As the economy continues its pandemic recovery, financial institutions of all sizes are looking for effective ways to compete. In this episode, Sean and Gina discuss leaning on brand for growth. Whether you’re a financial institution scaling through mergers or expanding operations into new markets, considering the implications of your brand in people’s minds is foundational to your success. Are you looking at brand early enough in M&A due diligence? Do you have the right name as you move into new markets? What is your strategic plan moving forward? To discuss credit union growth, Sean and Gina bring into the conversation Adrenaline’s managing director of strategy Juliet D’Ambrosio who just presented the CUNA Conference. Juliet discusses the power of the credit union value proposition and ways for brands to look outside of banking for brand best practices and inspiration for the industry.
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 in 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: Gina, several of our clients are in the middle of mergers and acquisitions, everything from credit unions, some even buying banks, community banks buying banks to get into new markets. We’ve got Canadian banks buying US banks, two of those with TD and BMO coming for First Horizon Bank of the West. We continue to see this as a major trend. There’s an M&A announced every day almost. You’ve been talking to some of the people that are involved in these mergers. I’d love for you to talk to our listeners about what they discovered and how they think about some of the things they’re not doing as they consider these mergers and acquisitions.
Gina Bleedorn: What I find interesting is the lens of which the acquisitions are viewed and the lens of which they are not. Understandably in the deal-making process, there are so many uncertainties that all types of potential implications cannot be vetted in initial stages. But I think for many, certain types of considerations, specifically around the brand and around the branch network, are not being considered as carefully as they could or should be as much for planning the actual integration as for decisioning to make the merger or acquisition happen.
Gina Bleedorn: Making more concerted efforts to think about what a brand implication would be or a name implication would be: Do I have a name right now that is going to be limiting to these new audiences I’ve just acquired into, to new markets or new segs I’ve just acquired into? How will my name play in the short and long term? What happens that we are oftentimes helping clients reconcile years, in some cases maybe decades, but many years later that could have been more adeptly and efficiently planned in advance is the result of the conglomeration of maybe names, of maybe brands, or maybe just irreconciled differences between organizations that need to be reconciled for future growth. So those are some of the big eye-opening things we are seeing. Because oftentimes when we work with clients, it’s right after these deals have occurred.
Sean Keathley: Well, Gina, we know that one of the things that is driving this activity is the economy continues to recover from our pandemic, and share prices are increasing. That’s a key item for people to consider, but it’s also creating some competition for these banks. We know of several situations where there’s multiple bidders. If you think about just the overall idea of due diligence and what a bank and its executive board is doing as they’re thinking about merging or doing acquisitions, where do you think what you’ve just talked about, where does that fit in from a timeline perspective? When should they be thinking about things you mentioned?
Gina Bleedorn: Really in the last, I would say, third of the due diligence process, so depending on how long that is for your organization, it could be the last couple of months, let’s say. That means this is getting serious. We’re finalizing. We have not entered into a definitive merger agreement publicly yet, but we’re close. At that time, that is the moment you must consider what downstream brand and even branch network implications might be. For the brand, that could be reconciling the position of the brand or the name or both. For the branch network, it’s not just about closures. It’s about how to really leverage formats and think about how to get more efficient, and ideally in a way downsize while looking like you’re upsizing, so more locations that are smaller and ultimately saving you operational cost, thinking about that sooner instead of just being afraid of the impact of closures.
Gina Bleedorn: It’s not about closing. It’s about redesigning and optimizing. That ideally begins at the end of due diligence before entering definitive merger agreement. Then at the moment of definitive merger agreement, the planning really starts to happen between that moment and legal day one so in the next however many months that is. It could be six months on average, four to six months for some. It’s upwards of a year or more. But that’s when you are really planning. Also of note is alignment with the strategic planning process of your organization. We find so many times, especially with anything related to the brand, that there is redundancies and overlaps in the conversations that are happening in strategic planning and in that process that really could and should be aligned with what’s happening with the brand and, in some cases, with the branch network, too. So in general, it is much further upstream thinking.
Sean Keathley: The strategic planning point is a great one, Gina. That’s not something Adrenaline per se, but we are very aware of best-in-class companies especially when you think about an ecosystem serving the industry. One of those companies that we know very well and have great respect for is Cornerstone. They told us that they get these boards together. They start thinking about name change implications, and they maybe want to Adrenaline to come to a workshop. Cornerstone is a consulting company that has a lot of former bankers involved. We do know that they were doing a lot of strategic planning for banks really in a range of sizes. Thinking about it and talking to Scott Sommer, their CEO, perhaps we can even invite them on one of these podcasts and let them talk about what they’re seeing through their lens which is upfront in some of these deals and advising people from a strategic plan perspective.
Gina Bleedorn: Something related to that is the investment banker world also, not to mention the M&A attorney world. We’ve been talking to a number of folks in that realm alongside the advisory firms like Cornerstone that are really surprised at the whole world of the brand and the branch implications and think it has so much room in the conversations, and, in some cases, even getting deals unstuck and, in other cases, helping deals be successful post-merger or post-acquisition.
Sean Keathley: Well, getting back to the root of this, we really know the large driver for merger and acquisition is it’s around growth. We do see people also looking for bank leaders. That is another we see when there’s a strong banking team in a community you don’t serve. That’s another reason people are doing this. But we’re also seeing people branching again, building de novo net new branches and new growth markets.
Sean Keathley: I think that the pandemic shifted people’s living and working habits. People moved around in a way that’s unprecedented in our last few years. I don’t see these trends stopping when people are looking for expansion of talent and their expansion of growth. M&A is one of the key ways to do that.
Sean Keathley: We mentioned credit unions earlier. I want to bring in our managing director of strategy, Juliet D’Ambrosio. She recently spoke in Los Angeles at the CUNA Conference. Juliet also leads a strategy team that is doing a lot of trend reporting for our clients. We just completed a major trend report for one of our national clients who’s coast to coast. When we do those types of reports we get out of the silo of banking and we think about a consumer working across different verticals. So maybe Juliet, talk to us a little bit about what you learned at CUNA and what you’re seeing maybe at 30,000 feet not just for banking but the broader trends you’re seeing in retail and hospitality.
Juliet D’Ambrosio: I’d be happy to. Thanks so much for having me on the podcast. I’ve been, as you know, a fan for lo these many years, so great to be here. First of all, the CUNA Conference itself had a great vibe. It was palpable energy where people were just excited and thrilled to be together again. The conversations that came out of the networking events, that came out of the breakouts, that came out of the sessions were all focused in one area, and that was on growth.
Juliet D’Ambrosio: We had lots of conversations with credit unions really across the country different asset sizes that were focused on being able to take what they had to offer and expand it. They were looking at expansion in lots of different ways, expansion of their market footprint. They were looking at expansion into new business lines and areas. We heard a lot about wealth particularly. They were also just looking to continue to attract members, new members, younger members, members for whom they know the credit union proposition is so powerful. This is an industry, it feels like it’s raring to go.
Juliet D’Ambrosio: What we presented at the conference really focused on bringing together two of the things that you were just mentioning, Sean. One is what’s happening in the credit union world and also what’s happening in the world at large. How is that affecting our clients? How is it affecting the industry generally? One of the biggest areas of overlap between the trends that we’re seeing happening just across any industry, retail, hospitality, entertainment and what credit unions have their eye on really comes down to the idea of customer experience or member experience, but those ideas that the experiences that you create are what will distinguish, define, and differentiate you. In fact, 81% of credit union executives now, their top objective, it’s not digital transformation. It’s not product and service innovation. 81% are focused on improving the member experience. That was actually from our friends at Cornerstone from a study that they did. So there’s a lot of interest around this idea of customer experience and how we’re seeing that come to life outside of the financial industry.
Juliet D’Ambrosio: I’m going to give you an example, a personal anecdote. I went to the Nike Store with my 18-year-old son. The Nike Store, as you enter it, gives you the ability… There’s a wall in front of you. There’s a QR code. You can download the Nike app. You fill out a very few personal details which could include things like size, interests, what kind of athlete you are. It serves up a fully self-directed shopping experience for those who want that, which is what my 18-year-old son did. Immediately downloaded the app and was off and, in fact, was able to scan products that he wanted and have a live shopping assistant come to meet him and deliver him the sizes that he was looking for. I was interested in a more, I guess we would call it, traditional shopping experience, so I was able to move through the store, try on clothes, gather what I needed. It was utterly high-touch and felt very personalized to my needs. The reason that I bring this up is that it highlights a great example of what we can learn from looking outside at a retail greatest-of-all-time in terms of innovative customer experiences at the retail level.
Sean Keathley: Juliet, that’s beautiful and so spot-on. Let me tie it directly to the financial institution’s world and why they can’t think in silos. Your son is going to graduate in May and go off to college. Let’s say the next thing on your afternoon was opening a checking account. You chose the most convenient location to your area. Then let’s assume that this still exists in the world today, banks and credit unions that have not made enough progress on experience. Can you imagine how let down you would be if you walked into a tired location without a brand experience with a legacy format that was more about transactions? I just can assume that that would not be nearly as fulfilling as your previous stop.
Juliet D’Ambrosio: Exactly. That sort of highlights one of the things that all of our clients are focused on, which is how to create relevance across generational divides.
Gina Bleedorn: I think perhaps the biggest takeaway of what we’ve discussed today is that you matter as a financial institution. You matter in people’s lives. Your brand matters because that is what people literally think of you when they think of you in their lives. So recognizing that and always going to back to the ultimate customers or members that you’re serving, you have an ideal opportunity to get the attention and be integrated into lives to help people. In a way, that’s what Believe in Banking was meant to represent as you are thinking about every decision that you make. If that is at the forefront, you can’t lose.
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.