Category Archives: Community Banking

Technology and Leadership: A Powerful Combination…for Better or Worse 

Taking a class—and pursuing a degree—based on leadership is an interesting exercise. Not only are there many opinions about leadership, but there are also many opinions about leaders and the value of leadership training. One could look at leadership as a personal journey of self-expression, or a mission to change the world, or a daily exercise in running a business, or some combination of all these things and more. Ultimately, leadership is an idea/ideal that means something a little different to everyone who lives it. For me, my own leadership ends up being a reflection of who I am and how I see the world, and even if it is the best of all possible approaches for me, it may not resonate or work for anyone else as a template for leadership. In other words, I think leadership is personal but it emanates outward and impacts everyone I touch, and so leadership—or whatever you may call it—is extremely important.

Connecting leadership with technology adds another dimension that makes an already complicated topic even more confusing. First, technology—like leadership—is all around us in an infinite number of ways. Technology touches everything we do and affects how we do it. Second, technology is changing rapidly and so keeping up with technology is just as challenging as knowing how to best leverage it as a leader. Third and finally, technology is so overwhelming (maybe because of its omnipresence) that it often becomes the focus and overshadows the message it is attempting to facilitate. In other words, it can be a distraction, a temptation, and a way to avoid or miss what is truly important.

With all that being said, leadership and technology are truly a powerful combination. Whether the combination is positive or negative is up to the user. Kevin Kelly, in his book The Inevitable, talks about twelve technological forces that will impact our future. Most of the forces resonated with me, but the idea that stuck with me the most is his description of “filtering.” The idea is there is so much information—more than we could ever hope to absorb—that how we choose to find, sort, and absorb information (aka filtering) is critically important. If we passively absorb whatever shows up on the screen in front of us, we will be at the mercy of whoever is making filtering decisions for us. This allows us to see what someone else wants us to see, prioritize someone else’s agenda, and understand truth through a different lens. Even if we choose being proactive over passive and we manage our own information, we are still forced to trust the filters we use, because there are so many filters and sources of information. So, filtering is also an exercise in making good choices about what and who to trust. Beyond that, it is also about discernment, because blind trust is a bad idea no matter how good the filter. The takeaway for me is to understand I am filtering (or being filtered to) and to proactively and wisely work through this process so I can use the tools technology has to offer and live well and be an effective leader.

This class has also raised some excellent questions (another Kelly force: the value of asking great questions) about the nature of leadership in the digital age. Michele Martin from the Bamboo Project talks about leadership being non-hierarchical in part because of our networked world. Everyone has access to information and learning, and can be impactful because of access. Michele defines leadership as “hosting the space for people to come together to discover solutions through meaningful conversations and structured exploration and action.” Rather than trying to influence a group—a popular, but misguided approach to leadership according to Gianperro and Jennifer Petriglieri —leadership should be more about representing a group and working on behalf of those people.

Finally, Michele Martin also mentioned Peter Drucker on the Bamboo Project link above. One of Drucker’s famous quotes is “Management is doing things right. Leadership is doing the right things.” This quote resonates with me as much as anything else because in today’s networked world I could spend all day (every day) doing the “right thing.” I could respond to every email, meet every deadline, attend every meeting, read every leadership book, and burn myself out to the point that I’m tempted to follow Christopher McCandless Into the Wild. The key is to focus on the “right things” and forgo volume for quality, whether that be in activities, relationships, work responsibilities, etc. In this way, leadership style becomes lifestyle. And, maybe that is the point here. As the lines between work, home, family, the physical and the network become more and more blurred together, it is important to understand how it is all interconnected and works together (or not). As it becomes harder to separate and differentiate, it is also critical to understand what (and why it) is happening to ultimately avoid getting lost in the network.

Will the Future of Community Banking Include Banks?

Community banks—at least in my experience—provide banking services to the communities where their leaders and employees live and work. On the consumer side of the equation, they provide home loans, car loans, credit cards, and other deposit and electronic banking services. On the business side, they provide access to small business loans, deposit products, and cash management services. While banks generally, and community banks specifically, seem to provide a valuable service for their communities, the number of banks in the Unites States continues to decrease, in part due to lack of new banks and also due to industry consolidation through mergers. From 1992 to 2018, the number of banks in the US declined by over 61% from 13,935 to 5,406. In addition to this trend, non-bank entitieshave entered the industry in larger numbers and have put additional pressure on the banking industry to compete and stay relevant.

This article at Worldfinance.com makes an argument that I largely agree with. Community banks (more-so than large banks) fill a void by providing funding to small and medium sized businesses that are overlooked by bigger banks, either because they are not as profitable as larger businesses, or because they do not appear as viable, stable, or scalable as bigger businesses. This is where community banks flourish because they understand the local economy, opportunities, and what will work in the area. They also have a vested interest in seeing local business succeed. Consumer products, on the other hand, are becoming commoditized in the sense that technology has allowed many new players in the field for basic banking services. Because of the rise in non-banks providing financial services, what will the banking industry look like in another 10 or 20 or 30 years?

Brett King, a well-known and outspoken technologist who has been preaching for innovation in the banking industry for a number of years, and has written several bookspredicting changes in the industry, sees banking happening largely without branches in the future. Banking, according to King, will be imbedded in consumers’ everyday lives and tool and they won’t need to visit—or even identify with—a traditional bank. In order to succeed, banks will need to adopt this reality and provide “frictionless” banking where people can get banking services seamlessly and electronically, in a way that provides convenience.

I think there will be a niche for community banking for many years to come, but I agree with Brett King that the industry will continue to consolidate as a large number of banks will refuse to move beyond traditional banking to the way of the future.

Stolen Data: What is the Ethical Choice?

The rise of the internet, online commerce, and electronic payments has made a myriad of services more convenient. Shopping online has never been easier, cash is no longer a necessity when traveling, and we are all connected in ways we never imagined even a few years ago. But the rise of convenience through networks has also created a significant headache for businesses and consumers alike. Every time we eschew cash for a card, or sign up for a rewards program at our favorite retailer, we are giving our personal identifying information (PII) to a company who is likely to allow it to be compromised sometime down the road. According to Matt Tatham at Experian, 56% of executives in a 624 person survey compiled in 2018 stated their organization experienced a data breach during the year. While this is a scary thought on its face as PII is constantly being stolen from big and small companies, a similarly concerning point is that you may never find out your information has been stolen.

Right now, there is not a comprehensive piece of federal legislation that compels companies to respond in a uniform way if they lose or compromise your personal information. While the European Union enacted protections in 2018for consumers that requires companies to inform victims within 72 hours, the United States is currently relying on individual statesto police their own companies. The states do not have a consistent approach and there is much confusion about corporate responsibility in specific cases. In Ohio, for example, private and government entities are not required to notify potential victims until 45 days from the data breach being discovered. While this deadline is better than nothing, if a criminal has someone’s PII for 45 days before the victim knows about the situation, that amount of time is more than enough for a criminal to steal a victim’s identity. Or, equally as bad, there is enough time to sell the information to the highest bidder online so that someone else who is highly motivated can take advantage of the information.

Because of the rise of data breaches in recent years, there has also been an increase in the ways companies can handlethe situation, and there are many resourcesonline to guide the organization through the crisis, including from the Federal Trade Commission. Unfortunately, crisis management is often about protecting the reputation of the company more than the compromised individual.

While there seems to be momentum building for the creation of federal legislation designed to protect the consumer, what is the ethical responsibility of the companies who have been entrusted with the personal information of their customers and users? What is the right thing to do—both before and after a data breach. At a minimum, consumers should know exactly what will happen to their information once a company stores it. The company should provide information on how they are keeping it safe. The company should not sell the information to 3rdparties unless approval is explicitly received from the consumer. If a data breach occurs, a company should—as soon as reasonably practical—reach out and make sure victimized individuals understand what happened, including the potential risks associated with the breach. There are times when companies offer free identity protection and loss mitigation services after a breach. This seems like the least a company can do under the circumstances. However, the company often has a disclaimer that accompanies the free service and it removes the consumer’s right to hold the company responsible down the road. This practice seems unethical and could be criminal if a company is intentionally covering up a mistake they made. Because there are still protections that need to be created, companies have the opportunity to hide behind the confusion if they so choose. The ethical practice is to be transparent, supportive, and take responsibility for the mistake and the clean-up. The companies who do this will not only protect their reputation as a customer-oriented organization, but they will be doing the right thing.

The Networked world: What does it mean for work?

The internet has had a profound impact on the way the world functions and interacts. There may be no better example of this impact then to look at the top 10 work skills in 2020 as identified by top10onlinecolleges.org. Of the skills mentioned, the majority of them have little to do with physical or technical skills and more to do with skills of discernment, comprehending, communication, literacy in new media, social intelligence, and novel intelligent thinking. What does this mean practically for organizations working in this new environment where job skills are more about navigating the new, visually networked world of the internet above all else?

According to an article by Aaron Smith about finding work in the digital age, it means that workers are more comfortable conducting a job search and all that entails on their cell phones even if it means the quality of the search is lower because of the limitations presented by a phone. It also means that a minority of job-seekers lack basic skills necessary to land a job where they can practice the new job skills mentioned above. According to Smith, 17% of seekers polled were uncomfortable putting together a professional resume, 21% were not sure how to use social media to promote their job skills, and 11% and 12% respectively were uncomfortable using email and completing an online application for a new job.

In a separate article by Aaron Smith and Janna Anderson, they express concern that while some high-skilled individuals will have incredible success because of this new world, there will be plenty of people who are left behind. Blue collar workers may not have the skills or education necessary to adapt to a new way of working and job-seeking. The education system as a whole is not equipping students to thrive in the new world of the internet and networks.

However, there are opportunities for networked workers to make significant contributions to the organizations they join. First, networked employees have access to an infinite supply of information. If they need answers, they know where to go to ask the right questions. Second, these networked workers likely have a large number of connections from all over the country—and the world—that can be used as a resource. Ready resources improve efficiency and profitability, so using this information and workers’ connections can provide a channel for high performance within an organization.

The challenge to effectively utilizing networked users is the flipside of the same coin. There is so much information on the internet that it may be difficult to find useful and relevant information in a manner that is cost-effective and efficient for the company. Kevin Kelly, in his book The Inevitable: Understanding the 12 technological forces that will shape our future, he talks about the phenomenon of tracking and how developing technology will enable us to locate everything in an organized and simple way. If his prediction is true, this particular challenge may be solvable. Second, and this depends on each individual and his or her work ethic and drive, but the internet and a significant network of connections can supply an endless stream of distractions that can have the exact opposite effect described earlier in the paragraph. The easy access to the entire network in one’s pocket means that networked individuals must use discretion in order to find the right balance of using the internet for work production and using the internet for everything else when work production is the stated priority.

The internet provides vast opportunity, but it also presents an equally vast challenge. When it is just as easy for the internet to control you as it is for you to control the internet, care must be taken to make sure the internet is the solution to the problem and not the problem itself.

The Changing Nature of Work – Banking and Technology

The nature of work is definitely changing because of the web and hyperlinked thinking. There is data everywhere, and it is connected to other data in an enormous linked network. The challenge that came to mind for me in the banking industry is the way in which filtering and interacting has both positive and negative connotations.

First, the positive. Weinbergertalks about how the web eliminates the need for data providers to filter out data and prioritize it for us. Instead, we can take the entire volume of data about a particular topic and filter it down to what is usable for us. The challenge here is to have the time and expertise to accomplish the filtering appropriately. As bankers, this gives us the opportunity to provide a filtering service and be content/service experts for banking. We can be trusted advisors and recommend appropriate products and services, and we can give good advice about banking. If a consumer wants to do his or her own research, the information is out there waiting to be found. However, if a customer wants to save time and energy and just wants answers, a content expert (banker, in this case) can save time and provide expertise.

As for the positive side of interacting, as bankers we have an opportunity to connect with customers and community like never before. We can reach clients in numerous ways on a variety of platforms. Customers can find answers in any format any time of day or night. They can find experts who can provide those answers anytime, and many of these interactions have the potential to aid relationship building over time if the support is ongoing and of good quality. Interacting also helps us as bankers get to know customers better, which in turn helps us provide the right products and services. Building relationships develops trust, which in turn often leads to loyal customers. In these ways the changing nature of work through filtering and interacting is a positive development for banking.

However, there are downsides to filtering and interacting in the banking industry. One significant negative is the prevalence in fraud in the banking industry. Every day, fraudsters are attempting to hack or cajole their way into the vaults—literal or virtual—of banks and their customers. Filtering in this sense is more akin to weeding out the problematic contacts and interactions to protect bank and customer assets. There are so many ways would-be fraudsters attempt to steal from banks and their customers. They send fraudulent emails, hack online banking, conduct phishing attempts, plant viruses, use phone and internet to impersonate real customers, etc, etc. In all these cases, it is up to the bank employee—and sometimes the customer—to filter out the good from the bad and avoid the pain of fraud. The volume of data and fraud attempts on banks, bank employees, and customers is astronomical, and this makes the filtering that much more critical.

The other negative related to interacting—other than fraud—is related to privacy concerns. Banks are held to the highest standard as it relates to privacy of information and customer data. In this interconnected world, the identity and identifying information of all of our customers is completely confidential. The connectedness makes privacy very difficult, and it is even more difficult to find a balance between interacting with customers in various formats, and protecting their privacy throughout. While relationship-building is a huge part of community banking, the practice of sharing and communicating publicly online makes it difficult to maintain the privacy required by banking law. Therefore, it makes the connections with customers more difficult, and interacting does not mean the same in banking as it might mean in other industries where privacy is not such a major factor.

So, in other words, the nature of work is definitely changing, and banking is no different. But, because of the standards and fraud risks in banking, it makes navigating the waters of fraud and privacy that much more critical and difficult.

Knowledge Management: What is It? And, What is it Good For?

Nancy Dixon, author of nancydixonblog.com, echoed my sentiments as I started trying to decipher what knowledge management actually was earlier this week. In a 2009 blog post, Dixon laments the name given to managing institutional knowledge: knowledge management. She doesn’t say why the label is regrettable, but I will make an assumption and assume she was accusing the label of being confusing and vague. Until this week, I had never heard the term knowledge management, and now I’m being told by author and professor Thomas Davenport in a 2015 Wall Street Journal article, that knowledge management may be on its way out of style.

Apparently, the early days of knowledge management consisted of having information located in a physical location and it was passed down from those who had the knowledge to those who did not. In the second phase of knowledge management, the information was identified as expertise or knowledge possessed by an individual rather than a textbook, and so knowledge was managed by sharing between individuals in more of a bottom-up rather than a top-down approach. In the third phase, knowledge is a collective exercise and is managed and shared by the group. In a possible fourth phase, knowledge lives in the cloud or on a network and is accessible by anyone at any time. Kevin Kelly, in his book, The Inevitable: Understanding the 12 Technological Forces that will Shape our Future, discusses the unbelievable amount of data and knowledge in the cloud, and he describes a world where it is accessible to everyone all the time.

So, if knowledge management is the exercise of managing one’s (or an institution’s) knowledge, than maybe today’s leadership problem is not generically managing knowledge, but specifically identifying what—in the infinite cloud of data—is important for one’s organization and then figuring out how to prioritize and disseminate the data in a way that is useful. There is more data out there than anyone could ever possibly hope to absorb, and it is not organized comprehensively or intuitively, so the challenge is less about access and more about prioritizing.

Flat or Spiky: Which World is it?

When Thomas Friedman wrote the world was flat in 2005, he was explaining forces at work that were increasing the pace of globalism and making people and technology around the world more accessible. When Richard Florida wrote a counterargument in the Atlantic Monthlyin 2005, he argued that the world was “spiky” and that technology, innovation, and opportunity were all clustered around certain, urban centers around the world and opportunity was not created equally.

I am wondering if they are both right, but for different reasons than they intended. First, maybe the world really is flat because information, opportunity, and technology are available at our fingertips, and the pace of technological advances are mind-boggling. It is easier to connect and do business with people from all over the world than it ever has been, and it gets simpler every day. However, maybe the world is spiky because—according to Richard Florida—talent, innovation, and investment are concentrated in specific urban centers that isolate and leave behind the rest of the world. The rest of the world that does not have the capacity or the resources to keep up and so are left in the valleys between the spikes.

I think the reality is a combination of the two arguments. I think the world really is flat for the reasons Friedman describes. The internet connects people. Technology makes communication and collaboration simpler than ever. These resources improve efficiency and profitability, and the entire world is available to anyone who decides to go—physically or electronically—seek his or her fortune. However, the maybe the world being flat is really contributing to Florida’s claim that the world is really spiky. Instead of this technology providing access to anyone wherever he or she happens to live, maybe what is happening is the flat world provides the access to information that is the avenue for innovators and smart people to travel from other places in the world to the innovation centers. Maybe knowledge, access, and travel allow those innovators to find and relocate to maximize their own talent and opportunity. Maybe the world being flat isn’t as much about innovate where you’re from, but instead find where you can maximize your talents and relocate so you can be most effective. It also seems to be about money and access to capital, and it makes sense again that people are drawn to where the opportunity—money and capital in this case—is. The forces Friedman describes to explain the world flattening all seem reasonable, but they are not distributed equally across the globe. For example, the proliferation of internet, cell phones, access to information, etc. have not been distributed equally around the world. Instead, these technologies are used where there is money for private and government investment, where there is a technology and information friendly political environment, and where there is incentive to invest. This seems like it spikes, rather than flattens the world.

Nick Bostrom gave a TED Talk in 2015 where he talked about the possibility of computers becoming smarter than humans. I’m not sure his premise promotes a flat world. Instead, it seems like computers becoming smarter than humans might accelerate the pace of computers absorbing jobs for humans. Whatever the reality, access to information and the global community has the potential to compress the world and make successful connections abroad easier. The challenge will be to bring others with us when we maximize the benefit of a flat world.

Community Banking Month is a Wrap

Riley Creek ParadeApril was Community Banking Month and banks everywhere highlighted what makes them stand out. In prior years, First National Bank participated in the 3/50 Project and all bank employees pledged to spend locally during the month of April.

This year, the Bank decided to highlight one of the primary things that makes us a community bank: community involvement. Because all of our employees live within the Bank’s market area, they are all personally invested in seeing their towns and cities thrive. And as a result, they are all VERY willing to volunteer their time and energy to people and organizations that need help. We decided to keep track of their involvement to highlight what makes our Bank different. Here are the results of their voluntary efforts through the first quarter of 2013: 47 employees volunteered at 183 different events and collectively spent 625 hours investing in their communities.

“Community” can be an over-used word these days, but the efforts of this group exemplify what community banking truly represents.

Are Banks Lending Money to Small Business?

There is a misconception that was especially popular during the banking crisis of the last several years and that continues today at some level. As a small business lender, I often get asked if banks are lending money to small business. The misconception being that banks–including community banks–are just sitting on their hands and are unwilling to invest any loan dollars into small business growth. The reality is very different, at least at the community bank level. The FDIC recently released a report that stated while community banks only have a small percentage–14%–of industry assets on their books, they account for 46% of all small loans originated to businesses and farms in the United States. I would argue this fantastic percentage of small business loans from community banks is the result of community banks being invested in their communities, leadership and decision makers who live and work in the areas they serve, and community bankers who are invested in seeing small businesses in their towns and cities succeed. First National Bank has seen great small business loan growth in the last 18 months, and I know other area community banks have made a similar commitment to finding and helping creditworthy small business owners grow and thrive.

Small Business says “What Fiscal Cliff?”

After today’s Bluffton Chamber breakfast, the Chamber and the Bluffton Center for Entrepreneurs hosted a small business workshop on the challenges of being an entrepreneur. About 25 entrepreneurs (and 17 Bluffton University business students) representing businesses from Bluffton, Findlay, Pandora, Columbus Grove, Ada, Beaverdam, and Lima swapped stories, offered advice, and shared words of wisdom about running a business from personal experience.

What stood out to me were the answers given to the following questions: “Does political noise, “fiscal cliff” drama, and discouraging economic news affect the way you run your business? And are you less inclined to grow and look for new opportunities as a result of today’s business climate?” The answer I heard from people around the room was largely the same: “if you’re not moving forward, you’re likely headed in the other direction.”

There are certainly businesses that are cutting spending and taking a less optimistic approach to 2013. American Express announced yesterday they are going to eliminate about 5,400 jobs this year as part of a restructuring effort. Morgan Stanley is also eliminating 1,600 jobs according to reports earlier this week.

However, the small businesses in the room today maintained that success doesn’t come from sitting still and it’s better to look past the negativity and find ways to adapt and grow. It takes partners who share this mindset for businesses to succeed. In places like Bluffton, Pandora, Findlay and other local communities, willing partners include community banks. A bank of any size sitting on excess funds can decide it’s time to put loans on the books and grow by buying business. However, when the economy falters and large national banks retreat, cut ties with small businesses they’ve suddenly lost the appetite for supporting, and then wait for better days, the value of invested community banks is significant.

Chase and Jamie Dimon don’t need Bluffton or Findlay. Bank of America doesn’t need Pandora. But First National Bank needs Bluffton. First National Bank needs Pandora and Findlay. Ditto for Citizens National Bank and the communities it serves. Businesses and banks need each other to thrive–and healty communities need both–and the right mix is what allows small business to look forward and succeed in spite of challenges.