A PUBLICATION OF THE FINANCIAL MANAGERS SOCIETY
TALES FROM THE
Proven Strategies for CECL Implementation
IN THIS ISSUE | Data Disillusionment | Exclusive Interview with Joseph Otting of the OCC
SEPTEMBER/OCTOBER 2018 | FMSinc.org
GET YOUR REGULATORY REPORTING IN PEAK PERFORMANCE
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5300 CALL REPORT BASICS
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Contents SEPTEMBER/OCTOBER 2018 | VOL. 2, ISSUE 5
forward, a publication of the Financial Managers Society 1 North LaSalle Street Suite 2225
Chicago, IL 60602-4003
FMSinc.org | 800-ASK-4FMS
FMS EDITORIAL STAFF
President and Chief Executive Officer
Editor and Director, Publications and Research
Specialist, Publications and Research
Manager, Sponsorship and Meetings
LYNDSEY WARNER CAULKINS
Layout and Design
FMS EXECUTIVE LEADERSHIP
STEVEN M. FUSCO, CMA, CFM
DARRELL E. BLOCKER, CPA
Immediate Past Chairman
Financial Managers Society, Inc. All rights reserved.
29 CONVERSATION WITH JOSEPH OTTING
An exclusive conversation with the Comptroller of the Currency
33 FOLLOW THE MONEY
New research from FMS pinpoints the biggest challenges and greatest opportunities of profitability analysis for institutions
35 ERM CHECK-UP
Community institutions want
the benefits of an enterprise risk management program, but struggle to find an effective process
6 MEMBER SPOTLIGHT
Mercedes Escotet of Banesco USA shares her perspective on digital transformation and growing her deposit base
8 70TH ANNIVERSARY
Celebrating the winners of the FMS awards, and looking back on an anniversary party to remember
38 HAPPY TALK
Springs Valley Bank & Trust invests in
FMS forward | SEPTEMBER/OCTOBER 2018 | 5
14 TALES FROM THE FRONT
As CECL preparation morphs into CECL implementation, shortfalls and strategies are beginning to emerge
18 FUTURE ALL-STARS
Keeping an eye out for the talent to fill these emerging positions will help your institution stay in the game
22 DATA DISILLUSIONMENT Analytics may be all the rage, but
data bias or misinterpretation can kill the buzz
26 THE POWER OF THE MIND What three mental qualities do great
FROM THE CEO
BY DANIELLE HOLLAND
FMS celebrates our 70th anniversary this year. As a professional membership organization, we enable our 1,800 members from banks, thrifts, credit unions and vendor partners across the country to provide you with a variety of specialized education, information and networking opportunities.
It’s back to school season, and as the leaves change colors we are offering a wealth of opportunities for professional education. Of course, our educational opportunities happen year-round. Some of our members went to summer school
in July at the FMS-AMIfs Institute in St. Louis, Missouri—an enormous success. With session on topics from asset liability management to profitability measurement from respected industry voices, our attendees went home with hands-on experience and renewed confidence in their skill set.
Right around the corner on September
9-14 is the Financial Managers School in Madison, Wisconsin. The School always fills up quickly and this year is no different, but many bank and credit union CFOs, controllers, and others who manage the finance and accounting at their institution will be joining us at the University of Madison this year! This week-long program is an immersion in ALM that leaves
attendees with a thorough understanding of the latest innovations in asset and liability management. With premier industry thought leaders on our faculty and a beautiful setting at the Fluno Center for Executive Education, the School is a wonderful opportunity every fall.
This month also holds the 5300 Call Report and the Call Report Boot Camp in Atlanta, Georgia. On September 13-14, accounting professionals from banks and credit unions will join us for two days of tips, techniques, and best practices. They will leave with a thorough guide to the new regulations and reporting requirements.
We are committed to bringing you all the tools you need to face every season with success, and to that end we are stocking our educational calendar with events. Be sure to check in online at FMSinc.org to stay abreast of the webinars, chapter gatherings, and other upcoming opportunities to learn and network with your peers.§
6 | FMS forward | SEPTEMBER/OCTOBER 2018
BY MARK LOEHRKE
Especially as we continue to celebrate
our 70th anniversary this year, it’s worth remembering that FMS would have never gotten this far without its active and engaged members, which is why one of the things we’ve aspired to do in our publications is to focus on how the broader issues affecting the industry are impacting our members in their own banks and credit unions.
The most obvious ongoing example of this focus is the Member Spotlight, a Q&A feature that we started running in the latter days of the old FMS Update newsletter
and happily carried over to FMS forward
(this month’s spotlight shines on Mercedes Escotet from Banesco USA). It’s a chance
to get to know a fellow FMS member and
to better understand the challenges and opportunities he or she is facing – challenges and opportunities that likely sound very familiar, no doubt. Because it’s one thing to read stories here and elsewhere about some pressing industry topic – including, among others in this issue, CECL implementation, regulatory priorities and profitability analysis – but it’s often much more meaningful to be able to view those general issues through the more specific lens of how a peer is actually working through them on a day-to-day basis.
I certainly appreciate all of the helpful FMS members who have either stepped up to volunteer or have indulged my blind solicitations to be featured in the Member
Spotlight over the past couple of years. But in working on our 70th anniversary feature on the winners of our inaugural FMS Awards for this issue, I was reminded how great it would be if we could do even more of this type of member-focused work in forward. There are just so many FMS members
out there doing fantastic work and really contributing to the ongoing health and vitality of this industry – and we want to be telling their stories as often as we can.
That was the idea behind a new feature you’ll find in this issue. The notion of Happy Talk is that there are plenty of stories out there about the challenges facing banks
and credit unions and dire predictions for
the future of the industry, so why not focus instead on some of the positive things that are happening for a change? Of course, a few hundred words on a community investment project in southern Indiana (suggested by our Immediate Past Chairman, Darrell Blocker) isn’t going to change the world, but it does serve as a reminder that amid the many headwinds that they face every day, FMS members are spearheading new initiatives and celebrating plenty of successes as well.
Maybe your bank or credit union has some good news, some happy talk, of its own – we certainly hope to find out. So thanks
in advance for reaching out to share your stories with your fellow FMS members. And thanks, as always, for reading.§
FMS forward | SEPTEMBER/OCTOBER 2018 | 7
FMS MEMBER SPOTLIGHT
Bio in Brief
Title: EVP, CFO
Institution: Banesco USA – Coral
Asset Size: $1.1 billion
Years in current position: 13 Years as an FMS member: 11
What is the single biggest challenge facing your institution right now?
Our main challenge is keeping up with the digital banking transformation the larger regional and national banks have versus community banks like ours. The goal is to provide a top-notch customer experience that will prove to be a competitive advantage over other community banks in our area.
Another big challenge is trying to grow our deposit base while maintaining our low cost of funds. This is extraordinarily difficult in a rising rate environment.
Love what you do. If you have a passion for what you do, it will never be considered work.
8 | FMS forward | SEPTEMBER/OCTOBER 2018
How has your role changed over the past five years?
In the past five years our bank has almost doubled in size, and I have gone from having a more operational role to a more strategic development role.
Where do you expect to be focusing most of your attention in the next two to three years?
My main focus over the next few years is to continue growing the bank in a manner that is efficient and innovative in order to provide our customers with the best possible banking experience.
What do you like best about working in a community institution? I like the personal touch a community bank has with both employees and customers. At Banesco USA, we work together as
a family and give that personal type of service to our customers. We take the time to understand the needs of our customers and tailor our services to meet their
needs. Knowing that we have personally contributed to the success of so many people is what makes me proud to work at a community bank.
What advice would you offer to someone entering the banking profession?
Love what you do. If you have a passion for what you do, it will never be considered work.
What is the best professional advice you’ve ever received?
The two best pieces of advice I ever received came from a former boss and my mom, and I have always taken these to heart and shared them with my staff. The first is to never assume, and the second is to be honest in everything you do.
We take the time to understand the needs of our customers and tailor our services
to meet their needs. Knowing that we have personally contributed to the success of so many people is what makes me proud to work at a community bank.
What roles outside of accounting and finance have you held and how have they helped you in your current position?
I began my professional career as a computer engineer in the IT department of a bank, which helped me develop critical thinking skills and gave me the opportunity to learn and understand different areas of the
bank. This understanding, along with my mathematics background, led me to transition into the field of accounting and finance.
What do you like best about being an FMS member?
I like to hear from all the different members about their challenges and how they’re overcoming them. I believe we all experience similar difficult moments, and the FMS community works together to overcome them by helping one another.
Where do you see the banking industry in 5-10 years? How do you see it changing/developing?
If we look back to where we were ten years ago, banking was very different because technology was very different. In the
next ten years digitalization will be at the forefront of banking, and those who don’t get on board the digitalization train will be left behind.§
FMS forward | SEPTEMBER/OCTOBER 2018 | 9
10 | FMS forward | SEPTEMBER/OCTOBER 2018
In commemoration of our 70th anniversary, FMS launched a new scholarship and awards program in 2018 designed to highlight the great work being done by some outstanding FMS members and chapters in pursuit of our common mission. We’re proud to introduce you to the winners of these inaugural awards, and to offer congratulations on their accomplishments.
member of the year
Managing Director and Head of Sales MountainView Financial Solutions, a Situs company
In addition to representing the unofficial face of FMS for many of the friends and colleagues she’s met and interacted with over the past two decades, Rita Bostick in many ways embodies both the proud history and bright future of the association as well.
A longtime volunteer in various capacities for FMS and a tireless advocate for the organization, she has likewise been similarly involved with the Association for Management Information
for Financial Services (AMIfs). With her unique perspective
and deep understanding of both organizations, Bostick saw the opportunity for a greater sum
of these two venerable bodies and drew on her relationships
on both sides to spearhead the FMS acquisition of AMIfs in 2017. While this move will certainly help grow and strengthen the membership base of FMS by broadening the association’s focus to include larger institutions and new topic areas, Bostick’s primary concern is that the combined organization continues its longstanding commitment
to top-notch industry education going forward.
“I’ve always been a student of the industry and have sought reputable and reliable sources of education,” she says. “FMS has always been a go-to resource for relevant, timely and insightful information from the brightest presenters. As the association continues to diversify its member base, channels and vision, it
will naturally adapt its solutions and offerings while leveraging its members as an avenue
for advancement. This is the essence of a living and dynamic organization.”
Perhaps more than anyone
else, however – and perhaps why she seems such a natural choice for Member of the Year – Bostick knows and appreciates the fact that the value of her FMS membership goes far beyond just its professional and educational benefits.
“I am humbled to have been chosen for this honor, as I could list 30 others who deserve this more than I do,” she says. “But really, my greatest reward over the years has been the long-term friendships and relationships that I’ve gained through FMS.”
Relationship Manager | FHLB Pittsburgh
As a member of FMS at both the national and chapter
levels for 42 years, John Foff
is the very definition of the word “tradition.” Foff joined FMS when he was new to the financial industry, looking to gain knowledge to help him advance in his career. And as he looks back now as the winner of the Chairman’s Award – which recognizes an FMS member who has exhibited exceptional service – he can tie several of his career opportunities directly to his involvement with FMS.
“I became a CFO after being
the president of the Philly chapter, and was offered the presidency of a bank after being the national chairman,” he says. “My current position as relationship manager for FHLB Pittsburgh is not only because I’m knowledgeable, but because I have a relationship with most of the CFOs and treasurers through FMS.”
In addition to his leadership roles in the Philly chapter and on the
national board, Foff has also served time on the nominating, strategic planning and cost accounting committees for FMS, and has also been a director of the Philadelphia chapter – and he’s held many of those positions on multiple occasions. But his deepest pride comes from his work as an advocate for the association’s education efforts.
“The more I became involved with FMS, the more I learned, which is why I’m most proud of using my time as chairman to help refocus FMS on expanding our professional education to include seminars, webinars and a major national conference,” he explains. “Providing access to knowledge either by a program, a published piece or through networking with our peers is our mission. Whether in a leadership position or responsible for an educational program, I believe that an enhanced understanding makes all of us better financial managers and advances our industry.”
FMS forward | SEPTEMBER/OCTOBER 2018 | 11
c h a p t e r
t h e
y e a r
and a longtime leader in the chapter. “They pass on the tradition and mentor the next generation.”
Launched in 1951, the Philadelphia chapter currently has around 230 members carrying on its historic tradition of high-quality educational events, charitable partnerships and scholarship programs. Philly spent the past year streamlining operations and bringing many of its processes up to date.
“Our secretary used to stuff envelopes and our treasurer position used to be hard to fill because it was so much worse,” Mennie explains. “Improving the behind-the-scenes processes helps us get out of the weeds so we can do more fun stuff. Now our officers can focus more on programming and membership.”
Those efforts have paid off during a year that saw Philly increase membership by six, increase attendance at its events and award $10,000 in charitable donations and scholarships – all while preparing to host an energetic East Coast Regional Conference in September. Tom cites the chapter’s partnership with national as a big reason for Philly’s continued growth.
“We’re great with a spreadsheet but we’re not marketing people,” he says. “Being able to share resources with the national organization has made us a lot better and given us a tremendous improvement in the product we send out to our members.”
The Chapter of the Year award aims to recognize the chapter
that demonstrates outstanding growth in membership and recruitment, as well as demonstrated support of the FMS mission of professional development and education. And the Philadelphia chapter – better known simply as “Philly” – certainly got the job done on both fronts this year.
“The Philly chapter is a family, and we have such a tradition of excellence from the great leaders we’ve had over the years,” says Tom Mennie, the VP and controller at MidCoast Community Bank
FMS Finance & Accounting scholarship
Columbia College of Missouri
Throughout a career in the financial services industry that stretches back to the 1980s – including stints as a bank teller and a switchboard operator at a savings and loan – Debbie Arsenty says she’s always been interested in accounting.
“From the time I was in high school, I‘ve always wanted to be
an accountant,” says Arsenty, a student at Columbia College of Missouri. “I’ve always been a numbers person, so I really enjoy it.”
For the past 19 years, she has been at Home State Bank, a $578-million community institution in Crystal Lake, Illinois, working her way up the ranks from teller to staff accountant, a position she’s held for over a decade now. Arsenty is as fervent an advocate for community banking as she is for accounting, and feels that institutions like hers have a unique opportunity to really ingrain themselves into their communities. She takes this responsibility seriously, lending a helping hand with charity events like the Relay for Life and local festivals.
It is her longstanding passion for accounting, continuing education and community banking that made Arsenty a deserving candidate for the FMS Finance and Accounting Scholarship.
“It’s difficult to create connection these days,” she explains. “But customers who do their banking in established community banks tend to feel a sense of pride and commitment to their bank, and local financial institutions have the chance to get to know their customers better because they live and work in the same community.”
12 | FMS forward | SEPTEMBER/OCTOBER 2018
chapter leader of the year
SVP | Multi-Bank Securities, Inc. New York / New Jersey Chapter
Over her more than a dozen years of involvement with FMS, Amy Wheatley has come to think of her peers in the New York / New Jersey chapter as family. So while she’s been more than pleased with all of the professional contacts she’s made and the industry education she’s absorbed over that time, the senior vice president at Multi-Bank Securities is even prouder of the many long-lasting friendships she’s developed through FMS.
“The camaraderie amongst the members is really what FMS is all about,” she says.
Wheatley’s unceasing dedication to nurturing that camaraderie
and helping to grow the association that has meant so much to
her as secretary of the NY/NJ chapter is why she was chosen as Chapter Leader of the Year. Among the many initiatives in which she has played a pivotal role on behalf of the chapter are her ongoing community work with the Wayne (NJ) Volunteer Organizations Active in Disaster group, and her efforts in helping to make the chapter’s inaugural Charity Casino Night fundraiser a rousing success.
“Amy spearheaded the casino night, which not only raised a lot of money for the Lupus Foundation but also helped lay the groundwork to revitalize our chapter members and attract new professionals,” says NY/NJ president Stephen Feehan.
Wheatley is already hard at work planning the 2019 East Coast Regional Conference in Long Branch, New Jersey, an undertaking she sees as yet another opportunity to ensure that the NY/NJ chapter remains a vital and growing family.
“I’m really proud of all our events because of how much time and effort goes into making them educational and entertaining to encourage strong participation,” she explains. “The East Coast Regional will be another opportunity to grow our chapter and find new and innovative ways to bring in new and younger associates.”
New York /
New Jersey Chapter
As it is for most FMS chapters, community involvement is one of the defining traits of the New York / New Jersey chapter. But while the group has a long history of granting academic scholarships to local students and organizing a number of well-executed charity campaigns, chapter president Stephen Feehan believes he and his peers really took their social mission to another level in the past year, resulting in the chapter winning the inaugural FMS Community Excellence Award.
“Community outreach programs are a cornerstone of community banking, so to be an organization of community banking professionals is to embrace charitable giving,” says Feehan, a senior vice president and risk manager at Columbia Bank. “One of our chapter’s missions is to increase the peer-to-peer networking and experience-sharing between local banking professionals, and there’s something a little more fulfilling when you have the opportunity to meet peers at a charitable event than at a formal training class.”
In addition to bonding over traditional work with local charities
and food banks (efforts that will of course continue in the years
to come), New York / New Jersey members this year staged their first-ever Charity Casino Night fundraiser, raising $7,400 to benefit the northeast regional division and New Jersey chapter of the Lupus Foundation of America – an organization near and dear to
the chapter, as a popular past president has a daughter fighting
the disease. Feehan says the event was a wonderful and gratifying addition to the chapter’s community involvement efforts (plans for a second casino night are already in works) – words he would also use to describe the feeling of winning this award.
“It’s awesome,” he says. “Just being able to address some of the needs in the community is rewarding enough, but having your peers recognize those contributions is greatly appreciated.”§
FMS forward | SEPTEMBER/OCTOBER 2018 | 13
Scenes from the 70th The 2018 FMS Forum – Orlando, Florida
TALES FROM THE FRONT
AS CECL PREPARATION MORPHS INTO CECL IMPLEMENTATION, SHORTFALLS AND STRATEGIES ARE BEGINNING TO EMERGE
Many institutions are beginning to move from the preparation phase to the implementation phase, and as those preparations transform into reality, some common mistakes and helpful lessons are emerging.
This isn’t to say that financial institutions aren’t making positive headway. According to FMS research, executives at community banks and credit unions are feeling better about CECL than they were last year – more than half (56%) of the 400 leaders surveyed deemed their CECL preparations to be on track and on time. So it seemed like a good time to check in to find out about some of the common implementation issues they’re having – and to come up with some tips for how to fine-tune an institution’s CECL plans as they move into the next phase.
16 | FMS forward | SEPTEMBER/OCTOBER 2018
More Data, More Problems
To absolutely nobody’s surprise, most of the issues institutions are running into as they implement CECL are related to data.
“Institutions have not had
to manage data in the same way they will have to under CECL,” says Brett Schwantes,
a senior manager at Wipfli LLP. “If certain data points are not as clear as they were hoping they would be, they may have to change some processes and controls to collect the data in a different way going forward in order to implement their desired CECL methodology.”
When it comes to those data issues, they can run the gamut. Some institutions are finding
that the data isn’t as clean
and straightforward as they
had hoped, and will require more legwork than they had planned for. For instance, some institutions have found that their loan renewal information is more difficult to pull than they had imagined.
“Sometimes institutions have found that the loan origination fields, such as date and balance, are overwritten every time a loan is renewed,” says Schwantes. “Or else they find they have to look at two different fields – the origination date and the last renewal date – to determine the ‘beginning’ date of a loan, and if a loan has been renewed more than once, the institution ends up missing the loan information for previous loan renewals.”
While some of these were issues that reared their ugly heads
as soon as institutions started preparing for CECL, it’s likely there will continue to be more data-specific challenges that pop up over the next few years.
“With hindsight, it is easy to see these problems will exist, but when institutions didn’t have to use certain data and estimate lifetime loan losses, they didn’t have processes or controls in place to manage data the way they will need to in the future,” Schwantes explains. “I’m not surprised institutions have and will continue to run into issues like these, which is why we’re telling our financial institution clients to start early and be ready to run into issues like these that will have to be addressed.”
Failing the History Test
Institutions are also proving the truth of a classic proverb
– those who don’t learn from the past are doomed to repeat it. To wit, some are making the same mistakes they saw their international peers make during the IFRS 9 adoption.
“These mistakes are largely related to process and decision- making delays that pushed back the ultimate implementation
of IFRS 9,” says Mike
The Uncertainty Principle
Many institutions are finding the shifting balances of demand loan estimates a challenge. With Americans running up a record high of over $1 trillion in revolving balance debt last year, this relatively obscure issue has become a recurring problem for CECL implementation.
The Spirit of the Law
Many banks that had
already built CCAR or DFAST infrastructures probably hoped to leverage those statistical models and mechanisms to implement CECL, but they were met with a nasty surprise.
“Those efforts may not produce
Riechers, a director at KPMG LLP. “Specifically, decisions around modeling, controls and reporting infrastructures may have delayed many institutions from leveraging a parallel-run period for as long as they would have liked. They may not have their entire loss forecasting mechanism built in time.”
Another history test that some community institutions in particular are struggling with is the absence of recent loan losses.
“A rising issue involves lines of credit and other demand loans,” Schwantes says. “Although the loan documents may indicate a term for the loan, the balance
of the loan fluctuates over time and may pay down to $0 multiple times over the stated term.
So institutions are struggling with how to determine what the term of such a loan is and
results in line with the principle of CECL as a best estimate of future loss reporting,” says Riechers.
CECL is meant to predict a steady-state performance under normal conditions rather than loss in times of duress
– a fundamental difference
“Without actual loss history, it will be challenging to estimate future lifetime losses, and many institutions will be unable to obtain loss history from historical periods with more losses because they had no reason to keep this data prior to the new accounting standard,” Schwantes says. “In these cases, they’ll likely have to rely more on peer data or other data until they’ve been able to accumulate a sufficient loss history of their own.”
how to estimate lifetime losses when the balance fluctuates so significantly.”
This concern echoes several
other data issues (like faulty
loan origination fields), in that something that may have sounded simple to calculate is in practice causing a significant amount of work for implementers.
that may have been hard to anticipate. However, now
that these institutions have seen their error, they have to start over from scratch. For institutions that thought their existing work would give them a head start on CECL, this
is bound to push back their implementation timetable.
FMS forward | SEPTEMBER/OCTOBER 2018 | 17
THE CHEAT SHEET
SOLUTION #1: GAP ANALYSIS
Even in the midst of implementation, it’s never too late to undertake a gap analysis – an in-depth look at the space between where you are now and where you hope to end up, as well as how to get there.
“A comprehensive gap analysis should help document and quantify the impact of all transition criteria and give you a solid road map to work from as you complete your CECL transition,” Riechers says.
He highly recommends an independent gap analysis, especially if your institution is already deep in the CECL process.
“Sometimes unless you’ve really dug in and gotten independent eyes on it, you don’t know what you’re getting until you get there,” he says.
No matter where you are in your CECL process, an independent gap analysis will highlight your blind spots and help you find a way to close the holes in your plan. If you’re just getting started, it will help you create an effective strategy; if you’re deep in the implementation phase, on the other hand, it can find errors before they really start to count against you. Think of it as being able to check your work before you have to turn it in.
SOLUTION #2: EFFECTIVE LEADERSHIP
Perhaps the biggest difference between institutions that are still floundering in the shallow end of the CECL pool and those who have seen relative success is the quality of their leadership. Like most major undertakings, CECL implementation tends to be much more difficult and much less effective without a strong leader.
“The common thread success stories share is a single strong leader backed by a cross-functional steering committee,” says Riechers. “When there’s decision by committee, that’s where issues may arise.”
Trying to implement CECL by group consensus is a recipe for infighting at worst and a drawn-out and ineffective decision-making process at best.
“Those who have made the most progress in the CECL implementation process have management teams that have made it a priority and dedicated resources to the implementation,” says Schwantes. “For example, the institutions that I think of as further along regarding CECL implementation have had a member of the management team
18 | FMS forward | SEPTEMBER/OCTOBER 2018
Some of the CECL recommendations that institutions have heard from the beginning still represent the best advice as implementation gets underway in earnest, while others have emerged from the hands-on experience of actually doing the work and learning from mistakes. Along the way, these four solutions have emerged as clear and actionable steps in the right direction.
holding the CECL implementation team members accountable.”
When the institution appoints an effective point person and the process itself gets meaningful buy-in from the organization’s leaders, CECL implementation tends to prosper.
SOLUTION #3: INVESTING TIME
Time is the greatest gift you can give your CECL implementation team. So with the hard deadline still two years away, the earlier you start the better.
“I would advise institutions to start early and be prepared to run into issues,” Schwantes says. “If certain tasks were not as easy as we were hoping they would be, we may have to change processes and controls and collect data going forward until we have what we need for the CECL methodology. The earlier we evaluate our data needs and the necessary changes, the likelier we are to have enough clean data by the time we need to estimate credit losses under CECL.”
In other words, use solutions #1 and #2 above to help your institution make the most of the time you have left.
“Every transition should have an independent gap analysis, strong leadership and a focus on process and controls – those are the lessons learned from CCAR, DFAST, IFRS 9 and other recent accounting change projects,” Riechers says. “This is what keeps these projects on track and on time, and not having one of those components can lead to unforeseen delays and unexpected effort.”
SOLUTION #4: STAYING FLEXIBLE
The truth is that while most of these recommendations have been around since the beginning of the CECL discussion, there were plenty of curve balls that couldn’t have been foreseen.
“The changes to Dodd-Frank, for instance, were not predictable even as recently as six months ago,” Riechers says. “It’s possible that we may start to see the repercussions of that in the mid-market space in a way that may not have been foreseeable prior to that change.”
Even now, as best practices begin to emerge, there is no one-size-fits- all CECL solution for every institution. The key is to find the method that best fits one’s needs and give it the best effort possible.
“Each institution has the flexibility to adopt CECL in a way that suits it,” says Schwantes. §
STAY AHEAD OF THE CURVE
2018 FALL PROGRAMMING
Join FMS this fall for more education, more networking and more professional development to keep you ahead of the curve.
RELATIONSHIP PROFITABILITY: THE HOLY GRAIL September 26
2 PM EST / 1 PM CST
MANAGING RISING RATES: DICTATING YOUR STRATEGY October 10
2 PM EST / 1 PM CST
CFO TECHNOLOGY ROUNDTABLE FOR BANKS October
CECL WORKSHOP November Chicago, IL
CFO TECHNOLOGY ROUNDTABLE FOR CREDIT UNIONS October
CONTROLLERS CLINIC November Chicago, IL
PROFITABILITY November Chicago, IL
In a constantly shifting competitive landscape, you need top talent to get ahead. But the skill sets your team needs are changing and expanding right along with the technological evolution of the industry, which is why we’ve filled out a roster card of the positions you may need to fill in order to stay in the game.
Some of these players may already be in your dugout and may just need a little more seasoning before they’re ready for the big leagues, while others can be projects that you pick up late in the draft and bring along slowly until the greater need arises. In either case, here are a few positions that may play a big part in your institution’s future competitiveness.
MACHINE LEARNING ENGINEER
What they do: A machine learning engineer creates the artificial intelligence programs that automate repetitive and time-consuming tasks at financial institutions to help further streamline and transform digital offerings.
Who they are: A talented machine learning engineer will have experience designing and building machine learning systems
that can incorporate massive amounts
of data with the end goal of improving processes. An advanced degree in machine learning or computer science is a plus, but it’s more important for this player to have extensive real-life experience with software engineering programs and data-processing technologies.
Where you can find them: There may be an excellent candidate on your bench right now, such as someone on your data analytics team who excels at coding and building algorithms. If nobody is quite there yet, there are excellent online courses on machine learning from places as diverse as Coursera and Northwestern that can build an existing employee’s skill set. If they have a brain for data and a knack for programming, they may be worth the investment.
What they do: Blockchain developers build and maintain distributed ledgers – instantly updated, unchangeable chains of data. Whether these chains comprise payments, contracts or other data sets, the information is able to be shared safely and quickly with many users.
Who they are: A good blockchain developer will have experience in open blockchain frameworks, payment protocol development and smart contract programming language. Blockchain has great promise for changing how financial institutions store and update their records, transactions, contracts and payments, and a good candidate would understand how to incorporate blockchain with existing processes and regulations.
Where you can find them: Blockchain
is still so nascent that most financial institutions probably don’t need a blockchain developer right now – a good thing, since they’re certainly hard to find. However, if
you have a talented programmer with some experience with cryptocurrencies, you may want to start having some discussions now
– because if he or she isn’t doing blockchain for you within the next couple of years, they’ll probably be doing it for someone else.
20 | FMS forward | SEPTEMBER/OCTOBER 2018
What they do: A cryptographer uses technology to protect sensitive data, building algorithms, security systems and other ciphers to encrypt information, and essentially creating a secret code that only authorized people will have the tools to solve. In today’s world of high-profile hacks and breaches, a cryptographer has the potential to develop into an essential line of defense.
Who they are: Cryptographers fuse expertise in computer science, applied mathematics and engineering to protect privileged information. This prospect should have strong skills that include computer architecture, information theory, programming language and both symmetric and asymmetric cryptography.
Where you can find them: Cryptographers could have a master’s of science or a PhD, but it’s not necessary – experience in security engineering can be just as solid an education. Having an analytical and creative cryptographer on your team is an investment against the reputation risk of data breaches and other forms of fraud.
What they do: A data scientist takes raw data and turns it into useful information – whether analyzing customer information to make marketing recommendations
or combing through transactions to detect fraud. This team player is the pillar of the data analytics department and an increasingly important source of knowledge as financial institutions prioritize data-based strategies.
Who they are: The “scientist” part of the title refers to a combination of statistics, mathematics and computer science – a good data scientist should have mastered all three. Strong quantitative and computer programming skills are a must.
Where you can find them: You can hire a data scientist right out of college from one of the many data science programs across the country, but your candidate doesn’t necessarily need a degree or years of experience. This is a growing and highly competitive field, so use test problems and scenarios during the hiring process to identify talented candidates that may not have an eye-catching pedigree.
CHIEF ANALYTICS OFFICER
What they do: Make room in the C-suite for this growing role. A CAO oversees
the data analytics of the institution,
with an emphasis on the analytics. The fundamental difference between a CAO and a CDO (chief data officer) is that the CAO is charged with turning that raw data into measurable benefits.
Who they are: An institution can invest plenty in data analytics and never see any real results – the job of the CAO is to make sure that doesn’t happen. Your CAO has
to be able to make changes to processes based on his or her findings, so a keen business insight is just as important as a strong tech background.
Where you can find them: If you’re
ready for a CAO, you should be ready to make sweeping changes based on his or her recommendations. A CAO should be able to not only find ways to change the organization for the better through data analytics, but should also be able to build buy-in around these changes and implement them smoothly.
FMS forward | SEPTEMBER/OCTOBER 2018 | 21
THE EXECUTIVE BOX
What’s the common theme running through all of these positions? You guessed it – technology.
According to our recent research in Community Mindset: Bank and Credit Union Leadership Viewpoints 2018, 75% of bank and credit union leaders saw technological innovation as the most important factor for growth at their institution. To grow, leaders must put their money where their mouth is by investing in key roles like these to truly innovate and expand. Leaders should not only be encouraging talented employees to pursue continuing education and training in emerging fields, they should be doing this themselves. Staying a step ahead of the competition is what will enable financial institutions to survive in a transforming industry – and the first step is a team manager who knows where the potential on his or her team lies. §
IS YOUR CECL
Don’t let CECL sideline your business
strategy. Through deep collaboration and
strategic alignment with your internal CECL
teams, MountainView helps financial institutions
do more than comply—we tackle CECL complexity by helping you prioritize, assess, and manage CECL’s broader business and risk management implications. From data optimization to model development, validation, and governance, MountainView’s CECL Credit Risk Solution offers a more intelligent
and strategic approach.
MODEL DEVELOPMENT DATA AND DOCUMENTATION OPTIMIZATION
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PROCESS AND POLICY CONSULTING
RITA BOSTICK U.S. Managing Director 602.549.2844 [email protected]
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© 2018 MountainView Financial Solutions, a Situs Company. All rights reserved.
By Jeff Prelle, Head of Risk Modeling – MountainView Financial Solutions, a Situs Company
As financial institutions progress forward in the new economic
cycle – a cycle defined by gradual interest rate increases, regulatory uncertainty and economic growth – it may be time to revisit the financial models and model processes used to facilitate interest
rate risk (IRR) analysis and other risk analyses such as capital stress testing. The accuracy and effectiveness of a model is critical because the outputs of the model may alter the accuracy and effectiveness of related models or impact strategic decisions.
Effective model risk management (MRM) will consider how risk relates to other models and the role of model risk in an institution’s overall enterprise risk management framework. If done well, an MRM can minimize losses and help an organization operate more efficiently. As a leading provider of independent model validations, we often see firsthand what comprises effective model risk management. While many, many details go into developing an MRM, we’ve identified six re-occurring components of highly effective programs.
1. NEEDS ANALYSIS AND STRATEGIC PLANNING.
Building an MRM plan requires a significant commitment to analyzing an institution’s unique environment, including but not limited to evaluating model definition; building the model inventory; building a model risk rating process; creating ongoing monitoring processes and limits; identifying model interdependencies; and establishing policies and operating procedures, documentation governance, best practices and roles and responsibilities. Effective planning will capture and address any rogue or misaligned model processes that create inefficiencies.
2. DATA ASSESSMENT AND MANAGEMENT.
A well-oiled MRM program will look closely at the data that will be used in its models, recognizing that the quality of data directly impacts model development and implementation success. The use of limited, fragmented, inaccurate or irrelevant data can significantly impact the precision of your model and model outputs. Moreover, broken data processes, such as data transference between systems, can make it difficult to create effective models and accurately validate models. When the data are poor, the rest of your MRM suffers.
3. MODEL DEVELOPMENT AND IMPLEMENTATION.
An effective MRM program controls the developed model’s
implementation. The control framework should ensure the model developed is accurately reflected in the production environment and change control is monitored. The model’s ongoing monitoring tests and thresholds should be established to ensure the model is continually performing in the production environment. Lastly, the controls around the data that feed the production model need to be established to ensure they are consistent with the data used to develop the model – this will ensure that the model output
is consistent with upstream or downstream feeder models and dependencies. The risk of downplaying the importance of good model design and implementation range from impaired strategic decisions to heightened regulatory scrutiny.
4. MODEL DOCUMENTATION.
Comprehensive documentation of a model is a critical component
of the MRM framework. Model purpose, limitations, user controls, processes, change control processes, theoretical considerations, alternate methods and quality control procedures will pave the way for a successful governance review and will help your institution create a reliable reference point that will outline specifications of your models.
5. MODEL VALIDATION.
SR 11-7, OCC 2011-12 and other similar industry guidelines require that banks independently validate a model to identify model risks such as problems with a model’s conceptual development, model outputs and assumptions, ongoing model monitoring and verification processes, back testing, governance and documentation. A strong validation will challenge all aspects of your model and specifically report on model risk. Since each institution is unique in its assumptions and business needs, a model validation should be institution-specific and completed by experienced and credentialed model validation experts.
6. MODEL AND PROCESS OPTIMIZATION.
The most effective MRMs stand out in their ability to help organizations continually review, refine and improve upon their existing model infrastructure. Institutions that find ways to operate more efficiently through workflow automation, for example, will reduce MRM costs across the board. Whether it is the ability to reapply/re-use specific aspects of a model or model process, improve data management for wider use, or identify ways to reduce steps in the development or deployment of a model, institutions that invest in model and process optimization will have a streamlined MRM program that may serve as a competitive advantage.§
SPONSORED CONTENT FROM MOUNTAINVIEW FINANCIAL SOLUTIONS
SIX TENETS OF EFFECTIVE MODEL RISK MANAGEMENT
FMS forward | SEPTEMBER/OCTOBER 2018 | 23
NOT LONG AGO, IT SEEMED THAT THE PRAISE FOR DATA ANALYTICS PROGRAMS WAS UNQUALIFIED. CUSTOMERS GOT BETTER SERVICES, BUSINESSES GOT USEFUL INFORMATION AND FINANCIAL INSTITUTIONS WERE INSTRUCTED TO USE DATA TO DRIVE ANY NUMBER OF
KEY BUSINESS DECISIONS. THE BEAUTY OF DATA, ACCORDING TO THE HAGIOGRAPHY, WAS THAT IT TALKS, AND ALL WE HAVE TO DO IS LISTEN.
WHAT VERY FEW PEOPLE SPENT TIME TALKING ABOUT, HOWEVER, WERE THE MANY WAYS THAT DATA CAN ACTUALLY LEAD AN ORGANIZATION ASTRAY.
Suddenly, we’re in the middle of a big data backlash. Customers are skeptical (if not outright bitter) about the extracting and storing of their personal information, and the practice of data analysis is beginning to show its potential seams. Perhaps it’s time, then, to have a second conversation about data – a more critical discussion of the ways that for all of its promise, data can also be misleading and dangerous.
A HUMAN PROBLEM
The most obvious potential flaw with
data analysis is the fact that humans
have to collect, organize and interpret it. While often discussed as if it’s a cold, unimpeachable process, the truth is that data analysis is very susceptible to human intervention, and therefore has the potential to do as much harm as good.
“A lot of times executives will try to get quantitative analysts or data scientists
to find analyses that support what they want to support,” says Tom Davenport, a professor of management and information technology at Babson College. “It’s a time-
honored tradition in leadership – torturing the data until it confesses.”
Beyond instances of people shaping
the data to support their pre-conceived outcomes, however, even experienced
and intelligent people with the noblest of intentions can make unintentional missteps that result in flawed conclusions.
“Most analytics are pretty artisanal in that they require a human to construct
a model and choose what data sets and variables to use,” Davenport explains. “You choose what variables you think are important or those that you think will illustrate your preferred outcome, so that certainly builds in some bias.”
Since humans build models, algorithms,
and data sets, there’s always a chance – maybe even a statistically likely chance
– that human error will find its way into the resulting data, and human bias will certainly appear in the analysis of that data.
“The biggest pitfall is when we impose our
24 | FMS forward | SEPTEMBER/OCTOBER 2018
A lot of times executives will try to get quantitative analysts or data scientists to find analyses that support what they want to support. It’s a time-honored tradition in leadership – torturing the data until it confesses.
Tom Davenport, Professor of Management and Information Technology – Babson College
own biases,” says Carla Gentry, data scientist and head of Analytical-Solutions. “You have to look at data that’s unbiased and that can stand alone – a fact on its own that doesn’t require additional interpretation.”
Looking at data on its own and not imposing one’s own opinions and feelings on it may be the goal, but an important part of the current reckoning surrounding data analysis is realizing that as long as humans are involved in this process, data will never truly be bias-free.
SUPPORTING THE DATA
Working to avoid common mistakes and misinterpretation starts with selecting the data itself. Even data that isn’t otherwise compromised can yield misleading results if the data set isn’t right.
“A lot of people don’t pay attention
to whether the sample is random or representative,” says Davenport.
“Your sample has to be representative of the population you’re studying. For instance, performing a survey of young people to
determine what retirees want would almost certainly offer deceptive results.”
Once the correct data set has been identified, it’s important to make sure you’re looking at that data from different angles to double-check your conclusions.
“If you run two models, and there’s a huge variance, you’ve done something wrong,” says Gentry. “You always have to have more than one way to look at data. I may run 1,500 models and get closer and closer to being accurate. I’ve churned through trillions and trillions of rows of data over the past twenty years, and I know enough to admit when I just don’t have enough information.”
Similarly, when a conclusion is finally reached, there needs to be more than one way to support that hypothesis.
“You can’t let a decision be based on one number,” says Gentry. “That number has to be supported by something else. You have to be open-minded and consider the historical perspective.”
She offers the example of a consumer whose credit score may have taken a hit during the recession.
“There are a lot of people on the fine line where you may not deem them credit- worthy, but if you look at their buying patterns they are still buying things and paying them off on time,” Gentry explains. “They may have lost their job or had an accident, or there may be other mitigating factors you wouldn’t know if you’re just looking at their credit score. You’re leaving money on the table if you throw out a whole group of people because of one number.”
It’s also important that executives have a strong grasp of the data and models being used in their institutions. If leaders are just swallowing the analysis of their data teams without knowing how to interrogate it, misinterpretation becomes a very real possibility.
“Executives have to know how these models work – they can’t just entrust all of the analysis to the quants,” says Davenport.
FMS forward | SEPTEMBER/OCTOBER 2018 | 25
“They need to know what variables are really important in determining the outcome in a particular model and be able to explain it.”
Among the most headline-grabbing data failures have been stories detailing how human biases tend to permeate even rigorous analytics. For example, studies have found that data-based algorithms used to determine prison sentences had inherited the overt or subliminal biases of their programmers – or worse, exacerbated historic issues by creating a feedback loop.
“A lot of the more visible examples of data analytics that were outwardly biased and relatively unintentional happened when people included variables that weren’t in themselves discriminatory but were highly correlated with those that are, like gender or ethnicity,” says Davenport. “You could argue that recent redlining complaints are examples of this – they’re not necessarily targeting minorities, but they’re targeting areas of cities where minorities are more likely to live.”
Davenport points out, however, that insurance companies commonly make decisions about rates based on gender or age.
“Insurance companies very commonly charge women more for life insurance because they tend to live longer, and they charge young people more for car insurance because they tend to get into more accidents. Is that bias or is that just good business practice? It’s hard to know where to draw the line.”
Perhaps the biggest shift in how data analytics have come to be viewed recently isn’t based on misinterpretation of the data, but rather on how companies are getting and sharing their data. The backlash that greeted the revelation of Facebook’s lax privacy practices can’t be ignored by any organization dealing in significant amounts of customer data. In addition to the negative shift in public sentiment, GDPR enforcement further highlights the need for organizations to reexamine what they’re doing with customer information.
“People are scared of collecting data because of GDPR, but you just need to be transparent and honest about the data you collect,” says Gentry. “If you’re a bank and you’re using my information, let me know. If my information is being used in an analysis, I don’t see why that shouldn’t be my business – it’s my data, after all.”
Gentry is quick to point out that no matter how intimidating GDPR seems, organizations will not have as hard a time adapting to the new regulation as some have feared.
“GDPR basically says you have to be forthright – you simply have to ask people before gathering and using their data,” says Gentry. “There are a lot of people right now complaining that this is devastating, but
we got used to not being able to use social security numbers as unique identifiers in the
about it in ways that you can’t about things like fraud prediction. With credit you can tell customers why they were turned down. One of the pioneers in this area was FICO, who would give you a FICO score, but then would tell you why you were assigned that score.”
Davenport says it’s even more important
to have a clear and convincing explanation for your models if they include variables or factors that can give the appearance of bias, whether or not the bias is actually there.
“You may still decide that you want to
use those variables because they’re good predictors, but you’ll also want to have
an explanation ready – not just for your customers, but for your regulators,” he says.
ANALYZING THE ANALYTICS
One thing is clear – the data backlash is real, requiring organizations to
The biggest pitfall is when we impose our own biases. You have to look at data that’s unbiased and that can stand alone – a fact on its own that doesn’t require additional interpretation.
Data Scientist and Founder – Analytical-Solutions
late 90s. In 2003, the Can-Spam act was another thing that everyone freaked out about that didn’t end up being a big deal. We’ll adjust to this too.”
Part of being transparent and honest
– and thus building public trust in your organization – is being able to explain what data you’re collecting and why in plain English. The recent data backlash was rooted not simply in faulty data collection practices, but the often opaque business interests underlying them.
“If they can’t get a coherent explanation, not only will customers react negatively but regulators will probably react negatively too,” says Davenport. “In a lot of areas like credit policy, you can be fairly transparent
fundamentally change the way they pull and analyze data. Financial institutions should be reexamining how they use data to make decisions, determining whether the data they’re using is compromised and ensuring their customers are on board with how their data is being used.
“We had a decade or so where everyone thought analytics were great, and
there were heroic movies about it, like Moneyball,” says Davenport. “But now we’re seeing a backlash with Facebook
and others. Leaders need to be much more cautious about what they do with analytics, and not generally assume that because it’s a data-based model that it’s going to be greeted positively.” §
26 | FMS forward | SEPTEMBER/OCTOBER 2018
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THE POWER OF THE MIND
Organizations spend $46 billion a year on leadership training and development – a substantial investment that perhaps isn’t seeing the returns that such an outlay would promise. In fact, according to a recent Gallup poll, only 13% of the global workforce reports feeling engaged and almost a quarter (24%) say they’re actively disengaged. And according to research from Jacqueline Carter and Rasmus Hougaard, even after all that leadership training, leaders say that they
fail to complete their most important tasks almost 65% of the time.
The question, then, is what is creating the divide between the vast resources poured into improving leadership and the continued plague of ineffective leadership. Carter and Hougaard were determined to solve that mystery, interviewing 250 C-level executives and surveying over 35,000 leaders to try and determine the most important traits for an effective leader. In the end, three mental qualities (as opposed to outward skills) stood out as the distinguishing characteristics of effective leaders: mindfulness, selflessness and compassion.
MAKING TIME FOR MINDFULNESS
Leading an organization has always been a job with high pressure and complexity, but the increasing pace of change has only served to exacerbate these factors. In fact, 73% of the leaders surveyed by Carter and Hougaard reported they rarely felt mindful, and 67% felt their minds were cluttered. Almost all leaders (96%) said they would like to be more mindful, but that’s often easier said than done.
“When I started my career, we’d work on five- or ten-year strategies, and that’s just inconceivable now,” Carter says. “It would just be a waste of time. It’s incredibly hard to innovate in this environment and this headspace. One of the biggest obstacles to mindfulness is how leaders are constantly putting out fires and are always on and always distracted. How do you make time for reflection and creativity?”
Carter and Hougaard recommend leaders try and practice ten minutes of mindfulness a day. Carter tells the story of a director
of a multinational company who saw his engagement scores go up – even as his overall time with employees went down. The difference was his mindfulness practice, which allowed him to be more fully present in the time he did spend with others.
“It’s incredibly hard
to innovate in this environment and this headspace. One of
the biggest obstacles
to mindfulness is how leaders are constantly putting out fires and are always on and always distracted. How do you make time for reflection and creativity?”
Carter believes mindfulness is necessary
in a world where every moment is a competition for mental space. Especially for leaders, whose days are full of meetings, emails and phone calls, every minute
can feel like information overload. Not only did the data show that mindfulness helped leaders connect and engage with employees, it also increased their performance across the board.
EGO IN CHECK
While Carter and Hougaard fully expected mindfulness to stand as a bedrock quality
28 | FMS forward | SEPTEMBER/OCTOBER 2018
of an effective leader, selflessness came as a surprise, emerging time and again in their survey and their conversations with C-suite leaders.
“We talked to so many senior executives, the heads of large organizations, who said the biggest challenge for a leader is keeping their ego in check,” Carter says, “If a leader starts to think it’s all about them they’re not going to be successful long term.”
She cautions taking this notion too far, however – being selfless doesn’t mean a
lack of confidence or drive. Rather, being a selfless leader means being able to recognize your own interests and instead ensure you are leading for the best interests of your team and the organization as a whole.
“It’s really about recognizing that we all have an ego,” Carter explains. “But if I’m only interested in feeding my ego, and not doing things that are helpful to other people, I may be successful in the short term but ultimately people won’t want to follow me.”
COMPASSION V. EMPATHY
Over the past several years, leaders have been told to be empathetic, but Carter and Hougaard’s research suggested that empathy may not be the best way for a leader to connect with coworkers or customers.
“Empathy requires taking on other people’s suffering like it’s your own, really feeling their pain – it may help you feel more connected, but it does nothing to help the actual suffering and pain,” Carter notes. “Compassion, on the other hand, is the intent to be of benefit. Empathy is sitting down next to someone who’s having a bad day and having a bad day with them, while compassion is talking to them to see how you can make their day better.”
Empathy can also create tunnel vision, causing leaders to make decisions that benefit a few rather than the organization as a whole. By distinguishing between compassion and empathy, leaders should
be able to see the downside of being overly invested in one person or a small group of people – at the expense of the greater good.
“We were also surprised by compassion, particularly because in our previous experience we had heard very few organizations or leaders talk about compassion as a core business strategy, but it was something that came up over and over,” says Carter. “In this day and age, when we’re seeing so many challenges in terms of social cohesion and the need for respect, compassion kept coming up as a strategic imperative.”
“The way we’re working now is not serving us well, and we’re seeing that in our engagement scores and in our productivity numbers. If we want to retain top talent from this up-and- coming generation, we need to change the way we lead them.” Jacqueline Carter
In fact, 90% of the leaders surveyed said that compassion was very important for leadership, and 80% said they would like to be more compassionate, but didn’t know how. This is where the trait of compassion leads back to mindfulness – leaders need the clarity and mental space to truly consider the needs of others and what’s best for the organization as a whole.
THE NEXT GENERATION
The growing importance of these traits in business relationships is driven in large part by the younger people entering the workforce. Organizations are finding that the old way
of training management and motivating employees simply doesn’t work anymore.
“This younger generation is not willing to put up with the same garbage that a lot of people in my generation put up with,”
Carter explains. “In a broad sense, this generation is looking for more purpose
and meaning in their work, and they want leaders who engage them and make them feel valued. What we found in our research is that everyone wants those things – who wouldn’t? – but this next generation of workers is demanding them. We really see this as a fundamental shift.”
Carter mentions a recent Gallup survey that found that 82% of employees say
their leaders are uninspiring. Even more remarkable is another study that found 65% of employees would pass up a raise
if they could instead see their leader fired. And reminiscent of the hilariously horrible bosses of television shows and comic strips, yet another survey found that 77% of leaders thought they did a great job of engaging their employees, oblivious to their underlings’ true feelings.
“We see this as a call to arms for leaders,” says Carter. “The way we’re working now is not serving us well, and we’re seeing that in our engagement scores and in
our productivity numbers. If we want to retain top talent from this up-and-coming generation, we need to change the way we lead them.”
In today’s tight hiring market, competition for highly skilled employees is more heightened than it’s been in decades. Poor leadership may be the difference between keeping good employees in the organization and sending them hustling off to your competitors. Fortunately, while becoming
a better leader may not be easy, at least it can be affordable. By training yourself to be more mindful, selfless and compassionate, you can increase your connection with employees and thus improve your institution’s performance overall.
“We need to bring more humanity into our work,” Carter says. “A good leader should be strategic, but still able to care about people. Because caring for your employees and customers is critical.”
Jacqueline Carter and Rasmus Hougaard’s book, The Mind of the Leader, is available from Harvard Business Review Press§
FMS forward | SEPTEMBER/OCTOBER 2018 | 29
SPONSORED CONTENT FROM PALADIN FS
THREE PROVEN TACTICS FOR MORE EQUITABLE TERMS IN CORE IT CONTRACTS
By Aaron Silva, CEO – Paladin fs Core suppliers count on the fact
that switching suppliers would pose astronomical cost to community banks and credit unions due to the financial logistics and human resources required to convert all of the institution’s programs and processes to the new system.
The assumption that a bank or credit union won’t go through the hassle of moving to another vendor – fewer than 4% of all banks switch suppliers in any given year, after all – often makes core suppliers overconfident when it comes time to renew a contract. They don’t want to lose the business any more than institutions want to change
their core provider. As a result, the cores will often back down when banks call their bluff – provided the banks have the right negotiation leverage.
These three tactics have proven successful for clients who have implemented them with our guidance – clients who have ultimately reaped the rewards of securing a fair contract with their chosen core supplier:
1. TWO YEARS FROM CONTRACT RENEWAL, TURN THE TABLES TO TURN THE TIDE.
To negotiate from a position of power, the conversation needs to begin at least two years in advance of a contract renewal date. With this window of time as a buffer, cores know the bank or credit union could conceivably go with another vendor. This is called “switching leverage.”
At this critical juncture, financial institutions must gather ammunition. They should
reach out to other vendors to request their best offers and do extensive research into pricing and contract benefits enjoyed by bigger banks. (Pro tip: This information is highly guarded and difficult to come by, but
you can bypass this step altogether if you partner with a third party that has access
to it through the real-world experience of working on countless deals and meticulously mining each for information about what offers other institutions are enjoying.)
2. SECURE TRUE SLAs – NOT SLOs IN DISGUISE.
A Service Level Agreement (SLA) is a commitment of a specified service level that, if not satisfactorily delivered, entitles the customer to a predefined financial credit or other tangible compensation. But core vendors’ SLAs are rarely that – in practice, they function more like Service Level Objectives, or SLOs. And an SLO doesn’t come with any guarantee, credit or remedy process that favors anybody but the supplier.
Community banks and credit unions must put key language in their contracts that includes a clear definition of consequences of a breach that is measurable and meaningful – with an option for either the supplier to make it right or the institution to terminate the agreement.
3. REMOVE CONTRACT LANGUAGE THAT PRACTICALLY PROHIBITS ACQUIRING THE LATEST INNOVATIONS.
Offering the top-tier fintech solutions that customers expect is crucial to the survival of community banks and credit unions – rinky-dink platforms for online banking,
bill pay, P2P payments, etc. will not keep them competitive. But most core suppliers include terms in their contracts that play a perverse game of fintech “keep away” with community financial institutions.
Community financial institutions must demand that core suppliers limit exclusivity for the services the institutions anticipate acquiring, changing or upgrading in the future. Under the current language in most
core contracts, banks do not have the right to switch to a more competitive solution without great pain in the form of high termination fees and costs required for de-conversion from the past solution and conversion to the new solution.
If a core supplier’s solution isn’t up to snuff, why should they be rewarded with a hefty fee for the privilege of the client not using their technology? Instead, the core should take the hit by absorbing the cost of exit for services and the costs to de-convert. After all, if the supplier is willing to stand by its solution, it should be ready to guarantee its quality and competitiveness.
Core suppliers don’t see the situation in the same light. But armed with the knowledge of what has been offered to other banks in the past – and what concessions are possible to attain for themselves – community banks and credit unions can get their core suppliers to offer fair terms for fintech solutions.
REASONABLE CORE CONTRACTS CREATE A WIN-WIN FOR BANKS AND VENDORS
By saddling community banks and credit unions with unfair fees and pricing, core vendors are ultimately harming themselves. As M&A continues among community institutions, their customer base dwindles.
That’s why it ultimately serves both parties to empower community banks and credit unions to compete with the big banks in the fintech sphere. The trick to succeeding in this endeavor is making the cores view the full picture – and in forcefully convincing them to play fair.
Aaron Silva is a banking industry veteran and entrepreneur with more than two decades
of experience in banking industry sales and contract negotiations.§
30 | FMS forward | SEPTEMBER/OCTOBER 2018
FMS forward | SEPTEMBER/OCTOBER 2018 | 31
BANKS DON’T GENERALLY HAVE TO GUESS WHERE THE OCC STANDS AND WHAT IT EXPECTS FROM THEM AT ANY GIVEN POINT IN TIME, AS THE AGENCY LAYS OUT A VERY CLEAR EXPLANATION OF ITS MOST UP-TO-DATE PRIORITIES AND CONCERNS TWICE A YEAR IN ITS SEMIANNUAL RISK PER- SPECTIVE PUBLICATIONS.
BUT FOR THE STORY BEHIND THE STORY, FMS REACHED OUT TO COMPTROLLER OF THE CUR- RENCY JOSEPH M. OTTING FOR AN EXCLUSIVE INTERVIEW ON THE CHALLENGES AND RISKS BANKS ARE FACING IN THE CURRENT ENVIRONMENT, AND HOW HIS AGENCY IS WORKING TO HELP THEM REMAIN RELE- VANT AND COMPETITIVE IN THE YEARS TO COME.
FMS: What are the most pronounced challenges facing the banking industry in the current environment?
Joseph Otting: The federal banking system is safe and sound today. The industry understands its risks better
than at any other point in my long career. Capital and liquidity are good. The relative calm and benign credit environment
give us a good opportunity to revisit our regulatory approach and decisions over the last decade to ensure we are protecting the safety and soundness of our banking system and the consumers and businesses it serves, and positioning our financial institutions to better serve their customers and communities.
Following the crisis, policymakers and the industry took the necessary actions to put out the fire, implement emergency safeguards and bring our economy back
from the brink. They were successful, and today we have a system of strong healthy banks because of those actions. Now, we need to consider whether those policies and practices implemented during a crisis continue to serve the best interests of our nation, our financial services industry and its customers.
We are beginning to make progress on that important front – keeping what works and changing what needs to improve. We are working to thoughtfully remove unnecessary burden and create a set of rules that ensure banks operate in a safe and sound manner, provide fair access, treat customers fairly and comply with the law. But the rules
also need to encourage banks to fulfill
their basic reason to exist, and that’s meeting the credit needs of the customers and communities they serve. The recently enacted Economic Growth, Regulatory Relief and Consumer Protection Act is a good step
When we talk about risks, credit quality is always a driver, and we are seeing some weaker underwriting and additional risk accumulating at this point in the economic cycle. The worst loans are made in the best of times.
in the right direction and demonstrates the positive results of bipartisan effort.
FMS: What does the OCC view as the most significant risks in the banking industry right now? What are the reasons behind the heightened concern in these areas?
Otting: While performance metrics are very good at this point in the cycle, bankers and regulators must remain vigilant.
When we talk about risks, credit quality is always a driver, and we are seeing some weaker underwriting and additional risk accumulating at this point in the economic cycle. The worst loans are made in the best of times.
We are also transitioning to a higher interest rate environment. Although rising rates generally increase net interest margins at small banks, bank portfolios with concentrations of long-duration and low, fixed-rate assets could decline in value. Rising interest rates likely will increase the cost of deposits because of competitive pressures, particularly for large banks subject to additional liquidity requirements.
We are also seeing continuing concerns with operational risks, driven by cybersecurity concerns and concentration of third-party service providers. Compliance with Bank Secrecy Act requirements as money laundering and terrorist financing methods evolve is a concern, as is managing compliance with new and evolving consumer protection and disclosure requirements.
We discuss these points in detail in the OCC’s Semiannual Risk Perspective. The report, which the OCC has published since 2012, is a valuable resource for bankers
and others interested in understanding current risks. The report shares insight
and data on key issues that could pose threats to safety and soundness, and it clearly communicates what examiners
will focus on over the coming months. Working with community national banks, locally based examiners will discuss how the issues identified in the Semiannual Risk Perspective relate to individual bank management’s unique business plans, as well as to their strategies for mitigating these risks. As such, bankers can avoid surprises during examinations and achieve business goals in a safe and sound manner.
FMS: What steps is the OCC taking to try and reduce the regulatory burden for banks? Where have the successes been thus far, and where is there still work to be done?
Otting: The OCC is working on three policy areas in the near term that will ease regulatory burden.
First, we are working to encourage national banks and federal savings associations to help meet the short-term, small-dollar credit needs of consumers. Millions of U.S. consumers borrow nearly $90 billion every year in short-term, small-dollar loans (typically ranging from $300 to $5,000) to make ends meet. Consumers should have more choices that are safe and affordable. In May of this year, the OCC clarified its expectations to encourage banks and savings associations to be part of the solution. Banks may not be able to serve all of this large market, but they can reach a significant portion
of it and bring additional options and more competition to the marketplace while delivering safe, fair and affordable products that promote the long-term financial goals of their customers.
Second, we are working to modernize the regulatory framework around the Community Reinvestment Act (CRA). Since becoming law in 1977, regulations
32 | FMS forward | SEPTEMBER/OCTOBER 2018
around the CRA have become outdated, cumbersome and complex, and no longer serve the law’s original purpose effectively. We have the opportunity to modernize the CRA by:
• Increasing opportunities for lending, investment and services in low- and moderate-income areas and rural communities
• Expanding the activities and products eligible to receive CRA consideration
• Making bank CRA performance more
• Improving the timeliness of written
evaluations of banks’ CRA performance
• Reducing the overall burden associated
with compliance and supervision related to CRA
Third, we need to improve how we fight money laundering and make complying with the Bank Secrecy Act (BSA) more efficient. Today, millions of suspicious activity reports are filed annually, and banks spend billions each year on reporting and other BSA compliance requirements. But it’s not working as efficiently as it should. We need a fresh approach.
The OCC is just one agency in the mix. It acts like an umpire in baseball calling balls and strikes, but the rules are written by other agencies. To fix the system, we will need a collective effort that involves lawmakers, the Treasury Department, the Financial Crimes
Enforcement Network and other regulators. Congress also has begun to reexamine the BSA to determine what can be improved, and I am optimistic that we can make the system work better and improve how we protect our financial system.
FMS: What steps do you think banks need to take to remain competitive and appeal to the next generation of consumers? What is the OCC doing to help them in this regard?
Otting: First and foremost, I believe that local banks will remain the heart of their communities, and we need to ensure that they remain part of the broader banking landscape in the future. To do this, we need greater flexibility to tailor regulatory requirements for community banks that do not pose the same risks to the economy as their larger counterparts. I think we’re seeing momentum in Washington to
make meaningful progress to reduce the regulatory burden on these banks. By lifting the burden, community banks can focus their energy on their customers and the technologies their customers have come to enjoy.
One example is capital. Smaller banks
need a simpler capital structure. I’ve been
a banker for more than 30 years, and I needed experts to help me fully understand the requirements from time to time. We should not put that kind of burden on smaller
banks that do not pose a threat to our financial system. We need to be mindful
of the burden of regulatory compliance on community banks and bring a more common sense approach to our assessment, and free up their resources to focus on what’s important to the banks’ customers.
Community banks also need a clearer path to take advantage of business opportunities. There are areas of small consumer lending in banking that should be thought through
to allow banks to participate in that space. Banks also have to understand how to safely take advantage of new technology, and they need to have the opportunity to use those rules to fill market needs.
Importantly, the OCC established its Office of Innovation two years ago. The Office of Innovation is responsible for implementing the OCC’s framework for responsible innovation, which includes establishing
an outreach and technical assistance program for banks and financial technology companies, conducting awareness and training activities for OCC examiners and other staff, and encouraging coordination and facilitation within the OCC of new programs and products with a focus
on technological change in the banking industry. This way, the regulated banks can be responsive to the needs of their customers in a safe and sound way, and can continue to use technology to serve their communities.§
I believe that local banks will remain the heart of their communities, and we need to ensure that they remain part of the broader banking landscape in the future. To do this, we need greater flexibility to tailor regulatory requirements for community banks that do not pose the same risks to the economy as their larger counterparts. I think we’re seeing momentum in Washington to make meaningful progress to reduce the regulatory burden on these banks.
FMS forward | SEPTEMBER/OCTOBER 2018 | 33
THE MONEY: FOCUS ON PROFITABILITY
As we sat down earlier this year to plan
out the survey that would eventually yield the data for the second incarnation of our proprietary FMS research report, Community Mindset: Bank and Credit Union Leadership Viewpoints, we first sought to identify any key topical areas that hadn’t been covered in our initial 2017 endeavor. And in looking at a variety of news items and trend pieces from around the industry, it quickly became apparent that to not probe the issue of profitability measurement and analysis was to ignore one of the most important issues facing institutions today.
Indeed, many of both the biggest challenges and the greatest opportunities for growth that banks and credit unions are facing in 2018 – from deposit strategies and the quest for income to digital banking and the ability to attract and retain new customers – can be tied back in one way or another to the concept of profitability measurement. But how many institutions are actually making a concerted effort to determine where their best opportunities lie by really digging into the data?
When asked about the priority of profitability analysis in their institutions,
37% of survey respondents deemed
it something that is “performed and discussed, but only occasionally tied to major decisions,” while one-third (33%) said it is “significantly relied on for strategic decisions” and slightly more than one in five (22%) said it is “performed, but not closely scrutinized” (Figure 1).
Like many other institution-wide initiatives (see the story elsewhere in this issue about ERM), one of the real keys to the value of profitability analysis in a bank
or credit union is the extent to which it is championed by management and embraced by employees throughout the organization. That’s what’s so telling about the responses in Figure 1 – while only 9% of respondents admitted to having no formal process for measuring profitability in place (which includes 23% from the $500 million-$999 million asset size), it’s debatable whether the 22% who perform profitability analysis but don’t scrutinize it or even the 37%
who perform and discuss it but don’t often tie it to major strategic decisions are really any better off. In other words, making the effort is probably better than doing nothing, but the real value of having profitability information is in using it to
FIGURE 1: PROFITABILITY ANALYSIS AS AN INSTITUTIONAL PRIORITY
Performed and discussed, but only occasionally tied to major decisions
Significantly relied upon for strategic decisions Performed, but not closely scrutinized
No formal process for measuring profitability
FMS forward | SEPTEMBER/OCTOBER 2018 | 35
guide institutional strategy – otherwise it’s just another pile of data.
Those respondents with a formal process in place to measure profitability conduct their analyses across a variety of dimensions, the most common of which are customer, line of business and product (Figure 2). While analysis by channel and officer are less popular across the board, they are inordinately favored by those institutions in the $1 billion-$1.9 billion and $2 billion-$4.9 billion asset categories. Customer analysis, meanwhile, is the overwhelming favorite dimension to measure for the $5 billion-$9.9 billion set.
In analyzing any of these profitability dimensions, 60% of all institutions utilize funds transfer pricing (FTP), while another 33% have plans to use FTP at some point in the future (Figure 3).
Finally, the notion that detailed profitability analysis is something only the biggest institutions can or should do is a fallacy,
based on the responses our survey elicited. Those 33% of respondents who noted that profitability analysis is significantly relied upon for strategic decisions, in fact, represented a
FIGURE 2: MEASURING DIMENSIONS OF PROFITABILITY
diverse cross-section of institution types and asset sizes. Profitability analysis, it turns out, isn’t a matter of size or complexity, but rather a question of priority and commitment.
Indeed, for those institutions not performing profitability analysis or performing
an analysis that does not measure for specific profitability dimensions, both data challenges (37%) and a lack of resources (13%) are seen as common impediments to venturing down this road. However, the lack of a robust profitability process for many respondents has less to do with technology, financial wherewithal or manpower, but rather a lack of institutional belief in the process, with 41% of these respondents citing limited perceived value in their institutions and 9% blaming a lack of support for the practice throughout the organization.
Research taken from the FMS-commissioned study Community Mindset: Bank and Credit Union Leadership Viewpoints 2018, a survey of 400 senior executives representing community-based banks and credit unions.
For more insights from this year’s report, visit FMSinc.org/Research. §
FIGURE 3: USE OF FTP IN PROFITABILITY ANALYSIS
36 | FMS forward | SEPTEMBER/OCTOBER 2018
Do not use FTP, and have no plans to do so
Do not use FTP, but are planning to do so
Customer Lines of business Product Channel Officer
Do not analyze profitability for specific dimensions
Many institutions want the benefits of an enterprise risk management program (ERM), but getting there can be harder than it seems. Community institutions often have the worst time of it, falling behind their larger brethren when it comes to building and maintaining successful ERM programs. But taking a look at where those institutions are and where they should be is the first step to bridging that distance.
THE CURRENT STATE OF ERM
As more financial institutions look to implement ERM programs, it has become very clear that simply having an ERM process is very different from having an effective ERM process. For many organizations, their attempts at ERM have not amounted to a solid top-to-bottom program so much as an exercise in communication.
“I’ve seen several banks implement an ERM policy, or even an ERM program, but in many
cases those aren’t really what ERM was designed to be,” says Bert Purdy, a partner at BKD. “It’s more of working to consolidate the silos – they’ll get everyone at the
same table to talk about their separate risk priorities rather than actually looking at risk from an enterprise-wide perspective.”
Purdy notes that banks with over a billion dollars in assets are more likely to have
a successful ERM program than smaller institutions – not surprising, given the fact that smaller institutions are unlikely to be able to dedicate the same resources to the project.
“Larger organizations have the ability
to dedicate personnel specifically to
build out their ERM programs,” says Marianne Turnbull, a managing director at CohnReznick. “Every ERM program needs a champion – someone who can provide a level of expertise and who can implement a successful approach.”
Smaller institutions that can’t pour resources into their program often turn to software to tap into the benefits of ERM, but it can be difficult to find a software program that fits the specific needs of the organization. Even when they land the right
software, it still takes time and resources to get it up and running.
“The difficulty with software programs is they can be very simple or they can be very complex,” Purdy notes. “You really have
to take the time to get that software to do what you want it to do and give you what you need from it. There is no cookie-cutter program that everyone should use, because every institution is different.”
There’s also a gap in how well ERM software is utilized once in place, with larger institutions once again showing better results than smaller institutions.
“Some institutions use software programs fairly well – everyone in the organization has access to the program and can look at the controls and increase or elevate risk when they need to,” Purdy explains. “But you really see that more with the bigger banks. Smaller community banks that do ERM are using their software program more as a warehousing feature than an actual tool that helps drive the enterprise risk process.”
STRATEGY AND RISK
Though asset size can play a significant
role in how well an institution is able to implement an ERM program, many programs fail not due to a lack of resources, but rather a lack of understanding of the relationship between strategy and risk.
“The first step is to understand your organization’s mission and goals,” says Turnbull. “This helps you build strategy,
and strategy is what determines your organization’s success in achieving its
goals and objectives. Before deciding on a strategy, an organization should consider its risk appetite and alternative strategies. That
The difficulty with software programs is they can be very simple or they can be very complex. You really have to take the time to get that software to do what you want it to do and
give you what you need from it. There is no cookie-cutter program that everyone should use, because every institution is different.
Bert Purdy, Partner – BKD
FMS forward | SEPTEMBER/OCTOBER 2018 | 37
interplay between strategy and risk is what ERM is built on, and that’s what drives the performance and value of an ERM program.”
Purdy defines ERM as the gap between strategy and how that strategy is executed.
“It’s how you get from the plan to the goal, and how you identify the risks and what to do about them,” he says. “Institutions really need to have a good understanding of their strategic plan, because without a good strategic plan ERM is useless.”
“Banks should build and monitor key risk indicators with the data team, so that things like rising delinquencies or dropping rates trigger a response,” Turnbull says. “ERM isn’t about just looking at the risks you’re dealing with now. You have to look at emerging risks and new opportunities. If your competition has a new product and you don’t, there is
a risk that you may lose your customer if you don’t adapt. Conversely, if you identify a customer need and develop a product to address the need, you have capitalized on a
adjusting your strategy to minimize risk and seize opportunities.”
THE LEADERSHIP FLOW
The difference between an effective ERM program and an ineffective one often rests on the people behind it. Without a specific person in charge to be the face of the program, many ERM attempts fail.
“Every ERM program needs a champion,” Turnbull says. “A champion is someone with expertise and well-defined responsibilities who can take ownership of the ERM process. This is a key differentiator between an ineffective and effective ERM process.”
That person should be well-versed in risk, and involved in an ongoing conversation with the board and top executives.
“In most cases, there should be a risk officer overseeing this program, but regardless someone has to oversee it,” Purdy says. “And the CEO and the board or a risk committee
“This has to come from leadership,” says Purdy. “Leaders need to be able to verbalize why we need it and how it’s going to benefit the institution. It’s never going to be a useful program if it doesn’t have executive buy-in.”
Once the program has a sponsor and
the full support of management, those leaders need to in turn make sure everyone throughout the organization understands and contributes to the ERM program.
“ERM involves all levels of the organization,” Turnbull explains. “It has to start at the
top, but for it to really have value and be effective, it needs buy-in at every level. Everyone throughout the entire organization has to understand their risk responsibilities.”
In fact, not only does the ERM mindset need to permeate every level of the institution, it has to become essential to each employee’s daily thoughts and actions.
“ERM is best done from a top-down approach, with board and senior management buy-in and governance established at the board and executive level,” Turnbull continues. “Leadership has to ensure that ERM is an integrated and ongoing process – a part of the way work is done daily throughout the organization.”
Enterprise risk management is gaining more advocates as risks become bigger, scarier and quicker to morph. However,
it can be easily dismissed as just another bureaucratic exercise if employees don’t fully understand what an effective ERM program brings to the organization. In truth, the difference between a slipshod ERM program and a healthy one may be the difference between the ultimate success or failure of an institution.
“A lot of leaders see ERM as a loss center, but when it’s done right it can prevent losses in the future,” Purdy says. “It’s hard to quantify how much money you’re saving, because the losses never occur if you have a good risk management program.”§
If your competition has a new product and
you don’t, there is a risk that you may lose your customer if you don’t adapt. Conversely, if you identify a customer need and develop
a product to address the need, you have capitalized on a new opportunity. A company’s ability to adapt to changing risks has a
huge impact on its success and viability.
Marianne Turnbull, Managing Director – CohnReznick
new opportunity. A company’s ability to adapt to changing risks has a huge impact on its success and viability.”
Because of this, ERM cannot be a static enterprise – it has to evolve constantly to address an ever-changing risk landscape.
“A successful ERM program is constantly reassessing its key assumptions,” Turnbull adds. “It’s about revisiting assumptions and
should drive that function. The board should design the strategy, the strategy should drive the ERM program and the board should then review the ERM program.”
Of course, having an expert to champion ERM in the institution doesn’t mean that leadership is off the hook for the program – without substantive ongoing support from the top, ERM will never reach its full potential in the organization.
38 | FMS forward | SEPTEMBER/OCTOBER 2018
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SPRINGS VALLEY BANK & TRUST STEPS UP FOR AFFORDABLE HOUSING
When French Lick Resort called on community leaders in the
small southern Indiana towns of French Lick and West Baden
(total population: 1,500) to make known its need for newer, more affordable single-family homes in the area to stabilize the ranks of its middle managers, Springs Valley Bank & Trust stepped up to the plate. The $390-million community bank, a fixture in the community dating back to 1905, agreed to partner with French Lick to get a number of town-owned tax-sale and neglected lots repatriated and back on the tax rolls – while also setting aside a million dollars for qualifying, low-down payment, new home construction loans under a new Valley Housing Initiative joint venture.
Springs Valley has since helped get a local contractor involved who is willing to build the lots to the specs and price point ($100- 150K) that the hotel outlined, and has sent team members out
to the hotel to discuss home ownership with employees and
walk them through the pre-approval process. While the bank has received some good PR for its involvement in the project and will certainly stand to earn some welcome non-interest income on the loans, chief lending officer Craig Buse says the notion of stepping in to aid this type of community effort is right in line with the bank’s longstanding philosophy.
“The ability to assist the hotel and help the community grow its population is probably the biggest reason for Springs Valley to jump on board with this initiative,” Buse explains. “As the only bank chartered in Orange County, we feel it absolutely necessary to help these individuals understand the process and provide a means for them to own a home.”
WHAT’S THE GOOD WORD AT YOUR INSTITUTION?
Is something going right in your bank or credit union? The Springs Valley Bank & Trust story here was based on a tip from former FMS chairman Darrell Blocker about his bank – maybe your institution has something similar to share. Is there a
new product or service that has taken off? A new customer initiative that’s really resonating? A great branch strategy that has people falling in love with your brick and mortar all over again? Whatever it is, we want to hear about it!
If you’d like to see your institution featured in a future installment of Happy Talk, shoot us a quick email at [email protected] and we’ll be in touch by phone or email for a few more details.§
ON THE HORIZON
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RELATIONSHIP PROFITABILITY: THE HOLY GRAIL MANAGING RISING RATES: DICTATING YOUR STRATEGY THE 2019 FMS FORUM
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June 23-25, 2019
MADISON, WI ATLANTA, GA HERSHEY, PA ONLINE ONLINE BOSTON, MA
We’re always adding new programming, so be sure to check the education calendar at FMSinc.org.
40 | FMS forward | SEPTEMBER/OCTOBER 2018
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