In this special episode, Sean and Gina welcome Jimmy Stead, Chief Consumer Banking Officer at Frost Bank, a $40 billion Texas-based bank that is focused squarely on the customer’s experience. Jimmy talks about decisions the bank has made to keep people at the center of their growing organization, like banishing phone trees and providing 24/7 customer service, allowing people to connect directly with bankers. He also addresses the bank’s relationship strategy saying that they’re at their best when people are engaged in their communities and how the branch serves as a focal point of that commitment.
Intro: This is Believe in Banking, a podcast series for decision-makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.
Sean Keathley: Welcome to our Believe in Banking Podcast. This is Sean Keathley, president and CEO of Adrenaline.
Gina Bleedorn: And I’m Gina Bleedorn chief experience officer at Adrenaline.
Sean Keathley: We’re especially excited for today’s podcast. We have yet another really esteemed guest with us today is Jimmy Stead, the chief consumer banking officer at Frost Bank. Gina, this is going to be an exciting discussion. Do you want to welcome Jimmy to the conversation?
Gina Bleedorn: Yes, I would love to welcome Jimmy. Welcome Jimmy. And I will say for us as a brand and as a bank is such a aspirational brand to not only other banks in Texas, but across the country, the things that you’ve done at Frost we’ve been watching for the last decade and your peers have been watching too, both those smaller than you larger than you. So it is clear that Frost is doing a lot of things right. And we are thrilled to have you Jimmy. Thank you for being here.
Jimmy Stead: Yeah, well thank you for those compliments and Sean and Gina. Thank you both for having me on, I was catching up on some of your podcasts and it’s clear that you guys both really have a passion for banking, which I think is cool. And I always admire people when I can see the passion and what they do. And I think it makes people interesting and it should make for a fun conversation.
Sean Keathley: That’s great, Jimmy, and we also know our limits and as we went through these and we’re getting great feedback and people are tweeting us. One of the big things we kept hearing is let’s hear from some of the people in the trenches in the front lines. And so we’ve had two other banks on, and one of the things we’ll be talking to you about, both of those organizations were more kind of community sized. And we have a little bit of a different animal here. Frost Bank is a $40 billion bank and growing. And so I think that’s a good kind of setup for you. Let’s almost pretend that, although as Gina points out, this is not realistic that people have not heard of Frost Bank. So let’s just maybe let you give like the minute or so bio we’ll get into your bio in a second, but just introduce the unique story of Frost Bank. It really is a great foundation for the conversation we want to have today.
Jimmy Stead: Yeah. Great. So Frost Bank was founded way back in 1868 in San Antonio, Texas. And I think one of the most interesting things is we’ve survived world wars and depressions and recessions and financial crisis’s, and now a pandemic. I’m certainly not the historian of Frost, but one of the things I know is that the gift of our history really, in my opinion, is the depth that which our core values are ingrained in every aspect of our business. And those are integrity, caring, and excellence. They just guide everything that we do, how we interact with our customers, how we treat employees, what we do for our shareholders and for that matter, our communities that we serve. So really at the end of the day, those values have carried us through all of that time. And here we are a bank and all the major markets in Texas.
Gina Bleedorn: Jim, what do each of those mean, do you mind digging into them for a minute? Because they’re a little a-typical, a little unique in those values, integrity, caring, excellence. Do you mind talking a bit about each and what that means to Frost?
Jimmy Stead: Sure. There’s so much depth in really each of those. So I’m going to try to keep it somewhat short, but the integrity piece, this is really about doing the right thing when no one’s looking and building trust with our customers and communities and even other third-party like regulators and it really every aspect of our business it’s how do we do the right thing? And how do we have the courage to do the right thing? Caring is caring about each other, caring about our customers, treating customers with significance and then excellence is we always want to do a great job. We’ve won the JD power award for customer satisfaction, 11 times in a row. And the report out in that meeting is always my most stressful meeting because Frost bankers just want to be better and better. And so there’s going to be one or two percentage points there that I’m going to lose sleep about. And so that’s really the excellence piece and it takes all three to be a successful Frost banker integrity, caring and excellence.
Sean Keathley: I’m really wanting to talk about this phone tree real quick. I think the strength of what Frost’s has done for the last 150 years that has maybe allowed you to survive all those things you talked about right now with branches largely closed and people doing digital, like think back to like before you even heard of COVID, and why the bank thought about doing that, if you don’t mind?
Jimmy Stead: That decision to not have a phone tree when the customer calls was made years ago before my time. And I’m so thankful, it was, it really just couldn’t be more simpler. It’s just came out of a belief that when a customer calls, they should be able to talk to a real actual person. And it’s just that simple. We answer over 2 million calls a year that way, and we’ve continued to build on it. We’ve implemented 24 seven customer service. So now anytime you call, you can talk to a real actual person. And last month we did something that I’m really excited about.
Jimmy Stead: In our mobile app, we have a feature now that if you call us after you log in, after the authenticate, we’ll pass your information to our call center and they’ll be able to greet you by name and they don’t have to reauthenticate you, they already have the authentication from the mobile app, which I think is just such a great feature. It just continues to build upon that same idea of you should be able to talk to a person without barriers. We shouldn’t get in our customer’s way from interacting with us.
Gina Bleedorn: It’s funny to hear you say that Jimmy and I say funny, because it’s such a wonderful and valuable customer seamlessness feature where you’re reducing friction, that very few banks have actually employed, but other industries have started to employ. And once a consumer experiences it in another industry, they start to transfer those expectations to all industries. And it’s wonderful that you are doing it in banking, whereas we know the expectations and delivery of a lot of technology oriented service deliveries are somewhat behind other industries. Tell us about your unique background at Frost, how you come from digital, but that has propelled you into the role you are now in over all of consumer banking and the importance of digital as it plays a role now in that foundation plays a role in your job, very big job at the bank.
Jimmy Stead: Yeah. So it might surprise you. I actually came out of school. I’m a hometown boy, I went to school in the same city I grew up with an accounting degree, and most of the people in my life thought I was going to be CPA and have a long career in accounting and finance, because it was just kind of something that came natural to me. But for me, I wasn’t happy. I was really missing something. And it was sort of a sense of purpose that meaningful mission that we’re all kind of looking for and motivated by. I just didn’t have that when I was doing that job. And so I was pretty lost for a while and I was pretty motivated and driven kid, so for me to be lost, it was a little unusual, but I found Frost Bank.
Jimmy Stead: I knew them to be a good company. I didn’t know a whole lot about them. They gave me a job as a personal banker, as a part of a leadership development program. Fast forward, 21 years, I’m still here and loving the work I get to do at Frost and the people that I get to work with, but in that journey, that really the pivotal thing that changed everything for me and really engaged me was about the time that I started was the time that our CEO at the time, Dick Evans and some of the other executives, they decided to build online banking in-house which really for a bank, our size back then in 1999 was a major decision. It was very unconventional and Dick’s quote from back then, Dick Evans, our CEO, his quote, and its famous inside Frost was, “I don’t want to vendor between me and my customer”, which really set the stage.
Jimmy Stead: And I was so lucky to be a part of the initial team. And we just had this team that was going to figure it out through that process, I just volunteered to do things. I’d played as many different roles as I could. And I got to learn a whole lot about technology, about the internal workings of technology and the really technical stuff. But also I got to learn about the customer facing side and how you build technology for people that makes their lives better and simplifies things. I got to be a student of what it takes to build a great team that can accomplish something great like that. And one of the things I really learned through that whole process that’s really driven me is that I find motivating. I talked about having passion earlier. I think rooting out complexity and trying to simplify things is my favorite thing to do.
Jimmy Stead: And that’s really about what building technology for people is about in my opinion. And so I’ve got a lot of experience doing that. Another sort of exciting event was back in 2011, when we decided to build our mobile app, we had over a decade of experience at that point. And we brought together a small team of people. And I think we’ve produced something really special. It’s kind of Malcolm Gladwell’s 10,000 hour rule. we had learned and we had practiced and we had made mistakes and over time we’d gotten better and better. And then we put this little team together and we built an app in nine months. And the first week we had over 10,000 downloads, we had a five star rating and it was just a really great experience, but it went back to, we had had a decade of experience at that point.
Jimmy Stead: So to get back to your question Phil asked me to lead the consumer bank. It was definitely a non-traditional choice of the guy that kind of grew up and then led digital for a while. And I think really the idea there was to bring the personal experience that magic that our people have with our customers, that connection, they have closer to the digital experience, which was also really strong and good, and we needed to bring those things together. And then a couple of years later, it was Phil also asked me to lead the IT department. So that started earlier this year in January. And boy, it’s been exciting to have an even wider view understanding the sense of urgency we have to have to have modern, nimble technology that can power the company and make experiences for our customers simpler and better. It’s really a high stakes thing.
Gina Bleedorn: Jimmy, I’d love to know you’re over IT, as well as the whole consumer banking experience. Do you think that a lot of banks, peer banks, have silos maybe even chasms between IT and the rest of the delivery of the consumer bank. And do you think that your position at Frost has allowed you to connect more dots, let’s say, than maybe others have been able to, because of that oversight of IT?
Jimmy Stead: Yes. Your question is really a very good one. You sort of said it all with your question actually, because the benefit of it is being able to see both sides and bring it together. One of the things just kind of growing up in digital that always just really stuck with me was if I had a developer like a software engineer and I said, what are you working on? I always wanted to hear what problem they were solving for the customer. And in the early days, what I would hear was how cool the code was that they were writing, which I also found interesting, but I always wanted the engineers and the database administrators, and I wanted everybody to be engaged in that customer problem. What we were solving, what we were doing for the customer and what the context and meaning of that was. And so being on both sides, the business and the technology and bringing them closer together and removing those silos and boundaries, it’s been great and it’s really helped us do that more to give everyone that sense of context and understanding of each other.
Gina Bleedorn: I love how you explained that and especially the point about the why and digging into the question. And I think that the orientation of most tech and IT experts are just to explore the possibilities of how far tech can go. It can do this. The code is so cool, just like you said, but is that in alignment with the why of why we’re doing it for the customer benefit? And so you’re bringing that together, clearly talk about for a minute. What is it like at your size as a regional bank that certainly you’ve, you’ve got a leg up far bigger in size than many community banks, but certainly not to the size of the super regionals and the nationals of which in many cases are banks you’re competing with for customers. How do you compete specifically on technology when budgets are simply a proponent of size, how do you compete with them to deliver the best in class experience that you are?
Jimmy Stead: I think, there’s no doubt it’s a challenge. We are at a scale where we can have the products and services and technology that the big banks have but our goal is really not sameness. We won’t win if that’s what we’re trying to do. I was listening to y’all’s podcast and talked a lot about doing good and making people’s lives better. That’s really what we’re trying to do, if we just focus on doing that really well, then we can compete and win. So yeah you talk about 15 billion dollar budgets that the large institutions have around technology. And we can’t compete with that spin, but we can stay really focused. we don’t have the luxury of spraying money over a bunch of different experiments and hoping one of them takes. We’ve got to be laser focused on the things that we really think are going to add value.
Jimmy Stead: And we just have less room for error. We also have to stay nimble. There is an advantage of being smaller. You’ve got less bureaucracy and you can move a little bit faster, but you’ve got to constantly fight that back. In order to stay nimble, you got to be constantly fighting to be on the right technology that’s fast and nimble and integrates well and fight back that bureaucracy so you can move quicker. And then the last point that I’ll make on this is the advantage that we have is we’re closer to our customer. And most of the people that listen to this are community banks and they’re close to their customers, and that’s an advantage to know your customer and to know what they’re looking for. Hopefully that helps us be more focused on the things that are meaningful and valuable.
Sean Keathley: Jimmy, one of the things that strikes me about Frost and just the authenticity, the strength behind the word written or said, and, and the power of doing what you say and being committed that in 2020, that is a real testament to who you are. And I’ll give you an example. There was a big plan for branch expansion, the notion being we don’t need to over branch or branch to the degree we did before digital existed. But I think Frost has this relationship strategy that you need people where people live and people work. And I think there’s no better Testament to that than Houston, where Houston’s been a newer market for you.
Sean Keathley: And there’s been expansion goals and Houston’s a big market. Not everyone lives in the city center, you’ve got people commuting. And I think your branch plan has been around where people have asked you to go and where the customer needed you, but just talk about maybe the difficulty in thinking about balancing that as COVID hits. And you mentioned Phil and Dick. And so there’s been a CEO transition and the bank has only continued to advance. And so now Phil’s saying, we are committed to these markets and that’s challenging, but just talk about the strategy of how the physical network plays a role in being community oriented.
Jimmy Stead: Yeah. We’ve decided to try to double our size in Houston, and that is part of our organic growth strategy. And we are very committed to it. We’ve already opened up 20 additional locations in the Houston market, and we’ve got five more to go plus just outside the Houston market where we’re going into Bryan-College Station. So I think the real core of your question is obviously branches are a little less needed over time, less and less needed to take care of transactions. And it’s undeniable that the pandemic has sped that process up less need for transactions in the branch. But I still don’t think it means the branch is dead. At least not for a company like Frost Bank. We’re really at our best when we have people who are in communities, they’re engaged in communities, they’re making a difference in communities, and for us, the branch serves as a focal point. So we have a lot of communities that we weren’t serving as well as we could in Houston, so we set out to fix that.
Sean Keathley: The other thing that really stands out with Frost, you have so many tenants of a community bank mindset, but the sophistication and the forward thinking, that’s allowing you to compete above your fighting weight. At 40 billion dollars, you are competing with banks much bigger than you, and you’ve been outlining why. Another element, I think that a lot of two and 3 billion, which are still even bigger than the average bank, the thing they worry about is how do we scale this notion of who we are. And so I think a good way to think about that. I think about a branch in Corpus Christi or Boerne Texas, George Strait lives close to there. How about the University of Houston? And I think that notion of how you’ve been able to make the Frost brand work in the neighborhoods. And I imagine part of what you just said is how you do that.
Jimmy Stead: Yeah. You mentioned the University of Houston. We opened up a branch there pretty recently across the street from University of Houston in an area called the Third Ward that the banks had largely ignored. And we put a team there that has really engaged in that community. And we’re just really happy with what’s happening and how we’re growing in that market and the impact that that team is able to have by really engaging in the community. So it’s one of those proud moments for us.
Gina Bleedorn: Jimmy talked to us about the COVID changes. We all certainly know in macro what they are, but the implications on the change in business, as you said already, transactions are going out. They were already going out now they’re especially going out. And now the motor bank, the drive up the forgotten area of car banking perhaps has new relevance. Talk to us about what you see as the formative, both short and even longer term changes in the role of the branch post COVID. What changes are you guys making right now? And what changes do you think you’re going to have to make in the medium to longer term?
Jimmy Stead: I think we’re really happy that we had 70% of our branches with motor banks. I mean, I think maybe, like you said before, the pandemic hit, you worry that they’re hard to manage, harder to manage when you, especially if you’ve got a detached motor bank, they’re expensive, obviously. So we had, as we opened up new branches, we had been very careful about when we would put a drive through, but we were sure happy we had 70% of our branches with them when the pandemic hit. So going forward I don’t know that our strategy has necessarily shifted dramatically. I think what we do every year is we look at our network and we say, where do we need to grow? Where do we need to reorient?
Jimmy Stead: Where do we think we’re no longer, it’s no longer needed. And it’s just that constant process of re-evaluating that, and it’s a regular habit that we have and it’s in our muscle memory. And so things are always changing in that process. There’s always new factors to consider. And so that’s where we are today is like, okay, the pandemic is hit, transactions are shifting. And we just have to think about what that means as we do these evaluations.
Gina Bleedorn: Jimmy, when you talk about the retail banking channel, when the retail banking channel is designed to be human, and that is what it is differentiator is, do you see any role for an ITM or a tellerless branch or by just a deployment, a standalone let’s call it drive up ITM somewhere where either it doesn’t make fiscal sense to put a full branch or even a very small branch or in markets where you might have had to consolidate branches because I’m leading a little bit with my own opinion, but I very much want to know yours about the human interaction point. And we have long said that do not put ITMs like in front of your tellers. People are coming to a location to talk to people, but if it is not feasible to have people, is there a world where it has a role in having a point of presence, and a point of service that is extending your presence and perceived presence as a spoke in areas that again, may not warrant as much physical investment?
Jimmy Stead: Absolutely. I think you nudged a little bit and then said, you’re going to lead on the question, but I think you’re right. I think what you described is, in my opinion, the right use of that technology,=. it solves a problem. Putting it in one of my branches or a detached motor bank, I don’t know what problem that necessarily solves, but as you described it, if we can’t locate a full branch or it doesn’t make sense to do that, then yeah, it’d be a great place to make a little bit more personal connection and still fulfill some transactions.
Sean Keathley: Jimmy, if you just think about the culture and the brand of the bank and how through your entire history, that’s allow you to be so focused on the type of people you hire. And then the followup is how did that play a role in what has just happened with PPP and this true desire to serve the customer, which the results are just astonishing when you look at the type of volume Frost processed.
Jimmy Stead: I think the thing about PPP and I’m proud of our industry as a whole, and I’m particularly proud of what Frost Bank did. We helped whole lot of small businesses and families. And I think we’ve been talking a lot in this conversation about purpose and a meaningful mission. It wasn’t hard to get people to work seven days a week and 20 hours a day to help save small businesses and get people paid. I mean, people were begging to be a part of that effort and it was one of the most unbelievable things I’ve seen in my 21 year career, and Frost Bank in particular helped over 19,000 small businesses for $3.4 billion. When we started this, I think we would have expected a bank our size to do about 900 million in PPP loans. So we did the equivalent of about four banks our size, and we had hundreds, probably a thousand or so.
Jimmy Stead: And we just had so many volunteers who worked unbelievable hours. And you talk about why do community banks, when and why is there a role for community banks when so much is technology driven these days? Well, we had people calling our customers at eight o’clock on a Sunday night and saying I’m reviewing your PPP application. And I found something that’s missing. I want to get it submitted tonight. Let’s work this out. And our customers were blown away by that, and so thankful. That’s the power of having a bank that has a relationship with you and you can trust and is looking out for your best interest. There’s a real value proposition and reason to be with the bank like that. I think PPP for so many of us helped us have a tangible provable value like we do every day. We do that every day, day in and day out, but it customers really saw it and felt it during that time.
Gina Bleedorn: I would just love to underscore what you just said. That to me is the most mind blowing, Jimmy, that you had hundreds like a thousand more than a thousand volunteers at your bank begging to help. That’s hard to believe they were begging to work around the clock to help people in a way it was like the moment to do the very thing they really want to do every day. And they had an ability to do it in an unprecedented way. So, that, to me, is amazing.
Jimmy Stead: Yeah, it is amazing, when there’s a meaningful mission, like we talked about, and that was a meaningful mission, it’s not hard to motivate people to get the work done. It was inspiring. I got to say it was one of the most exhausting and inspiring things I’ve ever been a part of.
Sean Keathley: Jimmy, as you describe what the culture of the bank allowed everyone to do. It really sets up one of my really key questions for a lot of our listeners. You’ve already demonstrated that you’re going to compete with other super regional banks and banks with 11 to $15 billion budgets. Tell us about the things that in kind of a summary form here that that Frost Bank is doing to behave like a community bank at scale.
Jimmy Stead: I think the one thing I’d say about this is there’s so many banks now that are saying that their technology companies and technology companies are entering banking and all the conversation these days is around scale and getting the cost out. I would say we absolutely have to have a sense of urgency around those things, technology, efficiency, scale, like those are urgent topics, but that’s not the reason we do this and it’s not the thing that’s really going to help us compete, and win it’s doing it for the right reasons and it ultimately look at Frost Bank, why have we been successful over the years is because we’re in this to make our customer’s lives better. And we’re in this to be a force for good. And we think we can do that. And so with all the talk about all these other things that are absolutely urgent and important, I don’t want to lose sight of what we’re in this for.
Gina Bleedorn: Jimmy, we can’t thank you enough for, well, really, actually all you’ve done to not only help your bank, but the banking industry and by proxy, the customers that you serve and the way that you can influence even other banks to serve their customers better, following in the footsteps of the things that Frost has done well, as you know, or have been exposed to on our Believe in Banking Podcast series, we set this up post COVID as a way to be a source of both knowledge and inspiration and idea sharing for the banking industry that we love and serve day in and day out. And that’s the premise behind Believe in Banking. It’s very clear, obviously, that you believe in banking and thus, we would love to know why Jimmy do you believe in banking?
Jimmy Stead: I love the way y’all close the show, by the way, that’s such a… You got to really think about that question. I think it goes back to what I just said a second ago is whether you’re building technology or whether you’re on the phone with the customer, or you have them face to face, whatever you’re doing, banks can really make a difference and make the world a better place. And I think your audience is the community banks. I think they’re doing that. I think that they’re making the world a better place. And when we think about our business that way, and we think about building technology that way, and we think about the policies that we have in our company and where we focus, if we’re focused on making the world a better place and doing good in people’s lives, and I think banking can make a real difference in the world. And so that’s why I believe in, I mean, finances are so critical to people’s lives and we’re right in the middle of it. So what an opportunity to do good for people. So that’s why I believe in banking.
Gina Bleedorn: That’s me clapping. Thank you. That was beautiful.
Jimmy Stead: We’ll good. This was fun, y’all
Outro: You’ve been listening to Believe in Banking. A podcast series created to empower decision makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, believeinbanking.com.