Trust and Wealth with Nick Lane // Cornerstone Hot Takes

I will definitely say here that the trust and wealth side of the house at the bank is probably one of the number one opportunities for banks to generate non-interest income in 2023.

Nice. Tell me about that. What are you seeing? What are the trends? What do you see for 2023?

Yeah. Well, I think banks in general are struggling with a lot of pressure on non-interest income. Obviously, we talk about payments. We know what’s going on with Reg II, with continual compression on debit card interchange, potential impact to credit, ODP...

ODP, NSF.

Yeah. We obviously see what’s going on in the news.

Yep, absolutely.

So banks are looking for areas where they can generate additional non-interest income. I know a lot are talking about banking as a service. It’s a pretty tough market to get into. But especially for a lot of community banks that already have trust and wealth available in their market, it’s definitely an opportunity for continued growth.

How are they executing that? Who’s being successful, or what’s maybe the successful approach to trust and wealth? How do you apply that?

Yeah. Well, there are a lot of trends that we’re seeing right now. The number one trend that we’re starting to see, and what we’ve been seeing for the past couple of years, is really starting to lean on their core vendors.

Okay.

We call them core on that side of the house as well.

Sure.

Their trust core vendors, to do a lot of their back-office processing for them. So, outsourcing the back office. It’s not an FTE save.

Now, there are some banks that are doing it. Trust operations are pretty complex. There’s a lot of stuff that goes into it. A lot of these banks in more rural areas might have some folks who are retiring and might have some FTEs that are difficult to replace.

However, the reason why most institutions are doing that is so they can take those back-office resources and strategically redeploy them more to a middle-office role that can then support that front office, who’s out there helping their customers.