Bankruption www.ebook3000.com Bankruption How Community Banking Can Survive Fintech John Waupsh Copyright © 2017 by John Wiley & Sons, Inc All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the Web at www.copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley publishes in a variety of print and electronic formats and by print-on-demand Some material included with standard print versions of this book may not be included in e-books or in print-on-demand If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com For more information about Wiley products, visit www.wiley.com Library of Congress Cataloging-in-Publication Data is available: ISBN 9781119273851 (Hardcover) ISBN 9781119273868 (ePDF) ISBN 9781119273882 (ePub) Cover Design: babarzaman Cover Image: © Lightspring/Shutterstock Printed in the United States of America 10 www.ebook3000.com To Brooke, Lowen, and Jack, for the constant support and inspiration To my parents and family, for the unrelenting encouragement Contents Preface Introduction Additional Thanks ix xv xvii Chapter 1: An Overview of the Bankruption Chapter 2: Community Banking Is Broken Chapter 3: The Opportunity for Community Financial Institutions 75 Chapter 4: Advice from Others 157 Chapter 5: Finishing Move 257 About the Author About the Companion Website Index 269 271 273 vii www.ebook3000.com Preface As battle-scarred survivors of a financial crisis and deep recession, community bankers today confront a frustratingly slow recovery, stiff competition from larger banks and other financial institutions, and the responsibility of complying with new and existing regulations Some observers have worried that these obstacles—particularly complying with regulations—may prove insurmountable –Ben Bernanke, chairman, board of governors of the Federal Reserve System We Have Become Enslaved by Fintech Content Today’s bankers get so much help A constant bombardment of LinkedIn articles, blog posts, tweets, podcasts, books(!), reports from big and small consulting firms, conferences, private discussion forums and tweet-ups, and, of course, an incessant barrage of regulation updates The help/noise would overwhelm any banker, if the content of the cacophony hadn’t already done so Flippant conference panel conjecture, medium expositions on what’s happening or what’s not happening, limited sample set surveys, and otherwise poorly researched analysis clog the analytical filter of even the most engaged banker ix x PREFACE Figure P.1 The Number of Financial Institutions in the United States by Type Credit Unions Banks 24k 22k 20k 18k 16k 14k 12k 10k 8k 6k 4k 2k 1939 1946 1953 1960 1967 1974 1981 1988 1995 2002 2009 SOURCE: CUNA and FDIC The number of banks and credit unions has dropped significantly over the past 35 years One day, peer to peer (excuse me, marketplace) lending is going to transform how someone borrows money, and the next day it is torn apart by the SEC.1 Then, it’s legal and thriving: all unicorns and showboats Seemingly, a few days later, it’s in the Consumer Financial Protection Bureau (CFPB)’s crosshairs (though consumers don’t seem to be worried about it) As my buddy @leimer is fond of saying, “Fintech never sleeps.” Perhaps Or maybe, fintech never shuts up According to Mike D King (@bankwide), in April 2016, “#fintech” was seeing 138 unique tweets and 562,000 exposures per hour That doesn’t include all those tweets about fintech that don’t contain the word, of course www.ebook3000.com Preface xi This continuous media and pundit churn delivers the consequence of imposed, conscious blindness Those of us who should know most about what is happening end up knowing the very least, because, to put it simply, keeping track of it all is mind-numbing and defeating Maybe the fintech startup hype machine is serving its purpose: beating bankers into submission Smashing, loud dissonant intimidation puts the silent, introverted banker quants who thrive in the shadows, directly where the STEM experts want them: fetal position, wailing And, Stockholm syndrome may yet force partnership discussions Sexy, boisterous, overcompensating fintech startups extending the partnership olive branch to financial institutions (again) Perhaps the noise is simply a byproduct of the remarkable innovation these guys bring to the table So maybe the weight of it all is something other than the noise Maybe It’s That Community Banking as We Know It Is No Longer Relevant FDIC-insured institutions dropped from 8,396 at the end of 2007 to 6,210 at the end of 2015, and credit unions fell from 7,284 to 5,410 during the same time period This has got to be the end of banking as we know it, right? Buckminster Fuller (inventor of the geodesic dome, a pioneer of sustainable planetary thinking, and one of the greatest comprehensive design minds of the modern era) spent most of his adult life relearning everything he was taught in school.2 His rationale for this was quite simple: much of what he learned in school classrooms and texts originated from facts that had been skewed over time by governments, religions, societies, or simply accidents (a byproduct of human-powered recordkeeping) The banking world of today has more contaminated and more biased reporting than Bucky’s of a hundred years ago For example, if one bothered to research the data behind the aforementioned stats, one would find that nearly the same number of institutions disappeared the six years preceding 2007 as the six years following xii PREFACE Does that make the trend more or less alarming? What if there were more sizable declinations of financial institutions at other points in history—would that change the argument? What if, when further analyzing the data, one would find the disappearing FIs were being replaced (via new charters) at a much slower rate than in the past? And what if, in one’s quieter moments, one were to consider that artificial intelligence can and should automatically manage money for humans and that blockchains and their enabled technologies such as bidirectional payment channels will be the ultimate arbiters, thereby making banks and credit unions obsolete? This is the juncture when the preponderance of noise clouds the real data and obscures actionable intelligence Futurists, technologists, and others suggest an end to banking as we know it While today’s banking will undergo complete transformation over time, that may not be today’s banking story The future of banking is entertaining to read and lots of fun to listen to or to debate at a conference, but it’s also not the best use of time for a banker who needs to drag her credit union or bank across the ever-widening chasm between yesterday and today If you want the very end of the banking story: ones and zeroes win In the future, thousands of existing “financial institutions” will assimilate, our money will be managed for us automatically via artificial intelligence, dumb or smart contracts and learned behaviors, and no banked human anywhere on earth will have to think about bills, managing their money, or rates on insurances, mortgages, or deposits I spend a few pages discussing this idea at the end of this book A few pages out of a couple hundred The reason is simple: any prediction toward the “big” future will prove itself true at some point in the horizon of time, but we should not confuse that far off world with today’s—or even the next 10 years’—reality And, perhaps if financial institutions make small changes now, they can adapt or, better yet, knock a dent in that trajectory www.ebook3000.com Preface xiii Not unlike Bucky’s endeavor, today’s community banking leaders need a clear baseline—a cleansing of the various myths that have promulgated themselves into mainstream thinking Where possible, Bankruption will use unadulterated data to distill the myths from the truths, the hypotheses from the facts Historical evidence and detailed data (rather than daily trends) will inform the practical guidance for short-term and long-term planning contained in the latter two-thirds of this book You’ll find this data in the many charts throughout the book, and to round out the analysis, many more charts are available via the book’s website for you to download and use in your own presentations In an attempt to maintain that focus, we won’t spend much time in this book on Ethereum, digital payments, internet of things, artificial intelligence, etc that are in the midst of evolution today While these topics must be given mind space as they may foundationally change the future of banking, they are outside the scope of this text—Brett King or Chris Skinner can offer you some great reads on these subjects Speaking of stellar industry thinkers, this book contains something that no conference has been able to do: get the absolute best minds in the industry in one place to share their thoughts on near-term, practical guidance for community banking executives I’m humbled by the generosity of these thinkers and doers Over 20 brilliant friends, from community bankers to industry analysts, offer their expert advice to community bankers—exclusively for Bankruption readers—and they asked for nothing in return So here it is: a project that has taken way too long, and required way too much sacrifice from my wife, co-workers and family My passion for the community banking industry is no secret, but all the passion in the world isn’t enough to return relevance to a dying model My hope is that by shedding the weight of the noise, you and your team can build a timely, executable business model around a strategy that makes sense for you, with achievable goals and deliberate solutions - John Index Check-cashing services, 210 CheckFree, 67 China banks, appearance, 61–64 community bankers, 62–63 loan opportunities, 62 mobile banking transactions, 63f P2P lenders, 62 state-controlled banks, impact, 61 China Banking Regulatory Commission, 62–63 Citi FinTech, 86 Citizens Bank of Edmond, 104, 176 mind-set, 177 Uniform Bank Performance Report, 106 Citizen’s Bank of Weir, 232 Clicks-and-mortar retailers, 96–97 investment, requirement, 97–98 Closed community banks, acquisitions, 17 Code, human trust, 264 Commercial Banking and Retail Banking Leadership Council, 194 Commercial loans, 234 Commodity business, 246 Communities community-focused financial institutions, 240 defining, 9, 112 financial institutions, phenomena, 201–202 Community bankers, risk aversion, 179 Community banking defining, 7–13 future, absence, 1–6 model, threat, 136 physical proximity, reliance, 2–3 problems, 277 Community banks, 189 assets, 19f level, 208 attention, 176–181 closure, 22 acquisition, 17 definitions, 21–22 failures, facts, 22 Federal Reserve System definition, number (depopulating towns), 25f operation, 197 running, 140 rural branches, 26 self-acquisition, 18f strategy, change, 240–241 see also Financial institutions (FIs) Community-based banking institutions, catering, Community financial institutions digital capabilities, requirement, 158 omnichannel adaptation, 100 opportunity, 75 problems, 93 younger audience attraction, 102 see also Financial institutions (FIs) Community institutions consumer relationships, relinquishment, 264 employee numbers, 90 growth, process, 229 innovation, absence, 203 interaction/resource sharing, 264 network, 263 thriving, see also Financial institutions (FIs) www.ebook3000.com 278 Companies, single-point solution sale, 118 Compensation, importance, 183 Competition action call, 119 usefulness, 177 Compliance, 83 finalization, 114 management system, 199–200 Computer-aided automation, impact, 65 Computer-system banks, 65 Concierge, impact, 185 Consolidation, 193 Consumer Bankers Association, 205 Consumer Financial Protection Bureau (CFPB), 22, 110–111, 131, 192, 241 consumer interaction oversight, 81 Consumers change agent role, 71–72 consumer-facing technologies, usage, 85 consumer-friendly payment mechanisms, 203 experience perception gap, 221–223 needs, pace (keeping), 192 product experience, 141–143 relationships, relinquishments, 264 switching costs, 130 trust, increase, 142 Conversion action call, 119 timeline, creation, 183 Core banking, extensibility, 119 Core influence, increase, 126 Core mission, adherence, 187 Core processor, 127, 185 INDEX Correlation, causation (contrast), 81–83 Coupon-matching, 97 Cox, Heather, 86 Coxon, Hal, 101, 181–186 CRE, 27 Credit card companies, 66, 216 Credit sources, 10f Credit Union National Association (CUNA), 146, 147, 192 Credit unions, 66, 189 assets (US), 12f associations, information, 146 competitive advantage, 244 financial assets, growth, 12 locations, increase, 136 noncommunity bank, contrast, 21, 44 operation, 197 role, 221 running, 140 strategy, change, 240–241 see also Financial institutions (FIs) Credit Union Service Organizations (CUSO), 67, 71 Crosman, Penny, 186–188 Cross-generational work, ease (startup overestimation), 131 Crowdfunding, 68 C-suite, 182 Culture danger, caution, 116–117 Current accounts, switchers (UK), 56f Current Account Switching Service (CASS), 56 CUSO See Credit Union Service Organizations Customer/member relationship management, 121 Customer relationship management (CRM), 208 Index Customers, 196 alienation, risk, 234 base, affluence, 239 end-to-end experience, focus, 235 expectations, 258–259 experience, enhancement (opportunity), 223–224 financial services, 231 intimacy, 245 journey, in-depth knowledge, 236 knowledge, 235 priority, 247 satisfaction, banking overestimation, 222f vertical specific solutions, creation, 233 Customer service, 99 consumer opinion, 138–141 term, usage, 231 CU Water Cooler Symposium, 188 D Data access, 121–122 creation, 3f data-fueled marketing, usage, 236 misinterpretation, 242 needs, 199 size, 237 usage, 236 visualization software, 121 Database consultant, impact, 103 Data-driven adjudication constructs, digital applications, 111 Data-driven insight, foundation, 96–97 Data-driven marketing activities, 202 279 Data proximity impact, 3–4 usage, 4–6 Data, release, 118–120 Davis, Matt, 188–192 Deming, W Edwards, 13 Demotion, appearance, 184 De novo, problems, 38–50, 158 Depopulated towns, characteristics, 107 Depopulating rural market, median community bank, 25 Depopulating towns, community bank numbers, 25f Depopulation, 23–27 branch density, strength, 32 Depository institutions, nonbank competitive pressures, 29 Deposits percentage, asset size basis, 8f placement, 263 Desjardins Group model, 191 Digital banking consumer switching costs, 130 enhancements, 203 platform, building/supporting, 232–233 Digital Banking Report rebranding, 161–162 subscription, 81, 112–113 Digital banking users, generational basis, 13f Digital branches challenges, overcoming, 110–112 management, 121 Digital campaigns, actions, 237 Digital capabilities, requirement, 158 Digital Channel Committee (Consumer Bankers Association), 205 www.ebook3000.com 280 Digital community banking, 112–114 shift, 116 shift, 106–116 formula, 114 Digital delivery gap, 216–217 Digital disruption, 95 Digital engagement, banking approach, 218f Digitalization, 224 challenge, 217 Digital platforms, extensibility, 119 Digital success, achievement, 110 Direct banks, 203 primary bank role, 35f Direct delivery, 66, 67–69 providers, impact, 68 Discipline of Market Leaders, The, 245 Disruption, impact, 231 Disruptors, impact, 177 Dissonance, 258 Distribution denial of service (DDoS) attacks, severity/volume, 121 Dodd-Frank Wall Street Reform and the Consumer Protection Act impact, 82 proponents/result, 44 Drucker, Peter, 241 Due diligence performance, 147 processes, 146–147 Dummy Twitter account, creation, 247 Dwolla, 70 E Early adopters, value (startup overestimation), 128–129 Early Saver account, 174–175 INDEX Economies of scale, 193 EFMA study, 64 Emigrant Savings Bank, 238 Emotion-as-a-service, integration, 254 Employees, impact, 90–92 End-consumer experience, 118 Endorsed vendor review, national association standards (adoption), 147–148 Endorsement model, 147–148 problem, 146–147 tier, introduction, 148 Endorsement Roadmap inclusion standards set, creation, 148 marketing, 149 products, qualitative feedback (provision), 148 End-user satisfaction, 120 End users, best-of-breed offerings (obtaining), 120 End-users, characteristics, 85 Engagement, barriers, 219f Entrepreneurial generation perspective, 153 small business guidance, usage, 150–151 Entrepreneurship education, 151 Entrepreneurs, interactions, 150–154 E-signature, 121 Esser, Julie, 192–194 Established trust, importance (startup underestimation), 129 European Union (EU), Payment Services Directive adoption, 82 Evaluating ladder, metrics (importance), 149 Evaluation fee, charging, 148 Evoke, 179–180 Excel, usage, 132 Index Expenses card, 233 Expert partners, alignment, 266 F Facebook, 95, 136, 212 appearance, 179 era, 216 monthly active users, 83f users, examination, 82 Face-to-face human interaction, 229 Fair Isaac Corporation (FICO) data, 10 Family banking services, 164 Family-friendly branches, 251–252 Federal banking charter, creation, 29 Federal Deposit Insurance Corporation (FDIC) banks study, 24 community bank study, 18 FDIC-insured bank branches, 102 density, 31f FDIC-insured bank failures, 14f problem list, 69 relationship lending, 11 Federal Deposit Insurance Corporation (FDIC), algorithm creation, Federal Reserve System, community bank definition, Feedback, response, 85 Ferrell, Will, 190 Filene Research, 193 Financial Brand, 127 Financial Brand Forum, 80 Financial Conduct Authority (FCA), 52–53 Financial goals, determination, 244 Financial institutions (FIs) assessment, presentation, 195 281 brevity/levity, absence, 123 competition, 31 cross-pollination, 67 customer priority, 247 digital advertising spending, 113f FI-led fintech accelerated company, 125 front line consideration, 88 future, uncertainty, 210 growth, 26, 189 human-centered problem-solving business, 189 innovation, 198 labeling, 81 local branch network, members/customers, 182 primary financial institution, future, 214 problem, 189 relevance, 190–192 relevancy problem, 190 retail environment, 181 sponsored incubators, 124 technology, usage, 117 total FIs, forecast, 8f trawlers, 93 trust, influencers, 130f user-centric products, 70 Financial Management Solutions, study, 36 Financial resources, redundancy, 193 Financial services, 231 brand awareness, 144f brand value, 138f marketing solution providers, 203 startups, presence, 159 Financial Services Authority (FSA), FSA-granted bank licenses, 54f www.ebook3000.com 282 Financial services companies, fintech (contrast), 65–66 Financial technology, impact, 65–66 Finovate, 80, 127 demoing, 124 Fintech, 64–66 accelerator, 238 adoption, bankruption (relationship), 128f challenge, 215–216 companies, partnering, 133, 187–188 competitors, 213 constructive feedback, 71 Direct delivery, 66, 67–69 feedback, 71–72 financial services companies, contrast, 65–66 force multiplier, 201–202 global Fintech financing, 159f Gold Label delivery, 66, 70–72 landscape, overview, 64–72 limited purpose federal banking charter, OCC creation, 29 market, dynamics, 200 options, 226–227 PwC survey, 66–67 startups, 66, 82, 148 interactions, 126–131 strengths, 226f weakness self-assessment, 225f White Label delivery, 66–67 FIRSTBranch, 108–109 digital success, achievement, 110 First State Bank, 103 Fishback, John, 194–197 “Fit in the box” lending, 11 Force multiplier, 201–202 Ford, Henry, 231 For-profit company, due diligence (performing), 147 INDEX Forward-thinking transition plan, 184 Foundation, problem, 118 Free Banking era, 238 “Free money,” offering, 174 Front-end website/apps, 127 Full-service FIs, efficiency, 36 Future, strategy (determination), 243 G Gas card, 233 Gen Z, 114 Geographical focus, 11–15 GitHub, 61 Global Fintech financing, 159f Gold Label delivery, 66, 70–72 fintech providers, 114 term (usage), 70 Millennials, 151–154 Good service, definition, 203 Google, 136, 192, 212 Google Fiber, 104 Google Play, 187 Gramlich, Jacob, 41 Great Depression, 28 Great Recession, 19, 64, 110, 115 branch footprint, 34 events, 65 impact, 152 Greenawalt, Andy, 99–100, 197–200 Griffith Savings Bank, acquisition, 17 Growth, absence, 24–25, 26 H Harris, Matt, 201–202 Heard on Hurd, 180 Heasley, Phil, 226 HELOC, 261 Index High-value customers, emphasis, 235–236 Hilton digital key, downloading, 80 Holvi, BBVA acquisition, 82 Homelink, launch, 52 Homogeneity, degree, 250 Household, primary bank user, 139–140 Housing wealth, 152 HSA card, 233 HSBC, 52 Hulu, usage, 249 Humanity, connection, 150 Human-powered retail banking, impact, 132 Human resources considerations, 184–185 Human resources, redundancy, 193 Human resources, usage, 133 Hybrid banks, 203 Hyper-local action, 190–191 I IBM report, 223 ICBA, 146 Idea Bank, 153 IDV software, usage, 211 iGen, 114 Inaction, problem, 84 Inactivity, problems, 79–86 In-branch account opening personnel, impact, 81 Incentive-based marketing campaigns, 130 Incubation, avoidance, 122–133 Indecision, impact, 84 Informationally opaque borrowers, lending, 10–11 Information technology (IT) strategy, 242 Infrastructure costs, impact, 223 ING Direct, 174 283 Innovation, 224 absence, 203 anti-innovation reflexes, 198 encouragement, regulatory environment (impact), 191 Innovators dilemma, 258 value, startup overestimation, 128–129 Insights, battle (winning), 190 Instagram, 143 Institutions, future, 13–15 In-store experience, 97 In-store routing, 97 Intangible assets, 137 Intellectual property, 137 Intelligent Enterprise, 186 Interactive teller machines, 33 Intercompany mergers, 16 Interfaces, development, 263 Internal bonus/incentive structures, 127 Internal learning, 127 Internal team, requirement, 228–229 Internet of Things, devices (forecast), 4f Internet-only banks, 203 Internet Plus policy, 61 Internet, usage, 50 Interstate Banking and Branching Efficiency Act (1994) (Riegle-Neal), 16–17, 29–30, 77–78, 83 Interstate branching, 77 Intimacy, yield, data proximity (impact), 3–4 Intracompany consolidation, 16 Intrastate branching, 77 Investment entities, 66 iPad Pro, usage, 132 iPhone, 142, 230 www.ebook3000.com 284 iPhone, (continued) release, 76 Iterative incentive-based marketing campaigns, 130 Ittycheria, Pradeep, 202–205 J Jack Henry & Associates, 254 Javelin study, 139 Jiménez, Alex, 84, 205–209 Job creation, 61 Joint venture, 126 Jumio, 211 Junk mail, impact, 261 K Kabbage, 204 Kaizen, 206 Kasasa, 70, 158, 181 Kayak, usage, 133 Keqiang, Li, 61–62 Kimerling, Dan, 124 King, Brett, 36, 158, 209–212 Know your customer (KYC), 61, 210, 232, 235 L Latimore, Dan, 212–213 Lean Principles, 84 adoption, 85 application, 206 Lean Startup, The (Ries), 84, 235 Legacy systems, challenge, 217 Legacy thinking, 1–2 LegalZoom, 153 Lender dissatisfaction (small business), 205f Lender satisfaction score, 204f Lending Club, 192 Lending criteria, usage, 10 LevelUp, 187 Liberty Bank, 109 INDEX Limited purpose federal banking charter (OCC creation), 29 Limited-purpose national charter, 69 Lincoln Savings Bank, 188 Lines of credit, 234 Lintel Bank, 60 Little Giant Ladder System, 146 Living expenses, 162 Lloyd’s of London, 52, 209 Loan applications, digital receipt, 110 Loan size, insignificance, 62 Local advertisements, impact, 102 Local credibility, merger, 203 Local digital marketing approach, 112 Locality, idea (importance), Local talent, hiring, 132–133 Location, impact, 230 Long-term goals, 121 Loyalty, reward, 260 M Machine learning, 160 Management, testing, 195 Market feedback, 114 Marketing, 101–104, 236 automation, 121 incentive-based marketing campaign, 130 local digital marketing approach, 112 online targeting, 249 shift, 248–249 Marous, Jim, 95, 112, 161, 214–227 Mashable, 251 Mass disbursements, 233 Megabanks accountholders, 140 impact, 140 offerings, 261 Index Meltdown (2008), 138–139 Member associations, improvement, 143–146 Mergers and acquisitions (M&As), 83, 237 Method application bias, curbing, 110–111 Metrics, 148 importance, 149 success metrics, 185–186 Metro Bank, branch-distribution strategy, 56–57 Microbranching, 101 Millennials, 151–154 aging, 257 characteristics, 151–153, 178 education levels, 152 financial product research, 152f income generation, 153 Mills, Scott, 227–229 Minimally Viable Product (MVP), 84–85 Mint.com, 68 Intuit acquisition, 64 PFM service, 70 Mobile app, 80 usefulness, 187 Mobile app-based banking, 20–21 Mobile banking, impact, 162 Mobile banking transactions (China), 63f Mobile deposit capture, rollout, 58–59 Mobile money services, growth, 211 Mobile POS payments, 255 Mobile technology, availability, 239 Mobile telephones/providers listing, 142 Modern life, complexity, 190 MomLogic (Warner Bros Studio), 253 285 Monetary commitment, de-risking, 109 Money amount, determination, 244 making process, 245 transmission, 211 Money 2020, 80, 127 Money Advice Service, The (study), 250–251 Monzo, 60–61, 86, 120 Moore, Geoffrey A., 128 Morris, Charles, 41 Mortgage technology, upgrading, 187 Mothers, marketing, 250–253 MovenBank, 157–158, 188, 209 Moven, implementation, 67 Move Your Money movement, 11 M-Pesa, 210 MVP See Minimally Viable Product N National associations, standards adoption, 147–150 Neo-bank, 61 Netflix, 134 Net Promoter Score, flaws, 95 Network Magazine, 186 New job creation, 61 Next Bank, 127 Next Money, 80 events, attendance, 81 US events, 229 Nichols, Chris, 30 Nicols, J.P., 229–231 Nobu, 94–95 Nonbank competitive pressures, 29 Non-cash payments, 36 Noncommunity bank, credit union (contrast), 21, 44 Noncompetitive spirit, 78 www.ebook3000.com 286 Normal world, banking world (contrast), 5, 98–99 Not-for-profit organization, 146 Not invented here (NIH), 204–205 Nottingham Building Society, 52 Nubank, 61 Number26, 61 Nussle, Jim, 143, 148 O Ocean Tomo study, 137 Office of the Comptroller of the Currency (OCC) banking charter creation, 82 federal banking charter creation, 29 limited-purpose national charter, 69 Office of Thrift Supervision (OTS), Dodd-Frank (impact), 82 Omnichannel, 97 adaptation, 100 banking models, 220f customer engagement, 217 investments, 99 OnDeck, 204 ProfitStars, partnering, 70 On-demand consumer retail purchase loans, 234 Online banking absence, 232 impact, 162 Online Banking Report, 58, 161, 248 On-location service, 26 Operating efficiency, 185–186 Operational excellence, 245 Oracle Financial Services Global Business Unit, 220 Oracle study, 220 INDEX Organizational dynamics, 199 Organizations change agent role, 208 operating model, 200 personnel, training/firing, 88–90 time-saving services, usage, 133 P P2P lending, 68 Paid-on-success model, pricing, 109 Paper check payments, decline, 36 Parent-child card, 233 Partnering, 224 usage, 122–133 Partnership arrangement, 126 cessation, 131 making, 247–248 Partners, obtaining (increase), 132–133 Payday lending, 210 Payment Services Directive, EU adoption, 82 PayPal, 68, 212 Payphones, usage (US), 265f Perimeter eSecurity, Inc., 197 Periscope, 180 Personnel impact, 90–92 training/firing, 88–90 PFM app, usage, 244 company, BOS transformation, 264 importance, 252 products, 70 Physical distribution, focus, 25 Physical money, impact, 229 Physical proximity, reliance, 2–3 Picasso, Pablo, 203 Pivot, mastery, 234–235 Index Plan, creation, 266 Planning team kickoff meeting, 207 regular meetings, 207–208 Political intention, variation, 146 Population loss, 24 POS deceleration, 254 payments, 255 Postal Savings System, establishment, 135 Practical Bank Credit, 195 Predictive analytics, 160 Prepaid card, 233 Prepaid debit cards, 210 Pretax return on assets (ROA), 26 Price, concern, 107–109 Pride, vice, Primary financial institution, future, 214 Private-label banks, 216 Problems, root causes (defining), 206 Process monitoring, 199 Products, 164 age range, 171t–174t availability, 98 endorsement, tier, 148 leadership, 245 value, startup overestimation, 131 Profitability reporting and tracking tool, 127 ProfitStars, OnDeck (partnering), 70 Proximity, impact, Prudential Regulatory Authority (PRA), 50, 52–53 capital requirements, 53 deposit-taking FIs, 51f Pure-play ecommerce sites, 96–97 Purpose, impact, 104–106 287 Q QR codes, absence, 102 Quicken Loans, 187 R Radius Bank, 187 Ramamurthi, Suresh, 69, 119, 158, 232–234 Ramirez, Steven J., 234–237 Reddit, front page (attainment), 248 Regehr, Kristen, 41 Regtech, 197–200 opportunity, 199–200 solutions, 199 usage, 133 Regulation, startup underestimations, 130–131 Regulators, proactive engagement, 131 Regulatory awareness issue tracking system, 200 workflow technology, 199 Regulatory change management, 199 Regulatory enforcement notice, 177 Regulatory taxonomy, 199 Relationship, data-based lending, 10–11 lending, 11 Relationship-type lending, 50 Repopulation, occurrence, 106 Reputational risk absence, 84 mitigation, 85–86 Resources, divestment, 254 Retail banking accounts, selection, 12 future, optimization, 259 problems, 259–260 Retail banks, customer competition, 215 www.ebook3000.com 288 Retail industry, examination, 96–98 Return on assets (ROA), 26 defining, 88 Return on average equity (US), 60f Return on equity (ROE), challenger banks, 59f Return on income (ROI), 124 Revenue generation, 254 Riegle-Neal See Interstate Banking and Branching Efficiency Act (1994) Ries, Eric, 84, 234 Ripple Labs, 188 Risk, 83, 212 action call, 119 appetite, 153 management, 233 models, 160 Royal Bank of Scotland, 52 Rural communities, young people (loss), 24 Rural depopulation, trend, 31–32 Ryan, Phil, 237–240 S Sales culture, reconsideration, 194–195 Sales processor/assistant positions, self-explanations, 185 Salvetti, Jack, 86, 88 Sauza Tequila, marketing focus, 253 SBA loans, 234 Scale increase, 142 results, 134–150 Schaus, Paul, 238 Schedule, creation, 266 Schultz, Howard, 239 Sector breakthrough, 200 Security-in-the-Cloud, 197 INDEX Self-directed digital model, 214 Self-liquidation, 16 SEO problems, 76 Sequoia Capital, 93 Service organization, repetitive workings, 208–209 Service providers, components, 121 Services, 164 customer focus, 228 Shevlin, Ron, 70, 94, 240–246, 259 Sieber, Scarlett, 246–248 Silicon Valley Bank (SVB), accelerated Standard Treasury, 124 Simple, 70, 188 BBVA acquisition, 204 Single-point solution, company sale, 118 Slack, usage, 132–133 Small businesses guidance, usage, 150–151 lender dissatisfaction, 205f lender satisfaction score, 204f relationship-type lending, 50 Smarter Bank (Shevlin), 240 SmartyPig, 174 Snapchat, 249 notification, 151 Snarketing 2.0, 240 Social cause, support, 106 Social media, impact, 178–179 Soft data, value, 10–11 Sonic Lunch (Bank of Ann Arbor), 179 Special Employer Groups, Specialization, impact, 238 Square, 68 Standard and Poor’s 500 (S&P500) market value, Ocean Tomo study, 137 Standard Chartered, 52 Index Standard Treasury, 124 Starbucks, popularity, 239 Startup companies cross-generational ease overestimation, 131 discussions, 150–151 established trust importance underestimation, 129 growth, 257 human inertia overestimation, 130 innovator/early adopter value overestimation, 128–129 integration cost, underestimation, 127 product value overestimation, 131 progress, 125 regulation underestimation, 130–131 testing period, 129 underestimations, 127 Startup companies, impact, 65–66 State-by-state licensing laws, 69 Storm, Shari, 248–253 Strategy fog, 240–243 formulation, 244 testing, 195 Strengths, weaknesses, opportunities, and threats (SWOT) analysis, 212–213 Stripe, 68, 210 Sub-LIBOR Funding source, 83 Subtraction, impact, 255 Success data-fueled marketing, 236 metrics, 185–186 Success rates, 123 T Tandem Bank, 61 TD Bank, implementation, 67 289 Technical integrations, 127 Technology budgets, 201 developments, 209 impact, 228 importance, 193–194 mortgage technology, upgrading, 187 offering, 240 reexamination, 132 revolution, 151 understanding, 117–122 Technology Department, support, 182 Tencent, QQ, 63 TheFinancialBrand.com, usage, 81 Three Six Three (3-6-3), 75–78 Too big to fail banks, 11 Top-down activities, bottom-up activities (combination), 206 Transactional data reconciliation, 263 Transaction assistance, 199 Transformation management, internal team (usage), 228–229 Transition, termination (comparison), 184 Trust, 147 increase, 142 influencers, 130f trust-establishing actions/services, 129 Twitter dummy Twitter account, creation, 247 professional gap, bridging, 179 U Uber, 212, 255 usage, 80, 133 Unbanked person, 263 Underwriting, 194, 196–197 www.ebook3000.com 290 Uniform Bank Performance Report (Citizen’s Bank), 106 United Federal Credit Union, 17 United Kingdom (UK) account satisfaction, 54f banking app satisfaction, 55f banking competition, increase, 50–52 branch convenience importance, 58f branch customers, digital channel usage, 57–58 Brexit, 60 challenger bank customers, 55f channel usage, frequency, 57f credit union members, connection, 51 current accounts, switchers, 56f deposit-taking FIs, 51f financial institutions, number, 50–52 United States adult Internet users, share, 142f average overdraft fee, 139f branch networks, average size, 37f channel usage, frequency, 32f credit unions, assets, 12f deposits, percentage (asset size basis), 8f digital banking model, 96 financial institutions, forecast, 262f multichannel embrace, 57 national debt, 115f payphones, usage, 265f population, age range, 163t residential housing market, effects, 20–21 return on average equity, 60f returns, women directors (impact), 94f INDEX total FIs, forecast, 8f towns, positive net in-immigration, 104 United States banks charters, issuance, 35 employees, number, 89f employees, salaries/benefits, 89f insolvencies, 21f voluntary attrition rates, 17f Universal banking, death, 144 Universal banks challenger banks, contrast, 53–59 unfriending, 145 USAA, 58, 86 User adoption, 128 User-centric products, 70 User experience (UX), 160, 254–255 User journeys/objectives, 121 U.S Postal Savings (USPS) offices, 136f revenue, 137f system, 135–136 Usury laws, 69 V Value absence, price (concern), 107–109 appreciation, 195 term, usage, 231 Variable-based compensation plan, 186 Vendor simplicity, 133 Venmo, 68, 187, 210 Venture Partner Santander Innoventures, 161 Verity Credit Union, 251 Verity Mom, initiative, 253 Via negativa (mastery), 255 Vine, hits, 248 Virtual receptionists, usage, 133 Index Virtual session, 182 Voice America, 209 Voice response system, 127 Voluntary attrition rates See United States Voluntary closures, 16–18 W Wachovia, impact, 34 Wagle, Likhit, 227 Wall Street & Technology, 186 Wal-Mart, 192 Wanamaker, John, 249 Washington Mutual (WaMu), impact, 34 Wealthfront, 68 Wealth management, 221 worry, 239 WeBank, 62–63 Website, market area, WeChat, 63 Wells Fargo, 202 Westpac, implementation, 67 291 Wetherington, Lee, 253–255 “We Want You” PowerPoints, 117 White Label delivery, 66–67 fintech providers, 114 point solutions, 118 William Mills Agency, 227 Women-owned businesses, 114 Word-of-mouth, creation, 236 World Council of Credit Unions, 51 WV United Federal Credit Union (Element FCU), 58 X Xanga, 179 Y Yantra Financial Technologies, 232 Y Combinator fintech startup, 124 Youth banking products/services, 165t–170t www.ebook3000.com ... or care about, Bankruption: How Community Banking Can Survive Fintech, John Waupsh © 2017 by John Wiley & Sons, Inc All rights reserved Published by John Wiley & Sons, Inc 2 BANKRUPTION and... micropolitan communities Bankruption: How Community Banking Can Survive Fintech, John Waupsh © 2017 by John Wiley & Sons, Inc All rights reserved Published by John Wiley & Sons, Inc 8 BANKRUPTION Figure.. .Bankruption How Community Banking Can Survive Fintech John Waupsh Copyright © 2017 by John Wiley & Sons, Inc All rights