In our final year-end special episode, we revisit topics that defined the year. Sean and Gina discuss the rise of Purpose Driven Banking in 2021 and how it sets a new standard for the industry moving forward. A term coined by Accenture, this approach to banking helps financial institutions mean more to their customers and members, truly living up to their essential role in people’s lives. Simultaneously, banks and credit unions that embrace a deeper sense of purpose find fresh opportunities and expanding influence. Tied to a renewed sense of purpose is community-building in community banking and new ways of thinking about serving – because community represents more than just geography. Finally, our hosts provide a preview of our first episode in 2022, featuring a community banking leader who will kick off the New Year in style.
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. I am Sean Keathley, President and CEO of Adrenaline.
Gina Bleedorn: And I’m Gina Bleedorn, Chief Experience Officer at Adrenaline.
Sean Keathley: Well, Gina, it’s hard to believe, here we are. This is our end of the year wrap up podcast and we’re excited. We’ve revisited some of the topics I think that really, in a lot of ways, sort of define the year.
Gina Bleedorn: Yeah. I’m interested in figuring out how many of our predictions came true. I know we said we’re not futurists, but maybe we are. So I’m interested in looking back on that to figure that out. I think we were right about a lot of things. Maybe not everything, but all incredibly valuable learning.
Sean Keathley: I under promise and over deliver. I’m not sure futurist, but I do think we have so many wonderful clients and have our finger on the pulse. And so it has been interesting to do a little bit of reflection. But to talk about that reflection, if we think about some of the key things we touched on, it is still relevant. This idea in banking of striking the balance between technology, which has been growing in popularity, and then with COVID, became a key to survival, but also human consultation. And that’s especially important when we’re talking about money, which is personal. And those pressures from the pandemic really caused, I think, maybe, acceleration and transformation of the consumer experience, especially as it regards to banking. So as we think about that, Gina, what are you looking back on in this episode as well?
Gina Bleedorn: Yeah, a huge piece, probably one of the most important takeaways for any bank or credit union, if you’re taking away anything, is this idea of purpose-driven banking. That is the idea that you are helping financially improve lives, you are advising and not just transacting, and you, as an organization, if you go the purpose-driven banking route that the consultancies are outlining, you’re willing to forego short-term fees that actually encourage, in a way, and further promote bad banking behavior to lead to better financial decisions for your customers. So it’s really a new bottom line for banks and it’s one that has a longer tail. It’s not about the quarterly earnings or maybe even the annual, but about the future. And that is what trusting relationships are built on now and will absolutely be built on ever moreso as we progress.
Sean Keathley: Well, it’s a great point and I think trust in banking has never been more critical. And to build on that, and it’s not a new idea, but in a lot of times we had to remind our community organizations, they had this power. This idea of community building and being community minded, you know, having branch managers that are from the neighborhood they serve and having the branch staff reflect the neighborhood they’re serving. And really, I think of a Frost example they told us about where they had a high school graduate from a part of Houston that was a tough neighborhood and underserved, and they were committed to serving all parts of Houston, and they hired a banker that had graduated from that high school. And so you’ve got someone running the branch in the neighborhood who grew up in the neighborhood. And I think it’s that kind of community building, which is bigger than just geography. And we’re going to talk about some of those topics as well, that really build a layer under what you mean by purpose-driven banking, like making a difference.
Gina Bleedorn: Yeah. The idea of community building, community integration, community presence even, is something that we cannot stress enough. As long as branches are relevant, traditional banking institutions will also be relevant. They are your superpower to competing against neobanks, challenger banks, FinTechs, and big banks, big national banks that are coming in from the outside. That community piece that you are quite literally local, real, present and committed by your physical presence, combined with the idea of having a purpose-driven approach to really just helping people with their finances, that is what consumers want. And more importantly, for you, organizationally, that is how you will win into 2022 and beyond.
Sean Keathley: Yeah, exactly right. So here it is, our special wrap-up for 2021. We hope you enjoy.
Gina Bleedorn: We want to talk about a topic we’ve discussed before, but has new relevance, and I think, growing relevance every day, and it’s the idea of purpose-driven banking. Accenture coined the phrase that’s now become broader than just Accenture and asked if this is banking’s electric car moment because it is that a little bit. The pandemic has accelerated the need to serve as heroes and I think banks have the opportunity to do that. Banking is a service that everybody needs. That is why FinTechs have slowly tried to make, let’s call it enjoyable experiences, out of different areas of banking by taking just friction out of payments, and maybe friction out of buying a car, and mortgage. And little by little, they are encroaching on the business proper of traditional financial institutions, but traditional financial institutions are coming back and they’re coming back with ways of exemplifying the idea behind of having a greater purpose, a higher bottom line, if you will, besides just profits.
Gina Bleedorn: And some ways you may have even seen some of these advertising campaigns are national. PNC for instance has a new low cash mode. Users get 24 hours notice so they can bring their accounts out of the negative, they can avoid fees. What’s nice about that is it is enabling and empowering consumers to take charge themselves to avoid paying overdraft fees. So PNC is giving consumers a way to help themselves. And also related, there has been a surge of underbanked support and underbanked programs. TD launched Essential Banking, targeted at the underbanked low fee, no minimum balance. And the underbanked community in the U.S. is about 18% of households in the country do not have a primary checking account or a primary financial institution, which sounds like a shocking number, but all of these ways of reaching varying audiences and extending further to the consumer to give them what they need, and what’s best for them and their lives, and their financial wellness. All of this, in our opinion, is examples of banks driving towards purpose-driven banking.
Sean Keathley: Yeah, Gina, it’s exciting to see these more traditional banks doing these more creative things. You know, and Ally was one of the early ones to talk about waiving fees, but in doing so is interesting. One of the things they came up within their leadership report, of the $12.4 billion dollars in overdraft fees in our industry in 2020, 95% of the consumers who paid those were financially vulnerable. And that gets back to what you talked about, the amount of underbanked people, the wealth gap, the average American going through all these challenges is a great opportunity for these banks. And the banks have a big advantage when asked who they trust.
Sean Keathley: There’s a great Finextra article about this, Americans trust traditional banks more. More than the government, more than government agencies, but far more than big tech and FinTech. And it’s thinking about who has their best interests in mind, who is going to safeguard their data, who believes in them and wants to help them. So these more traditional banks have a real advantage when they start to combine the trust they have in the consumer in some of these creative ways to do good.
Gina Bleedorn: I think the idea of building community sounds old, maybe, but is actually new because there are so many ways to build communities now and so many different varying types of communities. And on top of that, people are seeking like-mindedness in communities of all types more than they ever have. The opportunity in banking actually, for new customer acquisition, has never been higher than it appears to now be in 2021. 1 out of 10 people say they are considering switching primary financial institutions in 2021, according to KPMG. As a point of comparison, between 2018 and 2019, about 4% actually switched banks and now 10% are claiming that they are going to, at least, consider it. That is higher than it’s been in a decade. On top of that, according to a recent study by Novantas, 25% of businesses are expecting to switch their primary banking relationship this year as well.
Gina Bleedorn: So I think the time of reflection that was 2020 have forced financial wellness to the top of many people’s lists, as well as not being complacent with the status quo and wanting to make changes for good. This is an amazing opportunity for community institutions to take hold of because the top six banks control over half of the market share. So the majority of these people are looking to exit out of their large bank relationship into a more localized institution, and that’s where the idea of community, both virtual and physical, comes in. While Luvleen was talking about virtual-only communities, when that’s overlaid with physicality, that’s a sweet spot of differentiation for you. So capitalizing on the communities where you sit, and reaching the like-minded people in those communities, those are the communities you want to build.
Sean Keathley: I do agree the idea of community is not new, but I think we’re thinking about it in a new way. I mean, it may be in a bit of an expanded way, and there are a few examples we can reference. And one of our good clients, Town & Country FCU up in Portland, Maine, and thinking about the local communities there and not only the types of people, but the type of life stages. And an example of a very targeted ad for mortgage is a little puppy in a luscious green lawn, and it talks about more space for him to roam or that new gaming room that is the perfect place for that young professional that is a gamer and has a specific place to do it. So thinking about those sincere moments that people are dreaming about, and those ads are talking to them directly. We continue to think about communicating in all channels, but the reason people are going to come in are going to be more purposeful and thinking of people’s life stages.
Sean Keathley: I mean, those are moments when people are going to need their bank, and maybe get the ad online, but go see their banker. We’ve got another great client and very visionary CEO, Todd Nagel, an IncredibleBank story, which is just awesome. This notion of doing good in the communities, and the amount of help they provided, the areas they serve, and almost a million meals they donated in 2020. And one of the most exciting things, I think, and so unique about IncredibleBank is this 15-acre farm they have in central Wisconsin, and this notion of really thinking about feeding Americans, and there’s nothing better than that central Wisconsin organic food. And this is an example of truly living up to your values. It’s not just speak. You see an entire organization and all their culture believing in doing good and there’s others, whether it’s ICBA’s Bank on Local, KeyBank is talking about financial wellness. We’ve been talking a long time about a role of branch and the future is going to be education. So just a few different examples of how expanded community is coming to life.
Gina Bleedorn: As we wrap up 2021, and look ahead to 2022, we wanted to preview an exciting guest we have in the first podcast of the New Year. He has a heart for service and is truly a linchpin part and parcel of the community he serves, and exemplifies purpose-driven banking to the absolute nth degree, not to mention he is a gem of a human being.
Sean Keathley: Yes, it’s all true. And that man is David Trautman, Chairman and CEO of Park National Bank. Our conversation covered so many topics and I honestly think it’s many that banking leaders are facing today.
Gina Bleedorn: You’ll also hear from another brand leader at Adrenaline in that conversation. You might even hear the completely unflappable David answering questions in the midst of a fire alarm going off behind him. That is the type of CEO he is and interestingly, he even said it’s the type of bank they are. They weather the hurricanes and the storms, and believe that they might get banged up a little, they emerge even stronger. It was a delight of a discussion, be sure to tune in mid-January for that conversation.
Sean Keathley: And one last thing, Gina, as we get ready to turn the calendar to 2022, let’s not forget to wish our listeners a Happy Holidays.
Gina Bleedorn: We wish all the best for everyone in your lives, your personal lives, your work lives. All of them are really connected. Happy New Year from us at Believe in Banking.
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 or flagship site, believeinbanking.com.