Transcript
Coming up, a very special crossover edition of Cornerstone Advisors’ Plugged In.
Coming to you from the Scottsdale mothership, with a replacement of sorts, maybe even an upgrade from my typical co-host, Steve Williams, who unfortunately is on assignment at the moment.
We didn’t want to miss the opportunity to bring an incredibly talented part of our team, Mary Wisniewski, into the studio because she’s working on a pretty awesome new project, and we think it blends totally well with the Plugged In vibe and spirit that Steve and I take a lot of pride in.
We’re going to roll Plugged In as we normally do.
We’re going to give you some musical references.
We’re going to talk about the business of banking and what it takes to be a smarter bank in the weeks, months, and even years to come.
But we’re going to put our own fun little twist on it.
So Mary and I being together gives us some creative license.
First and foremost, hello, Mary.
Well, hello, Al.
Nice to see you in person versus just Zoom.
It’s wonderful.
Wonderful to be able to do this.
At Plugged In, we have a musical history, so I picked only two songs today.
Okay.
I’ll give you our walk-in song.
It’s by an artist named Sophie Ellis-Bextor.
She got her start in 2001 with the song “Murder on the Dancefloor” that really hit the U.K. Billboard charts, and then it took a big pause until TikTok resurrected it earlier this year.
Now you can’t go anywhere, at least in the D.C. area, without hearing “Murder on the Dancefloor.”
I was even at CorePower Yoga this morning, and that was one of the lead-in songs.
I thought, okay, that’s a good sign.
Mary and I are going to have some fun.
“Murder on the Dancefloor.”
We’re going to rip it up.
We’re going to have some fun.
We’re going to make sure we have a big smile on our face as we talk.
Inevitable.
Inevitable, and the cackle, because that’s what I do.
But again, I want to give listeners some orientation.
We’re going to talk about three big things today.
One is an issue I find resonating with bank CEOs and CFOs, and really investors and board members at the same time.
Second is, how do you differentiate your bank?
This is really a nod to the Smarter Bank series that Steve and I kicked off late August of last year.
I think, Mary, you’re going to have some really interesting insight given your travels.
The final one is a mistake that banks make.
We’re not going to call an individual out, but we’re going to say broadly, here are some things that challenge the industry, with a suggestion to fix it.
We thought that would be a good framework for Mary and me to take this thing down the path.
Since this is your first time, we should probably do some calisthenics and warm-ups.
If we’re out on the dance floor, we don’t want to just jump right in.
Look at that.
We can stretch it out.
We can do our thing.
Yoga poses all day long.
But I was thinking intellectually about some of the things that have caught my eye and attention.
I was really, really, really impressed with Nubank delivering a billion-dollar profit.
I wrote a GonzoBanker piece about them last year.
I’m personally interested in what they’re doing in the Latin American business community.
To see that type of financial result shows how digital banking continues to evolve across the world.
I think there are lessons that U.S. bankers can certainly think about.
Just the other day, our friends at nCino made what I thought was a very smart acquisition of DocFox, which is a provider of commercial bank account-opening software.
That’s one of those fintech M&A deals that I think people will be talking about in the weeks and months to come.
Then at the board level, it strikes me that there’s a greater emphasis being placed on not just succession planning, but really how do you attract talent in and then how do you develop and make sure you’re retaining it so that you can do some really cool things?
I’ve got an example behind me on the board of a bank in Nashville, Tennessee, Pinnacle Financial Partners, that posted some pretty spectacular statistics in their 2023 annual report.
I was looking at this on my flight out to Arizona, and I was just blown away by some of the statistics.
Maybe most notably, 97.2% of their associates polled say this is a great place to work, and it’s where they want to work.
Here we are in this world where work from home is a big challenge.
What your future looks like as an employee is certainly up for debate.
So to see a bank getting some pretty meaningful results from its talent base speaks volumes about their business model, but also the fact that it can be done.
I think those are three things that stand out to me.
Yeah.
Well, let me piggyback off that one because I saw on LinkedIn, it was quoting his story, but it was saying small banks are losing out on talent to big banks because big banks had more of a lenient work-from-home policy.
I know that’s long been an issue, and you hear even the big banks talking against it.
But as it turns out, the smaller banks are more rigid about this than the bigger banks, and they might be losing out on talent just from that.
So that’s one thing that I think about.
The other thing I really have been thinking about is Consumer Reports recently did an analysis of some of the top neobanks, like Chime and Current, and then some of the big-bank apps and what data they’re pulling, and if they’re sharing it in ways that it shouldn’t be shared.
This is a component I know that’s part of open-banking rules that are being developed here.
But I think if you talk to a fintech, they’ll say, “Hey, we only use the data we need to improve the product or do something better for the marketing.”
But I think there’s always this open question of, “Or are you selling it in a way that’s inappropriate, or are you using this in a bad way?”
So that’s really on my mind too.
It’s crazy to think about the different risks that people expose themselves to without really paying attention to what they’re walking into.
Screen scraping.
When I first started covering that story, I was like, “Yeah, it’s like giving your car key to a stranger.”
Yeah.
Mary alludes to her experience in this space.
If you’re not familiar with her, she’s an incredible fintech influencer, has been around the block when it comes to the business of banking, worked at American Banker, I believe, at various points.
So she takes, I think, a clever, keen, journalistic approach to some of these concepts.
The first one that I really want to dig into is under that “something strategic” umbrella.
For me, it’s this concept of return on tech.
It was surfaced at a board meeting I was a part of maybe two months ago, and it seems like I can’t get out of a conversation with C-level executive teams or boards without having some variation of, “Did I pick right?”
“Am I utilizing what I already have in terms that impact my revenue and operating models?”
Essentially, “Am I getting what I paid for?”
So I’m just curious.
As I think about this return on tech being a really strategic and important conversation starter and area to focus on, how do you think about this topic?
Well, it’s interesting because I feel like you think of a banker and think, wow, they’re really looking over every dollar spent.
But in reality, no.
I would say not as much as I would think.
Especially being at fintech events now, the tone has shifted a little bit.
But I would say there was what I would call overindulgence of spending money just to meet and greet with fintechs.
It’s like that theatrical thing.
“Oh, hey, I met this...”
The innovation theater that our friend Ron Shevlin says we need to move away from.
Jason says it.
But it brings me back to a story I wrote a long time ago about these big banks putting up innovation labs.
Sometimes they were really doing things in there.
Other times, it was just, “Oh, we checked this box. We did this.”
How would you ever know what the return on investment was?
Who knows?
It’s interesting you say that.
For every Eastern Bank that had an Eastern Labs that spun out a Numerated-type company, you had others that said, “This is great window dressing.”
It makes us look cool and hip, but it didn’t necessarily bring in the business outcomes that we were hoping for.
Yeah.
I think that’s one of the things that we’re again starting to realize.
You can have that innovation theater as long as you want, but ultimately it comes down to outcomes.
Are you owning the outcome?
On the tech front, there are so many different companies doing some really amazing work.
If you’re already engaged with them, have you taken a step back to say, “Am I realistically leveraging what I’ve already invested in to its greatest potential?”
I think there’s probably some real opportunity to improve your performance if you just take that frame of mind.
Yeah, I think so.
Okay.
I mentioned that Steve and I did a Smarter Bank series kickoff.
We’ve been using this theme in various Plugged In episodes and also across Cornerstone.
One of the pillars that we think is important for banks going forward is to be differentiated.
Yes.
Different.
Hard to do.
It’s easy to talk about.
It’s harder to do.
If you’re watching this, I’m going to put something up on the screen behind me.
If you’re not, I’ll try to explain what you’d be seeing.
We have a female hockey player up in Canada.
This is something the Professional Women’s Hockey League has as an advertisement done in conjunction with Molson.
If you like a good Canadian beer, I think Molson probably would be one of your picks.
They sponsor the league, and they’ve got this ad that says, “We covered our name so hers could be seen.”
I thought this was really, really, really amazing.
As a father with a daughter, I think about women’s sports and how they’re gaining in popularity.
To see people putting dollars against this is great.
Molson realized that most hockey players, at least female hockey players, had longer hair.
If they had the name of the player up on the top, like you’d find for most men, it would be covered.
Molson had a sponsorship agreement where Molson could be under the numbers that a player has.
They thought, that’s wrong.
It shouldn’t be about us.
It should be about the team and the athlete.
So they flipped it around.
Now you could see behind me that Molson will be basically concealed with the long hair, but the player’s name will be front and center.
I thought this is a great example of differentiating not just your brand, but also your positioning.
Sure.
It doesn’t fall into necessarily that DEI hashtag that some people would scoff at.
But it does show an appreciation for a community that they’re a part of.
I just think it’s a great example of how you can differentiate a brand that needs a little bit of spicing up.
Yeah.
And I’m having either a hallucination or this really happened, but didn’t you have a guest from Michigan State University Federal Credit Union?
It’s a mouthful, but yes, we did.
I made it through.
She, one of the efforts, was sponsoring...
So April, who’s the CEO of Michigan State University Federal Credit Union, talked to us about an NIL deal that the credit union struck with Michigan State’s women’s basketball team.
How impactful that was, not just for the women on the team, but also for the folks at the credit union, because it gave them pride and appreciation that it was the team they were getting behind, not necessarily just an individual.
Right.
I think, you know, that NIL stuff that’s going on in sports right now, you’re predisposed to think it’s going to be sponsoring the quarterback or the running back or the person who has the highest visibility.
Another opportunity, if you’re a bank, is to think, “I can really get behind a team.”
So many community banks think about their team and the dynamics they’re trying to strike.
Great opportunity to differentiate yourself.
Yeah, absolutely.
A great opportunity to say, “Hey, I’m not like the bank around the corner.”
Another thing that’s been on my mind is around customer acquisition.
Certainly the tone is that all the companies, of course, want the price to come down.
How much does it actually cost to acquire someone?
I was interviewing someone earlier this morning.
He said, “Ideally, it would be zero because your service is that good.”
But I haven’t met a bank service or a fintech service that’s that good, to be putting the cost that low.
But it brings me up to this.
This would be not the move a bank would likely do, but it points out, you’ve got to think about it very differently.
There’s this credit-building product called StellarFi.
Spell that for me.
Oh gosh.
Let’s hope this is correct.
S-T-E-L-L-A-R-F-I.
One of the experiments they started doing last year was buying debt from debt-collection agencies and forgiving it, hoping to win those consumers as their customers.
That is a very bold, unexpected move.
Again, banks wouldn’t do that, but you’ve got to think about, “Hey, it’s not just that I boosted the rate a little bit.”
Or, “Oh, I have mobile deposit.”
Hopefully, you’ve had it for a long time at this point.
But it’s got to be something different.
So this isn’t “fortune favors the bold,” like the old crypto ads with Matt Damon running around encouraging you to buy Bitcoin.
It’s actually taking it a step further.
We’re going to do something, even if the cost up front is feeling somewhat prohibitive, to essentially win and earn the trust of people that might then become long-term customers.
Yes.
Which is really cool.
Now, we think about things that work.
We don’t normally talk about things that don’t.
This is where I thought it might be a nice addition to Plugged In to start surfacing some of the mistakes that we notice banks make.
Not because we’re trying to throw any shade.
But if we can maybe offer some perspective and, ideally, a solution, I think that would be a pretty neat thing to offer up.
When I think about mistakes that banks make today, I think this is in our collective wheelhouse.
It goes to social media and really underestimating the power of YouTube and also TikTok.
I realize that for a lot of executive-level bankers, TikTok is a four-letter word.
I will leave all the political stuff that’s going on in my hometown of Washington, D.C., right now with respect to the company’s ownership structure.
But in terms of how people are finding information, essentially searching for ideas when it comes to their financial health and well-being, they’re not going to a bank’s website.
They’re not going to Facebook.
They’re not going to LinkedIn.
They are going to their peers, who don’t necessarily have any real financial sophistication, and they’re using TikTok and YouTube as a platform to educate themselves.
I think this is one of those opportunities for banks to become far better communicators and to distinguish themselves by getting into the conversations.
Last March, when Silicon Valley and First Republic went sideways and then collapsed, it was a run thanks to then-Twitter.
It accelerated.
Supposedly that was a lesson that was learned.
But as I look at a lot of banks’ positioning today, they’re still not using those two channels where so many Americans find the majority of their information.
I think that’s a mistake banks make.
I think there are opportunities within a bank to correct that.
I’m just curious.
Do you agree with this?
If so, what would you do?
I absolutely agree with it.
It’s sort of like, I don’t want to...
Well, I’m still going to make it consumer-facing.
The neobanks are pretty good usually on short-form video.
When you’re doing something for TikTok or for YouTube, you need to be, not always, because sometimes you can just be educational, but authentic.
And definitely funny helps a lot.
Even if a bank was thinking about doing this, they might be inclined to do what they already do.
“Here’s a stat of how much we donate to the community,” or something like that.
But that’s not going to really play out well.
It’d be better to show something in action with the community.
Or, this was a thing when I used to work at Bankrate, they got into short-form video.
One thing they played up was, “Three paydays this month.”
That’s something that resonates with people because it’s more money.
It’s fun.
You’ve got to make it fun.
Make it jazzy.
Make it short.
Make it interesting.
Certainly, I do think banks and credit unions both need to be...
Well, there are examples.
There’s a bank in Tennessee, InBank, that does some really clever comedic work.
They can poke fun at themselves, but they’re not selling anything.
I think that’s one of the big things when it comes to social that has to be emphasized.
You can’t expect to go out like a used-car salesman, sell your wares, and expect people to be excited.
Right.
I’m picturing the suit.
The awful suit.
There always seems to be an awful suit and the blow-up little...
Well, the dancing man is a nice thing to have at times.
But again, you’re seeing all these different tech companies doing creative and clever marketing.
Is there anything that you’ve seen that you feel a bank could emulate?
Not necessarily just rip off, but take some inspiration from?
They can pay an influencer to work with them.
Co-create content with them.
I think that’s always a good idea because that’s putting them in front of a wider audience, assuming they’re going for a national audience.
Well, talk a little bit more about that.
So you pay an influencer, and...
You pay an influencer.
It would depend on the influencer, but you should be like, “We’re doing three videos together. We’re doing six videos together. Here’s a theme.”
Now that influencer is going to really shape the content.
You’re not giving them a script.
You’re working really collaboratively on it.
“This is what we kind of want to touch on.”
Maybe it’s financial health.
Maybe it’s things a small-business owner could do to help save money or time.
I think that is one move.
I don’t know how many banks would do that, but it’s a great way to get your message out and grow the audience.
Call me crazy, but I think that type of decision, you have to have the CEO start it.
He or she has to own that.
Early on, they have to be the one who models the behavior that they want the rest of their team to set.
You can’t delegate that to a marketing department.
You can’t say, “Hey, there’s a 25-year-old that works here who is a great TikToker, and we’re going to use him or her.”
I think it has to be getting out of your comfort zone as an executive to say, “We understand this space has shifted. We haven’t shifted with it. I don’t really know it, and I may not even like it, but I understand this is where people are going to be trying to find information.”
We can plant our flag in a way that’s different.
In a sense, it’s like Jamie Dimon looking at the metaverse and opening up the Onyx bank in the metaverse.
Again, Ron, you and I, we’ve all joked, has anybody gone in there?
I don’t know.
But it exists.
Sometimes it’s just trying, and “What if it works?” is a good mindset.
“What if it works?”
Then I recently was looking this up.
So YouTube, I always...
Is it “Varo”?
“Varo”?
I’ll give you either option.
I’m going with both.
But the CEO there did a video on YouTube just to explain.
It seemed scripted, but it was like, “Why I’m doing this.”
He’s a former banker.
He’s just explaining, “Hey, this is why I’m building something.”
I think that would be a move a banker could do.
Yeah, totally.
Okay.
So those are the three things we wanted to cover.
I want to take us out with a song by Mary J. Blige.
It’s all about the “Family Affair.”
The reason I’m using this is, as I mentioned, Mary’s going to be doing something really cool for Cornerstone.
It reminded me of a conversation I had with Richard Davis, who now is the CEO of Make-A-Wish, but shared this with me when he was the CEO of U.S. Bank.
He talked about the types of people that he really looked to hire.
He said they really had three characteristics that he prized.
IQ, EQ, and CQ.
I think we all know IQ.
You have to show up at the table with the basic intelligence.
Sometimes.
Sometimes.
Well, most of the time, I think it helps.
EQ and empathy go a long way in this day and age.
But CQ is his short form for a curiosity quotient.
Staying curious at an executive level is so important.
That’s part of the reason why I wanted to have you on Plugged In today.
As a crossover, you’ve got a new show that’s going to be coming out pretty soon.
Yeah.
April 18th.
That will scratch that curiosity.
It’s for executives who are looking for something new.
Could you give us a little bit on this?
Yeah.
I’m calling it Money Isn’t Everything, which is going to be a surprise for the banking industry.
Of course, you hold money, but there’s so much more to it than that.
Banking is about identity.
It’s about data.
It’s about improving financial outcomes, ideally.
It’s about showing up in unexpected places, like in shopping sites and things like that.
I’ll be sitting down with, and I did sit down today with, fintech entrepreneurs, academics, and journalists.
We’ll be exploring, “Hey, this is maybe the direction financial services is going or could go.”
Hopefully, we’ll be bringing lots of interesting ideas.
And it’s going to be a little goofy.
That’s okay.
We like goofy.
Again, we want to help people get Plugged In with the business of banking and really look ahead to things that we find compelling and creative.
I want to thank Mary Wisniewski.
I want to send my best to my man Steve Williams.
We’ll bring him back into the studio at some point soon.
I’m Al Dominick.
Thanks for getting Plugged In with Cornerstone Advisors.
Enjoying Plugged In?
Subscribe on your favorite platform