PUB. 13 2024 ISSUE 1 The CommunityBanker BANK LOAN QUALITY DOESN’T ALIGN WITH WALL STREET METRICS HOLD ON! OFFICIAL PUBLICATION OF THE VIRGINIA ASSOCIATION OF COMMUNITY BANKS
DID YOU KNOW? Enjoy your association news anytime, anywhere. Scan the QR code to visit our online publication to stay up to date on the latest association news, share articles and read past issues. vacb-community-banker.thenewslinkgroup.org 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! 2 The CommunityBanker
© 2024 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 6 10 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 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 Chairman’s Message Recruitment and Development of Leadership By Joe Witt, CPA, VACB Chair 5 President’s Column Much To Do — Dive In! By Steven C. Yeakel, CAE, VACB President and CEO 6 3 Stages to Unlock a People-First Work Culture By Katie Barnes, Chief People Officer, BHG Financial 8 From Vision to Velocity The Making of the FedNow Service By Dennis Falk, SVP & Regional Manager, PCBB 10 Hold On! Bank Loan Quality Doesn’t Align with Wall Street Metrics By David Ruffin, Principal of IntelliCredit, a Division of QwickRate 13 Flourish Continuing the Climb for Our Communities By Rebeca Romero Rainey, President and CEO, ICBA 14 Winning the Battle for Deposits By Zach Harrod, Teslar Software 16 Save the Date! VACB — Williams Mullen 24th Annual Golf Tournament 16 Save the Date VACB 47th Annual Convention & Trade Show 17 Innovation Station The Powerful Role of Data in Community Bank Innovation By Charles E. Potts, Executive Vice President and Chief Innovation Officer, ICBA 19 ICBA Education A New Educational Program From VACB and ICBA 3 The CommunityBanker
CHAIRMAN’S MESSAGE RECRUITMENT AND DEVELOPMENT OF LEADERSHIP Joe Witt, CPA VACB Chair Fellow Community Bankers, It is hard to believe it has been almost five months since we met in Roanoke. 2023 had to be one of the toughest years to be a community banker. Thank you for supporting your communities during a period of rapidly rising interest rates and uncertainty. Community banks are vital to the growth and stability of our local economies. Your tireless efforts do not go unnoticed. Continuing to expand on our themes for this year (Building Unity, Recruitment and Development of Leadership, and Execution of our Value Proposition), I would like to focus this column on the second theme: Recruitment and Development of Leadership. Our industry is rapidly changing. New regulations, technology innovations, artificial intelligence, increased fraud, new and expanded customer expectations and competition from the non-banking sector have increased the need to recruit and develop talent within our financial institutions. This is exactly where the VACB and the ICBA can assist. The VACB provides affordable continuing education and specialized training in several areas that can help develop our future leaders. Log into the VACB website and see the extensive lists of webinars and series. They include topics such as credit analysis, ACH specialist, call reports, fraud, new accounts, compliance and many more. The talent we recruit today comes from many other industries, and the VACB can assist in educating these new employees in the financial services industry. Likewise, the ICBA also provides a broad selection of courses, seminars and certifications. I recently sent one of my employees to be certified in Enterprise Risk Management. She indicated that it was an excellent series of courses and has provided an increased understanding of ERM in our bank. The VACB website also includes the resources provided by the ICBA. Speaking of recruiting talent, let me update you on the progress the board has made in recruiting a new leader for the VACB. We have hired a search firm, Vetted Solutions, to assist us with finding Steve’s successor. Next, we created a search committee, which primarily consists of members of the board. Then, we clearly defined the characteristics and skills necessary to lead the VACB in the years ahead, and we developed a thorough job description. We are now actively recruiting candidates to lead the VACB. Initial screenings will be conducted by Vetted Solutions. Interviews by the search committee will begin in late spring and early summer. Our goal is to identify our final candidate by early August and have that individual on board prior to the next convention in Williamsburg. Thank you to the many Virginia bankers who are registered to attend the ICBA Live annual conference on March 14-17. I look forward to seeing each of you in Orlando. Please mark your calendars for the ICBA Capital Summit in D.C., April 28-30. It’s an excellent time to gather with fellow community bankers and let our legislators know what is important to our communities and how we serve them effectively. Best regards, Joe Witt Chair 4 The CommunityBanker
PRESIDENT’S COLUMN MUCH TO DO — DIVE IN! Steven C. Yeakel, CAE VACB President and CEO Throughout my tenure, our VACB chairs have provided great leadership across every area of association life, of which the authoring of inspiring and enjoyable magazine columns is a small part. Again, in this issue, the column from our chair, Joe Witt, has provided us with great focus on both the “what” and the “why” of community bank association engagement. I’m going to continue that theme, going a little deeper. We have a busy spring calendar filled with important and fun activities — activities that benefit you and your bank as well as your association. Be sure to register your leadership, and especially your directors, for this year’s VACB/VBA Directors’ Symposium. We make this outstanding program available in two locations: on April 16 in Blacksburg and on April 17 in Richmond. These programs have been well-received and highly rated by attendees for many years. Make plans now to attend. Then, be sure to take advantage of a day full of fun and fellowship at the 24th Annual Golf Tournament, to be held at beautiful Spring Creek on Monday, May 13. The tournament sells out, or comes close, almost every year, so gather your golfers and plan to join us. Finally, I’ll second the chair’s encouragement to take part in the ICBA Capital Summit, set for Washington, D.C., April 28-30. If you have participated in the past, you know how valuable it is and how necessary. If you have not participated in the past, please consider attending this year. The issues for community banking have never been more pressing, as there are many headwinds in many different directions. We need larger numbers to be more fully heard across the Virginia delegation. In fact, we are currently engaged on no less than 15 issues, and only one of them is an issue on which we hope to gain ground. The rest all involve “playing defense,” stopping or modifying bad initiatives. Here’s a partial list of the goals for our federal advocacy: • Permanent closure of the Industrial Loan Company loophole. • Restriction on credit reporting agencies from selling consumer mortgage data. • No credit card routing mandates. • Hearings on credit union tax status, CRA exemption, disclosures, etc. • A safe harbor for cannabis banking. • No Central Bank Digital Currency. • Denial of access for cryptocurrencies to regulated financial processes without safeguards. • Less check fraud through increased megabank accountability. • Support for agriculture through strong farm bill provisions and rural tax breaks like ECORA. As many of you know, this is my final year working for you at VACB. My fervent hope is that you will dive in, engaging with your association as never before. I look forward to greeting you at each of these great activities and at additional opportunities along the way. 5 The CommunityBanker
3 STAGES TO UNLOCK A PEOPLEFIRST WORK CULTURE By Katie Barnes, Chief People Officer, BHG Financial 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. 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 6 The CommunityBanker
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. 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 personal ambassadors of your bank’s culture within your institution and community. 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. Sources 1. https://www.gallup.com/workplace/247391/fixable-problem-costsbusinesses-trillion.aspx 2. https://www.wellable.co/blog/employee-engagement-statisticsyou-should-know/#:~:text=Companies%20with%20a%20highly%20 engaged,have%20higher%20customer%20retention%20rates 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. 7 The CommunityBanker
The Federal Reserve’s FedNow® Service, an instant payments rail that launched this past July, was a long time in the making. As you dive into the faster payments space, you probably have a few questions about how the FedNow Service was created. What were the criteria, who was in the room and — most importantly — are you behind if your team hasn’t gotten started yet? We sat down with Sheila Noll, PCBB’s Chief Operating Officer, who served on the FedNow Service’s Faster Payments Task Force, to give you an inside look at how the FedNow Service was launched. With over 30 years of banking leadership experience and expertise in the payments space, Sheila is a current or former member of many committees in the payments sector, including the ICBA Operations & Payments Committee, the Clearing House RTP® Advisory Committee and the Faster Payments Council Advisory Board. Below is an abbreviated version of our longer interview. Tell us about the work that went into building the FedNow Service payments rail. There were six major categories of criteria that the Faster Payments Task Force considered: ubiquity, efficiency, safety, soundness, security and speed. It was important for everyone to know that any payment would be settled, final and irrevocable — and that it would happen within seconds. We also needed to make sure that the laws of our country supported what we were trying to bring forth, that we had sufficient rules so everyone knew what was expected, and that everyone could play by the same rules, regardless of whether there were multiple operators. The work of the task force was extremely inclusive. Banks and credit unions of all sizes were able to be engaged, but it wasn’t just the financial institutions. Everyone was invited to the table, including core providers, fintechs and software developers who were looking to develop applications for this new great idea of a payment system. We also had some of the largest merchants at the table, as well as consumer advocacy groups, rulemaking bodies like the National Automated Clearinghouse Association (NACHA) and credit card associations. What did you learn while you were developing the FedNow Service? There were many other countries that jumped into instant payments before the U.S. did, as their economies are far less complex than ours. So as a self-professed payments geek, I’d always cringe a little bit when people would say, “Oh, the U.S. is so far behind.” I’m thinking, no, we were very thoughtful and methodical with our approach, and I think that was an important thing for us to do as a country. In addition, we heard and maybe even thought to ourselves to a certain degree early on, that faster FROM VISION THE MAKING OF THE FEDNOW SERVICE By Dennis Falk, SVP & Regional Manager, PCBB 8 The CommunityBanker
payments meant faster fraud. But quite frankly, we’re not seeing that. It could be because it’s not yet mainstream, but we’re not seeing the faster fraud because there’s less time for fraud to be introduced into a payment. What advice do you have for community banks that have already started to implement a faster payment method? It’s just getting everyone from every part of the organization thinking about, “OK, what’s next? What else can we do to better serve our customers?” Continually seek additional use cases that will make sense because solutions will come to market that will support new use cases we have not even thought of yet. Just keep learning, keep talking to your partners, and there will be even more opportunities as time goes by. Certainly, talk to your customers about what friction and what problems can be solved with faster payments. What do you recommend for community banks that haven’t chosen a faster payment method? I would say take a big, deep breath — there’s plenty of time. We truly are still in the infancy as it relates to deploying a solution. However, if you are not yet spending time learning about faster payments, then you’re getting a little behind. If you have not started to build a payment strategy around this, it’s very critical that you start doing that sooner rather than later. Moreover, there’s value in keeping your contracts with core providers and fintechs short because things are going to change dramatically in the next two to three years, and you want to be able to adapt to those things. Whenever or however a community bank decides to participate in faster payments, there are many resources available. The Federal Reserve will launch a tech-centric developer resource for participating financial institutions to access documentation, such as the recently updated operating procedures, technical specifications, as well as code and message samples to assist with service implementation. There are also correspondent banks available to help, some of which were even involved in the FedNow Pilot Program. To read more and learn about how the task force worked through the development process and how the U.S. may solve the national directory and interoperability issue, as well as specific faster payment use cases that community banks should consider, check out the white paper under the industry insights section of our website. TO VELOCITY To continue this discussion or for more information, please contact Dennis Falk at pcbb.com or dfalk@pcbb.com. Dedicated to serving the needs of community banks, PCBB’s comprehensive and robust set of solutions includes cash management services such as Settlement and Liquidity for the FedNow Service, international services, lending solutions and risk management advisory services. 9 The CommunityBanker
By David Ruffin, Principal of IntelliCredit, a Division of QwickRate BANK LOAN QUALITY DOESN’T ALIGN WITH WALL STREET METRICS 10 The CommunityBanker
Well . . . at least not in real time. I recently heard a senior lending officer proclaim, with obvious relief, “Looks like we’ve dodged the recession bullet. We’re refocusing on loan growth opportunities.” The Fed-orchestrated “soft landing” is, of course, what our industry desires, but history clearly warns that it can take years before the effects of macro events such as pandemics, rate shocks and rampant inflation actually show up in lower credit quality. Even as these triggering events subside or abate, the lesson is clear: We shouldn’t let our guard down yet. The Good Despite weaknesses in specific sectors of the economy, overall job growth and unemployment have remained resilient in the face of perceived economic pressures. The inflation rate in December fell to 3.4% vs. 6.5% a year earlier, and the Federal Reserve has hinted at lowering interest rates soon in response. While current rates are moderate compared to standards set in the ‘70s and ‘80s, cutting interest rates will certainly be a boon for the nearly-decimated mortgage industry and other lenders. The Bad Despite those promising economic indicators, other data signals potential challenges ahead: • A December 2023 study by renowned academics for the National Bureau of Economic Research indicated that about 44% of banks’ office loans are underwater (equity-to-loan value), with vacancies soaring. The study noted that a 10% default rate on broader commercial real estate (CRE) loans would result in about $80B in bank losses. Some fear that the drag of higher rates on the 1-4 family housing sector has created a multifamily housing bubble. • The research group “MSCI Real Capital Analytics” reported last summer that the community and regional bank share of the U.S. CRE market had exploded from 17% to 27% just since the pandemic. While the smaller banks have increased their CRE loans, investors and larger institutions have shed CRE exposures due to credit quality concerns and heightened regulatory scrutiny. • Weaknesses in the trucking sector were at the heart of a recent Midwest bank failure — the first credit quality focused closure in quite a while. • There’s a growing dichotomy between consumers living paycheck-to-paycheck (and running up credit card levels to historic heights) and those with strong balance sheets and investment resources. While this issue may be primarily affecting the credit union industry, it could impact bank performance as well. • The chart below of historical data from the “QwickAnalytics® National Performance Trends Report” (based on the proprietary QwickAnalytics Community Bank Index (QCBI) of true community banks) clearly indicates an approximate two-year lag between the end of rate hikes and the peak of non-performing loans (NPLs). This may be the most telling data supporting the continuing need for credit risk management vigilance! 11 The CommunityBanker
The Now It’s clear that, given all of the data listed previously, those directly responsible for your bank’s credit portfolio performance must stay vigilant. Consider directing attention to these key areas: • Accept that regulatory scrutiny is increasing significantly, particularly in the CRE arena. Be sure to reinforce your adherence to both the December 2006 “Interagency Guidance on CRE Concentrations” (Fed SR7-1) and the more recent June 2023 “Prudent CRE Loan Accommodations and Workouts” (Fed SR23-5). Be proactive in anticipating CRE repricing and performance, monitoring concentrations unique to your bank and ensuring that management and the board are fully informed. • Enhance all aspects of loan review — whether performed internally (annually) or by an external independent provider — and ensure the quality and experience levels of those performing the reviews are up to the task. Remember, loan review is one of the most reliable tools for early detection of credit risk — a proven corollary to reduce loan losses. • Perform stress tests, preferably paired with loan reviews, that go beyond providing theoretical losses. Also, focus on suspect borrowers who could potentially move the needle on losses higher. • Embrace practical and affordable portfolio analysis tools that provide early detection of weakening trends and emerging hotspots, particularly within your bank’s lending concentrations. Your loan portfolio is your DNA, so know what it is telling you before regulators arrive. Smaller banks remain laggards in this area. Waiting for call report data to depict loan quality is a fool’s errand because, as they say, “Those horses are already out of the barn.” We all join in the optimism of the lending officer ready to put recession fears behind them, but history and current conditions mandate that the industry keep its guard up and manage what appears poised to be the greatest level of credit stress since 2008’s Great Recession. David Ruffin is Principal of IntelliCredit, a division of QwickRate. He has extensive experience in the financial industry, including a long and pronounced emphasis on credit risk in a variety of roles that range from bank lender and senior credit officer to the co-founder of IntelliCredit and its technology that is revolutionizing a decades-old loan review process. For more information, visit intellicredit.com or email info@intellicredit.com. 12 The CommunityBanker
FLOURISH CONTINUING THE CLIMB FOR OUR COMMUNITIES By Rebeca Romero Rainey, President and CEO, ICBA 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. We see a steep climb this year 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. 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. 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. 13 The CommunityBanker
With tightening margins, inflation and high interest rates, community bankers face not only a challenging lending environment but also a battle to sustain deposits. Customers are more knowledgeable than ever and are prepared to shop across multiple channels to find the right fit for their deposit needs. So how can community financial institutions look to compete with larger banks and credit unions to attract those customers? Bring Your Personal Touch to the Digital World While big banks have access to more liquidity and economies of scale, community institutions have a long history of providing a personalized touch. Community bankers aren’t serving strangers; they are serving fellow community members whose names and needs they know. And historically, that has been enough to retain a competitive edge. Now, as depositors face rising costs due to inflation, motivating customers to deposit with your institution is not so simple. Customers are shopping for better rates and a simplified application process. At CitiBank, for example, customers can get a 4.35% APY by opening a savings account, and they can open that account in about 30 seconds through CitiBank’s website. With so much information right at the customer’s fingertips, community bankers must make sure their name isn’t lost in the noise. This means honing your search engine optimization (SEO) strategies to ensure your name is appearing alongside competitors in prospective customers’ search results. If the only information a prospective customer encounters is the flood of information big banks publish, they are going to go with the big bank. When prospects do arrive at your page, that page should be up-to-date with your current information, including WINNING THE BATTLE FOR DEPOSITS By Zach Harrod, Teslar Software 14 The CommunityBanker
any attractive rate changes or incentive programs. The page should also clearly communicate the story of your team’s personalized approach to customer relationships. The next step is making it easy for a customer to open an account with you. Simplify the Application Process Today, the average attention span is just above eight seconds. Fewer customers are walking into a physical location to open an account. If a customer encounters technical difficulties, long wait times or any other sort of friction during the application process, they may walk away, and there is no guarantee they will return to your institution. That’s why Teslar, over the past few years, has dedicated time and resources to simplifying the application process and enhancing the customer experience. Community bankers must look to remove those barriers and simplify the application process. This means a website that is up-to-date and user-friendly, but it also Despite the difficulties of the current landscape, community bankers do have options to maintain or even grow their deposit accounts. means making it easy for the customer to begin the application process online. This comes with its own difficulties: Opening accounts requires customers to submit private data and upload necessary documents. Big banks have the resources to build those solutions in-house, but the development process for such features is expensive and requires a specialized skill set. In order to compete with the economies of scale utilized by big banks in leveraging such technology, community institutions must look to form partnerships with competent vendors who offer those features at a realistic price point. Strategic partnerships with key software vendors will allow community bankers to focus on what they do best: personalizing their customer’s experience. Maintain Your Personalized Touch Through Community Involvement Sometimes, the old ways are the best ways. Community bankers must continue to leverage their competitive advantage, which is their ability to connect with their local communities. During this time of high inflation, many community members are struggling. Community bankers can continue to step into this gap with community-based initiatives such as food drives, sponsoring local teams or school supply drop-offs. These programs don’t have to be expensive to be effective, but by taking the reins on such initiatives, community bankers can continue to foster that relationship with their communities. When leading such efforts, it’s important to maintain a strong presence on social media (Instagram, TikTok, Snapchat, Facebook) to raise awareness of those initiatives. One platform isn’t enough — Facebook tends to appeal to an older demographic, while Instagram is essential for engaging Gen Z customers. Again, customers need access to your information to become involved, and utilizing multiple platforms is the best way to engage customers across various demographics. Despite the difficulties of the current landscape, community bankers do have options to maintain or even grow their deposit accounts. Through strategic partnerships with trusted vendors, a strong online presence and the appeal of their personalized touch, community bankers can continue to attract customers searching for the right fit for their deposit needs. 15 The CommunityBanker
Monday, May 13 Spring Creek Golf Club 10:00 a.m.- 3:30 p.m. VACB — WILLIAMS MULLEN 24TH ANNUAL GOLF TOURNAMENT SAVE THE DATE! VACB 47th ANNUAL CONVENTION & TRADE SHOW October 6-8, 2024 Kingsmill Resort Williamsburg, VA SAVE THE DATE
INNOVATION STATION THE POWERFUL ROLE OF DATA IN COMMUNITY BANK INNOVATION By Charles E. Potts, Executive Vice President and Chief Innovation Officer, ICBA Data is king. Everyone — from Big Tech to retailers to systems providers — prioritizes data for its ability to deliver on revenue expectations. Looking to improve the customer experience? Data tells a story. Want to strengthen fraud prevention? Data provides protections. Striving to prioritize the projects on your to-do list? Data leads the way. For these reasons and more, the overarching narrative for community banks in 2024 will center on all things data: how to uncover, understand, mine and activate the data you have for the benefit of the customers you serve. From our experiences with the PPP, we’ve learned the importance of identifying a need and reporting on the outsized role community banks play in servicing small businesses in their hour of need. But now the charge is to make sure we’re retaining those valued 17 The CommunityBanker
customers, attracting new ones and expanding our services to meet their evolving needs. The strategic approach to small business banking is predicated on better data analysis. Community banks have to ask, “Where are my small business customers moving money? Where am I losing deposits? What products and services are they getting from somebody else that I don’t have, or I do and they’re not using?” The answers to those questions come from existing data points, including payments. Community banks can investigate transactions, and the account they give may define product development’s next steps. Yet this data quarrying doesn’t have to be a manual process. Fintechs can help banks automate the review, pull out the central narrative and prioritize actions around it. Finding the right partner can be as simple as checking out our current ThinkTECH Accelerator cohort, which is focused on small business needs and data analytics (see sidebar). We heard from bankers that these are two key The strategic approach to small business banking is predicated on better data analysis. areas where they need solutions, and the companies in this cohort directly reflect that input. So, as we push forward this year and priorities abound, I come back to an often-repeated phrase: It’s about working smarter, not harder. Data analytics offers a tool to do just that, helping community banks excel in new ways by identifying the right opportunities. Data may be king, but ultimately, community banks will reign supreme if they can harness it to benefit their customers and communities. Charles E. Potts is ICBA’s executive vice president and chief innovation officer. Potts drives ICBA’s innovation initiatives and financial technology strategies. Accelerator Introduces Small Business and DataCentric Fintechs Join ICBA for our sixth ThinkTECH Accelerator, featuring fintechs that can help community banks with small business banking and data analytics. Banks are welcome to sign up for oneon-one or group sessions with the cohort. To schedule a time, visit icba.org/thinktech. 18 The CommunityBanker
A NEW EDUCATIONAL PROGRAM FROM VACB AND ICBA VACB and ICBA are teaming up to offer this great educational resource to complement the educational offerings that VACB provides to the membership. ICBA Education offers seminars, certification programs, leadership and directors’ training, as well as a vast array of online courses that bank trainers can use to create in-house training options for staff needs. This best-in-class education is offered through multiple delivery channels to fit the needs and schedules of today’s community bankers. A variety of curricula is available through live events, webinars and online courses. ICBA Education is available at no cost to VACB members! Scan the QR code to learn more. https://www.vacb.org/icba-education 19 The CommunityBanker
This magazine is designed and published by The newsLINK Group, LLC | 1.855.747.4003 7204 Glen Forest Drive, Suite 101 Richmond, VA 23226 Is your business in the dark? ADVERTISE IN THIS MAGAZINE AND SHINE A LIGHT ON YOUR COMPANY. CONTACT US TO LEARN MORE. 801.676.9722 • 855.747.4003 sales@thenewslinkgroup.com QR Code: website /ad-space
www.thenewslinkgroup.orgRkJQdWJsaXNoZXIy MTg3NDExNQ==