INDEPENDENT REPORT JANUARY/FEBRUARY Building on the past, banking on the future. A PUBLICATION OF INDEPENDENT COMMUNITY BANKERS OF COLORADO STRONGER TOGETHER 3 Stages to Unlock a People‑First Work Culture
©2024 The Independent Community Bankers of Colorado (ICBC)|The newsLINK Group, LLC. All rights reserved. The Independent Report is published six times per year. The information contained is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the ICBC, its board of directors or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service. ICBC encourages a first-print policy, and every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (855) 747-4003. 6732 West Coal Mine Avenue, #640 • Littleton, CO 80123 • 303.832.2000 2023-2024 OFFICERS ICBC CHAIRMAN Randy Younger President & CEO First National Bank Hugo-Limon ICBC PRESIDENT Tom Ogaard President & CEO Native American Bank ICBC PRESIDENT-ELECT Mike Hurst President Del Norte Bank ICBC ICBA STATE DIRECTOR PJ Wharton President & CEO Yampa Valley Bank ICBC STAFF EXECUTIVE DIRECTOR Mike Van Norstrand mvannorstrand@icbcolo.org ADMINISTRATION DIRECTOR TREASURER Maelynn Lewis mlewis@icbcolo.org LEGAL COUNSEL Christian Otteson Partner Otteson Shapiro, LLP LOBBYIST Mary Marchun Founding Partner The Capstone Group 2023-2024 DISTRICT DIRECTORS DISTRICT A Dan Ebert, Vice President, Evergreen National Bank Bruce Hellbaum, President/CEO, RNB State Bank/Front Range State Bank Robert Holt, Senior Vice President, North Valley Bank Jeff Walker, Senior Vice President & CCO, Redstone Bank DISTRICT B Mark Brase, President, Points West Community Bank Tim Croissant, Market President, Bank of Colorado Travis Goeglein, Senior Vice President, First FarmBank Ed Rarick, President/CFO, High Plains Bank DISTRICT C Sean Lening, President, GN Bank Kathryn Perry, Senior Vice President, Park State Bank & Trust Lora Rose, CFO, The State Bank Andrew Trainor, President, Community Banking, InBank DISTRICT D Wade Gebhardt, Corporate President, Mountain Valley Bank John Stelzriede, Market President — Colorado River Region, Alpine Bank Joe Martinez, President & CLO, San Luis Valley Federal Bank Jeris Romeo, Community Bank President — Avon & Eagle, ANB Bank ICBC ADVISORY BOARD MEMBERS Eric Budreau Partner Eide Bailly Jim Hall Managing Director Bond & Specialty Insurance — Financial Institutions, Travelers Bill Mitchell President & CEO Bankers’ Bank of the West Christian Otteson Partner Otteson Shapiro, LLP I C B C 2 | INDEPENDENT REPORT
CONTENTS 04 Support the ICBC’s Associate Members! 06 Stronger Together By Michael Van Norstrand, Executive Director, ICBC 08 Congratulations ICBC! 2023 MarCom Awards Winner 09 FLOURISH Continuing the Climb for Our Communities By Rebeca Romero Rainey, President and CEO, ICBA 10 FROM THE TOP Why Instant Payments Need To Be a 2024 Priority By Derek Williams, ICBA Chairman, President and CEO of Century Bank & Trust 11 Welcome Blendification and Kristopher James Company ICBC’s Newest Associate Members 12 Give Credit Where It’s Due Secondary Market for Whole Loans is Deep and Active By Jim Reber, President and CEO, ICBA Securities, ICBC Preferred Provider and ICBC Associate Member 14 What Are Bankers’ Top 8 Factors in Deciding the Best Core Banking System? By Jason Young, Senior Director of Enterprise Banking, CSI, ICBC Associate Member 16 3 Stages to Unlock a People-First Work Culture By Katie Barnes, Chief People Officer, BHG Financial, ICBC Preferred Provider and ICBC Associate Member 18 Protect Your ATMs From Top Hat Attacks By Mike Burke, Senior Robbery and Crisis Management Consultant, SHAZAM, ICBC Associate Member 19 ICBC Preferred Providers 20 ICBC’s 24-ATM Surcharge-Free Network! 22 From Vision to Velocity The Making of the FedNow Service By Matt Helsing, SVP & Northwest Regional Manager, PCBB, ICBC Associate Member 24 Cutting Costs Through Modernization Fix These Gaps in Your Deposits Strategy By Jason Schwablin, Chief Strategy Officer, Alogent, ICBC Associate Member 26 Independent Community Bankers of Colorado High School Scholarship 27 2024 Conference Calendar 28 Software’s Next Frontier (AI) and How It Blends with Community Banks Generative AI’s Impact on Changing the Role of Software in Your Bank By Dan Bruder, CEO, Co-founder at Blendification, Instructor of Strategy and Entrepreneurship at CU, Boulder, ICBC Associate Member 30 Burnout! Keeping Your Best Employees By Connie West, Gallup Certified Strengths Coach, Regional Vice President, The James Paul Group, ICBC Associate Member 31 Independent Community Bankers of Colorado Endorses BHG Financial, a Top Source for High-Quality Loans 31 ICBC Tour de Colorado 12 16 24 CONNECT Like us on Facebook ICBColo Connect with us ICBColo Follow us on X ICBColo Give us a call 303.832.2000 Follow us on Instagram ICBColo INDEPENDENT REPORT | 3
SUPPORT THE ICBC’S ASSOCIATE MEMBERS! ACCOUNTING / COMPLIANCE Crowe, LLP.....................................................................................303-831-5023 Eide Bailly, LLP..............................................................................303-770-5700 Fortner Bayens, PC.....................................................................303-296-6033 FORVIS, LLP ...................................................................................303-861-4545 Moss Adams, LLP........................................................................... 503-471-1277 Plante Moran ..............................................................................303-740-9400 ADVERTISING / EQUIPMENT / PRINTING / SUPPLIES Kristopher James Company......................................................800-274-9212 Spry. .................................................................................................303-323-4341 CAREER ADVANCEMENT Graduate School of Banking at Colorado...........................800-272-5138 COMPUTER PRODUCTS / CONSULTING Alogent...........................................................................................719-583-8004 CivITas Bank Solutions...............................................................303-291-3700 (A Bankers’ Bank of the West Bancorp Inc. Subsidiary) Cook Solutions Group...............................................................503-260-8562 Federal Protection, Inc.............................................................800-299-5400 *SBS CyberSecurity..................................................................785-594-0503 CONSULTING / HUMAN RESOURCES AND MANAGEMENT/ MARKETING / STRATEGIC PLANNING Bank Strategies, LLC ..................................................................303-291-3700 (A Bankers’ Bank of the West Bancorp Inc. Subsidiary) Bell Bank...........................................................................................701-371-3355 CD Construction Consulting...................................................... 720-701-2122 Expert Business Development ....................................................610-771-2121 *ICI Consulting, Inc.. ................................................................. 316-201-8590 The James Paul Group 877-584-6468 Kasasa ............................................................................................877-342-2557 Piper Sandler & Co.......................................................................415-978-5057 *S&P Global................................................................................434-951-6948 CORRESPONDENT BANKING SERVICE *Bankers’ Bank of the West. .................................................. 303-291-3700 Bell Bank...........................................................................................701-371-3355 Blendification..................................................................................970-274-1723 Citizens Bank Farmington.........................................................505-599-0100 INTRUST Bank...............................................................................800-732-5120 PCBB................................................................................................888-399-1930 TIB — The Independent BankersBank.................................. 972-650-6000 DATA PROCESSING / EFT / ATM / CARD PROCESSING / MERCHANT SERVICES *Bankers’ Bank of the West. .................................................. 303-291-3700 BluePoint ATM Solutions, LLC..................................................540-335-2848 Computer Services, Inc................................................................970-212-7104 Entrust. ........................................................................................... 720-279-3287 *FIS. ................................................................................................513-900-4661 FPS GOLD.........................................................................................801-201-2525 *IBT..................................................................................................512-606-1100 *ICBA Bancard / TCM Bank....................................................800-242-4770 Jack Henry & Associates.............................................................417-235-6652 SHAZAM..........................................................................................515-288-2828 Visa, Inc...........................................................................................415-238-3682 INSURANCE / BENEFIT SERVICES Bank Compensation Consulting............................................303-482-1844 First Insurance Services, Inc.......................................................719-456-2303 *ICBA Reinsurance................................................................... 888-790-6615 NFP Executive Benefits Company.............................................469-252-1037 *Travelers.................................................................................... 720-200-8416 Unitas Financial Services...........................................................800-461-9224 INVESTMENTS / FUNDING AND LENDING PARTNERS B:Side Capital...............................................................................303-657-0010 The Baker Group..........................................................................405-415-7200 BancAlliance.................................................................................. 301-232-5423 *BHG Financial***.....................................................................954-263-6399 The Citizens Bank........................................................................505-599-0145 Colorado Enterprise Fund........................................................303-860-0242 Colorado Housing and Finance Authority...........................303-297-7329 Crescent Mortgage....................................................................970-278-9328 D.A. Davidson.............................................................................303-764-6000 FHLBank Topeka — Denver Office............................................720-212-9873 First Bankers’ Banc Securities, Inc. (FBBS)...............................720-709-7613 Gill Capital Partners...................................................................303-296-6260 Holman Capital...........................................................................949-981-0237 *ICBA Mortgage........................................................................800-253-5356 *ICBA Securities........................................................................800-422-6442 IntraFi Network............................................................................303-706-9265 Northland Securities, Inc...........................................................303-801-3380 Olsen Palmer, LLC.......................................................................202-803-2620 Performance Trust..........................................................................312-521-1224 West Gate Bank Mortgage........................................................402-434-4116 LAW FIRMS Arnold & Porter...........................................................................303-863-1000 Godfrey Law Group, LLC..........................................................303-802-6336 Hoffman Nies Dave & Meyer, LLP............................................303-860-7140 Lewis Roca, LLP**......................................................................303-623-9000 Markus Williams Young & Hunsicker, LLC...........................303-830-0800 Moye White, LLP..........................................................................303-292-2900 Otteson Shapiro, LLP (IBC Counsel)......................................720-488-0220 Polsinelli......................................................................................... 303-572-9300 Spencer Fane, LLP......................................................................303-839-3838 Spierer Woodard Corbalis Goldberg.....................................303-792-3456 Stinson, LLP...................................................................................303-376-8400 LOAN REVIEW SERVICES Eide Bailly, LLP..............................................................................303-770-5700 Fortner Bayens, PC.....................................................................303-296-6033 ICBC LOBBYING AND PUBLIC RELATIONS The Capstone Group (ICBC Lobbyists)................................303-860-0555 *ICBC Preferred Providers **Silver Associate Member ***Gold Associate Member 4 | INDEPENDENT REPORT
♥ Bankers’ Bank of the West bbwest.com ▪ 800-873-4722 offices in Denver and Lincoln Member FDIC ▪ Equal Housing Lender we champion community banking Bank Stock Loans | Loan Participations | Cash Management | ATM/Debit Proud Legacy Sponsor of ICBC and supporter of Colorado community banks for over 40 years!
STRONGER TOGETHER Michael Van Norstrand Executive Director, ICBA Last year marked ICBC’s 50th anniversary, and I am pleased to report that the association is fantastically positioned for its next half-century! Financially, ICBC’s balance sheet eclipses most non-profit industry standards when it comes to fiscal diversity, security and strength. The board and management are committed to making prudent decisions to ensure that financial strength endures. On the membership front, ICBC continues to welcome new member banks and associate members even as the industry continues to consolidate. Our members recognize the value of ICBC’s mission and work and are committed to aligning their brand with ICBC. We take our responsibilities towards our members seriously and appreciate the trust they have placed in our organization. ICBC also continues to earn respect, establish credibility and demonstrate integrity through its collaboration and coalition-building with various industry leaders throughout the state. We have worked hard on multiple fronts to ensure that the issues facing community banks and small businesses are heard in the halls of the Colorado legislature, state governmental agencies and in Washington, D.C. Looking ahead, ICBC is facing some significant challenges in the Colorado 2024 legislative session. We will be vigilantly monitoring any proposed bills that may affect housing, labor and employment, taxation, energy and other areas of concern to small businesses. Our primary concern, however, is a bill that would allow credit unions to buy the assets of banks. This expected bill gained momentum in the wake of the Division of Banking Sunset Review Report, which is issued every 10 years by the Colorado Office of Policy, Research and Regulatory Reform (COPRR), an independent division of the Department of Regulatory Agencies (DORA). During the report process, ICBC met with COPRR to express concerns over potential recommendations and argued that the reviews should be limited to technical and ministerial matters, not used as governmental advocacy for substantial or significant changes that fundamentally transform the way industries compete and do business. Such proposals should go through the legislative process, where they can be broadly analyzed and examined to determine the potential ramifications to consumers and the state. 6 | INDEPENDENT REPORT
Despite vocalizing our concerns, the authors of the report, released in October, not only recommended the expansion of credit union membership and business lines, but that credit unions should have the right to buy bank assets. This was based, in part, on a factual error in the report, specifically that credit unions pay state income taxes (they do not), and therefore, there would be no tax loss to the state. ICBC protested to DORA and the Governor’s Office, and the report was recently amended to delete the assertion that credit unions pay state income taxes. But the finding that these purchases would have little fiscal impact on the state was not deleted, creating what appears to be a state-supported talking point for credit union advocates. Obviously, ICBC will vigorously oppose this latest mission creep by the credit union industry. We will not only focus on the tax impacts the bill would have on the state, but also the impacts on small businesses, agricultural lending and philanthropy that will dissipate when credit unions acquire the assets of banks — especially community banks. It might be a new year, but it sure seems like déjà vu all over again. INDEPENDENT REPORT | 7
Congratulat ons ICBC! To view this year’s winners, please scan the QR code. https://enter.amcpros.com/ marcom/winners/ 2023 MarCom Awards Winner Since its inception in 2004, MarCom Awards has evolved into one of the largest, most-respected creative competitions in the world. This year, there were over 6,000 entries from throughout the United States, Canada, and over 43 other countries in the competition. MarCom Awards is an international creative competition that recognizes outstanding achievements by marketing and communication professionals and recognizes the creativity, hard work, and generosity of industry professionals. MarCom’s Gold Award is presented to those entries judged to be among the most outstanding entries in the competition. Gold Winners are recognized for their excellence in terms of quality, creativity and resourcefulness. We are very pleased to announce that the INDEPENDENT Report was awarded the MarCom Gold for print media. 8 | INDEPENDENT REPORT
FLOURISH I recently came across a quote from the Pulitzer Prize-winning poet Theodore Roethke: “Over every mountain, there is a path, although it may not be seen from the valley.” As an avid hiker myself, it resonated because as you look up toward the climb ahead, you may not see the route, but you know it’s there — not unlike the situation we face in community banking today. As we enter 2024, we see a steep climb amid so many headwinds, including volatile interest rate and supervisory environments, emerging regulatory reforms, constant pressure on margins and more. Yet, with every step on the journey, we just get stronger. As we look back on 2023, we felt the impact of numerous challenges — failures of large, risky banks, fluctuating interest rates, increased competition and more — and we not only survived but thrived. We championed new solutions like FedNow. We successfully advocated for the vast majority of community banks to be exempted from the FDIC’s proposed special assessment. We expanded our innovation programs, creating a center for community bank innovation. These previous experiences have positioned our strength, and today, as we climb toward that next peak, we’re honing new skills. Each step is an investment in the future to further fuel the community banking model. Our national campaign goes hand in hand with this work. By telling the compelling stories of the ways in which you make a difference, we’ll continue to bolster the work you do. In advocacy, education and innovation, we are working alongside you to power your potential and help you surmount the trials you face along the journey. Continuing the Climb for Our Communities IN ADVOCACY, EDUCATION AND INNOVATION, WE ARE WORKING ALONGSIDE YOU TO POWER YOUR POTENTIAL AND HELP YOU SURMOUNT THE TRIALS YOU FACE ALONG THE JOURNEY. By Rebeca Romero Rainey President and CEO, ICBA And while this climb may be difficult, it will lead to new opportunities. As I reflect on my career, I realize some of the greatest learning moments were in the most challenging situations. That’s how I know community banks will find a way as an industry, as a network of community bankers, to find the right next step to provide for our communities. Hikers will stand at the bottom of the peak and realize it looks a lot higher than it did when they were farther away, but they made the climb. As we take our first steps into 2024, it’s that same “bring it on” mentality that will continue to bring us strength and guide us. We’re ready to see what lies ahead, embrace the challenge and create forward momentum. Because while the path from the valley to the summit may be circuitous, community bankers will always continue the climb for the good of their customers and communities. INDEPENDENT REPORT | 9
FROM THE TOP CONNECT WITH DEREK ON X @DEREKBWILLIAMS As we kick off the new year, our budgets have been set and our plans developed. But you know what they say about the best-laid plans: They change. Fortunately, community banks thrive on their ability to respond to market drivers, and in 2024, those demands point to instant payments. We’ve been monitoring developments with FedNow since it was announced. When it launched last July, there were only 35 participating banks, but in a few short months, more than 100 institutions were on board. And demand for the solution is rising: An October study from the Association for Financial Professionals revealed that over 75% of businesses plan to use real-time payments in the next five years. Clearly, our customers expect instant payments, and this growing demand is the reason FedNow needs to be at the forefront of our project lists. In fact, we have already shifted plans at my bank, moving FedNow up as a priority. It’s time to start dipping a toe in the water and be open to learning to get comfortable with the product so that when we’re ready to send, we have a good understanding of how it’s going to work. Even so, I had concerns about adding FedNow to an ever-growing technology list and how it may interfere with the other projects we have in the works, but two key points reassured me: 1. We don’t have to implement overnight. We can begin a formal exploration, determine the right partner to enable us and then get into full-scale implementation as timing fits. Why Instant Payments Need To Be a 2024 Priority QUOTE OF THE MONTH “A leader takes people where they want to go. A great leader takes people where they don’t necessarily want to go, but ought to be.” — Rosalynn Carter, former First Lady, writer and activist 2. In speaking to colleagues who’ve already made the leap to FedNow, I’ve consistently been told that onboarding was far simpler than they thought it would be. Early adopters are saying, “Don’t be scared; it’s not that tough.” Those points support decision-making for all of us. Once community banks get comfortable with a technology, they jump in to embrace what it offers — and ICBA and ICBA Payments are our partners on that journey. From working with core providers to advocate for a seamless implementation to offering solutions that can augment and support FedNow’s offerings, both ICBA and ICBA Payments stand ready to help community banks make the jump. Because — and make no mistake about it — it’s not if, but when, you will introduce FedNow. In our high-tech, high-touch model, being able to compete on instant payments is going to be a big part of high tech. We have to get involved to stay competitive. FedNow truly is community banks’ best chance to flourish in the payments space. By Derek Williams ICBA Chairman, President and CEO of Century Bank & Trust 10 | INDEPENDENT REPORT
SOCIAL ENGINEERING NETWORK MONITORING BY COMMUNITY BANKERS FORCOMMUNITY BANKS CivITas Bank Solutions was born from the needs voiced by community banks for affordable real-world technology and information security solutions. Anne Benigsen President David Philippi VP - Business Development Chris Tuzeneu VP – Information Security PENETRATION TESTING VULNERABILITY SCANS info@acivitas.com www.acivitas.com
GIVE CREDIT WHERE IT’S DUE Secondary Market for Whole Loans is Deep and Active By Jim Reber President and CEO, ICBA Securities, ICBC Preferred Provider and ICBC Associate Member Anecdotally and empirically, community bank lending has been relatively productive during this multi-year rate cycle. Many conversations I’ve had with bankers in all regions of the country sound alike: Loan demand has been healthy, and even better, credit quality has held up very well even though rates hit a 15-year high toward the end of the year. It sure seems like the industry learned its lessons from the last big downturn just prior to the Great Recession. Through September, lending activity by community banks had improved about 5% year-over-year, and reserves had increased only about half as much. Virtually all loan sectors showed growth, especially consumer loans. The resilience of the domestic economy has been on display through the appetite for credit, although the aggregate rate hikes may be finally taking their toll. The Federal Reserve’s quarterly senior loan officer survey released in October indicated tightening credit standards, higher borrowing spreads and declining demand for C&I, commercial and residential mortgages, and consumer loans. That pretty much runs the gamut. SHAKEOUT COMING? As 2024 gets underway, the lending market is perhaps at a crossroads. To be sure, loan demand is never uniform across the country, and various regions could see differing levels of borrower health and availability of credit. It’s been well documented that mortgage rates are more than double the average homeowner’s outstanding cost of borrowing, which was around 3.70% late in 2023. It may, therefore, be time to revisit the robust secondary market for performing, highquality, non-conforming loans. The conversation with a potential seller of whole loans often begins with a concentration issue. Perhaps a bank’s portfolio has too much longer-duration fixed rate credits. Or maybe it’s exceeding policy limits as it relates to sector weight in consumers or commercial real estate. Or, possibly, a given loan production office has created too many loans in a given geographical area. If so, analysts can help your team identify saleable blocks of your loan portfolio and estimates of secondary market prices. It’s also possible to negotiate the servicing of these blocks as either retained or released by the seller. 12 | INDEPENDENT REPORT
TWO-WAY STREET At the same time, there are all sorts of depository institutions that are looking to add loans. The root of their inquiries is that the desired mix of volume and quality can’t be filled internally. Again, it’s possible that concentrations are part of the dialog, and perhaps a given buyer is looking to add to a sector (for example, residential mortgages) where there is little opportunity in the local footprint. The matching up of sellers’ supply and buyers’ demand is what makes for the deep secondary market, and middlemen, such as ICBA Securities’ exclusive broker Stifel, can act as agents to connect the parties. These agents can assist in arriving at fair values for various loan blocks based on empirical data such FICO scores, risk-free rates, average lives and collateral. They also should have yield spread information on other, similarly structured recent whole loan transactions. Not least, they can assist with the sharing of information on the potential purchase/sale of given loans, including a sampling of loan files for underwriting and due diligence. BALLPARK ESTIMATES Of course, buyers of others’ credits would not have ever materialized if there weren’t adequate risk-adjusted returns. It’s difficult to estimate a range of incremental returns over the treasury curve for a given block of loans, as clearly, a portfolio will, by definition, not be homogeneous. However, it’s logical that the shorter the fixed-rate period (either to an adjustable reset date, a balloon date or maturity), the LOAN DEMAND HAS BEEN HEALTHY, AND, EVEN BETTER, CREDIT QUALITY HAS HELD UP VERY WELL EVEN THOUGH RATES HIT A 15-YEAR HIGH TOWARD THE END OF THE YEAR. lower required yield. Collateral will also factor in the yields; singlefamily residences have lower risk levels than do autos or commercial properties. Nevertheless, it’s not uncommon for a loan package to trade at 250 to 500 basis points (2.5% to 5%) over the curve. That being the case, there are several strategies that can be employed with whole loans as an investment. One is a leverage, in which wholesale funding is used to finance the purchase. Blocks of loans could produce net spreads over the related borrowings of 2% to 3.5%, which is a multiple of available spreads from investment securities. Also, buying loan packages with proceeds from a sale of underwater bonds can greatly shorten the “earnback” period, perhaps to within 12 months. There are more nuances to whole loan trading than we can adequately cover in this space. However, given that bank lending could be in a state of flux as the economy potentially slows, opportunities could arise for both buyers and sellers to benefit from these economic machinations. Finally, the start of 2024 gives whole loan market participants a full calendar year to realize and recognize the effects of the transaction. Jim Reber (jreber@icbasecurities.com) is president and CEO of ICBA Securities, ICBA’s institutional, fixed-income broker-dealer for community banks. INDEPENDENT REPORT | 13
WHAT ARE BANKERS’ TOP 8 FACTORS IN DECIDING THE BEST CORE BANKING SYSTEM? By Jason Young Senior Director of Enterprise Banking, CSI, ICBC Associate Member As we begin 2024, many institutions are reflecting on their goals and plans for the year ahead. And some may even begin evaluating whether to change core providers as current contracts near expiration. But what should bankers consider when deciding upon the best core bank system? We used findings from surveys, industry research reports and interviews from recent years to develop eight factors that banks should keep in mind when deciding on the right core banking platform. TOP CONSIDERATIONS FOR EVALUATING A CORE PLATFORM Factors for switching technologies include cost, satisfaction with their existing technology suites or a cultural mismatch with their provider. But since a conversion often overhauls business processes and takes a considerate monetary and time investment, deciding on the right partner requires a great deal of consideration and discussion with key stakeholders at the bank. Here are eight factors that should play a part in bankers’ evaluation of core platforms: 1. Expected Comprehensive Functionality Bankers favor a core platform approach to technology primarily because it eliminates dealing with multiple vendors and disjointed experiences. So, it’s hardly surprising that product suites and functionality top the list of essentials as bankers begin searching for a new core. Core contracts can last for decades, so banks must consider whether the vendor’s technology will successfully carry them into the future and grow alongside them. A core banking platform must offer comprehensive functionalities to support various banking operations, including customer onboarding, account management, deposits, loans, payments and reporting. This also includes integrating digital banking solutions to rival big banks and digital experiences elsewhere. 2. Whether a Core Will Maximize Return on Investment Banks evaluate the cost-effectiveness of a core banking platform by considering factors such as the initial implementation investment, ongoing support costs and potential customization or integration expenses. The best deals with new technologies often originate from the core vendor or their existing partners, as there are fewer implementation and integration steps. Although customer demands often drive technological priorities, most investments ultimately seek to save money one way or another. For instance, responsive cloud-based architecture can eliminate some software and hardware expenditures. Built-in 14 | INDEPENDENT REPORT
efficiencies like streamlined onboarding can also bolster the bottom line by helping customers open accounts and spend money from them faster. 3. Core Banking Platform Customization and Ease of Use Bankers look for banking functions to reliably fit together and interact cohesively. The core platform should be easily navigable with search functionality, easy-to-decipher data, readily available tutorials and reliable service representatives who assist with the platform as needed. On the vendor side, a thoughtful adherence to UX design principles can go a long way. Bankers often praise platforms with an aesthetic appeal, a natural hierarchy, straightforward language and accessibility. Overall, they look for consistency throughout the platform to create a coherent, straightforward experience when serving customers or accessing their data. 4. The Reliability and Stability of the Core Platform Given the stakes of employee demands and increasing competition, banks require a core banking platform that is reliable and stable. It should be capable of handling high transaction volumes and processing requests accurately and efficiently while maintaining uninterrupted service availability. If there are service interruptions, those support tickets should be resolved as promptly and effectively as possible. For that reason, many banks ask questions in the determination phase about how many support tickets a technology logs in a given week and how long it takes to resolve them. Further, a solid platform should have stringent security measures, including data encryption, access controls, audit trails and compliance with regulatory standards. 5. The Quality and Accessibility of Bank Data and Analytics Easy access to core data represents a massive advantage for a growing bank. Bank data and analytics offer insight into customer behaviors, performance indicators and regulatory reporting requirements. Accessing and querying core data should easily enable banks to identify opportunities for growth and relationship extension. As such, these banks look for robust reporting tools, account analysis and data-driven insight into customer profitability. Customer relationship management (CRM) is one such data source that offers efficiencies, as it enables bankers to track behaviors and transactions across the system on the customer level. Many banks also look for insight into overall profitability and net interest margin, as well as narrow performance analysis of branches and officers. 6. The Core’s Scalability and Flexibility Most institutions seek out a core platform that supports growth and can scale accordingly. This includes accommodating increased transaction volumes, additional branches and new products or services. While there are similarities across the board, every bank also has unique business processes and customer needs. Extensive API catalogs and support for third-party technology integrations assist in that pursuit and enable institutions to stay adaptable, even if the core provider doesn’t have the exact solution the institution needs. The resulting agility ensures that banks can quickly respond to market demands, regulatory requirements and technological advancements. 7. Tight Integration of All Banking Systems A cohesive core banking platform allows for easy data transfer that reduces expenses, opens accounts faster and enables the ability to launch new products more affordably. It also improves the overall user experience by making each component piece — even if it was added later or by a different vendor — fit into the technological puzzle without feeling tacked on or behaving like a disparate, siloed system. The standard of integration relates closely to the user experience, as it can help eliminate redundant processes and offer a more seamless feel. Tight integration also encompasses the digital experience — meaning the bank’s digital experience on a phone should mirror that on a laptop or tablet. 8. Core Vendor Support and Expertise Finally, the reputation and service offered by the core banking platform vendor are vital considerations for banks. While system functionality is vital in vetting the provider, the decision often comes down to which vendor will make the best partner, both in innovation strategy and culture. To understand whether the technology provider is a good fit, bankers often assess their industry reputations, the quality of interactions and how they answer questions. It’s also worthwhile for many to follow up with as many references as possible and ask other bankers’ opinions at networking events. Bankers also emphasize the importance of reliable technological implementations. They expect products to be fully ready for use, avoiding delays and ensuring a successful rollout that meets the needs of their customer base. Banks also require reliable assistance and dedicated personnel who can address their concerns reliably and proactively. SEARCHING FOR THE RIGHT CORE BANKING PLATFORM By carefully evaluating core banking technology, banks can empower themselves to thrive in the digital age while delivering exceptional customer service and creating a lasting partnership with their technology provider. Check out our “Definitive Guide to a Modern Core Banking Partnership” by scanning the QR code for a deep dive into the topic. https://www.csiweb.com/what-toknow/content-hub/whitepapers/ definitive-guide-modern-core-bankingpartnership/ INDEPENDENT REPORT | 15
3 STAGES TO UNLOCK A PEOPLE-FIRST WORK CULTURE We all know how hard it is to attract and retain top talent in the competitive community bank market. The challenge is even more acute today, considering how macroeconomic conditions have changed during the past several months. As a Chief People Officer, I have seen the value of creating and maintaining an agile, people-first work culture. Its daily contribution to operational effectiveness is enormous, serving as a stabilizing and steady force even in the face of external obstacles. You might wonder, “How will investing in my bank’s culture help it achieve growth and attract top talent?” As a response, this article will present industry insights and specific steps toward building an agile, people-first culture that could give your organization a competitive edge. THE HIGH COST OF EMPLOYEE DISSATISFACTION The cost of overlooking employee engagement and turnover can be significant. According to Gallup, the cost of replacing a disengaged individual employee can range from one-half to two times the employee’s annual salary.1 Meanwhile, companies with the most engaged employees were 22% more profitable than those with the least.2 Signs of “disengagement” are as you might expect. They can include a slow working tempo, lack of interest in work, being easily distracted and minimal output. Additionally, disengaged employees often possess negative attitudes about their work and organization, which can hurt the productivity and morale of your other employees — not to mention your bottom line. THREE STAGES OF CULTURE DEVELOPMENT To avoid the cost and hassle of recruiting new talent while maintaining an excellent relationship with your current employees, consider these three key points to create an agile, people-first company culture: Know Your Purpose, Know Your People and Build Your Culture. 1. Know Your Purpose Define your bank’s culture so that it becomes your “North Star.” Start by establishing new core values or refreshing existing ones. Conduct a thorough analysis to identify what values you want your employees to demonstrate within the context of what is most important to your bank and to your community. This approach can provide your team with a specific direction in which to anchor expectations and an actionable roadmap for employee behaviors. It is also important to recognize and acknowledge appropriate behaviors. It will help reinforce and speed up the adoption of the culture you hope to build. Establishing a system of core values also helps serve as a guideline for the type of individual you want to hire and who you want to promote. 2. Know Your People The needs of employees constantly evolve, especially during major macroeconomic events such as a recession or the recent pandemic. There are easy ways to regularly gauge your employees’ moods and attitudes. For example, a comprehensive semiannual employee survey can provide feedback about what is working, what is not and what can be done better. This information can help ensure your culture is embraced and allows you to quickly address any unfavorable trends that may emerge. Taking the time to build relationships with your employees and getting to know them on a personal level can also yield beneficial cultural impacts. Authentic connections between individual contributors and their senior leaders can forge a powerful “in it together” perspective that fuels employee satisfaction and spirit. Employees who feel respected, heard and seen can become By Katie Barnes Chief People Officer, BHG Financial, ICBC Preferred Provider and ICBC Associate Member 16 | INDEPENDENT REPORT
personal ambassadors of your bank’s culture within your institution and community. 3. Build Your Culture Culture can grow organically, but it requires action to blossom. Offering programs, perks and experiences that matter to your employees is an essential component of successful engagement. There is no shortage of options, even if your budget and resources are limited. All it takes is a bit of research, a little creativity and some thoughtful planning. To help demonstrate specific examples of “taking action,” here are several recent programs and initiatives that BHG Financial has introduced to enhance its work culture. These examples are just for illustration and to spark your own imagination. However, it is worth noting that the development of these programs was informed in many cases by our employees’ feedback in surveys and other engagements — reinforcing the value of “knowing your people.” Recent BHG Financial programs: • Transitioned to a permanent hybrid workforce with employees across the country. • Launched BHG Pulse, a program focused on the physical, emotional, social, financial and occupational well-being of our employees. • Introduced Wellness Weekends. All employees get one Friday off each month to refresh and recharge. It has quickly become our team’s favorite benefit while maintaining and enhancing productivity. • Created “Women in Tech,” our first Employee Resource Group, which provides training, connections and support to women within the tech industry. • Introduced BHG Together, a diversity, equity and inclusion program that provides monthly support, celebration and training. • Offered BHG LEAD, which provides employees with actionable steps they can take to become better leaders and grow their BHG careers. CONCLUDING THOUGHTS Building your institution’s culture takes time. There may be highs and lows, but if you prioritize listening to and engaging within your team, you will persevere. We call this principle “Winning Together,” with all oars rowing the same boat in the same direction. It has allowed BHG to create an award-winning culture and achieve continued growth. Katie Barnes is the Chief People Officer at BHG Financial, a leading provider of financial solutions for professionals, businesses and banks. In her role, she oversees the strategy and direction of BHG’s People Development (PD) department, leading various programs such as Talent Acquisition, Talent Management, Employee Experience and Compensation. Sources 1. https://www.gallup.com/workplace/247391/fixable-problem-costs-businessestrillion.aspx 2. https://www.wellable.co/blog/employee-engagement-statistics-you-shouldknow/#:~:text=Companies%20with%20a%20highly%20engaged,have%20 higher%20customer%20retention%20rates INDEPENDENT REPORT | 17
PROTECT YOUR ATMS FROM TOP HAT ATTACKS ATMs have become an attack vector for fraudsters who deploy a number of tactics to access the machines. Criminals compromise ATMs by installing skimming devices, executing hook and chain attacks and orchestrating “top hat” attacks. Recently, we’ve seen an uptick in top hat attacks, where persistent fraudsters work to gain access to the upper enclosure (top hat) of machines. TIPS TO LAYERED TOP HAT SECURITY As fraudsters continue to hone their tactics and identify top hat weaknesses, here are some tips to protect your machines from top hat attacks: • Control ATM access. Have a policy and procedure in place to document the names of technicians who are approved to service your ATMs, along with their working hours. Including photos of approved technicians with your documentation may be helpful, as there have been instances of criminals using fake identification to gain access. Additionally, set up a system to record where and when approved technicians access your ATMs. Once a system is in place, share the names of those who are allowed to access your ATMs with staff. This is especially critical for ATMs with exposed upper enclosures in remote locations, including convenience stores, malls and hotels. • Rekey the top hat lock. Make it a practice to replace top hat keys to prevent readily available universal keys from opening ATMs. • Alarm the top hat. Add an alarm system that sends your financial institution and law enforcement notification anytime an unauthorized person attempts to break into one of your machines. • Video surveillance. To catch a criminal, you need proof. Video security systems record and store video with time stamps. If a criminal attempts to attack one of your ATMs, having visual evidence of when and where the attack took place will assist law enforcement in arresting and prosecuting the individuals responsible. There’s no single solution to protect your ATMs from criminals. We encourage you to take a multi-layered approach and routinely review your policies and procedures to account for emerging security risks. Mike Burke is a veteran law enforcement professional with experience in criminal justice instruction, homeland security and fraud investigation. He guides SHAZAM clients to enhance their security measures and ensure regulatory compliance. SHAZAM, Inc. and ITS, Inc. provide this article for general informational purposes only. Our blog may be shared by a direct link wherein the content remains as originally presented and has not been altered. SHAZAM, Inc. and ITS, Inc. assume no responsibility for errors or omissions in the contents on the blog. By using this blog, reader agrees that the information published does not constitute nor is a substitute for legal advice, which should only be sought from a qualified, licensed attorney. By Mike Burke Senior Robbery and Crisis Management Consultant, SHAZAM, ICBC Associate Member 18 | INDEPENDENT REPORT
ICBC PREFERRED PROVIDERS ICBC Preferred Providers are selected by bankers just like you, so give them special consideration when considering their proposals for your bank! To learn more about ICBC’s Preferred Providers contact the ICBC at (303) 832-2000. Please note: ICBC endorses the listed companies but not all products offered by the company. Contact: Scott Wintenburg | swintenburg@bbwest.com | (303) 291-3700 or (800) 601-8630 Merchant services from Bankers’ Bank of the West help you grow customer relationships with mobile payments technology, competitive unbundled pricing, efficient approvals and startups, responsive support and training. Contact: Keith Gruebele | kgruebele@bhginc.com | (954) 263-6399 Creator of the largest community bank loan network in the country. ICBC members can access the BHG Loan Hub, a secure, state-of-art loan delivery platform and the number-one source for professional loans. Contact: Mara Spears | mara.spears@fisglobal.com | (813) 205-9488 Turn your card program into a growth opportunity. With 40 years in payments and card processing, we can quickly relieve you of the regulation and compliance burden. In the end, working with FIS is a low risk, high return proposition because of our payments expertise and proven results. FIS drives the ICBC’s 24 location ATM surcharge-free network. Contact: Phil Layher | phil.layher@ibtapps.com | (512) 616-1188 IBT Apps® is an empowering core partner to community banks nationwide, offering end-to-end core and digital banking solutions that meet today’s customer demands. Their adaptable i2Suite banking system enables your bank to streamline operations, control costs and mitigate risks. Transform your bank with the power of one total solution. Contact: icba.org/solutions | (866) 843-4222 The ICBC supports and recommends the following products and services supplied by our national association, the ICBA: ICBA Bankcard and TCM Bank, N.A.; ICBA Compliance & Risk Management; ICBA Mortgage; ICBA Reinsurance; and ICBA Securities. Contact: Mike Hatch | mike.hatch@ici-consulting.com | (316) 201-8590 Since 1994, ICI Consulting has helped banks and credit unions to assess, cost justify, evaluate, and convert core processing, digital banking, EFT, lending, document imaging, CRM and branch solutions. Contact: Robb Nielsen | robb.nielsen@sbscyber.com | (605) 251-7375 SBS is your cybersecurity partner. Our offerings include: TRACTM – Cybersecurity risk management software; CyberRISKTM – Automated FFIEC cybersecurity risk assessment software; IT and Network Security Audits; Consulting Services; Full Service Vendor Management; Role-Based Certifications; Vulnerability Assessments; Penetration Testing and More! Contact: Joe Valdez | joseph.valdez@spglobal.com | (213) 549-2281 S&P Global combines exclusive analysis and in-depth data in real time for the banking, financial services and insurance industries. From bank branch data and government assistance programs to executive compensation and league tables, S&P is the final word in business intelligence on financial institutions. Contact: Brandon Tate | btate2@travelers.com | (720) 200-8465 Offering a wide range of customized insurance protection, Travelers SelectOne+® for financial institutions is designed to respond to the most recent trends in banking. INDEPENDENT REPORT | 19
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