PUB. 12 2023 ISSUE 4 CommunityBanker The 46th ANNUAL CONVENTION & TRADE SHOW
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© 2023 Virginia Association of Community Banks | The newsLINK Group, LLC. All rights reserved. The Community Banker is published four times each year by The newsLINK Group, LLC for the Virginia Association of Community Banks and is the official publication for this association. The information contained in this publication is intended to provide general information for review and consideration. 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 as to your specific circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the Virginia Association of Community Banks, 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 advertised. The Community Banker is a collective work, and as such, some articles are submitted by authors who are independent of the Virginia Association of Community Banks. While The Community Banker encourages a first-print policy, in cases where this is not possible, 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. CONTENTS 10 17 VACB Board of Directors CHAIR Joseph R. Witt, CPA The Old Point National Bank Hampton CHAIR-ELECT Tara Y. Harrison Virginia National Bank Charlottesville VICE CHAIR Lisa E. Kilgour MainStreet Bank Fairfax IMMEDIATE PAST CHAIRMAN Jay A. Stafford Benchmark Community Bank Kenbridge ICBA VIRGINIA DELEGATE Jeff W. Dick MainStreet Bank Fairfax PRESIDENT & CEO Steven C. Yeakel, CAE VACB Richmond VACB STAFF Katharine C. Garner, CMP Vice President Education & Communications Kelli C. Mallinger Member Services Administrator VACB DIRECTORS CLASS OF 2024 Chris R. Snodgrass The Bank of Marion Marion Blake M. Edwards, Jr. Skyline National Bank Independence CLASS OF 2025 Dabney T.P. Gilliam, Jr. The Bank of Charlotte County Phoenix CLASS OF 2026 LeAnne R. Emert Benchmark Community Bank Kenbridge Cetric A. Gayles Citizens Bank & Trust Blackstone Aaron Green Pendleton Community Bank Harrisonburg James E. Hendricks Village Bank Midlothian Robert J. Hobbs CornerStone Bank Lexington Paul M. Mylum National Bank Roanoke Thomas L. Rasey, Jr. The Farmers Bank of Appomattox Appomattox Matthew H. Steilberg C&F Bank Toano 4 President’s Column The Battle Continues — We’re Strong Together! By Steven C. Yeakel, CAE, VACB President and CEO 5 Chairman’s Message Our Unified Voice Matters By Joe Witt, VACB Chair 6 Open APIs Benefits, Development and What to Look for in Your Community Bank’s Hosting Provider By Daren Fankhauser, SVP, Chief Development Officer & Chief Architect, Data Center, Inc. 10 VACB 46th Annual Convention Coverage 14 VACB 46th Annual Convention & Trade Show Exhibit Hall Prize Winners 15 We Appreciate Our Convention Sponsors! 16 Save the Date VACB 47th Annual Convention & Trade Show 17 Overdrafts Navigating the Evolving Regulatory Landscape By Cheryl Lawson, EVP — Compliance Review, ADVANTAGE, powered by JMFA 20 Get the Most Value Out of Your Vendors Top Questions to Ask When Vetting Potential Partners By David Hamrick, Teslar Software 22 Thoughts From VACB’s NextGen Scholarship Recipient By Michael Lee, AVP, Senior Credit Analyst, Virginia Partners Bank/Maryland Partners Bank (a Division of Virginia Partners Bank) 3 The CommunityBanker
President’s Column Steven Yeakel, CAE VACB President and CEO THE BATTLE CONTINUES — WE’RE STRONG TOGETHER! It has been most heartening to see our leadership bankers leaning into the coming year. Not only did we elect a great leadership team and re-elect a great group of directors, we also expanded the board and elected five new bankers to join. The headwinds remain on several fronts, but our resolve and enthusiasm are rising to prevail. How do we explain this surge in engagement? It happens because community bankers understand that they have a separate identity from other banks. It hasn’t always been so, but over the last 15 years or so, brick by brick, year by year, issue by issue, you have stood strong and spoken out, achieving key victories on critical issues that build the community bank brand and add to the viability of the community bank model. We need to look no further back than November 16 for a perfect example of community bank clout in action. On that day, the FDIC approved a special assessment in the wake of the failures of Silicon Valley and Signature Banks that exempted community banks under $5 billion in assets. The savings for community banks and the defense of the community bank model made it worth the considerable effort exerted by the ICBA, VACB and VACB member banks to make the exemption happen. ICBA rallied support on Capitol Hill and among regulators for exempting community banks. VACB was quick to follow suit with the Virginia delegation. VACB member banks submitted numerous comment letters in support of the exemption. No other bank trade association in Washington, D.C., or Virginia supported this important effort. It’s a winning combination: ICBA, VACB and Virginia’s community banks. Of course, the battle rages on in Washington, D.C., and in Richmond. On Capitol Hill and in the regulatory agencies, we are compelled to “play a lot of defense.” Our effort to stop the implementation of data reporting on small business loans, known as “1071 reporting,” or at least to narrow the scope of this broad, risky and costly requirement, will take a major effort, despite injunctions against it and progress on legislation to halt its implementation. ICBA is now providing resources that enable your business customers to join you; please take advantage of this opportunity to amplify our voice. A long list of issues, legislative and regulatory, will keep us more than busy. Please respond when you see our alerts. December always holds a number of “Lame Duck Session” surprises, and there is usually little time to act on them. In Richmond, the 2023 General Assembly elections left us with 18 new Senators and 34 new Delegates. That’s almost half of the State Senate and more than onethird of the House of Delegates! Please do all you can to increase your contact with your local General Assembly members. If you know them already, invite them to the bank for a meet-and-greet and a short conversation about key issues. If you don’t know them, seek them out at a public function ASAP, introduce yourself and invite them into a conversation about our community banking in Virginia. Offer yourself as a resource for any financial legislation the member may have questions about. I look forward to 2024 and am most grateful for the many contributions you have made toward the success of our association in 2023. Our work together on advocacy is the cornerstone of our success, and I am thankful that our collaboration is making a difference in Virginia. May it ever be so! 4 The CommunityBanker
Chairman’s Message Joe Witt, CPA VACB Chair OUR UNIFIED VOICE MATTERS Fellow Community Bankers, It was great to see everyone at the VACB Annual Convention in Roanoke last October. Being in the presence of many dedicated Virginia Community Bankers was humbling as I heard many stories about the great things each of you are doing for our communities every day. Thank you for supporting your local community, providing financial resources and expertise and enriching the lives of your customers. I would also like to thank Jay Stafford, the Executive Committee and the Board for an outstanding job this past year. Jay directed our team through a tough leadership process, providing a vision for the years ahead. As I stated at the convention dinner on Monday evening, I have three broad themes for the coming year: Building Unity, Recruitment and Development of Leadership and Execution of Our Value Proposition. Today’s column will focus on our first theme: Building Unity. As community bankers, we are stronger when unified with our voices, in our actions, with the sharing of ideas and expertise, in our educational efforts and with our support of the VACB. Our unified voice matters. It matters locally, it matters in Richmond and it matters in Washington, D.C. Whether we are fighting the unwarranted expansion of untaxed Credit Unions, FDIC assessments of Community Banks, or an excessive regulatory environment, our unified voice makes a difference. At the VACB, we are unapologetic about our advocacy for Community Banks. We must continue to come together with one voice to be successful. I urge each of you to support the VACB and the ICBA with this effort. I have attended the ICBA conference for many years. The first time I attended, my eyes were opened wide to the mission of the ICBA. It is through the ICBA that we, as Community Bankers, have a national voice. And that voice is unique to Community Banking. If you have not attended an ICBA conference, I encourage you to attend. I promise you will return with your eyes wide open. If you have attended in the past, Kathy and I hope to see you in Orlando this spring, March 14-17 at the Marriott Resort. Another opportunity to have our unified voices heard is the ICBA Capital Summit in Washington, D.C., April 28‑30. This is an excellent time, with other Community Bankers, to examine the issues and challenges facing our industry, visit with our elected officials, establish new relationships with fellow bankers and influence new legislation on Capitol Hill. I also encourage you to attend this important event and be a part of our unified voice. The more bankers that attend, the more of a collective voice will be heard. Please look at your calendars and consider attending both important events. As this year progresses, I will continue to update you on the progress of the VACB as we deliver on our Value Proposition to our membership. In the interim, I wish each of you a blessed holiday season. Best Regards, Joseph Witt Chair 5 The CommunityBanker
Open APIs: A Breakdown In today’s rapidly evolving fintech market, Open APIs serve as a transformative force for community banks. Offering new opportunities for expanded digital capabilities, Open APIs lead to enhanced services for consumers (like remote account opening or the management of mobile transactions) and increased profitability for financial institutions. So, what exactly is this magical piece of banking technology? API stands for Application Program Interface and serves as a connection between a third-party application and a bank. By making the tools and services of a bank available to a third party, (like Chime or Acorns, for example), both entities benefit from enhanced digital solutions and specialties. Open APIs work similarly but go a step further in allowing third parties to access the data of banking customers. This data can include the account holder’s name, account type, transaction details, etc. As sensitive as this data is, when handled with care, the sharing of customer information leads to the improved relevance and convenience of banking services. For customers, this can look like customized investment plans, real-time updates, budgeting assistance and more. For banks, this looks like increased customer satisfaction through competitive, flexible offerings. Built to ensure platform-agnostic operations, Open APIs function compatibly across all systems (whether MacOS, Windows or Linux) and lead to augmented digital services and capabilities. As such, understanding the specific advantages provided by Open APIs and how to ensure your hosting provider optimizes them is crucial to successful open banking. BENEFITS, DEVELOPMENT AND WHAT TO LOOK FOR IN YOUR COMMUNITY BANK’S HOSTING PROVIDER By Daren Fankhauser, SVP, Chief Development Officer & Chief Architect, Data Center, Inc. 6 The CommunityBanker
Benefits for Developers In the context of development, the benefits of Open APIs are vast and substantial. Explore the benefits below: I. Self-Documentation • Documentation is built dynamically and remains consistently up‑to-date • Commonly deliverable via HTML or PDF • Handy access for developers (via HTML-based documentation sites) to test API endpoints II. Compatibility • Data format is programming language independent, lightweight • Allows for complex data structures while remaining human‑readable • Information is accessible through nearly all devices or platforms III. Accessibility • Readiness via standard web technologies • Straightforward integration process for developers IV. Security Through Strong Controls in Place • Protection via encryption technology • Keys and single-use tokens • Firewalls that increase the detectability of intrusion • Granular security controls that limit entry to required access points V. Functionality • Functionality can be pulled into other applications instead of being trapped into exclusively using the main interface • Access to different sub-areas of the application can be granted without exposing the entire application • For applications written to consume an Open API, a “sandbox” can be used to invoke the API using test data With such value-enhancing benefits riding on the successful utilization of Open APIs, it is paramount for financial institutions to know what to look for in their hosting provider. Identifying Your Hosting Provider of Choice: Security, Access and Support As security plays a foundational role in all financial operations, banks must feel empowered by the knowledge that their data, which lies behind these APIs, is well secured. Adherence to industry standards for security on the part of hosting providers is the best way to ensure data protection. While true security necessitates that access to sensitive information be limited, it is optimal for the API documentation to be dynamic and accessible by the financial institutions they serve. Should challenges present themselves in the utilization or access of the APIs, adequate support is also essential. As such, it is advantageous to ask questions surrounding the support protocols that the API provider offers for developers and integrators specifically. Crystal Liebl, Development Web and UI Officer at DCI, speaks to the importance of provider support, saying, “While quality APIs are self-documenting, it’s crucial to have a vendor like DCI that can assist promptly with any challenges or questions that may occur. Commitment to great support is key to ensuring a smooth and quick implementation process.” Expanded digital capabilities for customers and institutions alike are always within reach through Open API technology. 7 The CommunityBanker
Further Considerations: Performance and the Absence of Middleware In addition to support, technology (however obvious it may seem) is another crucial piece to the success of open banking. Many providers tout their technological agility, but what does that look like? When running on and being backed up by the latest and greatest technology, consistent, quick response times are the result. System redundancy optimizes uptime and ensures business continuity. One marker of agile technology and performance is found in providers able to deliver all the pieces necessary without reliance on middleware. Providers who enable integrators to work directly with their company eliminate extra cost, vendor due diligence and additional network hoops often required when bringing middleware into a relationship. Noting DCI’s experience in this realm, Liebl shares, “We encourage direct integration as a means to reduce cost and receive information firsthand from the experts who wrote the APIs. Through outstanding developer support, there’s no chance for misinterpretation leading to costly delays or refactoring amidst implementation efforts.” Conclusion: Flexible Offerings Through Open APIs as a Leg Up for Community Banks By exploring the many benefits Open APIs bring to community banks in the fintech market, the transformative potential such technology holds becomes increasingly evident. Features like self-documentation, compatibility, accessibility, security and enhanced functionality work together to empower banks to deliver flexible, customized solutions. From there, a strategic partnership with a hosting provider that adheres to industry standards for security offers accessible documentation, provides reliable support and embraces technological breakthroughs makes all the difference. Catalyzed to drive innovation and position themselves as leaders in the dynamic and ever-evolving fintech landscape, no longer must community banks wait for core processing updates in programming. Expanded digital capabilities for customers and institutions alike are always within reach through Open API technology. CONTACT US TODAY! 801.676.9722 sales@thenewslinkgroup.com Your Customers Are Too. Advertising Space Available. QR Code 8 The CommunityBanker
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VACB 46th ANNUAL CONVENTION COVERAGE OCTOBER 1-3, 2023 HOTEL ROANOKE & CONFERENCE CENTER VACB members gathered at Hotel Roanoke in early October for its annual meeting and trade show with our Associate Members. Attendance was robust, and members were excited to gather in Roanoke and enjoy time together while bringing VACB’s formula for convention success to life. The VACB annual convention works on a three-pronged process — focusing on trends in the banking environment, exposure to the latest offerings from our Associate Members and great networking opportunities throughout our time together. The two Business Sessions were on target with valuable information, insight and inspiration. The Monday session began with the annual business meeting, where the election of officers and directors was held. Also, 2023 Chairman Jay Stafford and President Steve Yeakel presented an update on the developing VACB’s future and its plans to start recruiting a replacement for Steve when he retires at the end of 2024. Up next was an economic overview presented by Lauren Henderson from Stifel, who provided an overview of the economy and touched on inflation and the continued pressures on housing and labor markets. She also shared how Virginia compares to the rest of the nation in economic terms. Our next presenter, Dan Gonzalez with the Federal Reserve Financial Services, provided a high-level overview of the FedNowSM system and how the instant payments infrastructure, which was launched in July, will modernize the U.S. payment system. Gonzalez shared that by using the Federal Reserve’s system, banks of all sizes will be able to offer customers the ability to send and receive money in real time around the clock, 365 days a year. Our Monday Business Session concluded with Traci Brown, a nationally renowned body language expert, for her session on unlocking what faces say in various situations. Due to an unavoidable audio-visual glitch with the hotel, Traci had to shift her original session. Hopefully, we will see Liar, Liar, Pants on Fire at a future event. Monday afternoon, attendees had the option to have the afternoon to explore Roanoke on their own or join their peers for a group outing. Those who chose the latter gathered at The Vault Restaurant for a networking lunch. The Vault Restaurant is in The Liberty Trust Hotel, which is in the historic former First National Bank headquarters and the bank’s original vault is now home to its restaurant. Lunch was an eclectic menu of small plates and tapas, craft cocktails and fun all around! Monday night at the Chairman’s Celebration, attendees gathered for a relaxed evening of bankers, bluegrass and boots. The event began with dinner and then the passing of the gavel. Jay Stafford was honored for his past year at the helm of the association, and he then passed the gavel to our 2024 Chairman, Joe Witt from The Old Point National Bank. After dinner, the night was open for a great time to be had by all! Attendees had their pick of fun events, including bourbon and cigars, listening to our live bluegrass band, dancing or playing one of the many games, which included ax throwing, available to attendees! It was all about fun and fellowship Monday night as we celebrated our 2023 Chairman, Jay Stafford. Tuesday’s breakfast began the day and featured a legislative update presented by VACB’s own Steve Yeakel. Our second Business Session began with a lively presentation from ICBA Chairman-Elect Jack Hopkins. Jack shared fresh updates on the latest developments in Washington, D.C., and provided a review of priority issues that ICBA is tackling on behalf of its community bank members and how ICBA is continuing to “build the brand” of community banking. He also urged attendees to connect with ICBA and put their voluminous array of products, services and ICBA’s advocacy efforts to use at their community banks. Our next session featured Franz Gilbert from Deloitte Consulting, who shared his thoughts on emerging technologies, including artificial intelligence (AI) and 10 The CommunityBanker
how they are and will continue to transform work, workforce and workplaces across all industries. Franz also shared his thoughts on how AI will continue the move to modernize banks’ processes and discussed recent case studies that explored technology trends and their effect on financial services. He also discussed how these technologies will affect the future of work and how organizations can lead in this new work environment and navigate the future of work. Our final session on Tuesday morning was all about recent fraud trends. FBI Special Agent Rick Miller and Roanoke County Detective Betsy Van Patten shared recent fraud trends they are seeing in their jurisdictions, what the criminals are up to and how they are committing their crimes. Both Rick and Betsy shared ideas and tips on how banks can attempt to stay ahead of the bad actors to help combat fraud at their institutions. The convention concluded with the YHB Grand Prize Drawing. This year, Justin Crowder with YHB was on hand to draw a lucky banker’s name for one of several prize choices shipped to their home. Our Grand Prize winner at this convention was Donnie Kalowski with Village Bank. Jay Stafford in his last act as VACB Chairman, declared the 46th Annual Convention convened and wished all a safe trip home. He also urged everyone to make plans now to join VACB for the 47th Annual Convention & Trade Show in 2024. (L-R) Jesse Meadows and Luke Gore from YHB presenting the Grand Prize Gift to Jonah Pence with Jay Stafford www.bccadvisers.com WE VALUE BANKS. Business valuation for... ▪ Gifting and stock transfers ▪ Buy/sell agreements ▪ ESOP administration ▪ Estate settlement ▪ Stock offerings ▪ SBA 7(a) loans Lindy Ireland lindy@bccadvisers.com 434.333.6814 Now in Central Virginia! 11 The CommunityBanker
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VACB 46th ANNUAL CONVENTION & TRADE SHOW EXHIBIT HALL PRIZE WINNERS BCC Advisers $100 Amazon Gift Card Neil Burke, Benchmark Community Bank Banc Card Bourbon Leigh Minix, Benchmark Community Bank Bourbon Taylor Quicke, Citizens Bank & Trust Co. Massager Mark Reed, Pioneer Bank Brown Edwards CPAs Branded Brown Edwards Solo Stove Matt Steilberg, C&F Bank ePay Resources $50 Amazon Gift Card Lisa Kilgour, MainStreet Bank ICBA $150 Visa Gift Card Blake Edwards, Skyline National Bank Morgan-Keller $200 Lowe’s Gift Card Lisa Kilgour, MainStreet Bank QSI Bourbon Lara Ramsey, National Bank of Blacksburg SHAZAM Theragun Mini-Massager Lisa Kilgour, MainStreet Bank Source4 $200 Visa Gift Card Lisa Kilgour, MainStreet Bank Teslar Software Air Pods Pro Beth Beale, Benchmark Community Bank The Counts Realty & Auction Yeti Hopper Flip Blake Edwards, Skyline National Bank Travelers Insurance Samsonite Backpack & Elemental Drinkware Set Laurie Hart, Bank of Botetourt Works 24 Corporation Bushnell Golf Speaker/GPS Lara Ramsey, National Bank of Blacksburg Exhibit Card Drawing Winners $150 Lyn Hayth, Bank of Botetourt $150 Jenny Clark, Benchmark Community Bank $150 Randy Lail, Benchmark Community Bank 14 The CommunityBanker
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VACB 47th ANNUAL CONVENTION & TRADE SHOW October 6-8, 2024 Kingsmill Resort Williamsburg, VA SAVE THE DATE 16 The CommunityBanker
OVERDRAFTS In recent months, regulators have issued multiple documents in the form of supervisory guidance and observations, raising concerns for community banks. Notably, the October 2023 Supervisory Highlights from the Consumer Financial Protection Bureau (CFPB) addressed “unlawful junk fees” discovered in their supervision of financial institutions that are $10B and above. The areas of attention in deposit accounts include Multiple Fees on Re-Presented Items and Authorize Positive, Settle Negative (APSN), among other things. Addressing Multiple-Representments Multiple fees on re-presented items can occur when NSF items are re-presented after being returned to the originating financial institution. The CFPB recognized core processing systems are responsible for the assessment of fees on re-presented items. The Supervisory Highlights state, “Examiners concluded that, in the offering and providing of core service platforms, core processors engaged in an unfair act or practice by contributing to the assessment of unfair NSF fees on re-presented items.” It is unclear whether the CFPB will mandate that core processing systems implement technology to avoid assessing re-presentment NSF fees. However, they did comment that proper coding by originating financial institutions, in concert with core processing system solutions, will avoid the assessment of fees on re-presented items. It was also reported that “financial institutions engaged in unfair acts or practices by charging consumers re‑presentment NSF fees without affording the consumer a meaningful opportunity to prevent another fee after the first failed representment attempt.” As indicated in the Supervisory Highlights, the CFPB recognizes that only checks and (some) ACH items can be identified as re-presented items and recommends remediation of consumers for those identifiable re‑presentment NSF fees. Tackling Authorize Positive, Settle Negative (APSN) Concerns APSN occurs when overdraft fees for debit card or ATM transactions are assessed where the consumer had a sufficient available balance at the time the consumer authorized the transaction, but the account balance becomes insufficient at the time of settlement due to the delay between authorization and settlement. Regulators have expressed concerns about the potential for APSN practices to lead to unanticipated overdraft fees for consumers. To address the issue, financial institutions should consider technology solutions from their core processor NAVIGATING THE EVOLVING REGULATORY LANDSCAPE By Cheryl Lawson, EVP — Compliance Review, ADVANTAGE, powered by JMFA 17 The CommunityBanker
828 Main St, 15th Floor Lynchburg VA 24504 www.countsauction.com Call us for your Auction & Appraisal needs. 434-525-2991 that can avoid assessing fees for items authorized on a positive balance. Several core processors offer such capabilities — financial institutions can avoid regulatory criticism by implementing the necessary APSN technology. What to Expect from Regulatory Examinations Being ready for anything and everything is the best way to approach regulatory exams in this somewhat uncertain climate. Expect examiners will arrive with a longer checklist of questions about your overdraft program than in the past. To prepare for these examinations, community banks should: • Stay up-to-date on the latest regulatory guidance and industry insights • Review their overdraft fee policies and procedures to ensure compliance with regulations • Analyze their fee structure to ensure it is fair and reasonable • Consider implementing strategies to reduce consumer costs, such as grace periods, de minimis thresholds, proportional fees and reasonable fee amounts Strategies to Reduce Consumer Cost In addition to implementing technology solutions and preparing for regulatory examinations, financial institutions can also consider implementing strategies to reduce consumer costs associated with overdraft fees. These strategies include: • Providing a grace period: If a transaction is presented that would trigger an overdraft or NSF fee, give the account holder a grace period to make a deposit and then refund the fee. • Introducing a de minimis: Instead of charging a fee for every transaction that takes an account negative, consider only charging the fee if the account becomes negative by a threshold amount. • Implementing proportional fees: Consider establishing a smaller fee amount based on the transaction amount. • Ensuring reasonable fees: Assess the reasonableness of your overdraft and NSF fees relative to the local market to ensure the fees are not prohibitive. Make Informed Decisions While some financial institutions have heavily marketed their low or “eliminated” overdraft fees, that doesn’t necessarily mean your fee needs to change. Instead of making sweeping changes based on what others are doing, ask yourself, “What are our fees, and why were they set that way?” If you’ve raised your fees over time and now yours is higher than the rest in your market, maybe a change is needed. But if your consumers believe your overdraft fee is fair and you’re not having issues with unrecoverable losses, your fee may be appropriate. More importantly, a thorough analysis of your program and fee structure will help uncover any necessary changes to ensure you’re offering a consumer-first overdraft solution. Cheryl Lawson serves as JMFA’s principal liaison for regulatory requirements of overdraft services, including consumer protection issues and strategies to enhance safety and soundness. About ADVANTAGE ADVANTAGE, powered by JMFA, is a trusted consulting partner helping community banks improve their overdraft strategy and stay competitive with a compliant, consumer-first overdraft solution. 18 The CommunityBanker
Is your community bank skilled up? Meet Cindy. Cindy is the voice on the other end of the phone when bankers call about ICBA Education’s bank director program, webinars, and other educational offerings. She takes the time to talk through bankers’ professional goals, next steps, and ICBA’s available options (all at a discount to members). In the evenings and on the weekends, she can be found on her 150-acre farm in Central Minnesota or spending time with family and friends visiting and supporting our community. Are your bankers educated because they have Cindy as a resource? Learn more at icba.org/education
GET THE MOST VALUE OUT OF YOUR VENDORS TOP QUESTIONS TO ASK WHEN VETTING POTENTIAL PARTNERS By David Hamrick, Teslar Software Despite current economic conditions, innovative banks are avoiding cuts to their tech budgets. Investing in technology can help community banks improve efficiency, reduce operating costs and reach more customers with an improved customer experience. Tight budgets and economic uncertainty create even more pressure to make the most of your technology investments. What are some key factors that community banks should consider when vetting technology vendors to ensure the relationship is going to be a good longterm fit? It All Starts with Strategy The most successful businesses have clearly defined goals and desired outcomes that shape their business strategy, which in turn should set the foundation for your innovation and technology strategy. When the entire institution is on the same page, you know exactly what issues need to be solved and which solutions are the highest priorities. It’s essential to consider the vision and strategy of potential vendors as well. By asking vendors about their own goals and vision, banks can get a better sense of what drives the company forward. Partnering with vendors whose vision aligns with your needs and whose goals are in sync with your own will help ensure you are choosing a vendor who is dedicated to your team’s long‑term success. Configurable vs. Customizable: Which is the Right Solution for Your Business Needs? It’s important to discuss the level of customizability and configurability a vendor can offer. Custom code may sound appealing, but it comes with risks, high costs and limitations. It will take an intensive amount of time to get the project off the ground and into production, and it is difficult to make changes as you go. It also can’t scale or adapt to industry needs as quickly as a product with one code base. Some banks find solutions that offer no customization or configuring better suit their needs, especially if they lack 20 The CommunityBanker
internal resources to create a unique flow or process. Many banks are somewhere in the middle — their ideal solution provides customizability so they can fine-tune it to their specific operations or adapt quickly to changing industry needs without the price tag and constraints of custom code. Ensuring Long-Term Reliability You want to ensure you’re choosing vendors that can support you long-term, but the age of the company is not a good measure for this. Legacy systems are often outdated and lack innovation, but with new tech, you’re taking a chance on their longevity and stability. What other questions can help gauge if they’ll be around for the long haul? • Ask about the vendor’s technology roadmap, recent innovations and where they’re investing in R&D. This will give you an idea of how committed they are to improving their solutions and staying up to date with industry demands. • If applicable, ask how the vendor responded to events like the Paycheck Protection Program. Did they step up and provide support to their clients during this crisis? This can be a telling sign of their dedication to their customers and how quickly they can keep up with market demands. • Although it is preferable to find a “one-stop shop,” there really is no silver bullet in the marketplace, and it may take two or three vendors to achieve your desired outcome. Discuss their willingness to integrate with other third parties and potential competitors to determine limitations when building your tech stack. • How will the vendor adapt to industry changes and scale with your business? Understanding the Customer Experience — What’s It Like To Be Their Customer? Your experience as a customer should be a top priority when choosing a vendor — it is key to a successful partnership. You cannot base your expectations solely on the relationship you have with your sales representative. Ask questions that provide insight into how happy they keep their clients. Ask about support services and account management practices for implemented clients. How accessible and responsive is the support team? How are accounts managed, and how often do they meet with clients? It’s also worth inquiring about the company’s churn rate — this can be an uncomfortable question, but it is the core metric of client satisfaction. If possible, optimize your reference calls by speaking with clients who have a similar tech stack — core, imaging systems or other vital solutions. Each interaction with a system is unique, so hearing the experiences of banks with similar operations or goals will allow you to ask more targeted and specific questions. As you search for solutions, you will undoubtedly vet many vendors. Asking the right questions during the discovery process can make all the difference in your long-term partnership success and return on investment. Save yourself time and future headaches, and enter the partnership with complete confidence that you’ve made the best decision. To continue this conversation or if you’d like to consider a partnership with Teslar, please contact David Hamrick at david@teslarsoftware.com. At the VACB convention, we spoke with several banks that have been hesitant to venture away from their core and form relationships with third-party vendors. We hope this information is a helpful starting point as you consider vendor partnerships. Teslar Software, founded in 2008, is a configurable lending process automation platform for community banks. Teslar transforms lending and deposit operations by providing easy access to centralized, relevant information to balance portfolios, optimize profits and help community bankers effectively serve their customers. Please visit teslarsoftware.com to learn more. First for Your Success'" ubb.com • Member FDIC Your Full-Service Bankers' Bank As the nation's first Bankers' Bank, UBB has earned the trust of over 1,000 community banks by never competing against them. UBB is not a division or department of a large retail bank but rather a dedicated community bank ally committed solely to the success of every customer we serve. To Request Pricing or Additional Information Visit ubbRequest.com 21 The CommunityBanker
THOUGHTS FROM VACB’s NEXTGEN SCHOLARSHIP RECIPIENT By Michael Lee, AVP, Senior Credit Analyst, Virginia Partners Bank/Maryland Partners Bank (a Division of Virginia Partners Bank) As a first-time attendee to an ICBA event, it was even more exciting to have won a scholarship through the Virginia Association of Community Banks to attend this year’s Lead FWD Summit in Kansas City. Since graduating from George Mason in 2015 and starting my professional career, I knew I wanted to be involved with a company that was local and customer-focused. After eight years of working for community banks, I know I made the right decision. Personally, I’ve always been on the credit side of the banks I’ve worked for. I’ve been a credit analyst on teams as small as three to a large team in the teens. The teams that have succeeded the most have been led by someone who wants to get the job done but in the right way. Recently, I’ve begun to step into a team leader role and have had to navigate that position. In the process of learning how to lead my new team effectively, the Lead FWD Summit’s timing couldn’t have been better. The event was refreshing for me because it brought together people who were just starting their journey — like I was eight years ago — and seasoned executives. We had plenty of time to pick each other’s brains and ask questions about what has or has not worked for them. Even though we work for different banks in different states, I found that our goal is still the same. We want to grow professionally and help others succeed in their goals, too. Hearing from others who have a great leader and hearing from those who are trying to be a great leader really put things into perspective. As the event’s main focus was leadership, we were able to discuss realworld case studies that everyone from credit, lenders, branch managers and executives could chime in on. It was helpful to learn what others have done in difficult times and what they’d do differently next time. The event was also engaging because they had interesting guest speakers, for example, Sean Bott, who is a mind reader. Not only did he teach us some useful tips on interacting with people to get better outcomes, but he also helped lighten the mood with some laughs. We also played a game while listening to industry experts, which brought up some good conversations on how the banking industry will develop and evolve in the years to come. I don’t think I’ll forget the sight of seeing everyone running through the Marriott collecting clues as part of the game. I can definitely say I walked away with new skills, and I believe it will have a positive impact on my team, within my bank and hopefully our community. 22 The CommunityBanker
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