In our special summer series, we’re revisiting some of our most popular episodes and rounding up some of the best thinking from banking leaders featured on the Believe in Banking podcast. In this special summer episode, we’re highlighting insights from: Ryan Kilpatrick, executive vice president and chief brand and communication officer from Origin Bank; Brad Tidwell, president and CEO of VeraBank; and Jimmy Stead, chief consumer banking officer at Frost Bank. In these enlightening conversations, these leaders talk about the year of change that COVID brought to banking and how the pandemic accelerated the way customers bank. They discuss how their institutions managed through change and helped people understand what’s happening and what’s coming. Finally, with purpose at their core, these bankers demonstrate how banking can be a force for good.
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 podcast for Believe in Banking. I am Sean Keathley, President and CEO from Adrenaline. Following our last conversation with Todd Nagel, he’s the CEO from Incredible Bank, where he talked about his belief that banking should actually be the center of every community. We thought what better way to kick off our special summer series than do a roundup of some of the best thinking from all of the banking leaders that we have featured on our Believe in Banking podcasts. So in this special summer episode, we’re going to revisit some of the bits of brilliance and meaningful moments from our discussion from different banking leaders.
Sean Keathley: We’re going back to three or four of the most popular podcasts as defined by our downloads and we’re going to highlight insights from first of all, Ryan Kilpatrick, who is Executive Vice President and the Chief Brand and Communication Officer from Origin Bank, Brad Tidwell, who is President and CEO of VeraBank and Jimmy Stead, who is the Chief Consumer Banking Officer at Frost Bank.
Sean Keathley: These leaders are taking on some of the biggest issues in banking. They’re talking about relationship banking in the modern era as redefined by the COVID pandemic. And they’re talking about competing with big banks. Many ways are delivering on customer expectations and really thinking about doing that in this new world where the consumer is in charge and the expectations that it’s all channels all the time and 24 seven. We’re happy to return to these enlightening and thought provoking discussions and hope you enjoy.
Sean Keathley: Ryan talk about what your… You’ve just redone your values. And that was really pre COVID. And I think that’ll be the perfect setup to some of the challenges we’ve seen as you’ve gone into 2020, but talk about how you’ve updated the way you talk about your values as the bank has matured and grown, and now you are public, you’re on NASDAQ, but I really like how you guys have not forgotten what got you here, but still knew it wasn’t stagnant. It had to be refreshed a bit. So talk about that for a second.
Ryan Kilpatrick: Yeah, definitely. And we did not change our core values when we changed the name of the bank. We wanted to remain true to who we were and what got us to the point that we are in. But trust and innovation and being flexible and forward thinking, respecting ourselves and others is such a big component of who we are, the individual and corporate commitment to our community. Those are some of our values, again, that we just consistently talk about with our employees, whether it’s emails from our executive team to all employees, whether it’s through conversations and management meetings, we’re always coming back to those values. One of our core values that I like a lot and certainly applies to where we are currently in dealing with COVID-19 and how we’re able to impact customers in a different way, is our ability to be flexible.
Ryan Kilpatrick: And we changed our vision statement. We were assessing it, the old vision and thought we need to… Our focus has not necessarily changed, but it’s evolved. And so our new vision, I think, speaks to that in terms of what our strategy is and what we’re trying to do as a company. And then obviously that’s reflected in our brand. But our new vision says, to combine the power of a trusted advisor with innovative technology to build unwavering loyalty by connecting people to their dreams.
Ryan Kilpatrick: And we think that’s powerful in terms of tying the relationship aspect of our people being trusted advisors, and certainly with the importance of technology and how people are interacting and doing business. We want that combination to create this unwavering loyalty that’s going to connect people to all the things they want to accomplish. Because as bankers, I really think, and we think, let’s help people accomplish the dreams that they want to accomplish. And so that’s what we’ve tried to do and I think an example of our ability to be flexible, certainly in these changing times.
Gina Bleedorn: Given everything that’s happened, what do you think this all means for the future of banking, but the future of Origin? What do you think we’re going to see and what do you think Origin’s going to have to do in the new world of March 125th that may go on for another 125 or more days?
Ryan Kilpatrick: Yeah, well we hope that’s not the case, but look, I think anybody who’s in a leadership position, whether it’s leading a bank or leading any company it’s examining where we are and how we can be more efficient certainly, but how we can be more impactful and how we navigate through these times. I have conversations with people in the industry and certainly we have them internally about, how does this change the way that our customers are going to bank? Certainly as is the case probably with every bank and credit union out there. They’re seeing, I would imagine, a higher flux of customers using their mobile device or their desktop to do banking.
Ryan Kilpatrick: We all know that’s critically important. I think that gets accelerated substantially through this time, but also moving forward. So what may have been to be, say in two to five years for many bank executives, as they consider investing in technology and how do they weave that into their normal business model, that has to be accelerated.
Sean Keathley: Brad, the next question may be a bit sobering for our listeners, but I hear you talking about the realistic view on things. I have said what you’ve said, the consumer is largely the current market. When the consumer is healthy and spending and saving, things are well. And that is not the case in 2020. As you think about the philosophy of a bank founded in the great depression, the philosophy a bank who changed CEOs in some of the hardest times in the state of Texas, economically in the late eighties, are you not better prepared to deal with this pandemic and this methodical growth? I mean, I don’t want to name any institutions, but think just at 30,000 feet, there are a lot of community banks. The average community bank, is still, to me, at an alarming asset size.
Sean Keathley: It is still surprising given the size of Chase and their technology budget or BFA that the average community bank being just under $400 million. What are your thoughts on how that will impact things going forward as you talk to other CEOs with the sentiment? Has everybody been cautious as VeraBank? Is everybody as well prepared?
Brad Tidwell: That’s a great question. And I’ll take it in a couple of parts. One of the interesting things, I was on a conference call with the regional director for the Southern region of the OCC recently. I think it’s 13 States stretching from Texas to Florida. So it’s a big swath of the country and it’s a very economically diverse and vibrant swath of the country. But one of the comments that he made and I thought he was spot on about this was, folks in my role, there’s a lot of bank CEOs who have been through multiple crisis before.
Brad Tidwell: Myself got in during the Texas banking crisis of the eighties and we went through 9/11. We went through the tech bust, we went through the great recession of the late 2000s, but the average banker, the average lending banker has not been through many of these cycles.
Brad Tidwell: And so I think senior management like myself and my peers, we’ve got an even tougher job to make sure we help our folks understand what’s happening and what’s coming and why we have to take the difficult steps we do during this period of time to manage through this. So I think that’s one thing. Secondly, does the size of your bank matter in the future? Yes, it does. Does it matter as to how you survive this current crisis or not? Maybe not. There are a lot of very, very well run, from a credit perspective, smaller institutions, and there are some poor run, from a credit perspective, smaller institutions.
Brad Tidwell: There are some well run larger ones, 3 billion, 5 billion, 6 billion, 20 billion banks out there. And then there’s some banks that maybe have taken risks they shouldn’t have taken. So I don’t know that size will determine a bank’s ability to manage through the economic challenges of the pandemic. Now, if you don’t have enough capital, sure, but that’s not always sized dependent. So I think size is much more important as it relates to how you’re going to compete in the future. I do think as we look around our industry today, there are banks that are taking multiple different approaches. I think to your point, the banks that are going to be most successful and they probably have to be a billion or above and a billion’s not real big, but a billion or above, they have to diversify their revenue stream. If they are purely a spread lender, if all they can do to make money is loan out deposits at an acceptable spread, it’s going to get tougher and tougher and we’re seeing that right now with that interest margins.
Brad Tidwell: If you are not committed to treasury management, if you’re not committed to wealth management, if you’re not committed to non-interest income, then I think you are going to find yourself very challenged over the coming years. And there can be plenty of challenges if you are committed to those things, but the banks that are pure spread lenders, they’re the ones that are going to find it most difficult to compete regardless of size. Then if you take size into consideration, I think the number one challenge, and I had this conversation with a banker that I respect a tremendous amount, an excellent banker they’re surviving the pandemic just fine, but they’re not a large bank at all. They’re less than three or $400 million, well less.
Brad Tidwell: And he told me, he said, “Brad, it’s the technology.” He said, “How do we keep up with the technology spend?” And then it was a rhetorical question. The answer was, “We can’t keep up with the technology spend.” And so how do they compete? Because I really believe, and you’ll hear bankers say all the time that are in these small communities, well that our customers, they don’t demand all these things. They don’t want all of the technology services that Chase or Capital One or the non-banks can provide. I think that’s BS. I actually think that is a cop out on our part. Our customers want all the same things, but they also want that personal service.
Brad Tidwell: And so to believe you can get away with not having online account opening, not having DocuSign, eSign, not having the ability to do lending online, not have imaging services. And to think that you’re not going to have to have those things because your customers are small town customers and don’t want to, I think that’s a tremendous mistake.
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’s 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 derive 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 in front of your tellers. People are coming to a location to talk to people.
Gina Bleedorn: But if it is not feasible to have people, is there a world where it has a role in having a point of presence, any 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 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, that’d be a great place to make a little bit more personal connection and still fulfill some transactions.
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 in a summary form here 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, those are urgent topics. But that’s not the reason why 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, when you 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.
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.