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New Year Resolutions for Financial Institutions in 2017

Jan 01, 2017

It’s that time of year again and many of the same resolutions from my New Year’s Resolutions for 2016 still apply, including but by no means limited to those concerning cybersecurity, BSA and AML, CECL, credit underwriting, and consumer regulation.

However, a new wrinkle has emerged in our arena for 2017 that many never expected, stemming from the anything-but-business-asusual U.S. presidential campaign and election. No matter your politics, many were surprised when Donald Trump was elected President (except perhaps Mr. Trump himself). Signs are pointing to a more financial institution-friendly administration and, as is normal in a Republican administration, less regulation and less government interference. Having said that, there are major uncertainties on the horizon. What role will the Consumer Financial Protection Bureau play going forward? What changes will occur in some Federal Reserve Banks and the Fed’s leadership? Will an overhaul of the tax code occur? And the list goes on.

But as it was in 2016, it will be in 2017. Another rate hike is almost guaranteed. The ongoing threat of cybersecurity attacks and viruses is a daily concern. Many regulations, including TRID, must be managed. Preparations for HMDA changes are (or should be) actively in process. Competition to attract and keep good loan customers is fierce. More baby boomers will be retiring, impacting your deposit base and your employee base. Mergers and acquisitions in financial institutions will continue, some related to managing evolving supervisory expectations and others related to changing demographics and succession planning.

So what should our resolutions for 2017 be? Personally, I always tend to have the same three resolutions—get in a good exercise routine, lose weight, and find a greater balance in life for work and play. Sadly, by mid-January, especially if winter has really set in, those tend to go by the wayside. So for 2017, I plan to incorporate some of the FranklinCovey 7 Habits of Highly Effective People training that I received from Wipfli to help with those goals.

One recommended habit is to “start with the end in mind.” If you have a calendar year-end, you have likely just completed your strategic planning and budgeting work. This means you know where you want to be next year, in three years, and in five years. The assumptions in your strategic plan and your budget are your stepping stones in achieving those goals. And your strategic plan might include the following:

  1. Increase organic loan growth by x percent.
  2. Increase net interest margin by increasing core deposits.
  3. Improve loan pricing by truly considering risk in rate and selling high-touch services to customers.
  4. Increase other income by x percent by introducing a new type of cash management tool.
  5. Improve efficiency ratio by x percent by evaluating processes and talent pool.
  6. Increase salaries and benefits by x percent. Increase FTEs by x in this location and reduce FTEs by x in these locations.
  7. Evaluate emerging technologies and FinTech solutions and define where you want to be in the FinTech landscape.
  8. Improve/implement a proactive enterprise risk management process that recognizes risks and opportunities before they impact the income statement and capital.
  9. Improve compliance examination rating by proactively evaluating the impact of regulations and including more hands-on training for front line staff.
  10. Evaluate merger opportunities to improve market share, obtain niche products, or augment succession planning.

This is a long but necessary list. But with any New Year’s resolutions, where do you begin? One approach taken from the FranklinCovey organization incorporates The 4 Disciplines of Execution. It focuses on the Wildly Important Goals or WIGS. We as individuals and your financial institution are more likely to succeed if we establish one to three goals. If we have four to ten, we may accomplish two. If we have over ten, forget it—we get mired down in the minutia. 

So instead of the traditional ten resolutions offered in prior years, I am embracing the WIGS concept and recommending only one resolution for 2017.

1. Change Management. Resolve to incorporate a change management model in any major project you undertake. Having a model increases your awareness of and allows you to understand your financial institution’s readiness for change, plans for getting there, and yes, plans for resistance that may come your way. As we navigate through our ever-changing industry, use of a change management model will go a long way to incorporating your plans for 2017 and beyond in the following manner:

  • Evaluating emerging technologies and FinTech solutions. If you have an upcoming system conversion or contract negotiation, this process can help determine whether any technologies from your core provider or new providers can allow you to operate in a high-tech, high-touch environment. The process also helps recruit and retain customers and employees, and it improves efficiencies.
  • An enhanced and robust ERM process. This gives you a heads-up to upcoming issues in many areas, including safety and soundness and regulatory compliance issues (e.g., credit concentrations, new regulatory requirements including HMDA, process improvements, and risks including right talent).
  • Merger and acquisition opportunities. This helps with implementing new products to improve income, more core deposits to improve net interest margin, more loan opportunities to explore in different market areas, and more talent to fill and augment. It also helps you recognize the impact regulatory requirements have due to growth through merger.

I, too, have decided to have only one WIG for 2017—that is to find a greater balance in my life for work and play. If successful, my first two, exercise and weight, should fall into place. The final discipline from The 4 Disciplines of Execution is about accountability. So be accountable to your resolution throughout the year. I will be checking back on this next January 1—and you can hold me accountable to my resolution! 

Call us for further information on implementing a change model and, as always, thank you for your trust in us and best wishes for a wonderful 2017.


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Wipfli Editorial Team

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