GonzoBankers, 2019 was a year of extremes. On the one hand, uncertainties about the economy and growth opportunities were constant. There is an understanding that technology and fintech are going to cause radical change, but the how, how big and when are still very unclear. Brutal competition is an everyday affair, as are product and price commoditization.
On the other hand, the 1,000-or-so financial institutions we call “troublemakers” are scaling enough to stay in the game and ready for all of it. They have never been more passionate about their mission, more excited about the opportunities, more committed to their customers, or prouder of their teams. They have a very simple answer to all of these headwinds: Bring. It. On.
But that’s for next year. Right now, we have the holiday respite to enjoy, and we almost don’t need to remind you of tradition #1. First, find a comfy chair. Second, get ahold of your favorite substance for relaxing and enjoying the holidays (which, it goes without saying, will come from the mineral family, not animal or vegetable). Third, read and enjoy the 2019 edition of the GonzoBanker Awards, our 18th annual list.
We may not be good, but we’re persistent!
Charles Scharf, CEO, Wells Fargo – We have to give a nod to the individual tapped to restore the reputation and culture of such a legendary bank. We expect a thoughtful, deliberate and inclusive process from Scharf as he works to set the stage coach in the right direction.
Kent Oram, CEO, Idaho Central Credit Union – As evolution, revolution and occasional shareholder dilution occur across the industry, a leader in Idaho has quietly worked over the past 12 years on accumulating legendary performance. Under Oram’s tenure the Idaho Central “Green Machine” has grown 20% each year, from $600 milllion in assets to $5 billion – all while knocking out a 1.55% ROA, building strong member loyalty and creating a top rated workplace in the state.
Chris Myers, President & CEO, Citizens Business Bank– During a tumultuous time for West Coast banks, Myers kept his sights on being a top commercial relationship bank. The company’s market capitalization, which after declining to less than $600 million in the 2009 recession, has now grown to almost $3 billion. Best of luck in the next chapter, Chris!
Mark Turner, Executive Chairman of the Board, WSFS Bank – We have to give the nod to an early 2019 retirement of Turner, who had one hell of a run in 12 years at the helm of a great community and wealth bank. Mark, your class has left its mark on the great WSFS organization.
Paul Trylko, CEO, Amplify Credit Union – Trylko was a student of the industry during his 20-year run as chief executive officer, growing Amplify from a tiny credit union to one with $1.3 billion of assets under management. A finance pro who was not afraid of technology, Trylko brought respect and class to every endeavor he undertook.
Olan Jones, CEO & President, Eastman Credit Union – Jones completes a great 20-year term at Eastman, increasing assets from $631 million to $5 billion and creating more than 650 new full-time jobs. It was always clear how much Jones loves his credit union, his team and his community.
In an industry changing slowly, the Gonzo team has to salute Pierre Naude, CEO of nCino. Naude is a coder by background with an infectious passion for what technology can do for the banking industry. But what’s more apparent is the energy and pride he takes in building great products with great teams of people. nCino saw tremendous growth and some mongo signings in 2019 fueled by Naude’s belief that things are just getting started in Wilmington, N.C.
There were a ton of big mergers in 2019, including the vaunted BB&T and SunTrust combo and a great get-together between First Horizon and Iberia Bancshares. Yet the Gonzo team has to give a shout out to the late entry of Texas Capital and Independent Bank. In a state that wears autonomy on its chest, it was a bold move for two successful players to collaborate and create a $50 billion powerhouse and the largest independent bank in the great state of Texas!
SchoolsFirst Credit Union and Schools Financial Credit Union. This was a terrific combination of two education-focused cooperatives across both Southern and Northern California markets. Hats off the Schools Financial’s board and management for acknowledging that even multi-billion dollar credit unions can drive value via merging with someone bigger.
ConnectOne Bancorp, Inc. picks up Bancorp of New Jersey, Inc. A slam dunk in market acquisition of a bank with the same core system and eight of nine Bancorp branches within walking distance of ConnectOne branches. Hats off to Frank Sorrentino and team. So many consolidation opportunities like this out there across markets with a glut of branches. Expect more of these slam-dunk in-market mergers that reduce locations 10%+.
The ‘En Vogue’ Trend of the Year – Credit unions buying community banks. This is yet another chapter in industry consolidation chock full of strong opinions – positive and negative – from both sides of the table. The good news is that the grass roots of the financial system is merging amongst itself and NOT getting swallowed by the man. As the En Vogue ladies might recommend, “Free your mind … and the rest will follow.”
Best Pundit in Banking – Goes to Tom Brown of Second Curve Capital, who is revered for his annual CEO Conference and whose annual branch mystery shop tradition made press in The Wall Street Journal this year. Brown gives his employees $100 to go open accounts across the Philadelphia area and then shares the results: good, bad and humorous. This year Brown also had his team shop the digital channel. Second Curve analyst Zack Maxfield opened a TD Bank checking account on his phone in nine minutes while he waited to speak with a teller at one of the bank’s branches, but waited an hour to fund the account and order a debit card. So many miles to go, retail bankers!
This year, the Gonzo team will begin bestowing “Smarter Bank” awards to institutions that are driving into the future with a clear view of the industry’s new realities. Legacy banks need not apply. At Cornerstone, our six components of a Smarter Bank are as follows:
And this year’s Smarter Bank is … drum roll … USAA. Sure, we know it’s cliche to point out the merits of this direct banking powerhouse, but the plain fact is that USAA nails every variable in building a Smarter Bank. The bank’s strategy is laser-focused. It was the original data junkie. Its Baldrige-winning tenacity on customer experience is legendary and consistent. It is an innovator with tech (e.g., mobile, remote capture); it partners with the likes of Google, Schwab and TrueCar; and its talent is active every day with 150+ agile team members creating new capabilities and the highest Net Promoter Score in banking. Bravo and best of luck to new CEO Wayne Peacock to keep the growth and success chugging.
And now, the GonzoBanker team salutes some other troublemakers in each individual Smarter Bank category:
The Strategy Award – Goes to Studio Bank in Nashville, Tenn. We like the laser focus here and the progressive non-bank vibe the bank is projecting. It’s early but it’ s a great entry to the market and our industry.
The Data Award – Goes to Wings Financial Credit Union for its great approach to building an internal Strategic Insights and Member Analytics group. Using a mongo Microsoft SQL Server stack with Tableau for data visualization and lots of APIs/SDKs for data integration and access, this financial institution is well on its way to making data have a business impact. And the real ringer is how Wings has made this a cultural priority. Insights from this group are presented monthly and quarterly to the entire organization and quarterly to the board and dialed in systematically into new member experience projects. We salute CEO Frank Weidner, CIO David Mason and Strategic Insights Manager Mike Lindberg for taking this big strategic step.
The Experience Award – Goes to Chase for setting the bar in how the digital experience drives engagement revenue growth. In a mature credit cycle with a tough yield cure, Chase is still growing retail revenue a 7+% and mobile banking users by 12+%.
The Tech Award – Goes to Capital One. What? The bank that got hacked via AWS wins the tech award? Yes, because across the board Capital One’s executive team is committing to and delivering in the new world of Tech – cloud, big data, AI, open source, five-minute digital accounts – it’s big, expensive stuff and it’s hard work. As Capital One CIO Rob Alexander said famously a year ago, “We’re a software company.”
The Ecosystem Award – Goes to Partners Credit Union for its collaborative member experience work with digital banking vendor Kony (now part of Temenos). The digital banking provider helped implement digital competitiveness against big banks that Partners sought. And Partners CEO John Janclaes helped put Kony on the market map in mid-size shops, even keynoting Kony’s conference with a leadership book in tow. It looked effortless, but ecosystem alignment like that takes real work.
The Talent Award – Goes to Pinnacle Financial Partners, Nashville, Tenn., for creating a progressive culture that still makes the profession of banking fun and challenging. Pinnacle takes pride in attracting great bankers who care about customers, colleagues and community.
Hats off to all the winners of our first annual Smarter Bank awards!
The Alpha Early Adopter Award – Kit Snyder, Scott Sylvester, Lindsay Land and the rest of the team at Consumers Credit Union in Michigan. Consumers was the first big credit union to deploy the Phoenix core system and this year was the first big go-live of the Lumin digital banking system. If you think of teams that take early system adoption risk, manage it well and get an edge on the competition as a result, you probably don’t think first of a $1 billion credit union in Kalamazoo. Might be time to.
The workplace a millennial will most confuse with Silicon Valley – Live Oak Bank in North Carolina. Open design, open workspaces, outside play/party spaces, and a dining area that would be the envy of a Vegas buffet if Vegas buffets actually served healthy stuff. No surprise that there is also a high energy level.
The “Excedrin Award for Pain Relief” – Goes to First Internet Bancorp Founder, President & CEO David Becker. Netflix co-founder Marc Randolph said the leading trait of an innovator is identifying pain. Well, enter David Becker (who also founded and sold re:Member Data to OSI and VIFI to Digital Insight). According to an American Banker article, First Internet recently created Amplify, a product that provides small-business owners with a checking account that has free ACH and bill pay, along with no service charges, and includes treasury management tools. Accounts that maintain an average balance of at least $10,000 get paid higher rates. It was a direct response to issues Becker said he faced as a younger entrepreneur: “I can remember paying hundreds of dollars to my community bank in monthly service charges based on my ACH activity.” Well done, sir!
The 2019 Industry Oh Sh*t Moment Award – Goes to Apple and Goldman Sachs for the Apple Card launch. From app and decision to credentials and top-of-wallet in under three minutes followed by helpful follow-up content emails, the Apple Card has redefined consumer expectations. Even with worries around an allegedly discriminatory algorithm, Silicon Valley UX met big bank Wall Street money in slick onboarding that has our attention.
Test-and-Learn … and-Test-and-Learn-Again Award – Goes to Chase for launching and folding digital-only bank Finn exactly 20 years after Chase predecessor Bank One launched and folded Wingspanbank.com. It’s like déjà vu all over again.
The Fundamentals Still Matter Award – Goes to the once flashy MetroBank in the United Kingdom. Brainchild of former Commerce Bancorp CEO Vernon Hill, MetroBank saw its share price drop more than 80% this year as it ran into loan risk-weighting issues with the regulators that required a dilutive capital raise. By year’s end, Hill had been shown the door and now Metro is stabilizing its reputation as the highest priority. The Lesson: credit and risk professionals can be a pain sometimes, but they keep banks inside the lanes for long-term value creation.
Most Egregious Fintech Valuation – Chime, which went fromone funding round at $1.5 billion late last year to $5 billion in recent months. Chime is a category killer in new digital accounts opened, but it’s still not clear how small online payment accounts and debit interchange will create a future earnings. That said, legacy banks need to take note of the viral awareness and growth building for this elegant app.
The Scratch ‘n’ Sniff Award – Goes to the bank signage and kiosk provider who sent Cornerstone a “2020 budgeting prep” email asking us make room for their “exceptional scent offerings.”
Niche Payments Acquisition Award – Goes to City National Bank for its acquisition of FilmTrak. So cool to see CNB with the strategic clarity to focus efforts around the tech that drives the bank’s niche’s income statement (Exactuals manages royalties) and balance sheet (FilmTrack manages IP).
The Coke, Pepsi or maybe RC Award – Goes to Fiserv, FIS and Global Payments for their First Data, Worldpay and TSYS acquisitions, respectively. These deals, combined, shook up the entire payments ecosystem in a period of just a few months in 2019. In the 2020 payments world, making the right choice is a high stakes, but limited option game for bankers.
Overpriced Unicorn (a.k.a. Sweet Deal for the Acquiree) Award –Goes to Honey Science Corporation for its $4 billion acquisition by PayPal with Honey keeping its brand and HQ. Jeesh. Is the company holiday party in Monaco this year?
David-Meets-Goliath Award – Goes to Alliant Credit Union CTO Alan Pitcher who went toe-to-toe and idea-for-idea with BofA and other bigs on an innovation panel at Finovate Fall. Long live the entrepreneurial mid-size shops!
Industry Zeitgeist Award – Goes to Banno founder and BillGo EVP of Technology Wade Arnold at the AFT Fall conference with “We have digitized everything but we haven’t digitized the cross-sale. … It has to be more than banner ads for credit cards you already have.” EXACTLY!
Next-Slide-Please Award – Goes to industry futurist Mike Walsh at the NCR Thrive conference celebrating Jeff Bezos’s ban on PowerPoint at Amazon, by showing it to the audience in PowerPoint. Our heads are spinning.
Culture Warrior Quip of the Year Award – Goes to Hancock Whitney Chief Digital Officer Jennifer Wilson for “We are the THEY. There is no separate group of THEY people magically figuring things out. That’s us.” at Kony’s Accelerate conference.
What-to-Watch-for-in-Analytics Award – Goes to TechStars’s Jon Zanoff at Finovate Spring for “Look for companies’ access to data, ability to cleanse data, and what have they been surprised to learn from their data.”
Star Wars Advisory Award – Goes to Digital Growth Institute Founder & CEO James Robert Lay at Financial Brand Forum with this counsel: “Trust is built with content … become your customers’ helpful guide. Be their Yoda.”
Go-Where-the-People-Are Award – Goes to Webster Five AVP/Marketing Manager Holly Deslauriers at Financial Brand Forum with “Our demographic is age 40s and 50s and Facebook is WHERE THEY’RE AT.”
George Costanza Do-the-Opposite Award – Goes to the “customer-centric, data-driven marketing” firm that ignored the first lesson of customer-centric, data-driven marketing when it sent a carpet-bomb email blast referencing “Your financial institution” to a consultant who doesn’t actually work at a financial institution.
F-Bomb Award – Goes to Finastra CEO Simon Paris who said during the company’s New York conference, “We may not like the connotation that we are one of the industry’s big three F-words, but we think the other two F-words [nod to FIS and Fiserv] are headed in one direction while we are headed in another.”
The Branding Name-Thud Award – Goes to BB&T + Suntrust becoming Truist. What the heckist? The merger deal itself made total sense, but goodbye to one of the brightest, sunniest industry brand names and an Atlanta hallmark.
Reality Check on Challenger Startups Award – Goes to Umpqua EVP & Chief Strategy Officer Rilla Delorier. “Enough of the scare talk. Good news, banks: We have customers.”
Best Consultant Layover Experience – Goes to the Prince Store next to the Delta Skyclub in Minneapolis-St. Paul Airport. Let’s go crazy!
Big Pile of Nothing Award – Goes to Google on its checking account announcement. This press release got a lot of attention but it was very, very light on details, especially around what would be unique to consumers about the offering. As Cornerstone Research Director Ron Shevlin concluded in his popular Forbes column, “Bottom line: How can anybody predict the impact of Google’s announcement – when there is no announcement?”
Worst Loan Offer of the Year Award – Goes to “You’ve Been Selected to Apply.” C’mon! 1987 called and wants this offer back along with “Visit Your Nearest Branch for Details.”
New-Group-for-Stereotypes-and-Buzzwords Award – Goes to Gen Z. Sorry Millennials, you are now so yesterday like GenX and the OK Boomers. And no, Karen, you can’t talk to the manager about it.
Technology of the Year – Goes to a swath of technologies focused on Customer Authentication. So talk about a busy area of focus and some hair pulling when it comes to customer experience? Whether it be voice technology with folks like Pindrop or digital identification with innovators like Alloy, balancing the need to combat fraud with the need for an oh-so-friction-free customer experience will mean managing and embedding many layers of new technologies.
The NextGen Analytics Award Delivered Today – Goes to Incorta. In a world where execs are getting frustrated with the “spinning up” of data governance and warehouses in their organizations taking years, this crafty company has gained attention by its speed to market in providing analytics that doesn’t require aggregating data on a single database. Better fast and 90% there than the perfect data environment that never gets built.
The U.S. Open Banking Won’t Be Voluntary Award – Goes to the late-year flap between Venmo and PNC regarding the Plaid aggregation tool used to facilitate Venmo’s P2P transactions. As Cornerstone Research Director Ron Shevlin observed, this is primarily rooted in the Venmo versus Zelle rivalry, but it also shows that innovative tech like Plaid will still face relationship and rivalry issues along the road to open banking.
When Big Data Feels Creepy Award – Goes to Revolut for when it took flack for a Valentine’s Day ad that led people to believe it was tracking people’s spending habits a bit too closely and not taking customer privacy seriously enough. Challenger banks are bringing experiences but building trust will be the most important experience for these outfits to scale.
Rebranded Macro and Foxtrot Award – Goes to the flaunted robotic process automation or “RPA.” It’s totally cool that banks and credit unions are piloting the power of new technology, but so far the use cases have been batch files, reconciliation and exception reporting processes that operations folks who retired on the golf course were writing back in the ’80s. Hats off to longtime Enablesoft CEO and automation evangelist Richard Milam who rode the robotics wave to be acquired richly by Nintex in March with lead investor Thoma Bravo (also owner of Hyland, Ellie and MeridianLink).
Core Deal of the Year – Nothing answers the question of “Yeah, but can it scale?” like signing a $53 billion, 239-branch bank and getting it implemented. New York Community Bancorp selected Fiserv DNA to earn this year’s Core Deal. In replacing FIS Miser, NYCB moves core and digital from in-house to ASP and adds Fiserv’s Commercial Center and Dovetail payments hub. Congrats to the DNA team for this huge win. Regional bank CIOs will be watching closely to see if Fiserv can pull off its most complex conversion in years and finally challenge FIS IBS in the regional space.
Best Insider Core Deal of the Year – Goes to Live Oak Bank for signing with new core system entrant Finxact. It’s an easier sale when the bank marshals the development. Seriously, congrats to Finxact for loads of advance industry attention (including an unprecedented ABA investment). Bank execs everywhere are watching this implementation with great interest and hope for increased core market competition.
Golden Cufflink Award – Brent Edwards from Corelation wins this year’s Golden Cufflink Award for outstanding demos in the bank and CU marketplace. In case you haven’t noticed, Corelation is one of the few core system “disruptors” out there that actually has revenue and market momentum in addition to the requisite market buzz. Edwards is the bass player for the Corelation sales team band – reigning in the prima donna singers and lead guitarists when they go off script and keeping the song moving in the right direction at the right pace. Edwards humbly walks into a demo, knows the prospect and his product cold, and is able to connect almost immediately because of the homework he has done and his self-deprecating sense of humor. Great job, Brent!
Shooting Fish in a Barrel Award – Goes to the presenter from a mortgage provider whose demo featured the fastest talker ever, with no questions asked, and it’s a good thing too because he/she put everyone else on mute to eliminate any possibility of interaction.
Best Example of the 80/20 Rule Award – Goes to the deposit origination provider presenter who offered, “If you are opening an account for a marijuana business with Iranian oil money, it might take longer than four minutes.”
10 Simple Words Said in Every Demo that Absolutely Nobody Believes – “It’s not there now, but we can certainly do it.”
So there’s no doubt about it, GonzoBankers – 2020 will be a tougher revenue year for most. And when revenue is pinched, a bright light starts to get placed on expenses, investments and growth. Yet GonzoBankers never say die … they’ll accept the challenge, work overtime and sleep when they’re dead.
Now is the time when the toughest, grittiest and most creative bankers will find crafty ways to keep transforming their banks even through times when growth isn’t easy. They will remain pumped up by all the opportunity that exists to grow markets and better serve customers, and they will get serious about unlocking the potential that digital, data, experience design, tech, partners and talent can provide to truly build a Smarter Bank – one that is half bank and half tech company, battle tested for the future.
As we close out the decade, the team at Cornerstone Advisors who bring you GonzoBanker believes the 2010-2020 decade that brought disruption to customer expectations will be followed by the 2020-2030 decade that will disrupt how bank shareholder value is created and maintained. It’s game on. The troublemakers who still compete with the national banks 10 years from now will be better scaled, better at tech, operating with more agility and attracting Gonzo talent across all functions.
It’s a tall order but it’s exactly the BHAG that we know the most tenacious GonzoBankers will set for their organizations going into 2020.
Happy holidays … be safe … recharge … get ready.