Tag Archives: banking

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.

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.

More Perspective on TAG

In case you’re interested, here is an interesting (if you like this sort of thing) article on the TAG program I posted about earlier. I don’t necessarily agree with every point about why we should keep the guarantee program for bank deposits, but I do agree there is still a lot of uncertainty in the market right now and caution may not be a bad thing. Also, keeping the program is not a taxpayer funded project because banks are the ones paying into the insurance program.

Does your iPhone do your Banking?

Right now I’m reading a book about banking called Bank 2.0 by Brett King that feels completely out of date. It was written in 2010.

Banking is changing so fast because of technology that many banks–and consumers–may be having a difficult time keeping up. A few short years ago mobile banking (banking on a mobile phone) was a novelty. Now almost every Top 100 bank (biggest banks by size in the United States) and many community banks like First National offer mobile banking.

At FNB (and many community banks) the branch has traditionally been where all business is transacted. With the introduction of various technologies (online banking, mobile banking, direct deposit, etc) now only about 15% of First National Bank’s client transactions happen physically in the branch. The rest happen electronically or online.

I’m curious to know what your experience has been with banking and technology. Do you use mobile banking? If so, what do you like? And if not, is there a specific reason?

There are still only a few of the largest banks that offer check deposit with a mobile phone. Do you use this service at Chase, PayPal, or another institution? Does the service work as promised?

How Quickly We Forget

Saturday afternoon I had nap duty with the little one while the rest of the family headed to the pool. I flipped past ESPN while looking for something worth watching and noticed O.J. Simpson’s Ford Bronco on the screen. That piqued my interest so I put down the remote. Turns out I had tuned into one of ESPN’s “30 for 30” films. The network has been celebrating its 30th anniversary by airing 30 original documentary pieces about significant sports moments since September 7, 1979. Until Saturday I hadn’t paid much attention but this one caught my eye right away. Entitled “June 7, 1994,” it detailed one day in 1994 that included a number of significant sporting events, the most memorable being O.J. Simpson’s surreal ride on the Los Angeles Freeway that was watched by some 95 million viewers. The funny thing about the film to me was that it was fascinating, but I remember almost nothing about it! Watching it Saturday I was struck by the throngs of media that descended on the police station, the crowds of people that gathered on the overpasses to watch O.J.’s Bronco pass underneath, and the mass confusion surrounding the whole saga. Why didn’t I remember anything from that day? This may be a poor example, but the thing I took away from watching this documentary was that it is so easy to forget the past. Winston Churchill said that “those who forget history are bound to repeat it.” I tie this back to banking as my introduction to discussing the historic Dodd-Frank Wall Street Reform and Consumer Protection Act (2010). This is a very significant piece of legislation, but whether it will be effective remains to be seen. In a historical context this Act is one in a long line of reforms that were all designed to improve and/or fix a financial system. In some cases, like the Federal Reserve Act (1913), reform was designed to create a system (The Federal Reserve) whereby the general public could depend on the banking system. More recent reform like the Gramm-Leach-Bliley Act (1999), repealed earlier legislation (Glass-Steagall, 1933) and loosened restrictions between banks, investment and securities firms, and insurance companies and allowed them to consolidate. The general consensus leading up to 1999 was that our financial world had advanced and this “old-fashioned” law was no longer needed in our sophisticated self-regulating world. Although many factors led to the financial crisis that came to a head in 2008, deregulation played a MAJOR role in the events that transpired. And this crisis is far from over, as the economic reverberations are still being felt in many different places around the world. So what did we learn from all this? Or putting it another way, what did we forget? The Dodd-Frank Act is a sweeping piece of legislation that will touch every corner of the financial services and banking industry. It created a new consumer protection council, permanently increased protection on FDIC insured deposits to $250,000, eliminated a federal regulatory agency, and that’s just the beginning. And finally, the Act also tried to tie up loose ends that came untied as a result of deregulation. It seems that we may have forgotten history and as a result we ended up repeating it. Some of the details and circumstances were different, but the results were not pretty in the 1920’s and 1930’s and the same holds true for 2007-2010. I’m not going to dig any deeper for now because I’d rather you think I know all the answers! What I do know is that the 2,300+ page bill is only the beginning of an avalanche of legislation and rule-writing that will transform the financial system once again. And for the record, the original Federal Reserve Act was only 32 pages. I’m hoping to spend some time discussing specific pieces of this new legislation in the coming months. I’m very interested to see how all of this pans out in Washington D.C. and I’m pretty sure I’ll have plenty to blog about from here on out.


Lemonade Anyone??

Lemonade Anyone??

My daughter Clara would make Donald Trump proud. Ever since she was old enough to know that money buys things, she has been scheming about different ways she can earn money. Over the last year or so her focus has been on buying a laptop computer for the different games and activities she enjoys. She knows they are expensive but that hasn’t stopped her from saving her pennies anyways. Her dad will probably have to subsidize her purchase later this year, but for now she keeps on plugging away. Some of the projects she has undertaken include growing and selling gourds from Grandma Matthews’ garden, selling a homemade soapy concoction to Judy Augsburger and other understanding neighbors, and helping out with our periodic garage sales. But her all time favorite money maker is the old standby: a lemonade stand.

I can’t tell you how many times she will race up to me in the middle of winter or during a spring downpour and ask if she can go out and sell lemonade for her laptop fund. As tiresome as that question can be in the dead of winter, her persistence and entrepreneurial spirit are inspiring. And her favorite small business has recently been the inspiration for a new youth program we are starting at First National Bank.

Until we come up with a better name we are calling our new program the “Young Entrepreneurs” and it is designed to inspire kids to earn, save, and take responsibility for their own money. Every year we spend time in area schools teaching students about the importance of saving and about understanding the value of money. This year we have been taking this one step farther and are encouraging them to take ownership of the things they want by earning their own money.

The Bank already offers a youth savings account called Moola-Moola and we are giving away business kits to children who open or already have an account. The packet includes a zippered change bag, checklists for helping to plan a lemonade stand or any other youth project, a pencil, and for the first 50 kids who come in after June 1 we will also give them a poster board so they can advertise their business with a poster.

If we can inspire kids like Clara to think about earning and saving money now, they will be that much farther ahead as they grow older. Feel free to bring your child or grandchild into any of our branches and we can help give your young entrepreneurs the tools they will need to make a little lemonade out of lemons.

Member FDIC

How Did This Get Started?

First, a brief history to get this blog started…I didn’t really plan to be a banker.  I stumbled onto the scene and ultimately have a group of angry “soccer moms” to thank for landing my first banking job.  My career path can probably be chalked up to poor career planning.  Graduating with my undergraduate English degree at Anderson University in Anderson, Indiana, did not steer me in a particular direction, and I didn’t spend enough time in the Career Development Center to come out of school with a good plan.  Mike Baker, who was President of Madison Community Bank in Anderson in 2002, saw me surrounded by angry parents at a local soccer tournament I was helping to coordinate.  He apparently thought I handled the heated exchange well enough to also calm down potentially disgruntled bank clients and said if I ever needed a job to apply at Madison Community.  Because of my aforementioned career planning, I did eventually find my way to the bank during my senior year and the rest really is history. 

I spent four years learning the basics of banking.  My job titles included teller, customer service representative, Manager in Training, Branch Manager, and Commercial Lender.  I accepted customer deposits, opened new accounts, made consumer and commercial loans, and as a manager supervised a modest branch staff.  I worked full-time at six different branches in three different towns over the course of four years.  I learned from some great community bankers including Mike Baker, Senior Lender Kirk Klabunde, and once retired John May, who will probably never officially retire again. 

In 2006, I moved back home to Bluffton, Ohio, and began working at First National Bank of Pandora as a Commercial Lender.  I typically serve small businesses in Bluffton and the surrounding communities.  It was probably at this point that I began to embrace the mentality of a community banker.  I am personally invested in the community and I want to see Bluffton grow and continue to be a great place to live and raise a family.  Although my wife, Renee, and I never planned to return to Bluffton, we’re glad we did.  I have enjoyed coming back to my hometown and seeing it from a fresh perspective.  It is inspiring to see how local entrepreneurs have contributed to the growth and prosperity of Bluffton, and working closely with small business has given me an even greater appreciation for the commitment shown by these individuals.  Even though the part I play as a banker was and is relatively small, working with local business owners and seeing them grow and succeed is very rewarding and continues to be one of the best parts of my community banking career. 

This weekly blog will hopefully paint an accurate picture of community banking, both locally and across the industry and will give me a chance to share banking insights, helpful tips, First National Bank activities, and hopefully some entertaining reading.