark Tryniski President & CEO, Community Bank System “President and CEO of Community Bank System since 2006, Mark Tryniski joined the commercial bank, based in DeWitt, a suburb of Syracuse, three years earlier. Previously a partner in the Syracuse office of PricewaterhouseCoopers, Tryniski spent 18 years working with U.S. Securities and Exchange Commission registrants in banking and other industries. He’s active in the New York Bankers Association, the New York Business Development Corp. and SUNY Oswego, where he earned a bachelor’s degree.” To read the complete article: http://bit.ly/IBANYShonors ■
STEPHEN W. RICE
Stephen W. Rice is Director of Government Relations & Communications for the Independent Bankers Association of New York State.
Issue Five | 7
MEMBER PROFILE | By Bryan Adler, Special to Banking New York
DIGITAL DATING GAME: First Impressions Activate At The Point Of Excitement
“Y Bryan Adler
ou never get a second chance to make a first impression,” has never held more true than in today’s digital world. When it comes to mobile apps, banks and credit unions must focus on that first impression to create early loyalty with consumers. Two key components that go hand-in-hand to improve their user experience are digital account opening and a strong onboarding experience. Digital account creation is about speed and seamlessness for the customer. Deloitte released a study on the account opening process, and one of the key findings was that while most customers are happy with the digital onboarding processes of banks, there’s still significant room for improvement. We see it every day. Plus, customers who aren’t happy with the sign-up process are less likely to purchase additional products and are more likely to churn. As digital account opening goes mobile, it adds new benefits for the end user, as outlined by The Financial Brand. Think about how much your customers would appreciate small improvements such as cleaner interfaces, fewer keystrokes and singlechannel engagement. It’s certainly something I think about as I go through my routine digital experiences, like grocery shopping, and I’m sure you’ve experienced good and CONTINUED ON PAGE 10
8 | Banking New York | November / December 2019
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Issue Five | 9
CONTINUED FROM PAGE 8
bad interfaces as well. helping a customer early on, they also provide ongoing benefit Once the customer has created their account, we must not throughout the customer journey. With digital, data can easily stop wowing them. The best experiences include a frictionless be tied together and analyzed to yours and the customer’s and helpful onboarding program. Onboarding programs benefit. By leveraging information the customer has provided, for financial institutions may require additional steps, but you can easily segment customers and provide appropriate according to Deloitte, customers expect that due to financial offers to them. Running a quick soft pull credit check allows regulations. Surprisingly, 81 percent of Deloitte’s respondents financial institutions to automate loan offers seamlessly, thought these regulations and requirements for additional whether in the app or via a follow-up email. information were beneficial. At the end of the day, you have the customer information. So, how do we onboard the customer? Hubspot has Develop insights from it, and act on it to activate new some amazing examples of options for customers at the point of excitement. onboarding processes that could prove A solid digital experience offers your valuable for the financial industry. best opportunity to impress and engage Providing a tutorial Providing a tutorial upon the user’s them in those first moments after upon the user’s initial initial sign-on quickly and simply helps they’ve expressed interest in doing your customers understand how to use business with your bank or credit sign-on quickly and your application and mitigate the need union. Use your processes to show the simply helps your for them to contact your support teams. customer you’re engaged with them Other successful methods include as well. Your initial engagement can customers understand feature call-outs in your applications, reinforce that positive first impression how to use your followed by calls to action to engage and make it a lasting and valuable one. ■ them in your services. For example, application and a call-out in a checking account setmitigate the need for up might highlight where your other Bryan Adler is founder and CEO of services are listed. Facebook’s interface Vetter. More information is available them to contact your is a good example, showing links to a list at www.thinkvetter.com, via email at support teams. of all your friends or groups in one place. firstname.lastname@example.org, or by calling While measurable benefits exist to (646) 518-8238.
Independent Bankers Association of New York State
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Issue Five | 11
PERSONNEL | By Stephan A. Ingalls and Guy Hatch, Special to Banking New York
Four Steps To Fix The Broken Employee Review System
t’s October, and if your business works on a calendar year cycle, it’s time. Your boss seems a bit busier than normal. Maybe even a little stressed. More time behind closed doors in the office. Lots of “Hey, let’s get these done before the end of the month” shouts down the hallway. Then, you realize. You remember what all this kerfuffle is about. It’s time for performance reviews and you immediately get a little sick to your stomach. You recall a discussion with some consultants on the subject. “Only 2 in 10 employees strongly agree that their performance is managed in a way that motivates them to do outstanding work.” Only “29 percent of employees strongly agree that the performance reviews they receive are fair, and 26 percent strongly agree they are accurate” (Gallup, 2017). Well, that’s not good. But if it’s any consolation, your boss doesn’t like it any better than you do. “More than 90 percent of managers, employees, and human resource (HR) heads feel that their performance management processes fail to deliver the results they expected, and many view their current processes as ineffective and/or inaccurate (Corporate Leadership Council, 2012).” Wow. If that weren’t bad enough, that same 2012 report suggests that “managers and employees spend about 210 and 40 hours, respectively, per year on performance appraisal and performance management activities.” I’d like to have that time back.
IF BROKEN, WHY USE IT?
It’s a debate raging throughout business and a question leaders are asking themselves, “If this system is as broken as it seems to be, why don’t we abandon it all together and get some of that time back?” We have enough to do. And this is precisely what a number of big organizations have chosen to do, including Eli Lilly, Adobe, and Gap, Inc. So why are we still doing this? Sounds like they might be on to something. Not so fast. Even without a formal system, organizations will continue to assess and rank employees, but now with a less structured, more intuition-based approach. How will my organization determine compensation levels when “over 90 percent of companies tie pay to performance” and “82 percent link individual
12 | Banking New York | November / December 2019
performance to compensation (Mercer, 2013).” Are they just going to wing it? Most businesses we encounter conduct some form of annual evaluation and link pay to review outcomes. But, only around 5 percent of those organizations feel like they have the system right – that the system fulfills its purpose and guides individuals along a growth path. So – review systems appear broken and we spend significant manpower on their management. Yet, we need them. What should we do?
FOCUS YOUR ENERGIES
We believe there are four areas where organizations should apply some energies to get a better return on that 210-hour annual investment.
1. Make the review mirror those competencies your organization needs to nurture and reward.
All too often, we find review templates that have been pulled from some HR software system or brought along from a former organization. Stop it. Your organization’s culture exercises a specific brand of leadership. You grow leaders in a way that’s unique from every other organization on the planet. Think through those competencies (your leadership brand) and what’s required to: (a) get in the door, (b) be a successful employee, (c) stand out among your peers for recognition and promotion (informal leadership), and (d) formally execute leadership and management responsibilities from the most junior to your executives.
2. Your performance review system should mirror that brand.
The performance review system should tie directly to individual development plans (and those should tie to your organization’s succession plan). In those organizations we work with, we also find weak or overly standardized individual development plans (IDP). In fact, organizations openly struggle with performance reviews for long-standing, stable employees. “What do I say this year that I didn’t say last year?” Reviews, yearto-year, aren’t much beyond a cut and paste exercise. Struggling with engagement much? Remember, of all the pros and cons around performance reviews, this is the one time annually (or
Only “29 percent of employees strongly agree that the performance reviews they receive are fair, and 26 percent strongly agree they are accurate.” – Gallup, 2017
more frequently if you’re lucky) that you and your boss are supposed to have a one-on-one discussion about how you’re doing and what’s next. If that conversation has gotten stale, so have you. The templates our IDPs come in should be common, but what’s in that document should be uniquely tailored to your progression – from wherever you are to wherever the organization is growing you to be. Even if you’ve plateaued, position-wise, at work, the IDP can speak to selfdevelopment, time management, emotional intelligence, or communications goals. We all need work there. But even better, that progression we’re talking about should link directly to your organization’s succession plan – and we’re not talking about what happens if the boss gets hit by a bus. Rather, your business’ succession and performance management should encompass a wider group of employees at various seniority levels who represent “single points of human failure.” Where there’s a plan for everyone’s succession (read growth) in your organization, you have the makings of a tailored IDP which becomes that thing on which your performance review is based.
3. Teach your leaders to counsel and coach.
When we promote someone to a formal leadership position and make them responsible for developing others, they all too often receive a “get out there and coach ‘em up” admonition from the boss. Boo. Frankly, if that’s how you’re developing subordinate leaders
to review performance and offer feedback, your system is going to continue to struggle. Spend the time teaching them what, when, where, and how to do this right – your way. Your employees will be better, they’ll be better, and the system becomes worth your time again.
4. Lastly, regularly check on how recurring performance reviews and the IDP is being managed.
Quarterly updates to augment the annual, formal review? Sure. I’ll bet they aren’t happening as regularly as you think they are, and if they’re not – you’re violating a cardinal rule for reviews – never, ever surprise anyone. We know. There are no lightning bolts here. Good, oldfashioned, common sense leadership. But you know what they say about common sense – it’s not so common. Want some help? It’s out there. ■ Stephen A. Ingalls is president and CEO and Guy Hatch is director of business development at Catalyzer, which specializes in leadership development. More information is available at TeamCatalyzer.com. Stephen A. Ingalls
Issue Five | 13
CUSTOMER SERVICE | By Bruce Paul, Special to Banking New York
What Your Customers Think — And Your Staff Does Not Know — Can Sink or Lift You
“How many of the community banks here believe their customer service is average or below average?” I often ask that when presenting to large community bank conferences. Typically, a small group of attendees — maybe 5-10 percent -- are brave enough to raise their hands. By inference, this means that the vast majority of community banks think the customer service they provide is better than their competitors. In fact, in the New York, 81 percent of community bank leaders believe their customer service is very good. However, their customers may not agree. In the latest Banking Benchmarks across Pennsylvania and New Jersey, only 26.9 percent of community banks were rated that high by their own customers. This is based upon 393,637 objective reviews by households and businesses across those 2 states. How can it be that customers see community banks so differently than they see themselves? Community banks can be forgiven for usually concluding that their customer service is above average, because so much of the anecdotal feedback they get is positive. And this makes sense, because the very happy customers often want to let you know how happy they are, especially to praise a specific staff member and the
14 | Banking New York | November / December 2019
service they provided. And it is relatively rare indeed that a community bank receives a complaint about a specific staff member’s customer service. And even more rare is to have a customer take the time to let you know that your customer service is neither good nor bad, but just mediocre. To be fair, there are some banks whose customers do truly rate their customer service as exceptional, and who therefore have an actual competitive advantage when it comes to servicing customers. Some of the best performers in specific areas are listed below. But for the rest of the banks that are not standing out, what are they to do? First, identify any servicing areas that where the bank is subpar or declining. According to the most recent Benchmarks, the most common servicing elements where banks fall down are: • Not proactively recommending solutions • Giving customers the runaround (especially among business customers) • Staff not being able to answer banking questions (a training issue) • Treating customers like a number • Not listening and understanding customer needs
Avoiding these pitfalls are all crucially important in retaining customers and earning their loyalty. Across the state, 24.1 percent of customers say their bank can’t even answer basic banking questions (slightly higher in NJ than PA) and 29.7 percent say their bank never recommends appropriate banking products (slightly higher in PA than NJ). But do you know how many of your customers think that about you? If you do not already track these, you need to start. To get you started, we can tell you your current baseline since we have been asking your customers (and everyone else’s customers) through the NY Banking Benchmarks for years. Just contact our staff and we will share your ratings and rankings (vs your local competitors). Second, identify areas where you are relatively strong compared to key competitors and use them to your competitive advantage. It is often hard to stand out in a crowded marketplace, but most banks have at least one area of relative advantage. It might be that your staff are better listeners, or more responsive, or better and training customers on mobile banking, etc. Third, put together a plan of action to tackle the areas where you are weakest, and exploit the areas you are strongest. Not weakest or strongest overall, but where you excel or fall behind compared to key local competitors. • One of our new subscribers was dismayed to learn that 19% of their own business customers say they sometimes get the runaround. But when they learned that the average was 32 percent among their key local competitors, they realized they actually had a competitive advantage. And they began to leverage that to gain market share. • Another bank learned that their customers rated their technology low compared to competitors. This was not a surprise, but they also learned that the tools themselves (online, mobile) were actually rated slightly higher than average. According to their own customers, it was the training they received that was well below average. They realized they needed to spend more resources on training their own staff to understand the tools and to answer questions, rather than spending on newer and better bells and whistles. • A Community Bank subscriber thought they were doing a good job recommending solutions to their customers. In fact, 64 percent of their customers agreed. But when they learned that the average in their trade area was 72 percent, they realized they needed to step up training for front line staff. They went so far as to share the Benchmark results with each branch manager to show that it was their own customers that wanted more “leaning in” and this energized them to work harder. Fourth, track your progress to make sure you are making the improvements you need to in the eyes of your customers. You can do that through internal metrics, such as the percent of staff that have completed new
training modules, but you should also supplement with directly asking your customers to weigh in. After all, it does not matter if all of your staff receive cross-sell training if customers do not see the effect. Understanding what you customers actually think about your customer service, your technology, and every other aspect of your bank will tell you where to focus effort. This will allow you to fix what is not working (in the customers’ eyes) and highlight what they really love. As the old saying goes: Your Customers’ Perception is Your Reality. Do you need a Reality Check? ■ Bruce Paul is president and CEO of Customer Experience Solutions, which produces the semiannual New England Banking Benchmarks.
Best Customer Service
According to their own customers and compared to local competitors WESTERN NY Allegany, Cattaraugus, Chautauqua, Erie, Niagara 1 Evans 2 Northwest 3 Community 4 Cattaraugus Cnty 5 Lake Shore CENTRAL NY Broome, Cayuga, Chemung, Chenango, Cortland, Delaware, Genesee, Livingston, Madison, Monroe, Onondaga, Ontario, Orleans, Oswego, Schuyler, Seneca, Steuben, Tioga, Tompkins, Wayne, Wyoming, Yates 1 Canandaigua 2 Fairport 3 Lyons 4 Tompkins Castile 5 Fulton SB CAPITAL NY Albany, Columbia, Greene, Rensselaer, Saratoga, Schenectady, Warren, Washington 1 Capital Bank 2 Kinderhook 3 Glens Falls 4 Greene Cnty 5 Saratoga
MOHAWK VALLEY-NORTH COUNTRY Clinton, Essex, Franklin, Fulton, Hamilton, Herkimer, Jefferson, Lewis, Montgomery, Oneida, Otsego, Schoharie, St. Lawrence 1 Watertown NY 2 Glens Falls 3 Community 4 Adirondack 5 Champlain HUDSON VALLEY NY Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster, Westchester 1 Jeff Bank 2 Riverside 3 Orange B&T 4 Walden 5 Catskill Hudson NEW YORK CITY NY 5 Boroughs 1 Maspeth 2 FNB Long Island 3 Hope 4 Ponce 5 Chase LONG ISLAND NY Nassau, Suffolk 1 BNB 2 Chase 3 FNB Long Island 4 TD 5 People's United
Issue Five | 15
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WORKPLACE | By Denise D’Agostino, Karen Kirchner and Ellen Keithline Byrne, Special to Banking New York
Is Your Workplace In Crisis? 5 Prevention Strategies
urnout is becoming an epidemic. The banking crisis of 2008 was a catalyst for enormous change in the financial world. New technologies, regulations and organizational structures altered working conditions and the pace of banking life became even faster and more complex. Most businesses are attempting to do more with less and the resulting work stress can push your good people into burnout. A total of 85% of financial professionals have reported being impacted by burnout which one recent study found to be a significant contributor to high turnover. The good news is that if you understand the problem and put processes in place, burn-out is avoidable. Here’s what you can do to keep it at bay. First, what is burnout? The World Health Organization defines it as “resulting from chronic workplace stress that has not
been successfully managed. It is characterized by three dimensions: • feelings of energy depletion or exhaustion; • increased mental distance from one’s job, or feelings of negativism or cynicism related to one’s job; and • reduced professional efficacy.” What’s challenging about burnout is that it’s insidious and can slowly creep up on your most diligent employees. Often, those who fall prey are the highly motivated, empathetic, perfectionists who identify with their work. For these employees, often your superstars, things can easily get out of balance and it’s critical for senior leaders to understand what is at the root of this potentially costly problem. Burn-out is more than the result of exhaustion after a year-end deadline or a crisis with a key client. It
of financial professionals have reported being impacted by burnout.
Issue Five | 17
becomes a chronic condition. And it’s a phenomenon that cannot be easily remedied with a weeklong beach vacation or a yoga class. As executive coaches and leadership consultants, we have coached many highly respected and capable leaders, and we often see signs of burn out before management notices there’s an issue. If these leaders can’t change their environment or their reaction to it, they are in danger of leaving, or worse, developing significant mental health issues. In one case, a client we will call Mary is a VP who is truly passionate about her work, and loves her staff and her leadership team. But after years of tirelessly committing her time to her organization and recent resource cuts, she began sharing that she can’t even listen to the CEO when he walks into her office. In the past, she looked forward to their conversations but no longer. She explained that she was exhausted most of the time. She was contemplating leaving the company to find something else, (or better yet, going to the beach and never coming back), until we started to identify how she could take control of her situation. Through coaching, Mary learned to establish clear boundaries, delegate what she could, and say “no” to projects that did not have strategic implications. In short, she started taking better care of herself. She began with taking a 3-month sabbatical and reinvigorating her health regime. With her boss’ help, she re-engineered her position so she would have more resources, less fire drills and feel a sense of greater impact. It took a few months but now the company has their superstar VP back doing great work. Fortunately, Mary had the help of a coach and a concerned boss who
helped her get on a healthy course and back to her high functioning, happy self.
WHAT ARE THE DANGER SIGNS?
Burnout researcher Christina Maslach identifies three components to watch out for: Physical and emotional exhaustion • Chronic fatigue and insomnia – Are certain employees always tired? Do they express having difficulties sleeping? • Physical symptoms – Are they going to the doctor more often and seem to get sick more often? Do they look less well? • Anxiety, depression and irritability – Are they more worried or edgy these days? Do they seem uncharacteristically sad? Cynicism and detachment, depersonalization • Loss of enjoyment – Are they not as upbeat and fun as they once were? • Isolation and detachment – Are they no longer interested in socializing? • Negativity – Do they seem more negative than usual? Sense of ineffectiveness and lack of accomplishment • Are they no longer proud of their work and constantly overwhelmed? • Are their results suffering?
WHAT CAN ORGANIZATIONS DO?
Avoiding this negative spiral is the responsibility of both the individual as well as the organization. The individual: People have a choice in how they handle the mismatch between the resources they have to do the work and the demands of the position.
The company: It’s also the company’s responsibility to set up employees for success by putting the right people in the right positions with the appropriate resources. And showing appreciation for the value that employees bring to the company is also critical.
5 STEPS YOU CAN TAKE TO HELP YOUR TEAM AVOID BURNOUT:
1. Encourage and model self-care. It’s starts with you. What is your own mindset around work life balance? Most senior leaders connect their success to their drive and dedication, which often means long hours and 24/7 attention to work. What kind of example are you setting? 2. Be realistic when you cut resources and reallocate work. Burnout is more likely when demands are high and resources are scarce. Check in with staff members to find out if their workload is achievable, and if not, be willing to make changes. 3. Job mismatch – Maslach also emphasizes the importance of people doing work they are wellsuited for. Do you have the right people in the right seats? 4. HR resources – Fight the stigma around getting help. Make support services available to help employees build coping skills to better handle demanding work environments. 5. Be proactive and identify employees at the highest risk. Educate them on the warning signs of burnout and the importance of self-care. Burnout may be an epidemic but it’s not inevitable. Build awareness and intervene early to protect your organization’s greatest asset. In the process, you’ll be showing your team how much they matter. ■
Her New Standard, LLC was founded by Denise D’Agostino, Karen Kirchner and Ellen Keithline Byrne, a team of organizational leaders, executive coaches and a PhD, who create programs specifically for women leaders –– to help them rise up in today’s competitive world and make their mark. For additional information visit hernewstandard.com or follow us on LinkedIn and Instagram.
18 | Banking New York | November / December 2019
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INSIGHT | By Theo Moumtzidis, Special to Banking New York
Worry: The Unspoken Foundation of Bank Customer Dissatisfaction
esearch shows that bank customers worry about the interactions with their banks and other financial institutions more than customers in other consumer market segments. Why? Because the stakes are higher. For example, it doesn’t matter if you are late to pick up your dry cleaning. You won’t be charged a late fee. Or, if you buy coffee at the local coffee shop, you won’t be rejected because of a low credit score or missed information in your order. When it comes to banking, however, there are a myriad of worries, such as funds being lost or data being hacked, fees being charged, unpredictable wait times, administrative red-tape, and confusing, complicated processes. And, it doesn’t stop there. If you have ever spent time listening to incoming call center service calls, you would have heard customer concerns such as, “I am calling to make sure that my ATM deposit was credited to my account.” Additionally, customers can worry about more trivial things in their day-to-day interactions with their banks such as, “Did I pick the fastest teller line?” or more profound situations like, “Did I make any mistakes when I filled in my mortgage application?” It’s enough to give anyone a headache at best, an ulcer at the worst. TYPES OF WORRIES Customer worries come in a variety of forms and intensities. They can, however, be categorized, analyzed, and managed. Here is a starter list of “worry categories” to help bankers understand the customer experience and how the bank’s processes, practices and policies impact the customer’s well-being. • Transaction Completion, e.g., “Did my transaction post?” • Process Compliance, e.g., “Did I fill in the form correctly?” • Wait Time, e.g., “How long will I hold until the next agent picks up my call?” • Customer Choice, e.g., “Did I pick the right product?” These questions signify worry. Worry is a negative feeling. The source of the worry, in this case the bank, is subconsciously blamed for the negative feeling. When your bank causes worry, or doesn’t take steps to mitigate it, your customers develop negative feelings about your bank.
20 | Banking New York | November / December 2019
A MISSED OPPORTUNITY Why is “worry” generally not recognized, discussed or addressed by bankers? Because worrying is often a feeling that exists in the background. Rarely do customers articulate it in their complaints or voice it when asked general open-ended questions about their experience. Bankers are busy enough addressing the stated problems of customers that they have no time, interest, or appetite to probe for the unstated worries. Instead, banks measure “first call problem resolution,” but they do not explore “worry identification and resolution.” If it’s silent, it’s not measured. If it’s not measured, it’s not recognized, discussed, or addressed. And, if it is not even verbalized, why should banks care about it? The reason is that this sense of “worrying” degrades the customer experience rapidly and has a cumulative impact. Because it is not an instant feeling, it can last for minutes, hours, days, months, or longer. It might not be verbalized, but it is real. You ask customers to stay with your bank forever; to buy more products, open more accounts, refer the bank to their friends and family. Their responsiveness is greatly affected by their experience. Happy customers will stay long-term, open more accounts, refer the bank to others. Perpetually worried customers will not. TACTICS THAT REMOVE OR MITIGATE WORRIES There is tactical path that systematically can identify and remove or mitigate these worries. The first step is to understand what customers worry about when they interact with the bank. Become knowledgeable about the nature of the worrying and what action (or inaction) of the bank is fueling the worry. This phase is called “worry mapping.” There are two components to successful “worry mapping.” 1. Conduct analyses of bank processes, policies, and communications to develop hypotheses of what is causing customer worries. 2. Conduct customer research to understand what customers actually worry about and validate the hypotheses generated based on the analyses above. There are two types of customer research that are relevant in this case: passive and active. “Passive” refers to listening to recorded calls (or using speech analytics) and reading customer feedback (or using
“It’s all about listening to what the customer is saying, not drawing conclusions until you hear the whole story. Empathize with them and try to find a solution.” – Michael Billia, Investors Bank
text analytics). In both cases, the bank has to read (or listen) between the lines to identify the underlying worry. “Active” requires asking questions of customers and frontline employees. The second step in worry mapping is to identify what modifications to processes or information flows can mitigate the worries. In some cases, there is something the bank does (e.g., a process, a policy) that can be eliminated or modified. In other cases, a new process step or a new information flow needs to be added or modified. THE ROLE OF THE FRONT LINE It is essential to train the front line to develop the skillset to probe for underlying worries. Part of the training includes developing of targeted questions to ask or even pre-emptively providing answers to questions that are representative of customer worry. Today’s front line is far more likely to be serving customers who have problems to resolve, need advice, are opening a new account, or require additional information. These are higher worry-propensity interactions. The front line in a digitally transformed world, where mundane transactions have migrated to other channels, have a higher role and responsibility to manage customer worries.
Michael Billia is a senior vice president with New Jersey-based Investors Bank. He says, “It’s all about listening to what the customer is saying, not drawing conclusions until you hear the whole story. Empathize with them and try to find a solution.” Investors Bank trains employees through a program called Customer Connect, which encourages front line employees to have conversations with customers (or potential customers) to find out how they can help and to uncover the questions civilians might have about the banking process. There are tricks to the trade, says Billia. “I think customers that are nervous are reserved and don’t ask a lot of questions. One of the things bankers need to do better is develop a rapport through an open conversation to make the customer feel at ease, also to make them understand that no question is stupid.” Just listen—really listen to what is being said or is going unsaid. “We tend not to listen to the full concern and try to answer questions before we really understand what the [issue] is,” Billia notes. When it comes to banking and financial matters the queries are often multifaceted and can head off in several directions. According to Billia, “It starts with having great conversations. Listening and letting the customers know that we are there to help them, not just to sell a product or a service.”
Issue Five | 21
Banks that proactively address and manage their customers’ “worries” have more satisfied and more loyal customers.
THE IMPACT OF DIGITAL TRANSFORMATION Digital transformation is a powerful tool to assuage customer worries for two reasons. First, it allows for two-way information flows. Deposits and payments can be confirmed, and alerts can help prevent undesired outcomes. The amount, frequency, customization, personalization, and ease-of-access of information in a digital environment transforms the customers’ banking experience. Second, digital transformation allows for real-time interactions. Credit applications, even for small businesses, can be instantly decisioned. Mobile check deposits can be instantly checked (e.g., for missing or stale dates) and accepted in real-time. Expected wait times for a chat session are visible, so gone is the worry of “how long will I hold for”? The content of the chat session is emailed to the customer providing a record of the conversation as opposed to yesteryear’s “do you remember who you spoke with who might have told you that?” TURN WORRY MANAGEMENT INTO A COMPETITIVE ADVANTAGE Senior management must drive the cultural transformation of the bank
22 | Banking New York | November / December 2019
in order to identify and eliminate customer worries. Below the C-suite, executives who will (and should) find themselves in the middle of such efforts include heads of retail, it/ops, digital transformation, and customer experience. Banks that proactively address and manage their customers’ “worries” have more satisfied and more loyal customers. That’s because a “worryfree” bank creates fewer negative surprises to its customers. The worries about (and the occasional) negative outcomes damage the feeling of trust which is the foundation of a relationship with a financial institution. A bank that can avoid these self-inflicted wounds will have happier customers who will be less likely to defect and more likely to provide referrals. Net promoter scores should rise dramatically. The C-suite and bank boards will value the positive results to customer experience and the impact to shareholder value creation. ■ Theo Moumtzidis is managing director of Delos Advisors, a NY-based consulting firm that specializes in working with financial institutions in the U.S. and abroad. For additional information, send email to theo. email@example.com
ON THE MOVE
TRY TO KEEP UP
NBT Bancorp Inc. Hires Kelley as General Counsel
LOCAL PROFESSIONALS MAKING THEIR MARK IN NEW YORK BANKING
NBT Bancorp Inc. President and CEO John H. Watt Jr. announced that Angela Wolfe Kelley has joined NBT as executive vice president and general counsel. In this position, Kelley will coordinate NBT’s legal activities, manage external legal counsel and oversee relations with regulatory agencies. Kelley will serve on NBT’s Executive Management Team and will be appointed Corporate Secretary by NBT’s Board of Directors. She will be based at the company’s headquarters in Norwich, NY. Kelley has 12 years of corporate law experience. She comes to NBT from Heartland Financial USA, Inc., a financial services holding company based in Dubuque, IA, where she was employed as senior vice president, deputy general counsel and corporate secretary. “We are very pleased to welcome Angela Kelley to NBT,” said Watt. “Her experience managing legal, risk and other activities for a larger community bank has prepared her well for her new role at NBT. We look forward to her strategic advice as we continue to grow.” Prior to joining Heartland Financial, Kelley was an attorney with Faegre Baker Daniels LLP of Minneapolis and Des Moines. She earned her Juris Doctor at University of Iowa College of Law and her bachelor’s degree in Political Science and Psychology from the University of Iowa.
DePledge Joins Bank Leumi USA
Bank Leumi USA has hired John DePledge to head its New York-based Asset-Based Lending (ABL) business. In this role, DePledge will manage the continued expansion and growth of the bank’s ABL practice, launched by Leumi in 2018. Over his 30-year career in corporate finance, DePledge has successfully developed and grown asset-based lending practices at major North American banks through various economic and market cycles. He most recently served as business head and national sales manager for Citibank’s Asset-Based Lending Unit, where he led product development and closed over $2.5 billion in new business. “John has built an impressive track record of establishing and building successful asset-based lending practices over his three-decade career,” said Shawn McGowen, Leumi’s chief banking officer. “His experience and strong relationships in the middlemarket lending space are valuable strengths as we grow our asset-based lending business.” Prior to Citibank, DePledge was head of business development at TD Bank, where he established the company’s Mid-Atlantic ABL lending capability. He has also worked in various capacities for LaSalle Business Credit, People’s United Bank, Citytrust Bank and Associates Commercial Corporation. DePledge is the president of the Secured Finance Network (SFN), formerly known as the Commercial Finance Association, and serves on
the board of directors of the Secured Finance Foundation. Previously, he served on the board of directors for the Philadelphia chapter of Turnaround Management Association and is a past president of SFN’s Philadelphia chapter. He earned a Master of Business Administration in Finance from Sacred Heart University and a Bachelor of Science in Accounting from Franklin Pierce University. Leumi’s Commercial Banking division specializes in serving select industries, products and asset types in the U.S. middle-market, including healthcare, technology, apparel and real estate. Its bankers focus on market areas with the greatest growth potential and work closely with a diverse roster of clients in each sector to develop custom solutions that best support their business needs. It provides asset-based loans from $5,000,000 to $30,000,000 for working capital, refinancing, acquisitions, mergers, turnarounds and growth.
Five Star Bank Promotes Case, Fogel
Five Star Bank, subsidiary of Financial Institutions Inc., announced that David G. Case was named chief credit officer and Jon M. Fogle will lead its business banking unit. Case previously served as chief commercial credit officer, overseeing credit approval for commercial lending. He is now also responsible for residential real estate and indirect consumer credit approval. The consolidation
Issue Five | 23
of these responsibilities creates an enterprise-wide lending authority for the bank and is a continuation of Five Star Bank’s efforts to reinforce strong and effective leadership of these functions. Fogle continues as commercial market executive and Rochester regional president. He will now also lead the business banking unit, a strategic line of business for the bank. He and his team will work to grow small business lending, deposits, and cash management services in collaboration with the Bank’s retail network, credit team and Small Business Administration associates. William L. Kreienberg, chief banking and revenue officer, said, “Dave and Jon are seasoned professionals that have been instrumental in growing and strengthening our commercial lending platform. They have demonstrated
strong leadership skills that will position them for success in their recently expanded roles.” Case joined Five Star Bank in 2005 as commercial market executive and was named chief commercial credit officer in 2014. He is a graduate of Ithaca College and serves on the board of directors for Thompson Health System and Foundation, Happiness House, CP Rochester and Rochester Rehabilitation. Fogle joined the bank in 2013 as commercial market executive and was named regional president in May 2014. He is a graduate of Hobart College, serves on the board of directors for the Boys & Girls Clubs of Rochester and as chair of the Rochester Business Charitable Organization, and recently served as president of the Hobart College SAA.
is located at the Medford branch and responsible for ensuring the credit union is compliant in generally accepted accounting principles and adherent to governing rules and regulations. She oversees the production of financial reports delivered to Suffolk Federal’s board of directors as well as regulatory reporting. As controller, Sumpter represents the accounting department as the primary contact for internal audits, external financial audits and regulatory exams.
Sumpter Joins Suffolk Federal CU
The Federal Deposit Insurance Corporation announced the appointment of John F. Vogel as deputy director operations and chief of staff in the division of risk management
The $1.1 billion Suffolk Federal Credit Union in Medford, N.Y., hired Renee Sumpter, CPA, as vice president and controller. Sumpter
FDIC Announces Personnel Changes
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supervision. Mr. Vogel previously served as Regional Director for the New York Region. Replacing him as regional director is Frank R. Hughes, who previously served as deputy regional director for the New York Region. Vogel fills the vacancy created by the promotion of Maureen Sweeney earlier this year to director of the division of resolutions and receiverships. In his new position, Vogel will provide leadership and direction for RMS’s operations and executive office oversight. Mr. Vogel has nearly 30 years of service with the FDIC. Early in his career, he served as a Bank Examiner and Supervisory Examiner in offices throughout New England. From 2004 through 2006, he served as special assistant to FDIC board member Thomas J. Curry in Washington, DC, and then returned to New England to serve as the field supervisor for the Southern New England Field Territory. In August 2009, Vogel became an assistant regional director in New York, subsequently served deputy regional director for risk management, and was named regional director in 2012. Hughes replaces Vogel as regional director for the New York Region. Hughes presently serves as Deputy regional director for the New York Region, a position he was appointed to in 2018 after serving as assistant regional director beginning in 2014. He began his FDIC career as a bank examiner in 1989 and has 30 years of industry experience, including 24 with the FDIC. Before coming to the New York Region, Hughes held a number of positions in the Kansas City Region, served as president and board member of a community bank in Kansas City, Missouri, and as a senior examiner with the Federal Housing Finance Agency. He has a Bachelor of Science in Finance from Arizona State University in Tempe, Arizona; holds a Chartered Financial Analyst designation; and is a graduate of the Graduate School of Banking at the University of Colorado, and the Executive Potential Program at Graduate School USA.
McCarthy Joins Community Bank Commercial Banking Team
Community Bank has hired Sue McCarthy as vice president, commercial banker in Albany, New York. With the addition of McCarthy, the bank’s Albany Commercial Banking team will grow to six team members. In her new role, McCarthy will grow, develop and manage new commercial banking relationships in the Upstate New York region within the technology, manufacturing, higher education, nonprofit and service industries. She will be responsible for providing direct service to commercial customers, including loans, deposits, and other commercial products and services. McCarthy brings to the team extensive experience in middlemarket lending, client relationships,
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business banking, and mergers and acquisitions. She has more than 20 years of experience in commercial banking focused on lending, treasury management sales and client management. Most recently, McCarthy was a treasury management sales relationship manager with KeyBank in Albany, where she managed business banking portfolios. “We’re thrilled to welcome someone with Sue’s level of experience to our team,” Community Bank N.A. Commercial Team Leader Ken Countermine said. “Sue has spent most of her career serving the Capital Region, so no one knows this community better than she does. She’s a true expert when it comes to serving the needs of our customers and believes in the importance of long-term client relationships. I know she will be a big asset to our team.” McCarthy earned her Bachelor of Science in finance from Siena College. She resides in Colonie with her husband, Tim, and their twin sons. ■
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Register Today: aba.com/CS13 Issue Five | 25
MARKETING | By Steven K. Gold, Special to Banking New York
Is Your Charitable Giving Also Effective Marketing? How Giving Can Grow Your Bank
hen our community thrives, our bank thrives,” states Tara Brewster, vice president of business development at Greenfield Savings Bank (Greenfield, MA). Indeed, strong communities equate with community bank success. Thriving communities are created in several ways, including effective local government, good schools, quality employers, and nonprofit organizations that support a community’s needs – especially those needs that are not being met by government or the for-profit sector. Local nonprofits play a crucial role in the health and economic wellbeing of a community. Community banks are some of the biggest benefactors of local nonprofits. Even outside of CRA requirements, community banks are generous. Many give hundreds of thousands of dollars a year, to more than a million dollars a year, to support nonprofits in communities they serve. This makes perfect business sense since, as Brewster points out, thriving communities create conditions of wealth and stability that reinforce bank success. WHAT MORE CAN BE DONE? What if banks could do even more to support local nonprofits that help our communities to thrive? How could banks be motivated to do this? Is there some underutilized asset held by local nonprofits that can be ‘unlocked’ to
26 | Banking New York | November / December 2019
transform nonprofits into valued partners rather than just recipients? It turns out that there is. Nonprofits have something that all organizations need in order to succeed in the long run: deep emotional connections with their supporters. Similar to their favorite sports teams, people are passionate about the causes they care about. Unfortunately, despite the best intentions of bank leadership teams, the vast majority of banks and other businesses do not inspire the same emotional connections as the local animal shelter or the Boston Red Sox. Better interest rates and friendly service simply cannot compete. According to Jim Briand, founder of NexTier Partners and past president of the New England Financial Marketing Association, “One of the key ways that community banks can compete and differentiate themselves is by making their community support dollars work harder. If a community bank competes on technology or rates alone, they are competing on the terms of big banks.” COMPETING DIMENSIONS Banks compete along dimensions such as service, convenience, technology and rates. Nonprofits are different. They are borne out of a deep human need. They touch our hearts and minds in ways that banks and other businesses cannot. If you or a loved one has experienced the effects of cancer, then you will be drawn to those organizations that
help cancer patients, families and survivors. If you love animals, then you will probably support the local animal shelter. If you or a loved one has a need or particular interest, then you will be passionate about the organizations that support your need or interest. Many community banks support local nonprofits and think they are building emotional connections with members of the community, except that current banknonprofit collaborations are generally ineffective. This is evident by the prevalence of the “Giant Cardboard Check” ceremony and photograph. The problem with giant cardboard checks is that they are low value, such as when they appear on page 14 of the local newspaper. They are not widely noticed and are generally ineffective even when they are noticed. UNLOCKING POTENTIAL This led a group of us to look for ways to do better. We posed a few simple questions to ourselves: what if we could unlock the potential for a nonprofit to be a highly effective advocate (marketing partner) for a community bank? Would nonprofits acting as effective local marketing partners enable banks to keep more dollars in the community, instead of sending dollars to out-oftown advertising agencies or a newspaper owned by an out-of-state media conglomerate? If local nonprofits can help a community bank to be more successful, then the community gets stronger. Everyone wins. We determined that there are five major goals for such an initiative, and any bank can use these as guidelines to work with nonprofit advocates: • Make customers, prospective customers and employees more fully aware of the bank’s commitment to the community • Create strong emotional connections between the bank and its customers, prospective customers, and employees • Competitively differentiate the bank to drive brand awareness, new business, customer loyalty, and profitability • Elevate the status of local nonprofits to be the bank’s marketing partners – opening the door to additional support • Create a virtuous cycle between the bank and local nonprofits that keeps more dollars local and strengthens communities
Authenticity Report, Changing Our World Inc., 2018). Other research says that customer lifetime value for a financial brand is increased by 5.8 times when a customer is emotionally engaged with the brand (source: Motista/ The Financial Brand, 2017). There is clearly an opportunity to grow customer loyalty and value. “Community banks are some of the most charitable businesses around. Yet most banks miss out on a massive opportunity to transform their charitable giving into actions that will help them emotionally connect with customers. It’s a missed opportunity for banks and also for the communities they serve. We address this by providing a simple, turnkey solution that transforms our members’ charitable giving into effective, measurable marketing” says Charlie DiPietro, president of A World For Good. “Banks can now leverage the hidden power that nonprofits have to be powerful advocates for their brand.” One key to working with a nonprofit advocate is to make it easy for them, as well as for the bank’s marketing team. Most nonprofits are operating with small teams, stretched to their limits, and so any solution needs to be simple. It is also important to offer value to each and every nonprofit advocate, to be a good long-term partner. This means rewarding the nonprofit with greater awareness, and possibly increased giving over time. As a nonprofit does the work of an effective marketing partner, it deserves increased support. This creates the virtuous cycle that benefits the entire community. When your community thrives, your bank thrives. ■ Steven K. Gold Is founder and CEO of A World of Good. More Information is available on its website: home.aworldforgood.com.
DRIVING THE COMMUNICATION Although there are ways for community banks to make giving activities more apparent – beyond giant cardboard checks – it’s challenging because a bank is still driving the communication. In order to be most effective, the nonprofit needs to play an active role in the communication. This is why we created A World For Good, to give banks and nonprofits a simple, effective marketing tool – one that builds the virtuous cycle mentioned above. According to one study, when a non-profit advocates for a brand it is 3.5 times more effective than the brand’s own advertising (source: The Issue Five | 27
2,000 Consumers Told Us Their Worst Cybersecurity Fears
Hereâ€™s what you can do to help your customers conquer their concerns By STEVE SANDERS Special To Banking New York
28 | Banking New York | September / October 2019
odayâ€™s consumers are inundated with troubling cybersecurity news, on practically a daily basis. When word of the Capital One data breach broke, consumers again were left scrambling to figure out if their personal information was included in the 106 million exposed records. They are weary, to say the least. So, how can financial institutions help restore their peace of mind? To find out, CSI polled more than 2,000 American consumers about the cybersecurity threats and challenges surrounding them and their financial institutions. The result? Consumers (unsurprisingly) want to know how to better protect themselves and are open to their bank showing them how. Almost three-fourths (74 percent) said that they would likely participate in a cybersecurity awareness program if offered by their financial institution. This insight presents banks with a tremendous, inexpensive opportunity to increase their value and retain more customers.
IF YOUR INSTITUTION HOSTS A CYBERSECURITY AWARENESS PROGRAM, PEOPLE WILL COME. BY DOING SO, YOU CREATE A WIN-WIN FOR CONSUMERS AND YOUR INSTITUTION.
IF YOU HOST IT, CUSTOMERS WILL COME
Per our poll, consumers ages 18 to 44 are the most likely (75 percent) to attend a bank-sponsored cybersecurity education program, and interest from those age 45 and older is close behind (73 percent). So, if your institution hosts a cybersecurity awareness program, people will come. By doing so, you create a win-win for consumers and your institution. Here are just a few of the benefits: • Bolster your institution’s reputation as an active corporate citizen • Increase the potential for new business as you share your knowledge • Create more cyber-aware customers able to thwart malicious cyberactivity • Reduce your own risk from cybercrime as a result
THE KEYS TO A SUCCESSFUL EVENT
To capitalize on this opportunity, you much be intentional and deliberate in your planning: • Create a guest list: You should include your existing customers, but don’t stop there. Cement your status as a local hero by inviting the community at large. • Save the date: The bad guys aren’t waiting, so don’t procrastinate. Host your event as soon as you can properly plan it. • Don’t stop at one: Reach the broadest audience by hosting several sessions conveniently scheduled for various demographics, i.e., mornings for senior citizens and stay-at-home parents, evenings or weekends for working adults. • Remember: location, location, location: Select a venue conducive to a group meeting and one that projects a professional and credible atmosphere. Also make sure the location is conveniently accessible and big enough to comfortably house your entire guest list. • Pick a partner: Pairing up with your local chamber of commerce, an area civic organization or academic institution is a great way to reach the broader community. • Give more than advice: Everyone loves free stuff. This is a great opportunity to hand out bankbranded items like pens, mugs, etc. You could also give away a more valuable door prize. • Bring in the experts: Technology can be a dry and complicated topic, so pick a speaker with the cybersecurity chops to inspire confidence and motivate them to heed the advice.
THE MAKINGS OF A USEFUL MESSAGE
Beyond the logistical details, ensure you craft an informative message, including these topics: • Practicing good cyber hygiene: CSO Online shares several basic cyber-hygiene tips that you can share: - Use secure access points: Only connect devices through private Wi-Fi networks or use a virtual private network (VPN) to encrypt a public Wi-Fi network. - Install updates: As soon as hardware and software updates are available, download them to protect against known vulnerabilities. - Protect yourself: Always use strong, unique passwords and incorporate multi-factor authentication whenever it’s available. - Practice safe emailing: Beware of opening links or attachments from unknown or suspicious persons. - Use anti-malware protection: Explain that this isn’t just for computers and laptops anymore. Consumers need to think about mobile and other Internet-connected devices. • Protecting Online Footprints: The NCSAM 2019 Toolkit is a great resource for anyone hosting a cybersecurity awareness program. It also suggests talking about these online safety tips: - Personalize privacy settings - Post safely to social media - Understand the Internet of Things (IoT) - Protect from social engineering - Stay safe with e-commerce • Responding to a data breach: Explain the key actions consumers should do after a data breach, including finding out what information was stolen and if their personal data was included, as well as putting fraud alerts on affected debit and credit cards and credit reports. • Dealing with identity theft: It also is important to discuss what consumers should do if their identities are stolen. • Institutional defenses: Finally, take the opportunity to discuss how your institution protects itself and its customers and their personal data from cyber intrusion.
MORE HELPFUL INSIGHT FROM CSI’S CONSUMER CYBERSECURITY POLL
Consumer receptivity to a bank-sponsored cybersecurity education program is just one of the takeaways from our survey. Download CSI’s 2019 Consumer Cybersecurity Poll Executive Report [bit.ly/2oUf6gv] to gain valuable insight about consumers’ thoughts surrounding cybersecurity. ■ Steve Sanders is vice president of Internal Audit for CSI. In his role, he oversees the evaluation and mitigation of risks associated with IT, financial and operational systems. Issue Five | 29
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BANKS COULD SEE SIGNIFICANT LOSS IN PAYMENTS REVENUE BY 2025 A new report from Accenture reveals $280 billion in global payments revenue could be displaced by the growth of digital payments and competition from non-banks. The report found that global payments revenue will likely grow at an annual rate of 5.5%, from $1.5 trillion in 2019 to more than $2 trillion by 2025. Only banks that change their business models to adopt the latest technologies and focus on providing value-added services to customers will capture a share of the $500 billion in incremental revenue growth. Titled “Banking Pulse Survey: Two Ways To Win,” the report is based on a revenue-risk analysis model that Accenture developed to measure trends in how consumers pay and projected changes in merchant behavior, technology and regulation. The research is complemented by a survey of 240 payments executives at banks across 22 countries to determine how they plan to mitigate and capitalize on the disruption in payments to grow customer loyalty, revenues and profitability. “Rather than being at the forefront of the new wave of the booming payments market, banks are feeling the heat from new competition and seeing their margins squeezed,” said Gareth Wilson, Accenture’s global payments lead. 30 | Banking New York | November / December 2019
“We face an inevitable world of instant, invisible and free payments, which spells trouble for banks that don’t want to be relegated to the plumbing of payments. But it also presents an opportunity to tap into a new business model based on this digital boom.” Read More CITIBANK FINED $30M BY OCC FOR HOLDING ON TO FORECLOSURES Citibank is facing a $30 million fine by federal banking regulators after an investigation confirmed the bank was not selling foreclosed homes back to the market in a timely fashion. The Office of the Comptroller of the Currency announced Friday that it fined Citibank $30 million for “violations related to the holding period of other real estate owned.” Under federal banking regulations, there is a two-year limit on banks maintaining possession of a foreclosed property. The rules stipulate that banks can apply for an annual exemption that can push their ownership of a property to as much as five years. But after that, the bank is supposed to sell the property back into the market to prevent available housing inventory from being kept away from would-be homebuyers. And according to the OCC, Citibank violated that rule by holding onto hundreds of foreclosures for longer than the five-year limit. “The OCC found the bank engaged
in repeated violations of the statutory holding period for OREO,” the agency said in a statement. “These violations resulted from the bank’s deficient processes and controls in the identification and monitoring of the OREO holding period. In assessing this civil money penalty, the OCC found the bank failed to meet its commitment to implement corrective actions, resulting in additional violations.” MAN OPENS FIRST LGBTQ CREDIT UNION Myles Meyers is looking to combat LGBTQ at banking institutions as he opens the country’s first LGBTQ credit union. A male-to-female transgender woman was locked out of her bank account in 2018 because a phone operator thought she sounded like a man. A same sex couple was qualified for a mortgage, but a lending institution decided to deny them because gay marriage had just been legalized and the bank wasn’t sure how it was going to work out. These are just a few of the stories that Myles Meyers cited as inspiration to start the country’s first LGBTQ credit union, which is slated to launch next year. Meyers’ effort comes in response to what advocates and researches say is systematic discrimination against LGBTQ clients.■
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Banking New York tackles the topic of employee burnout and how to spot it. The issue also delves into what IBANYS sees for 2020, better empl...
Published on Nov 4, 2019
Banking New York tackles the topic of employee burnout and how to spot it. The issue also delves into what IBANYS sees for 2020, better empl...