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Ten resolutions for bankers in the New Year

Having worked both as a banker and as a bank consultant for over 20 years, I can testify that this current period seems among the most negative work environments I have ever witnessed. Many bankers now act more like hedgehogs than leaders, operating out of a defensive crouch rather than putting themselves or their ideas forward. When I commented to one senior banker that he seemed paranoid about strictly following internal rules and external regulatory requirements, he quickly agreed, “I am paranoid!” The feckless Consumer Financial Protection Bureau and other regulators constantly piling on does not help.

Even so, the New Year provides all of us with an opportunity to consider where we are in our lives and where we want to go. As an advisor to the industry, here is my New Year’s resolution “wish list” for bankers and the industry at large:

Choose “greed” over fear. Our business choices are usually driven by either the desire for more dollars/wealth creation or the need to protect ourselves from potential harm. In recent years, fear has taken over the banking industry, often resulting in a lack of innovation and slow decision-making. Many bankers would rather make no decision than risk making the wrong one. I understand why, but it is an unsustainable approach to business and a terrible way to work and live. It is also one reason why revenues at many banks are growing so slowly. Fear as a decision guide can lead to a shrinking bank that will simply disappear or become irrelevant to many customers.

Fight back against the internal bureaucrats. When I was a banker, the relationship manager (RM) was king. Bluntly, operations personnel and other “back office” people were part of a lower caste. Admittedly, that may not have been a good thing, but banking has now swung in the opposite direction. At many banks, the RM seems overly controlled and limited in decision-making choices. There is a reason why support people are called support people. Today, though, they are increasingly in charge. Not necessarily a good thing.

If it feels like jail, escape! Over the years, I have heard multiple bankers say, “I have x more years to go,” as if they are marking off the days on a wall calendar in Alcatraz. Mortgages, children and worry about the future all keep unhappy employees stuck in their jobs. But, trust me: there are other jobs available with other banks or outside the industry in which the banker can feel happy. I have spoken with bankers who have escaped to better places; they are relieved and notably happier.

Create stretch goals and stick to them. Bankers need to develop and commit to project plans rather than letting the months slip by with no forward movement. Executives at alternative finance companies that I know are often stunned by the fact that it can take a year or more for a bank to come to a decision. More bankers need to set and keep to time commitments.

Change compensation. This is an area that should have been addressed decades ago. At many banks I have worked with, the best performers continue to get paid little more than mediocre employees. Pay for performance is hardly a new concept, but it should become the norm rather than the exception at banks. Unfortunately, Human Resources groups often seem to be barriers to, rather than supporters of this change.

Fire mediocre staff. Years ago, during an economic slowdown, a senior banker told me that he was afraid to fire his mediocre people because he did not think he would get permission to hire replacements due to budget concerns. He felt a mediocre employee was better than no employee. When the economy turned around, that same banker said that he did not want to replace mediocre people because, given the improved job market, he was afraid that he could not find a stronger banker to replace the mediocre one. This Catch 22-like thinking needs to be replaced by management upgrading its staff.

Decommoditize your bank. Bankers will often say, “We all sell the same thing,” and bemoan their inability to differentiate themselves from others. Yet, the most successful banks do differentiate themselves by their focus on segments based on industry, loan type, market segment or channel. The best performing banks I know all gain strong returns from their segmentation strategies. They avoid being “all things to all people” and have invested in initiatives that allow them to provide real value to their customers.

Pursue “X as a Service.”  More third parties are offering digital platforms, increased lending capabilities and other services to banks, particularly related to consumer and business banking. Banks can partner up to gain a digital platform or develop a relationship with a third-party lender that can increase revenues and improve customer service. Today, the number of banks working with these players is still relatively low. Over the next year, banks can and should evaluate and exploit the many partnership opportunities available to them.

Change the architecture. Banks should move to open floor plans that encourage communication rather that the traditional office structure that reinforces silos. Look outside banking to companies like OnDeck or LendKey for examples of company leaders showing a commitment to breaking down the walls, literally. OnDeck’s CEO will regularly change where he sits, imbedding himself with different functional groups. LendsKey’s CEO works from an open space that allows privacy but also easy access. Banks need to get away from the hushed library-like floors that exile company leaders.

Reclaim your pride. When I started my post-MBA career at Citibank, my fellow bankers and I were proud of being at the bank. Citi was a place you wanted to be and where you knew you were part of the best group of bankers. Too often today, bankers resemble Eeyore, the sad-sack donkey from Winnie the Pooh, having lost the enthusiasm that may have gotten them into banking in the first place. However, most commercial bankers I know really do care about the customer and operate with integrity and a focus on ensuring customer satisfaction. Those are characteristics that are all too rare and bankers should be proud of the quality service they offer.

None of us succeeds at achieving all or most of our New Year resolutions (10 pounds less has become an evergreen vow for me). However, setting goals and aiming for them, even if they cannot all be accomplished, can help to change a bank’s culture and create a more positive working environment for 2016 and beyond.

Mr. Wendel is president of New York City-based FIC Advisors, Inc. He can be reached at [email protected].