I’m sure most people have had experiences with kids, whether their own or someone else’s, where they have seen how fun and resilient kids can be. They remind you of the Energizer Bunny — loud and obnoxious one minute, then quiet and thoughtful shortly thereafter as they figure something out.
As I was reflecting on the industry, I think most financial institutions are just like kids. (Well, maybe not the loud and obnoxious part.)
Now before you think I am insulting the industry, let me explain. Kids like to have fun. Kids like to laugh. And kids are very resilient. Someone knocks them down, and while they may cry for a bit, they get right back to it, and soon they are having fun again, and forgot about what happened minutes ago. Faced with things that may stress out adults, kids seem to be able to deal with it in their own way and get back to the things that kids do … play, have fun, ask questions, etc.
So, too, is the financial institutions industry resilient, albeit in a different way.
There has been a lot of change during my career. When I started working at Wipfli in June of 1981, my very first job was with a bank client. Since then, I have worked almost exclusively with the industry. Over the last 40 years, I have seen a lot of things that have impacted the industry and thought it would be fun to talk about a few of them and how they have impacted the industry.
Think about all we have faced in the last 40 years: the thrift crisis of the 1980s; the Tax Reform Act of 1986 (and other subsequent acts); regulatory consolidation; Y2K; the formation of the CFPB and addition of significant regulation (think BSA, Fair Lending, UDAAP, etc.); BASEL III, CBLR and other capital expectations; the Great Recession; seven U.S. presidents and national policy changes; and now COVID-19, PPP loans and digital transformation. Then there’s fintech, de novo banking, bank closures, and did I mention significant consolidation? When I started at Wipfli in 1981, there were over 39,000 banks, thrifts and credit unions. Today there are about 11,000 left.
Back in 1981 on that first bank job, it took us about a day to balance the loan and deposit systems, and if you could not operate a 10 key, you were in trouble, as everything was posted on ledger cards. Believe it or not, there were no computers of any significance in 1981 (many if not most institutions had ledger cards for the general ledger, savings accounts and loans). Today you can download all the accounts and reconcile them to the general ledger balances in minutes.
All of our workpapers were manual. Information security was making sure the trash got shredded before it went out the door. We played cards at lunch with clients, and at the end of the day often went across the street for a cocktail or beer with the client and sometimes most of the bank employees.
Many other things were different too. When you received a phone message, it came on a pink sheet of paper that whoever answered the call wrote up. Now we get messages at any time of the day automatically transcribed and placed in an email. I have multiple computers that I rely on nearly every waking minute of every day. Don’t know something? Google it. Need to know something about a customer? In the past you needed to ask someone who knew; now you can find it on the internet or read about their history in your CRM system. Artificial intelligence? That is what we accused our new staff of having!
Much has changed, but the ability of the industry to adjust has not. Perhaps the best examples of industry resiliency have just occurred recently, with the COVID-19 crisis. The industry adjusted from being fully open to working from home, using new technology alternatives overnight and changing the ways in which service got delivered, all with nearly no hiccups! Before this crisis, we talked about the need to be nimble; during the crisis we lived nimble and set a new standard of expectation for the future.
Considering all the challenges the industry has been through, it has been nothing but resilient. And it will need to be as we move into the future. I believe much of the continued growth in the history of the U.S. has happened because there was a financial institution on every corner or in every city and town in the country, and the staff of those institutions not only knew who they were lending to but also took some risks to help out their customers and communities. While I worry about consolidation impacting that, I am confident that the industry will continue to stay close to its mission of being a key community member, providing credit, taking risks, but ultimately helping their community (and country) grow.
As many of you know, I am retiring in a few days. While I am looking forward to not having to adjust so quickly as I move forward into the next phase of my life, I know that those in the industry will continue to monitor, measure and adjust as needed in the future, and probably at a faster pace than ever before. Don’t forget to keep being like a kid — resilient and with those Energizer batteries in place. I know you are up to the challenge!
Finally, it has been great working with many of you. I wish you continued success well into the future.
If you wish to stay in touch, my new email address is email@example.com
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