Shift Your Bank’s Performance Environment

high performance banking

 “It’s Hollywood!” my grandfather said as he watched the first man land on the moon. “That’s not really happening.”

From the viewpoint of my grandfather—who still owned the horses on his farm till the day he died because he did not trust that tractors were really the wave of the future—a person on the moon was beyond his scope of understanding.

That situation is not very dissimilar from the current state of banking. Most banks are experiencing acceptable spreads, so they are holding onto their horses while financial services companies are moving on to four-wheel drive, turbo-charged tractors.

The problem is that what creates profits for banks today will probably not create profits in the future. The new trends are so complicated and threatening that it is much easier to ignore them, hoping they will just go away. Smart leaders are analyzing the trends, deciding which will create the best opportunities, and building the foundation for upcoming crazy times.

Here are some suggestions for you to focus on in creating your future.

1. Resist temptation to acquire.

Yes, it sounds sexy and easy. Weak banks are throwing the keys at stronger banks right now and it sounds a little easier than organic growth…but think again.

When you acquire, you get the bad loans, the people who made them, AND the mindsets and skillsets of the executives who caused that bank to get into the shape it’s in. And that’s the good part.

The real challenge is that you also get a culture of “us-versus-them” game-playing that typically takes two years to clean up. Now that’s costly.

Since culture is the leading predictor of future growth and profitability, it isn’t just the impact of having to transform the culture of the new bank that’s costly. There’s the even more costly impact on your own bank’s culture—which is already results-driven, upbeat, possibility-oriented and downright rocking. Plus, of course, there’s always the risk that changing the culture of the acquired bank won’t work because they refuse to dance to your tune.

Although smarter minds than mine are predicting that acquisitions may be available for 10 cents on the dollar come 2013, you’ll always want to consider organic growth first and get good at it. Then, and only then, should you consider picking up one of those banks in 2013 at bargain pricing.

In order to acquire, you have to have your own house in order—from systems of culture to hiring, marketing, sales processes…you name it—you want systems in place that work before you risk blowing up what has taken hard work to create.

2. Create an identity.

Position your bank by either a niche market that you serve, by a style of doing business such as speed or customer service or financial planning, or by unusual products. History has proven that niched businesses are more profitable than generic businesses, and location, which was the niche for most banks in the past, will be closer to inconsequential in the future as Generation “Y” does banking on their terms. Identifying 3-5 target markets and building programs around those targets is key.

3. Change your focus from customer satisfaction to customer success.

Traditional marketing has been a tremendous ROI disappointment in almost every bank and company for the last decade. It just doesn’t work too well any more.

Legendary marketing mind Seth Godin finds it hard to believe that people are still doing it.

What works now is magnetic marketing—being so good at what you do that people would crawl naked over broken glass to get to you.

That means that you have to create “wow” experiences that create a talkable “sneezing” opportunity. The goal? That every customer becomes an evangelist. And it doesn’t just end there. Beyond talkable experiences, the focus must, must, must be on customer success. IF you make people successful, they’ll pay you a huge premium, send all their friends, and stay for life. NOW you have a bank.

4. OWN the relationship.

If your people are still order-taking, there are risks that may quickly become insurmountable. The problem is that somebody who represents another bank or brokerage where your customer does business will likely figure out a sales process that pulls in your customer’s total combined business. If you’re not first…well, you can figure that part out.

5.  Teach your people how to “be”

Training is a word used for animals. You don’t want to “train” your people. You want to educate your people on how to be.

When people get how to “be” responsive, caring, aware, committed, passionate about making a difference, results-focused, clear-thinking, practical and more, that trumps a few sales tricks any day.

To do that, your people need to learn how to learn.

Research from the American Society for Training and Development found the highest return on investment that companies received was from dollars invested in educating their people. Technology was second. So, why are banks investing in buildings—the least profitable investment?

It isn’t enough to learn for the sake of learning. It is what your people are learning that matters. In the past, people simply had to learn what to do. Now we have to teach them how to think. Intuition comes from having a wide base of knowledge from focused learning.

As important as learning…is unlearning. Bank personnel are traditionally miserable at this. More than any industry, bankers are married to the old ways of doing things.

Turn your organization—instead—into a learning organization. As we shift from the industrial era to the knowledge economy, the winners will be those organizations who have invested in learning.

If you are still using the old models of business like the old models of strategic planning, managing by objectives, and the other “be-all-end-all-answers” of business schools of the past, you will find that the employee of today is far too sophisticated to be managed by control-freak techniques. Instead of managing by fear, we need to unleash people by creating a powerful vision that allows them to think outside the box of the archaic job-description model and to create extraordinary results by creatively finding ways to align with the vision of the organization.

6. Create a powerful direction.

Are your people passionate about your vision? Is it embroidered on their underwear? If not, you’re missing the most significant component of a high-performance organization.

A mission statement doesn’t cut it. Let me repeat that. A mission statement never impacts passion. A vision of extraordinary results that gets everyone salivating is a much more powerful transformational component for improving results.

Additionally, being extremely clear about what niche markets you’ll pursue, the psychographics of those niche markets, the critical drivers you’ll measure and celebrate weekly, the key initiatives and the key results that will enable you to meet your most important objectives….well, if those aren’t clear, direction and passion just ain’t gonna happen.

While I hate to share the obvious, it may be a very important wake-up call. The game of leadership has stepped up—and you need to step up your game… fast. This starts with clarity and aligning everyone.

7. Burn the budget.

Don’t get me wrong…you still need a budget. You just have to get more sophisticated in your modeling and be able to change it based on scenarios that play out. If you don’t think that you need to shake it up when three banks in your area are all struggling and their customers are sitting there ripe to be picked off, you’ve lost touch with reality.

And yet it happens all time. Those opportunities present themselves and the bean counters chime in…”well, it’s not in our budget.” That dog don’t hunt.

8. Learn the new model of sales.

There are entirely too many banks sitting with below 70 percent loan-to-deposit who are accepting it as the new reality. Unfortunately, it’s only reality for them because their people never caught on to the fact that they now have to be hunters…targeting their competitors’ most desirable customers and capturing every one of them while attracting premium pricing.

Of course, this new model of sales doesn’t work so well with a team that’s missing the skills or the mindset to do that. It’s your job as a leader to improve those skills and change that mindset.

9.  Hide from glum bankers.

Emotional Intelligence experts say that depression is a bit contagious. If you hang around depressed people…well, it’s hard to not pick up on their gloomy ways of thinking, their victim mentality, and their dismal that’s-just-how-it-is mindset.

So, my best advice is hang around movers and shakers who are salivating about the opportunities out there and “high-fiving” the massive results they’re getting by seizing those opportunities.

It’s exciting to see the tremendous amount of bankers who are “getting it” right now. But the majority…well, Eeyore could be their pet.

Sure, bad things still happen to good people. But while a typical response would be, “That stinks. I guess we stink and I guess that’s how it’s going to stay,” a much healthier response is, “Hmm, what can I do to overcome the impact of that?”

The ultimate message here is: Stay away from the highly depressed. They do not make good companions when times are tough.

Creative Commons License photo credit: Travelling_Artist

 

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