Does Your Bank Have ‘Diggers’?

Hey Gonzomongers, have you heard any ugly economic news today? I haven’t checked my MarionBerry PDA in the last five minutes so I might have missed a new portfolio write-off, CEO dismissal or Fed rate cut.

 Today’s economic doldrums and fierce commoditization have bankers focused on both slashing operating expenses and driving revenue growth through innovation. Our industry is hoping to better leverage technology and process to get more efficient, and we’re dying to mimic the success of Apple or Starbucks and find new, higher-margin ways to make money. But here’s the rub, guys: there’s no easy answer to either of these issues. Right now things aren’t going from Good to Great, they’re going from Great to Really Crappy, and the Blue Ocean these days is filled with an Exxon Valdez full of blood-red ink. Instead of pinning our hopes on the next innovation conference or management book, I’d think about firing up my bank’s very own “diggers.”

 Here’s the Gonzo definition of a digger:

Digger (noun) – a bank manager or employee who combines a deep understanding of a particular business area with the creativity, tenacity and pragmatism to create real improvements day in and day out.

Diggers are some of the most realistic yet optimistic professionals in the financial services industry because of their Zen-like ability to fix and improve stuff beneath the meaningless blabber of executives, consultants, technology vendors and regulators.

It’s important to note that diggers are not just people with rong ops knowledge – far from it! In fact, a vast majority of bank operations folks are actually what Gonzo calls “lethargios”:

Lethargio (noun) – a bank employee with deep, but narrow knowledge in a particular business area who generates frustration and slows organizational progress because of his/her constant cynicism, closed mind and technical arrogance.

Lethargios relish the thought that no one else in the organization knows what they know, and it pleases them to label everyone else in the bank “complete idiots” because they do not possess the narrow technical knowledge that the lethargio hoards. They use four-part forms, signoff requirements and unreadable operating policies as sources of personal power.

When banks think about new ideas and innovation, it’s important to acknowledge that our industry is complex and operationally intense – much more so than making a cup of coffee or selling a pair of shoes. For this reason, “operations” should not be viewed as the details that we work out after the poets and beekeepers have designed some visionary innovation (edible checks?). Instead, good operations folks – the diggers – can play a key role in dreaming up creative and practical new ways of doing business. Diggers thrive on this stuff. Lethargios would rather sit around like Pooh-Bear’s buzz-killing friend Eeyore, lamenting, “It probably wouldn’t work anyway.”

Any GonzoBanker searching for diggers in their organization can use the following criteria:

Rule #1: Diggers Innovate Without Direction or Permission from the Top
One time, fellow Gonzo consultant Terence Roche and I were analyzing the mortgage servicing operations at First Federal Savings Bank in Lacrosse, Wisconsin. When we asked to review the payment processing function, loan servicing manager Jerry Bothun blew us away by pointing to the receptionist at the front of the bank executive office. It seems this star digger, Mr. Bothun, had creatively devised a process where all mortgage loan coupons were bar-coded and this pleasant receptionist was simply “wanding” over the loan payments when the phones weren’t ringing and she had spare time. When Cornerstone benchmarked First Fed’s servicing group, they had the productivity of behemoths 20 times their size! Importantly, no one had told Jerry Bothun to create this innovation, and he didn’t simply buy a vendor’s product to make this breakthrough happen. He personally researched bar coding technology, figured out how the hardware worked, priced it out and teamed with his IT department to integrate the process into the bank’s in-house core system.

 Jerry and his counterpart in IT, Bob Heiderscheit (another Gonzo digger), also cooked up the coolest automated refinance process for existing mortgages that we have ever seen. It was more streamlined and efficient than anything Wells or Countrywide could have imagined, and it got birthed some snowy day in Wisconsin by some unknown Midwest diggers.

 Rule #2: Diggers Love Saving Money (those cheap SOBs)
While diggers love to improve processes because it feels like solving some sort of Rubik’s cube for them, they also get goosebumps over saving the bank money. A clear sign of a digger is someone who treats the bank operating expenses like they were a wad of Franklins stuffed in their own wallet.

 Digging is exactly what Star Financial Bank’s Ralph Marcuccilli and Wescom Credit Union’s Rob Guilford demonstrated when they separately created innovative, in-house bill pay capabilities for their institutions. Both dudes leveraged their operations knowledge and their organizations’ existing back-office capacity to create bill-pay solutions at fractions of the cost of outsourced alternatives. While lethargios would simply have thrown up their arms, rolled their eyes and complained about the poor service from the bank’s bill pay provider, these diggers came out of left field to make a real impact on the bottom line.

 Rule #3: Diggers Win With 90% Perfection
True diggers don’t wait for the stars to align perfectly before they pull the trigger and just implement something. They realize that waiting for a technology to be fully baked is for idealists who get teary-eyed reading The Secret.

 When Internet and intranet technology first hit our industry, many pundits talked about corporate portals that would integrate every application in the bank through a single Web page. Most of this dream is absent today even after a decade. However, back then Mike Elvir and key ops players from the Bank of Oklahoma (BOK) started digging to create an intranet tool that streamlined paper-based branch forms that moved from front to back office. They programmed in dropdowns and G/L interfaces to ensure data from the branches was accurate so that back-office re-keying would not be necessary. This was eight years ago when most of us were still learning how to Google, and the system was so cool that BOK ended up selling this cobbled together application to several other banks. Sure, the application may die in the near future, but it will have lived a wonderful productive life because of Mike and his diggers.

Rule #4: Diggers Don’t Kiss Butt
The final rule of diggers centers around the conviction and honesty they bring to their jobs. Diggers are never confused with our third and most rare form of operations professional, the “Politico”:

Politico (noun) – a bank manager or employee who lives with constant anxiety regarding their worth in the organization.Because they either have weak knowledge, limited creativity or both, they consume a great deal of energy managing their “brand” inside the bank. They attend lots of meetings, throw out grandiose statements (“We have to focus on the customer”), and often pelt managers with PowerPoints that promote the tremendous progress the politico is making in the organization. Unfortunately, it’s hard to ever determine what a politico has actually accomplished after years of service around the place. 

Diggers don’t play politics. Instead they seem to serve this undefined “soul” in their organizations that they believe is more important than whoever might be occupying the executive suites at the time. But far from being disrespectful, diggers build their case and win support by gathering data, clearly communicating the facts and convincing management that they care so much about the recommendation that it must be right.

One of the legendary stories around our consulting firm came from Colette Wallner, now the president of Johnson Asset Management in Chicago. In the late 1990s, Colette was a retail operations manager working with us on the merger of two $5 billion banks. A conversion issue had arisen whether passbooks should be retained by one of the banks at conversion. As managers emotionally talked about the “downside” of eliminating passbooks and all the geriatrics they cared about, Colette simply started dropping a wide variety of passbooks that the bank holding company maintained onto the meeting table.

She talked about the aging print formats that would have to be supported and how difficult it would be to maintain this house of cards for little customer benefit. The evidence was too striking and management got the point.

Support Your Local Diggers
When one considers the value created per salary dollar, a bank’s diggers provide astronomical returns. Often times, however, diggers are not valued inside their banks on a fair market basis. For Gonzo CEOs and executives looking for greater efficiency and EPS, there’s a number of ways you can better support your diggers:

•  Avoid throwing out buzzwords and fads – Diggers hate that stuff, and nothing sinks their morale more than oversimplification of an issue or opportunity. CRM? … BCP? … API? … ERM? Diggers would say BFD. 
• Be realistic and listen to the details about implementation – Diggers often have to tell management the truth about implementation issues regarding systems, mergers and new product rollouts. These are tough jobs that usually require selecting between several suboptimal options on a daily basis. Nothing takes the wind out of a digger more than an executive unwilling to hear them out and understand the trade-offs that have to be accepted with any meaningful operational change.
• Let diggers move freely move across organizational lines – Diggers that thrive figure out how to connect front-office, marketing and ops folks to make things happen. Diggers never reach their potential in organizations that are so hierarchical and protocol-driven that they need permission and (oh God) “buy-in” to talk to different managers throughout the bank.
• Let them learn with budget dollars – Diggers often don’t have the clout to attend the big industry conferences or peer roundtables, yet they have the best ability to leverage outside perspectives to make the bank better. The best $25,000 a bank could spend would be for a travel and education budget for diggers to attend industry events and make site visits to other best practice banks.
• Invest in digger glue tools – Diggers reach their greatest potential when they are joined at the hip with equally creative and tenacious freaks in the IT department. Diggers who are sniffing out process improvement opportunities need constant collaboration with bank Web and database developers to cobble those 90% solutions together. They need the budget for tools like middleware, imaging and work flow software so they can get the automation and integration needed for efficiency and delivery improvements.
• Make heroes out of the diggers – Diggers rarely get the applause at the officer meeting or the rah-rah announcement over the corporate email. While it’s important to salute the branch and sales staff, diggers deserve their equal time.

Diggers are a rare breed, hard to find and retain, but there’s bound to be several kicking up dirt and making new space somewhere in your bank today. I think it’s time we enlist them more actively in the hunt for efficiency and innovation.
-sw

“We’re diggin’ in the morning
right before the sun
keep diggin’ the holes till the day is done”
–D Tent Boys