When the future doesn’t live up to its hype

Data scientists have concluded at least half of all fintech articles contain the sentence: “Community banks are not known for being on the cutting edge of technology.” I’ve written it many times, and it hurts a little when I do. It happens to be true, but I’m wrong to be glum. Maybe the community of community bankers at large has seen too many tech promises fail to deliver, and so they remain skeptical of the Next New Thing.  [Continue]

Delayed gratification and the future of interest rates

We are taught in business school that interest rates are the expression of the time value of money. Time value of money ultimately boils down to “delayed gratification.” The lower the interest rate, the more we are comfortable delaying gratification in using our money for goods and services for ourselves. To be willing to delay the use of their money, people ask for interest to allow others to utilize their money until a later time. So, in 2021 when we experienced the lowest interest rates in modern financial history, does this sync with our society’s expanding patience for delayed gratification reaching new record highs? [Continue]

What help can your bank provide to financial caregivers?

I have a close friend whose parents both have late stage cancer. In short order, questions about caregivers and safe housing, and how to pay for it, landed in my friend’s lap. She and I spoke while she prepared to temporarily move to her parent’s small Iowa town so she could manage the logistics. I was a bit troubled, therefore, when I stumbled upon a survey that revealed that 31 percent of financial caregivers said their bankers were indifferent to their needs, while 22 percent were disappointed with the support they received from their banks.  [Continue]

Take your M&A communications strategy to the next level

The pandemic turned what was a slow shuffle toward the edge of the technology cliff, into a hard shove right off the edge. Banks had to get nimble, creative, flexible and comfortable with a very different way of operating in a very short time period. And frankly, they did. The continuous push toward leveling up in the digital and technology game is often a driver for a larger decision to find one or more strategic partners, to combine resources — or organizations — to build the best, most competitive and sustainable solution. Enter the acquisition strategy! [Continue]

Spend some extra time with your borrowers’ financials this year

It’s that time of year. Soon your loan customers will be compiling their year-end financial statements and, if their loan agreements dictate, providing copies to your bank for review. This year, like last, might include some extra scrutiny. PPP money combined with a “not quite back to normal” may make for some financial statements that don’t align with your borrowers’ pre-pandemic financials. Are your credit analysts prepared to assess the borrowers’ financial health, given these considerations? [Continue]

Entrepreneurs create banking niche

Will 2022 be the year of the entrepreneur? The Wall Street Journal recently noted that the number of self-employed workers has risen by 500,000 since spring 2020, to about 9.44 million, a 6 percent increase, and 4.54 million new businesses received federal tax ID numbers in the first 10 months of 2021, up 56 percent from the previous year. Some banks will be able to affirm the rise of entrepreneurship by delivering products and services specifically tailored to this unique customer group. [Continue]

Automation can reduce disparities in loan approvals

The Paycheck Protection Program included guidance from the SBA to prioritize loans to businesses owned by socially and economically disadvantaged individuals. Yet an October 2021 research paper, published by a group of New York University professors, found a disparity in the approval of PPP loans to Black-owned businesses. These differences in approval rates are not explained by factors like pre-existing bank relationships or applicant behavior. The paper’s authors suggest that preference-based discrimination occurs — and automation can make lending more equitable.  [Continue]

Climate change beckons bankers

May 1, 2008, was the first time I ever heard a speech on climate change in the context of a banking meeting. The annual “Day with the Superintendent” was taking place in West Des Moines, and former Iowa Governor Tom Vilsack opened a 45-minute speech by declaring “climate change is real.” I think the speech caught a lot of people off guard, as evidenced by the tepid audience applause at the conclusion of his remarks. In 13 years, the climate change discussion has moved to the center of the policymaking agenda. [Continue]

Empathy humanizes each customer service interaction

The pandemic has been the ultimate stress test for banks, catapulting digital transformation to top priority status. For our 2021 TrendWatch report, we polled banks of all sizes about how Covid-19 affected the way they connected with customers. More than 57 percent of respondents said they’d accelerated their digital transformation, channeling consumers to the digital environment for activities they would normally perform in a branch. While technology continually transforms how people engage, the need — and desire — for human connection remains strong. [Continue]

Community bankers recount recent deals

Buying and selling activity in banking was chugging along through February of 2020. The number of sellers was manageable, said David Stieber, an investment banker with Oak Ridge Financial, Minneapolis, and that created “a really good environment to feed bank M&A.” And just as life on earth as we knew it came to a screeching halt in March 2020, so too did bank M&A.   [Continue]