by GSBC President Michael Stevens
To provide an incentive for our student peer groups to continue to engage throughout the year, one of GSBC’s intersession projects is a collaborative peer-group project. These groups of 10 students identify a topic of interest, agree on an approach and divide the work among group members.
Technology is a dominant force in business strategy, especially in financial services. Technology innovations have changed how banks conduct business, banks’ cost structure and the banks’ competition. This past year, one of our student peer groups explored this complicated decision matrix of seemingly endless avenues for community banks while trying to manage costs and identifying revenue generating solutions. They found technology adoption to be critical in meeting customer expectations and maximizing employee productivity.
The peer group divided into sub-groups by asset size to zero in on recommendations appropriate for the size of the bank. The following is a snapshot of their recommendations:
Banks Under 300MM in Assets
Smaller banks are not immune to having to expand their technology footprint. The costs can be particularly challenging. For these banks, they should leverage the resources and arrangements they have. Regular communication with the bank’s core service provider will keep bank management informed of the core’s current technology solutions. Smaller banks have closer relationships with their customers. This is a strategic advantage. Banks should be exploring and learning about technology solutions with their customers. Finally, bankers can learn from their network of similar size and larger banks. A community bank can be innovative without being first!
Banks Over 300MM but less than 1B in Assets
Banks in this asset category likely face greater competitive pressure from larger banks. A supportive decision-making team within the bank to support technology and recognize the benefits is key. Banks of this size typically rely on outside vendors for various forms of technology. This requires vendor management expertise and a deep understanding of regulatory requirements. Identifying vendors with a track record of working with the bank’s core service provider provides more seamless implementation and helps to manage costs.
Banks Over 1B in Assets
Banks in this category face more national competition. They also run the risk that their customers may feel less loyalty and find it difficult to build personal relationships, which is commonplace in smaller banks. Larger banks must find ways to add value to create loyalty. Banks of this size need to proactively invest in their digital banking platforms. Investing in platforms adds value to customers by adding services. A robust platform also allows the bank to push personalized messages to help strengthen the relationship.
Banks of all sizes are having to adapt to changing technology and customer expectations. Expectations are being driven by the amount of data and technology available at a consumer’s fingertips. The path to address customers’ needs and improve operational efficiency should be aligned with the bank’s strategic advantages.
I take full responsibility for the above interpretation of the papers, but want to acknowledge the excellent work done by the original student authors:
Justin Clevenger (Colorado), Susana Salamun (Colorado), Emily Jobe (Iowa), Amber Ten Eyck (Kansas), Wesley Campbell (Kentucky), Lane Bangasser (Minnesota), Joe Young (Missouri), Audra Wyman (North Dakota), Brittany Kleager (Nebraska) and Colin Smith (Texas)
Michael L. Stevens
This is the third installment in a 4-part series of articles highlighting the work of our peer groups from the 2022 Annual School Session. Read the first two installments: