Ladies & Gentlemen, What you are about to hear is based on a true story of two mid-size banks, but names, numbers, and key aspects of the story have been changed to protect the innocent.
This is a tale of growth at Warm Pulse Bank and Cold Fish Bank. Warm Pulse and Cold Fish are both mid-size community banks very similar in most ways, including:
Warm Pulse and Cold Fish are like many of you out there: duking it out largely on sales productivity … converting favorable customer impressions with solid products to get revenue pumped through the pipeline. Not a new story … in banking or just about any other industry.
The BIG difference between these banks is performance driven by organic growth. Warm Pulse has 5X the loan growth and 3X the return on assets of Cold Fish. And, loan growth explains most of the ROA difference. So, what explains a huge growth gap? What’s the difference in financial ratios for the banks and what is a good ROA for a bank?
Cold Fish, on the other hand, points to a high number of low-producing loan officers. Cold Fish’s main difficulty attracting and developing high producers is – now here’s a real shocker – those lenders want to be paid more than the bank wants to pay.
So, how can we look into the cultures of Warm Pulse and Cold Fish to better understand this difference? Here again, LinkedIn comes in handy. There, Warm Pulse and Cold Fish are also more similar than different as both have roughly the same number of followers and employees on the platform. However, there is a big difference in the senior leadership team.
Warm Pulse’s chief executive officer has 300+ connections and the chief lending officer has 500+ connections. The CEO and CLO both use LinkedIn not just to tell the bank’s story and to generate loans, but also to recruit loan officers.
Multiple times a month, the CLO personally posts about growth developments, top producers, awards, and recognition. When combined with other posts from throughout the bank, anyone following it would see an inviting and attractive growth story. Warm Pulse is genuinely excited about its growth helping their community. And while I’m certain the topic of compensation comes up, the bank is primarily competing for loan officer talent on relationships, energy, and future development.
Cold Fish’s CEO, on the other hand, has zero connections on LinkedIn. While Cold Fish’s CLO has 200+ connections, the CLO’s profile only says “Vice President” – hardly descriptive or distinguishing anymore in banking, if it ever was. The words “loans” or “lending” are nowhere to be found in the CLO’s profile. You would never know this executive leads a team of lenders, much less that you could actually borrow money there. More importantly, neither the CEO nor the CLO have ever posted a single development about the bank. In fact, they don’t even have their pictures in their profiles. They seem somehow unapproachable. And the bank finds itself competing for loan officer talent primarily on compensation.
I’ll stipulate that the differences between Warm Pulse and Cold Fish aren’t only about LinkedIn, but the network impact is more than symptomatic. It’s at least partly causal.
While we are on the topic of LinkedIn, it’s been a fun journey at mid-size banks over the years …
Techies, headhunters, vendor account reps, airbrushed-beautiful realtors, snot-nose consultants, and that-kid-you-met-at-summer-camp-during-the-Reagan-administration all united to slam your inbox with “since we trust each other” connection invites.
HR departments began using LinkedIn to recruit and worked to get LinkedIn pages for their companies if just to protect the recruiting image of the company. Realizing the power of information, references, and targeting capabilities, nearly all bank HR execs now use the platform every single day. This is where Cold Fish Bank is likely still swimming.
After initially networking for their jobs, loan officers saw the marketing value within their personal networks. Some commercial and mortgage lenders really took this to new levels and LinkedIn began fanning the flame with industry exposure and promoting some services. Some fintech vendors also started to realize the origination and underwriting integration possibilities.
CEOs and other senior leaders outside of HR got into the action, with personal recruiting of management and specialized talent. Banks realized the power of personal over corporate LinkedIn dialog. Banks including Warm Pulse pushed to better leverage their teams’ collective personal networks.
So, join me down at Benihana next week to celebrate Warm Pulse’s profitable growth and the contributions of its top performers. There will be a full spread of tempura, hibachi shrimp, and – after photos are taken and shared on LinkedIn – a round of umbrella drinks and sake shots for all. But the only cold fish will be at the sushi bar.
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