Banking Mid Atlantic (May/June)

MAY/JUNE 2019

A MARRIAGE OF MOBILES T-MOBILE, BANKMOBILE CONNECT OVER FEE-FREE CHECKING

ON TOP

Consumers Pick The Best New Jersey Banks

THE FUTURE? Pinpointing A Recession

A PUBLICATI O N O F A M E R I C AN B U S IN ES S M ED IA

READY TO

LEAVE Your Customers Want Out

Our 100 years means that wherever you are going, we can guide you there.

WILLIAM J. NOWIK, PRINCIPAL IT ASSURANCE SERVICES

At Wolf & Company, we pride ourselves on insightful guidance and responsive service. As a leading regional firm, our dedicated professionals and tenured leaders provide Assurance, Tax, Risk Management and Business Consulting services that help you achieve your goals.

Visit wolfandco.com to find out more.

MAY/JUNE 2019

21 Customer Retention

Detect your defectors before they depart

24 Statistics

Mid Atlantic customers itching to move to new banks

4 Letter From The

10 Banking Choice

How banks can be important and loved

Honoring the best in New Jersey banking

Publisher

5 Research

Why there’s no crystal ball for recessions

Awards

12 Experiences

A dollop of humanity goes a long way towards better call center results

15 Women & Leadership Make the women in your organization thrive

26 Did You See?

Keep abreast of banking news from our weekly newsletters you may have missed in New Jersey, Pennsylvania and Delaware.

28 Try To Keep Up

Local banking professionals making their move up the corporate ladder

30 Anything But Banking Overseas baseball and the dignity in losing

CONTENTS

STORY 18 COVER A marriage built on long-term revenue, not short-term gains

www.ambizmedia.com May/June 2019 | BANKING MID ATLANTIC

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L ET T E R F RO M T H E P U B LIS H E R

B

Take A Dive Into Customer Service

anks are not loved.

Banks (and credit unions) are necessary. Banks provide critical financial services to their communities. Banks are important. But loved? No one’s lining up for new checking accounts the way they line up for new iPhones.

But that doesn’t mean banks can’t be shown a little love, sometimes.

Elsewhere in this issue, you’ll find the results of the Mid Atlantic Banking Choice Awards, and some nice photos of the awards ceremony in April, featuring seven-time Olympic Medalist Amanda Beard who spoke about working to be your best, even when you think no one loves what you’re doing. Success will surface when you bring your best.

In this case, the best were those chosen by consumers throughout the region. Banking Mid Atlantic magazine teamed with Customer Experience Solutions. CES is an independent research firm that routinely surveys tens of thousands of local consumers on their banking preferences. These surveys are conducted using the strictest methodology to ensure accuracy and to eliminate bias. They form the basis for the popular Banking Benchmarks report relied on by many of the region’s banks and credit unions, because this is the most reliable data on consumers’ true feelings toward their banking relationships.

CES’s survey asks customers a sizable number of questions about both their primary banking institution, and their perception of other others that they are aware of but not a customer of. Analysis of their responses delivered ratings for each institution in four areas: customer experience, technology, contribution to the community, and overall quality.

And when asked, those consumers said they really prefer the banks that get it all right.

So here was the takeaway: it’s true that banks don’t get much love.

But that doesn’t mean consumers don’t appreciate their institutions, when those institutions are working hard to make their customers love them.

STAFF CEO, PUBLISHER & EDITOR Vincent M. Valvo ASSOCIATE PUBLISHER Barb Dimauro MANAGING EDITOR Keith Griffin OPERATIONS MANAGER Kurt Schenher ONLINE CONTENT DIRECTOR Navindra Persaud GRAPHIC DESIGN MANAGER Stacy Murray GRAPHIC DESIGNER Scott Ellison Submit your news to

editorial@ambizmedia.com If you would like additional copies of Banking Mid Atlantic Call (860) 719-1991 or email kschenher@ambizmedia.com Cover illustration: iStock.com/JR Casas

www.ambizmedia.com © 2019 American Business Media LLC All rights reserved.

Banking Mid Atlantic magazine is a trademark of American Business Media LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to:

VINC E N T M. VALVO

CEO, Publisher & Editor

American Business Media LLC 345 North Main St., Suite 313 West Hartford, CT 06117

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BANKING MID ATLANTIC | May/June 2019

O PINIO N

Why Are Recessions So Hard To Predict

By Thorsten Drautzburg

M

ost economists model business cycle fluctuations as being driven by random forces. Since predicting random events is impossible, this view of business cycles explains why forecasting business cycles and recessions is hard.

One might be tempted to conclude that if the origins of business cycles are random forces, then analyzing business cycles must be a pointless endeavor. However, economists distinguish between two different types of random forces— broadly speaking, demand shocks and supply shocks. Both are surprise events that, when put into a mathematical model of the economy, generate patterns in economic variables that resemble business cycles.

While such a model doesn’t make it any easier to forecast a recession, these models are useful for determining which type of shock hit the economy.

Even after the fact, knowing which shock hit the economy informs research and policy decisions.

Business cycles are fluctuations, or contractions and expansions, in output, typically measured as the deviation of an economic indicator such as output from its trend. In the U.S., a recession is defined by the National Bureau of Economic Research as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”

May/June 2019 | BANKING MID ATLANTIC

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procyclical, while unemployment shows the opposite pattern. In contrast, labor productivity is only moderately procyclical, and real wages are nearly acyclical. Investment is about three times more volatile than GDP, whereas private consumption is one-third less volatile, which is intuitive if households prefer to keep their rate of spending steady through good times and bad.

Modern thinking of business cycles began with the real business cycle (RBC) paradigm. This paradigm proposes that random changes in total factor productivity are the key shock to the economy. Total factor productivity determines how much firms and, ultimately, the economy can produce given inputs such as capital and labor.

These random changes can reflect both actual changes in technology and, more broadly, changes in the legal or regulatory environment. To map these shocks to the data, the model makes assumptions about how willing households are to forgo consumption today in order to consume more Source: Data retrieved from FRED, Federal Reserve Bank of St. Louis: https://fred. stlouisfed.org; author’s calculations. tomorrow, and how willing they are to work more in response to higher wages.

Note: All variables except the unemployment rate are %-deviations from trend. The While the RBC model has been volatility of investment, consumption, the real wage, and productivity are measured influential due to its ability to match the relative to GDP. All series are persistent, with autocorrelations around 0.9 or higher: Their cyclical value today tends to be close to the cyclical value yesterday. qualitative features of the U.S. business cycle, it has difficulty explaining the low cyclicality of wages and employment.

New Keynesian (NK) models add nominal, or price-related, elements to WHAT CHARACTERIZES U.S. BUSINESS CYCLES? the RBC model that nevertheless have real effects. These Investment and consumption are both procyclical. models typically feature various types of demand and They rise in expansions and fall in recessions. This supply shocks. Estimated versions of these NK models makes economic sense because output and income are have shaped how central banks analyze business cycles. higher in expansions. Hours worked are also strongly Today, NK models typically also model financial variables. Harald Uhlig and I estimated a NK model that includes the spread between the yields on private bonds and government-issued bonds. These spreads are important because firms cannot borrow at the same rate as the government.

Since they also pay the spread, both the rate of government bonds and spreads matter for private decisions, while only the former were traditionally considered in NK models. Our approach sidesteps modeling the specific drivers of bond spreads, such as, for example, changes in default risk or in how markets price default risk.

We found that shocks to bond spreads alone accounted for the drop in output growth at the onset of the Great Recession, even though these shocks usually 6

BANKING MID ATLANTIC | May/June 2019

contribute much less to fluctuations. Incorporating bond spreads can also significantly improve the forecasting performance of NK models.

“Researchers do not imply that business cycles are perfectly predictable, just that ups and downs are somewhat predictable and that shocks are smaller than commonly believed.”

recession—in contrast to the models discussed above.

The standard models imply that economic indicators such as output or unemployment return smoothly to their long-run trends or averages after a shock.

In contrast, business cycles in intrinsically cyclical models—that is, ones that assume that each cycle carries the seeds of the next—could, in the extreme, explain business cycles in the absence of shocks. Of course, researchers do not imply that business cycles are perfectly predictable, just that ups and downs are somewhat predictable and that shocks are smaller than commonly believed.

(This article originally appeared on the Federal Reserve Bank of Philadelphia’s website and can be viewed at: http://bit.ly/FedRecession)

Identifying shocks that cause movements in economic variables is not just of academic interest. It is important for policymakers at central banks to know whether Thorsten Drautzburg is a senior inflation falls because of, say, a shock that leads to economist at the Federal Reserve unexpectedly high productivity (a positive supply Bank of Philadelphia. The views shock) or because of a shock that leads households to expressed here are the author’s unexpectedly increase the rate at which they save (a and not necessarily those of negative demand shock). To pursue their mandates of the Federal Reserve Bank of price stability and full employment, central banks may Philadelphia or the Federal want to lower interest rates in the event of unexpected Reserve System. increases in supply and may have to raise interest rates if demand unexpectedly rises.

Using dynamic models driven by shocks to analyze the driving forces of business cycles has its limitations. First, shocks can be a measure of our ignorance. In the spirit of “less is more,” economists favor models that generate larger effects from small shocks. Second, Certified Enterprise Risk Professional the way business cycle models are typically estimated implies that they always point to specific shocks to explain the observed changes in economic indicators, without the ability to test whether they have identified the right shocks.

Earn the ABA Certified Enterprise My recent research questions Risk Professional (CERP) designation whether the identified shocks to demonstrate your expertise to in NK models are correct if one believes established narrative employers and regulators. accounts of these shocks. Related research allows us to quantify Apply by June 2 for the how important shocks are without August Exam session! taking a stance on how many shocks there actually are.

Using data on U.S. recessions since the 1850s, the argument has been made that the likelihood of a recession has depended on the aba.com/CERP1 time elapsed since the previous

CERP

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BANKING MID ATLANTIC | May/June 2019

THE CONSUMER EXPERIENCE

APRIL 19, 2018

Best

THE IN NEW JERSEY BANKING After an inspirational speech by Olympic STATEWIDE WINNERS champion swimmer Amanda Beard, four New B A N K I N G C H O I C EThe A WA R D S . Cstatewide OM overall customer service Jersey banks were honored as best in the award for New Jersey went to First Hope Bank state in the categories of Customer Service, of Columbia, N.J. As Bruce Paul noted, being Technology, Community Contribution, and proactive with solutions for its customers – and Overall Quality. These statewide awards are not only reactive – earned First Hope Bank its the highest honor any bank in New Jersey can accolade. achieve.

Chase Bank won the statewide accolade Additional regional winners were announced for technology. As Bruce Paul noted, while as well. A complete list can be found on the Chase does have strong following pages. tools, what customers really appreciate is the The prestigious Banking Choice Awards are bank’s stronger tech presented by American Business Media and support for both retail and Customer Experience Solutions LLC. Unlike commercial customers. typical “popularity contests,” these awards are given based on interviews with thousands of banking customers in a double-blind format. No financial institutions are involved in collecting the data, which is then used to create the highly respected Banking Benchmarks. Customer Experience Solutions is the recognized leader in measuring and tracking customer experience for banking institutions.

Vincent M. Valvo, president and CEO of American Business Media, said, “Customers can choose to bank wherever they want. The Banking Choice Awards determine which banks do it best.”

In the statewide Community Contribution category, Crest Bank, our overall New Jersey winner is well known among prospective customers in the Cape May area. It is based in Wildwood, N.J. Republic Bank was the statewide quality winner. It was selected for its strength at providing high value for the fees it charges, as well as improving customers’ financial well being at the same time.

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Best

THE IN NEW JERSEY BANKING The Banking Choice Awards celebrate the financial institutions that regularly go above and beyond to serve their customers. There are countless ways to gauge outstanding performance, but who better to ask than the consumers themselves?

Overall Quality Awards

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REGIONAL WINNERS

Community Contribution Awards

In the Gateway Region: Gold winner is Columbia Bank Silver winner is Atlantic Stewardship Bank Bronze winner is ConnectOne Bank

In the Gateway region Gold winner is BCB Bank Silver winner is Chase Bank Bronze winner is TD Bank

In Northern New Jersey: Gold prize winner is SB One Bank Silver winner is First Hope Bank Bronze winner is TD Bank

In Northern New Jersey The gold winner is SB One Bank The silver winner is TD Bank The bronze winner is Regal Bank

In Central New Jersey: Gold prize winner is Two River Community Bank Silver prize winner is Manasquan Bank Bronze winner is The Bank of Princeton

In Central New Jersey The gold winner is TD Bank The silver winner is the Bank of Princeton The bronze winner is Peapack-Gladstone Bank

In Southern New Jersey Gold prize winner is Republic Bank Silver prize winner is Franklin Bank Bronze prize winner is Columbia Bank

In Southern New Jersey The gold winner is Crest Bank The silver winner is Sturdy Bank The Bronze winner is is Citizens Bank

BANKING MID ATLANTIC | May/June 2019

Technology Awards

Customer Service Awards

In the Gateway Region Gold winner is Chase Bank Silver winner is ConnectOne Bank Bronze winner is TD Bank

In the Gateway Region Gold winner is Columbia Bank Silver is Atlantic Stewardship Bank Bronze winner is Spencer Savings Bank

In Northern New Jersey Gold winner is Chase Bank Silver winner is Capital One Bank Bronze winner is TD Bank

In Northern New Jersey Gold Winner is First Hope Bank Silver Winner is SB One Bank Bronze Winner is ConnectOne Bank

In Central New Jersey Gold winner is Chase Bank Silver winner is Capital One Bank Bronze winner is Manasquan Bank

In Central New Jersey Gold winner is Manasquan Bank Silver winner is Two River Community Bank Bronze Winner is Fulton Bank of New Jersey

In Southern New Jersey Gold winner is Century Savings Bank Silver winner is Republic Bank Bronze winner is TD Bank

In Southern New Jersey Gold winner is Franklin Bank Silver Winner is Republic Bank Bronze Winner is Fulton Bank of New Jersey

About American Business Media

About Customer Experience Solutions

American Business Media (www.ambizmedia.com/) connects business professionals across the country in effective, unique and high-quality ways through a collection of in-person, print, and digital products that are unparalleled in their reach.

American Business Media is proud to be the nation’s largest producer of banking, credit union and mortgage conferences.

Customer Experience Solutions (www.cescx.com) provides banks the insight they need when it comes to understanding customer benchmarks. From measurements of perception of overall quality and customer service to the ease-of-use of technology and bank practices to evaluation of levels of loyalty and vulnerability, Customer Experience Solutions creates custom CX programs that provide banks with a wide range of insights into the customer and prospect experience within their competitive environment.

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STAT IST ICS

A Call For More Humanity CALL CENTERS PRESENT AN OPPORTUNITY TO MAINTAIN THE HUMAN TOUCH

V

By MICHAEL KIRKPATRICK, Special to Banking Mid Atlantic

ery early in my career, I worked at a sandwich shop for a gentleman named Spiro, an affable Greek immigrant with a wry sense of humor and perpetual smile. Spiro was a master of customer service and it came naturally. Spiro knew many of his customers by name, their children’s names - where they worked, where they lived and so on. He’d often check in with folks no matter how busy the restaurant. People really enjoyed the visit, not just the food. Spiro was delivering “relatedness,” an inherent quality explained well in the self-determination theory of human behavior. We all want this human connection - it’s built in. Spiro unknowingly tapped into this by demonstrating an authentic caring about his customers.

Many years later, I had the opportunity to lead digital at another sandwich shop — but this was a large regional player. Through the process of investigating the opportunity with their leadership, I was pitched the sandwich shop experience of the future. As they described

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an experience full of tablets and automation, I realized quickly that even though I was often the eager advocate for digital products and experience-enhancing technology, in this case it didn’t feel right. I remembered Spiro and realized they were engineering out one of the best parts of the experience: the human part. I didn’t take the job.

That was an epiphany. Since then I’ve built my career helping companies focus on being more thoughtful and intentional about incorporating digital products into a bigger picture and total customer experience journey. If your CX is like a dining experience, it’s never about any single component; it’s about the total experience and includes a blend of technology and humanity. Adding technology to make payment easier is smart. Replacing the warm and friendly host with a kiosk is not. Today, world-class customer experience requires this artful blend of human and digital talent. And in banking, where money matters are intensely personal and often emotional -or- highly transactional, it’s good business to deploy the

right talent for the given challenge.

So where specifically should banks deploy human talent to enhance the customer experience? Well first, I need to ask - have you mapped the customer journey? If not, you need to start there.

These days, most banks and CUs have this covered.

A comprehensive journey map that shows how your customers flow through your services over time is essential. Financial institutions should also remember to incorporate the emotional context of the customer at key milestones in the journey. For example, a customer is in a vulnerable and anxious state after suffering an unfortunate overdraft just prior to an impending automatic mortgage payment out of sequence with their paycheck. Does your bank have a plan in place for moments like this one? Or do you rely on a spontaneous solution by your team?

Designing for emotional state is key to showing customers you really do care - which garners loyalty. Employees can sometimes “call an audible” in ways a computer never could. How good does it feel when you visit a friend and after the long trip, he or she takes your coat, shuffles you to the chair and hands you a cocktail? I feel a sigh of relief thinking about it.

Humans remain superior at delivering empathy and caring to your customers. Your website or app can’t do that quite yet. Humans also remain superior at explaining matters of finance/money that are complex and sometimes best answered through dynamic conversation.

And certainly, when something goes wrong, the tenor

of a conversation changes dramatically when taken out of digital channels and served by humans with high emotional intelligence (EI).

Are you well-versed in the moments of the customer journey that might be especially emotionally charged?

Those are great candidates for humanity. Unfortunately for banks, these are often (but not exclusively) negative incidents. Beyond those, consider other moments such as an application for a small business loan or a first-time home purchase. Those transactions are highly emotional, and your best humanity could make a customer for life if handled with care and respect.

In banking, this focus on human empathy starts with the call center - likely your largest concentration of humanity interfacing daily with your customers. To build a great team you must hire for high EI. Emotionally intelligent people ask questions, listen deeply to others, and are genuine and honest – all characteristics of likability. Why does likability matter? In a study by famed Nobel Prize-winning psychologist and behavioral economist Daniel Kahneman it was found that people would rather do business with someone they like and trust – even if the less likeable person is offering a better product at a lower price. Customers who like your employees will do more business with you despite pricing inequities. Want to compete with “no fees”? Be nicer.

I’ve had the pleasure of working with USAA for years and have observed their best-in-class call centers firsthand. It’s no secret to say they truly understand the importance of EI and building customer rapport. I was

Today, worldclass customer experience requires this artful blend of human and digital talent.

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These days in a world where more things than ever can be done automatically, remotely and by machine - it’s important to deliver humanity. impressed to see their innately curious member service reps (MSRs) spending the required time to understand the member situation and artfully make a true personal connection while whizzing through what seemed like a dozen screens to complete the transaction. They have the same operational pressures as most to be more efficient, but it never comes at the cost of listening and empathizing.

They’re mission focused. And USAA’s customers appreciate it as evidenced by USAA’s top satisfaction rankings on JD Power and contribute strongly to their industry leading loyalty scores.

Call centers are expensive to run, and that’s often why banks and CUs are pressured to drive call volume and call time down. There is a priority to complete calls quickly and most banks are looking to offload as much as possible to digital or outsource.

A smart business strategy would entail investing energy in making sure your digital products handle all the transactional stuff (like change-of-address) to allow your human talent to focus on higher value things better served by people. For example, helping customers understand their credit options or dealing with an unfortunate fee situation. Deploy digital to drive higher value calls that benefit from the human touch.

When the digital channel is expected to deliver empathy – you’re off course and the corollary is also true. Don’t waste your human talent on transactional stuff. You may need to organize and motivate your employees on different metrics to get there. A big cell phone company offers some inspiration.

T-Mobile is receiving a lot of attention for revamping its call center operations. It has gone against the grain and organized for better service by creating customer pools managed by consistent care teams organized geographically.

That consistency means when a customer calls, they are routed to their pool of reps - not a roundrobin based on availability across the country.

Because of this, you may get the same rep if you call back and customers love this continuity. Relationships are formed and T-Mobile teams are truly invested in the success and happiness of their customers because T-Mobile has organized the business to allow teams to manage their customer pool like a mini P&L. Customer satisfaction and profitability are directly connected to the employee compensation and progression planning. The organization is built to

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encourage employees to spend time with customers, something that’s counter to how competitors operate, often seeking ways to move more traffic out of the call center and online. This human-first mindset is being credited with T-Mobile’s huge turnaround over the past two years.

Back to the sub shop…

Spiro paid us by the hour and obviously the focus was on creating and delivering great food quickly. However, he also modeled behaviors he knew as important and wanted us to also exhibit - caring about the customer as a person.

Recognizing the look on a face when a customer stops in mid-commute and just wants to get home. We’d recognize this, remember their regular order, find it and begin ringing it up without even being asked — in this case even dialing down the banter.

Human connection and empathy in customer experience sound hokey and may feel out of place when designing experiences to achieve business objectives measured in metrics often ruthlessly based in logic. However, world-class CX requires this line of thinking and today we live in an experience economy. These days in a world where more things than ever can be done automatically, remotely and by machine - it’s important to deliver humanity.

Especially in matters of money.

Custom who like ers employeyour e will do s more bu sin with youess despite pric inequiti ing es.

Michael S. Kirkpatrick is senior vice president, client experience & strategy and leads the financial services practices at Mad*Pow, an experience design agency in Portsmouth, NH and Boston, MA.

WO MEN A N D LE A D ER S HIP

Are The Women In Your Organization Thriving?

T

A CLOSER LOOK AT THE INCLUSION PART OF DIVERSITY & INCLUSION

By KAREN KIRCHNER, ELLEN KEITHLINE BYRNE, and DENISE D’AGOSTINO

hese days there is never-ending talk in financial institutions about diversity and inclusion, particularly as it relates to women. Executives and boards know that to be innovative and relevant in the years to come they need to address this issue. They are paying attention to research like the study done at Deloitte Insights which found that organizations with an inclusive culture are eight times more likely to achieve better business outcomes.

However, when we take a close look at the fundamentals of diversity and inclusion, we see that the diversity part of the equation gets more attention because it is easier to measure. The inclusion part is trickier and more complex.

Deloitte Insights identifies a basic formula: “Diversity + inclusion = better business outcomes. Yet diversity without inclusion in worthless.” A firm can work towards meeting its diversity goals, but if it doesn’t have an inclusive culture where people feel they belong, those people don’t stay or thrive. The organization ultimately misses out on the benefits of its D & I initiatives.

In a study on inclusive leadership, Catalyst, a global nonprofit focused on women in the workplace, discovered that when employees feel included, they are: • more innovative; • more willing to go above and beyond to help other team members; and, • better at perceiving similarities with coworkers and engendering a feeling of belonging while perceiving differences that lead to feelings that it’s OK to be unique As leadership consultants, we work with financial institutions of all sizes that are struggling with how to build inclusive cultures and attract, retain and advance women.

We’ve taken a deep dive into the research and our own decades of experience to share key considerations as you evaluate how inclusive your culture is.

UNDERSTAND THE PROBLEM

To feel “included” in an organization means to feel accepted as an insider in the workplace while maintaining May/June 2019 | BANKING MID ATLANTIC

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Diversity + Inclusion = your own unique identity. Research recognizes fundamental requirements of an inclusive workplace: a. Employees are treated with respect b. Employees are valued for their strengths c. Leaders do what’s right

three

These elements make employees happier, more confident and ultimately more productive.

LOOK BEYOND THE OBVIOUS

Putting in place new HR offerings like launching a women’s networking group or offering unconscious bias training, while helpful, only addresses a small piece of what’s needed. Like most important things, it’s a complex systemic issue requiring a broad look at the internal factors related to shifting an organizational system to better promote a feeling of inclusion.

The executive team needs to ensure their practices support their aggressive diversity goals. “Add women and stir” doesn’t work. Many organizational structures were originally designed by men to fit men’s lifestyles. It’s folly to simply place women into a traditional structure and expect them to thrive. Often women falter because they don’t have the networks, sponsors and processes in place to back their success which exacerbates the view that women struggle in certain leadership roles.

One significant obstacle is that a substantial pay gap still exists between men and women doing the same work. This is demotivating to women who are working just as hard and

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getting results that are equal to or better than those of their male counterparts.

For instance, in a large regional commercial bank servicing New England and New York, a woman we’ll call Mary was promoted to the head of mortgages. She was excited and eager to surpass her group’s objectives. Yet soon after her move, Mary discovered that a new male hire below her was making $40,000 more than she was. She became angry and resentful, talking to other senior woman about the inequities in the bank.

When underlying organizational systems, such as pay rates, show a lack of gender parity, women don’t feel equally valued or respected. The bank eventually responded and adjusted the pay discrepancy; however, it didn’t make broad changes across the bank.

The good news is that some banks are leading the way in this area as part of their commitment to providing an inclusive and rewarding experience for all. In January 2018, Bank of America announced that for employees in the US and UK, on average, compensation received by women is equal to 99 percent of what is received by men. These larger businesses can be role models for smaller firms by introducing more progressive organizational systems.

DIAGNOSE YOUR CULTURE AND IDENTIFY PATTERNS

Often executives make assumptions about their culture. The stories are plentiful. Rachna Mukerjee, chief human resources

Better Business Outcomes officer from Schneider Electric, while offering remarks relating to including women in its culture, said “I already understand the need and we are doing it.” Soon after Managing Director Anil Chaudhry convinced him to conduct a roundtable with company women. The executive team was stunned to learn how unhappy their female employees were. That was a tipping point and significant changes ensued.

The best way to confirm or challenge your assumptions is to examine where people thrive within the organization. Robin Ely, faculty chair of Harvard Business School’s Gender Initiative, suggests you ask deeper level questions on how you’re doing.

At first, examine your culture, not with gender in mind, and then tease out where gender issues show up most.

Ask questions such as: • What does thriving or not thriving look like?

• What does it really take to get work done effectively here?

• What are the critical junctures in career paths?

A diverse and inclusive workplace is worth the effort so that you get the full benefit of your employees’ talents and contributions.

With these answers you can begin to see the norms, structures and patterns that direct your people. You can see where the Moxie Leaders was founded by (from left) Denise D’Agostino, pain points lie. Then you can check your assumptions and Karen Kirchner and Ellen Keithline Byrne, a team of begin a strategy on how to address any issues that surfaced. organizational leaders, executive coaches and a PhD, who For example, one financial services firm we worked with create programs specifically for women leaders –– to help them found that many key decisions were made in informal settings rise up in today’s competitive world and make their mark. For where mostly men were present, such as the golf course or additional information visit www.moxie-leaders.com. over drinks after work. Once this pattern was discovered, the firm made a conscious effort to include women in a wider variety of outings that gave them more access to senior management.

In January 2019, Bank of America won the Catalyst Award for building workplaces that work for women. Since 2015, one of the bank’s key practices Successful leadership means knowing both the strategies that work to understand patterns is the use of today and the people who will implement them tomorrow. To help “Courageous Conversations.” These are you, your business and its future leaders succeed, tap into these hosted dialogues ranging from small forward-looking leadership development opportunities from ABA. conversations with teams to enterprise conversations with community partners.

The topics include race, gender dynamics, NEW! social justice, national current events Community Bank Online Training Suites and more. During the wake of violence With input from bank CEOs, we’ve put in Dallas, Baton Rouge, Minneapolis and together our most popular, short and concise, Charlotte, the bank hosted a conversation online training courses into specially priced that brought out into the open issues that were on the minds of their people instead bundles starting at $95! of them privately brewing. Through these conversations, employees see the bank’s NEW! commitment to including all voices. In Emerging Leaders Online Certificates addition, it’s an opportunity to identify Top-tier online content featuring preeminent areas where the bank’s practices don’t Wharton faculty. Attractively priced and will align with their employees’ ability to fit into busy schedules. thrive.

Good leadership requires two things.

Given these thoughts, do you think the women in your organization feel fully included?

If you’re not sure, start asking questions to diagnose what’s really going on.

aba.com/Leadership1

May/June 2019 | BANKING MID ATLANTIC

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COV E R STO RY

+

It’s About Dialing In Customers – Not The Short-Term Revenue T-MOBILE AND BANKMOBILE’S RELATIONSHIP’S SUCCESS WILL BE BASED ON RETENTION

W

hy would an online bank enter into a relationship with a mobile data carrier to start offering consumer checking accounts?

Especially when the interest rate and fee structure suggest it might be difficult to make it a profitable line of business?

The answer appears to center on one priority: Customer acquisition for both sides.

T-Mobile’s recent rollout of its T-Mobile Money checking accounts, offered in partnership with BankMobile (a division of Customers Bank) prompted questions concerning the consumer-friendly structure of the accounts. T-Mobile Money pays 4 percent interest on account balances up to $3,000, which is more than 10 times the industry norm, and pays 1 percent on everything from $3,001 up.

The accounts are also virtually fee-free, although customers do have the option of buying into an elevated level of overdraft protection. The standard no-fee overdraft protection

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is limited to overdrafts of $50 or less.

Since fees are usually a major source of bank income on consumer checking accounts, T-Mobile Money isn’t designed to generate revenue in the traditional way. And if a heavy volume of accountholders maintains balances below $3,000, the interest payments have the potential to represent a much higher cost than traditional banks incur on their consumer checking accounts.

Customers only need to deposit a minimum of $200 for the 4 percent APY to kick in.

So how does T-Mobile Money make money for T-Mobile or for BankMobile?

While the principals involved in the partnership were reluctant to talk on the record about the deal or any of its details, the answer appears to lie in the proposition of low-cost customer acquisition.

Jim Perry, a senior strategist at Market Insights, said T-Mobile has the challenge of churn in its customer base (as does any bank).

“They’re just looking to gain more of that real estate,” he said. Both

T-Mobile and BankMobile, Perry added, want to deepen their relationships with their customers and this is one way to do that. At the same time, he said, neither side is cannibalizing their own customer bases.

Luvleen Sidhu

Luvleen Sidhu, president and chief strategy officer at BankMobile, declined to discuss specifics of the T-Mobile Money arrangement but talked in broader terms about why BankMobile is interested in such an offering.

“We were looking for a new way to grow,” Sidhu said. “You can grow exponentially in terms of customer acquisition at high-volume, low-cost, and we pivoted to a Business-to-

T-MOBILE SPRINT MERGER COULD SWEETEN THE DEAL T-Mobile and Sprint are in the midst of regulatory approvals for a merger valued at $26 billion. If approved, it would significantly expand the market for the T-Mobile Money checking accounts.

The merger would combine third-largest T-Mobile, which as of April had 81.3 million customers, with fourth-largest Sprint in competition with the two biggest providers, Verizon and AT&T. Sprint has 54/5 million customers, according to company statistics.

Toward the end of May, Ajit Pai, the Federal Communications Commission chairman, endorsed the merger. It includes concessions from both companies including no price hikes for three years, according to NPR.org. Sprint will also sell off its prepaid brand Boost Mobile.

However, the agreement still needs Justice Department approval. NPR says if approved, the deal would reduce the number of major U.S. wireless telecom carriers from four to three.

OVER

Business-to-Consumers model.”

In other words, the traditional method of acquiring customers via a local bank branch was costly and inefficient, and it often resulted in checking accounts whose balances stayed in the unattractive range between $300 and $1,000. Working with a business partner with access to a higher volume of consumers gives BankMobile access to more potential customers at far less acquisition cost.

“It’s a matter of attracting customers,” said Peter Ostrowski, managing director of Cranford, New Jersey-based Ostrowski & Company.

“T-Mobile is looking for customers so this is a way for both of them to gain access to customers. The money looks expensive, but there are no branches involved so the overhead is minimal.”

And Ostrowski, a veteran banking analyst, emphasizes that the deposits can also be used to fund BankMobile’s expansion of its lending portfolio.

BankMobile’s first foray into the B-to-B-to-C involved partnering with various colleges and universities.

“We’re acquiring about 5,000 accounts a week as opposed to one per branch for week, and we’re

$34 billion

acquiring those customers at less than $10,” Sidhu said.

In the past, Perry said, some community banks made errors trying to enter the digital banking space.

He said attempting to lure customers with high-interest rate offers on money market accounts attracts rate shoppers – and not long-term clients.

“They won’t have a stickiness,” he said.

Others involved with the deal, including top officials at BankMobile parent company Customers Bank, based in Phoenixville, Penn., deferred to T-Mobile, which declined to go on the record with any details

AMOUNT BANK CUSTOMERS PAID IN OVERDRAFT FEES IN 2018.

19

about the strategy behind T-Mobile Money beyond what was in the press release announcing the deal.

But as a customer acquisition strategy, T-Mobile’s direction here is in line with some crucial trends concerning the way people bank. A 2017 survey by the American Bankers Association indicated that twothirds of all bank customers do the bulk of their banking activity online and/or via mobile devices.

According to a 2014 study by the Consumer Financial Protection Bureau, most overdraft fees result from purchases of less than $24, so in many cases the overdraft fee exceeds the amount of the overdraft.

And Forbes in 2018 cited a survey from the financial research firm Moebs Services reporting that bank customers paid more than $34 billion in overdraft fees, while many others paid the fees for overdraft protection programs in which their banks automatically enrolled them.

T-Mobile’s strategic opportunity is to acquire customers who want to flip that script – to stop paying fees to their banks while actually earning some serious interest on their balances. At the same time, because so many of them are doing their banking in the mobile space, TMobile gets an opportunity to engage with those banking customers on familiar turf.

Once a customer is in the fold, T-Mobile and BankMobile would have a built-in audience for upsell

efforts, with push notifications and other efforts made easier and cheaper by the fact that customers are already engaged with both digitally.

Will other digital carriers follow T-Mobile into this space? Not that they are saying, at least.

“This is not something we are considering doing at this time,” said Brittany Siwald, corporate spokeswoman for AT&T. David Tovar, senior vice president of corporate communications for Sprint, echoed the sentiment.

“We have no current plans for a product like this,” Tovar said.

Perry from Market Insights, though, wouldn’t be surprised to see more cellular providers enter this market. “I can see other cellular providers or even healthcare providers doing this. It’s all about delivering the deeper relationship. This is a way for a retailer to tap into a consumer’s understanding of the banking relationship,” he said.

To be sure, a partnership to provide checking accounts with a mobile carrier is unconventional. But Ostrowski isn’t surprised to see it coming from the likes of BankMobile CEO Jay Sidhu.

“He’s tried a bunch of different things,” Ostrowski said. “He gets out there. They’re already talking about wanting to go two or three years before monetizing the investment, before they see if it makes sense or not.”

Senior Management & Leadership October 16, 2019 RESORTS CASINO HOTEL / ATLANTIC CITY, NJ

bankhorizons.com

For info on our banking shows visit bankconferences.com or call 860.719.1991

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BANKING MID ATLANTIC | May/June 2019

Mid Atlantic’s gathering of C-level banking executives looking to take their institutions to the next level. Thought leaders will be on hand presenting on topics that should be top-ofmind for key executives at financial institutions in the Mid Atlantic region, such as corporate synergy, disruption, team-building and corporate culture. Not for the faint of heart – this will be a sobering but motivating meeting of some of the top minds in the industry.

C USTOM E R S ERVICE

Why Did Your Last

100 Customers Leave? www

C

By THEO MOUMTZIDIS

ustomer defections can be split into two important categories: inevitable and preventable. Inevitable are defections of customers or accounts that take place through no fault of the bank. Customers might move to a neighboring state outside the bank’s footprint whether for work or personal reasons. Another reason customers leave is if their financial situation changes. Based on current research, about half the balances that leave a bank’s balance sheet due to defection or diminishment (the reduction of balances in accounts that remain open) are inevitable.

On the other hand, many customers leave their banks for reasons that could have been prevented. These incidents represent failures of the bank: its staff, systems, procedures, pricing strategy, and practices. Deeper root cause analysis may reveal gaps in training, governance, strategy, or striking the right balance between risk prevention and the holy grail of an “easy/simple/fast” customer experience.

Josephine Moran, executive vice-president for retail banking with New Jersey-based Provident Bank, experienced this first-hand. She was faced with the prospect of losing a very big customer who wanted to open an additional account. The customer, however, thought the bank required too much paperwork and was on the verge of leaving.

May/June 2019 | BANKING MID ATLANTIC

21

Immediately, she set out to review the bank’s policies and procedures and discovered they were not consistent among the branches. As a result, she streamlined the policies and made sure that customers receive the same experience at every branch location.

She says, “We knew we had to go above and beyond and get out of the way to create a ‘Wow’ experience.

We learned it’s important not to say no to customers.

We have to find a way to tell every customer what we can do to solve their problems.”

OBSCURITY OF DEFECTIONS Why do banks lose the retention battle against preventable defections without putting up a fight? One answer is by the time defections are known it is too late. While a big customer might feel entitled to speak up and escalate past the first “no,” most retail customers will give up quickly or not even bother voicing their complaint.

A big part of the “defection dilemma” results from organizational and cultural reasons. A new account or a new customer relationship can be traced to the person or channel that opened the account. Often, new customer acquisitions can be linked to a marketing campaign. Account openings are visible events that happen at a specific moment in time when the account is created. They are identifiable, attributable events that take place in an observed moment in time. They are easy to celebrate, easy to reward and easy to set targets for.

It’s hard to avoid “easy” as banks work to create strong sales cultures.

Contrary to sales, defections are slow and progressive. Moreover, they are hard to link to a banker or a territory. If a customer decides to leave because she became unhappy with a new fee for receiving paper statements or with the poor way a branch manager handled an identity theft event on her account, these will not visible. The actual account closure might happen weeks or months later.

Unable to point a finger to the culprit, these important events remain “orphan.” Powerless to attribute defection events (or retention successes) to individual bankers, banks do not reward employees who retain well. Nor do they penalize those whose actions lead to customer defections. This reality creates institutional apathy about retention and ignorance

about the true reasons for it.

When bank boards or senior executive teams are asked to guess why their most recent 100 bank customers defected, the order and percentages of their guesses vary strikingly. At the same time if asked about acquisition, they will be able to quote response rates to a marketing campaign to the second decimal point.

SHIFT THE FOCUS FROM ACQUISITION TO RETENTION The reality is: a customer lost was more valuable than a new customer gained. Why? Three reasons: first, tenure is the most important determinant of loyalty. Simply put, every additional year a customer stays with the bank, the less likely they are to defect.

Therefore, their lifetime value increases.

Secondly, longer tenured customers know how the bank operates, and they become efficient users of their accounts. For example, if they make frequent wire transfers, they are less likely to make errors on the wire instruction form and might have been migrated to stored wire models in their online environment.

Thirdly, banks accumulate transactional and behavioral information over the years.

These can be mined for more effective cross-sell offers as well as better credit decisions. On the contrary, new deposit or revolving credit accounts not only lack these three benefits, they also have a 30 percent likelihood of remaining unused or even be closed on their 12-month anniversary.

lost r e m o t s u c A le b a u l a v e r o was m than a newined. a customer g

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BANKING MID ATLANTIC | May/June 2019

THE FIGHT TO RETAIN CUSTOMERS So, if defecting customers are worth fighting for, how should banks pick up the fight? Timing is critical!

The earlier the intent for defection is detected, the higher the chances of averting it. Once the customer has opened a new account with another bank, which will happen well before they close the account with the bank they are defecting from and has started moving their recurring payments and other money flows, retaining them is tantamount to re-acquiring them.

The customer would have to repeat the effort they just made to move away in order to move back.

There are red flags that go up when a customer begins their defection journey. That is the time to reach out and ask, “How did we mess up?” or ask them to

respond to a customer satisfaction survey. High-defection-risk customers will be more truthful before they have pulled the plug at which point they want to evade the bank’s reactive retention offers.

When it comes to these early warning “red flags,” analytics can play a central role in sniffing out impending defections. A discontinued direct deposit can be analyzed to determine if it is related to end-of-employment (i.e., not a defection event) or a possible shift of the payroll to a competing bank. Shifts in transaction patterns can also help identify higher risk for defection relationships.

Analytics can also be used for postmortem analyses.

While these will occur too late to retain a particular account, they can reveal a systematic root cause that can be addressed to prevent future defections. A spike in defections after a new policy or a new fee went into effect should be identified and warrant a discussion. Any correlations between defections and a customer’s channel use or events that might have affected a customer (e.g., a branch consolidation or a staff change) can also offer actionable insights.

Analytics and their results have to be coupled with the right soft skills. Soft skills to hire for would include empathy, good listening skills, creativity (to find solutions to customer problems), overall problemsolving skills, negotiating skills (to negotiate not just with the unhappy customer but also internal bank areas whose actions could be the source of the customer dissatisfaction). The banker who is reaching a red flagged customer to ask, “How did we mess up?” must have the ability to convey empathy and a genuine desire to learn as opposed to being perceived as making a clumsy attempt to prevent a defection with a pushy sales pitch.

investing in processes and soft skills to leverage the analytics. When done right, the ROI can be far greater than the most successful new account acquisition marketing campaign. Such “soft skills” encourage unhappy customers to speak up instead of defect in silence. They also give more credibility to the genuine interest of bankers in their efforts to discuss a “red flag” raised by early-detection analytic models.

In the end, the reality is shareholder value is driven by growth and profitability. Growth is the net effect of the acquisition of new customers, new accounts and new balances versus customer defections. While new customers and accounts are acquired in the spotlight, they defect in obscurity.

In order to prevent more customers from going to the competition, bankers need to ask and answer these three questions: Why do customers defect? Why does this happen in the shadows? Why do banks focus more on acquisition rather than retention? With this commitment and mindset, savvy bankers will be wellpositioned for long-term, sustainable growth.

LOOKING FORWARD A focus on retention must come from the top. Senior management has to instill a culture that celebrates retention as much as acquisition. In addition, they need to make sure systems are developed for both the early detection of defections as well as for analytics that correlate defections with their root causes. That means

Theo Moumtzidis managing director of Delos Advisors, a NY-based consulting firm that specializes in working with financial institutions in the U.S. and abroad. Contact him at theo.moumtzidis@delosadvisors.com

The earlier the intent for defection is detected, the higher the chances of averting it.

May/June 2019 | BANKING MID ATLANTIC

23

STAT IST ICS

BANK SWITCHING FOR CONSUMERS AND BUSINESSES IN PENNSYLVANIA AND NEW JERSEY IS ON THE RISE

I

By BRUCE PAUL, Special to Banking Mid Atlantic

t has taken the American bank customer almost 10 years since the beginning of the financial crisis to feel fully confident again. They are now comfortable enough in their financial lives to get back to the old practice of switching banks. The strong economy, the increase in competition for deposit dollars, and the increase in smart Bruce Paul marketing spending means more and more consumers and businesses are in play.

According to the latest Banking Benchmarks across both Pennsylvania and New Jersey, bank switching is once again on the table. We interviewed households and businesses in every corner of the Keystone and Garden states and collected a total of 392,519 bank reviews by customers from 436 banking institutions. As part of those interviews, we asked customers of each and every bank to evaluate the banks they use on 53 different metrics, including whether they were planning to leave that bank in the next 6 months. On average, about 21 percent of Pennsylvania households and 28 percent of Pennsylvania businesses are unhappy with their current primary bank. In New Jersey, 23 percent of households and 28 percent of businesses are unhappy with their current bank. That is higher than the past couple of years, particularly in New Jersey.

What has risen much higher, though, is the percentage of unhappy customers that are willing to make a move (instead of just gripe to friends over lunch or on social media): almost 10 percent of New Jersey households and 9 percent of Pennsylvania households have actually started shopping around and/or opened accounts elsewhere with the intention of switching primary banks within the next six months. For businesses it is even higher. This is a dramatic increase from just one year ago.

The upcoming rate of defection varies widely by county and even widely within some counties. Table One shows how upcoming attrition rates vary, both for households (retail) and businesses (commercial) in some areas.

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BANKING MID ATLANTIC | May/June 2019

When we asked customers at every one of the 436 banking institutions in the two states how likely they were to leave that bank, we saw a very wide disparity. Some banks had very few customers looking to leave, while others had a very high percentage.

While most banks were consistent from branch to branch, some banks had defection rates that varied greatly across their own trade areas. Table Two shows the number of banks in each region with very low upcoming attrition rates according to their own customers (under 5%), and the number with very high upcoming attrition rates (over 20%). Just about any institution will struggle to survive if 20% of their customers depart so there are a couple of dozen institutions across the two States that are in for a difficult time. (There are seven institutions with over 45% of their customer bases saying they will leave shortly. Yikes!)

Even if a bank is not one of the ones facing very high defection, it needs to know, first and foremost: why are any of my customers defecting and what can I do to prevent them from leaving? They also will want to know: how can I win more than my fair share of the defectors from other banks? The TABLE ONE: Available Market Share Today Retail Market Share in Play

Commercial Market Share in Play

Greater Philadelphia, PA

11%

14%

Greater Pittsburg, PA

10%

13%

Lehigh Valley, PA

12%

10%

Dauphin County, PA

8%

8%

Northeast PA

7%

9%

Newark area, NJ

14%

19%

Northeast Gateway NJ

12%

16%

Morris County, NJ

11%

14%

Somerset County, NJ

5%

7%

Area

answer to both questions is the same: by understanding what makes people leave their current bank, you also understand their top priority in selecting a new bank.

The reasons customers leave their banks can vary but we some common themes across the hundreds of thousands of interviews we conduct. Below are the Top 10 reasons that customers across New Jersey and Pennsylvania cite for leaving their bank. They also are the Top 10 things they are looking for in a new bank.

TABLE TWO: Highs and Lows of Attribution Rates

# of banks with Total number of banking very low defection institutions covered by rate (under 5%) the Benchmarks

State

# of banks with very high defection rate (over 20%)

Western PA

4

10

79

Central PA

3

9

67

Northeast PA

4

9

44

Southeast PA

11

20

93

Northern NJ

5

7

80

3

11

42

2

6

31

Some things that might surprise you: • Banks are losing more customers Central NJ by not being pushy enough (low proactivity), than by being too pushy.

Southern NJ Customers are 4 times more likely to say their bank lacks proactivity than to say their bank is pushy. Of course, staff that can present thoughtful solutions (rather than just suggest a HELOC to everyone who walks through the door) will make their customers’ financial lives better.

• Technology is not in the Top 7 reasons people leave their bank. (Further surprise: it is even lower among millennials—according to tens of thousands of millennials themselves.)

• Lack of friendliness and low responsiveness are not major drivers of switching. This is because all banks are friendly and responsive (yes, even the biggest ones), so this is not a major factor driving people to switch.

The reasons for switching banks often varies by region, by county and sometimes even by town because switching behavior is highly dependent upon the strengths and weaknesses of banks in each market. If each bank in your trade area charges a lot of fees, then fees will be a major reason people want to switch. Conversely, if no one is charging fees, low fees will not be a draw.

The ideal situation is when your bank has a competitive advantage. For instance, if you have built a reputation for being proactive in bringing solutions to customers while competitors struggle to do the same.

TABLE THREE: Top 10 Reasons New England Customers Cite For Leaving Their Bank 1

My bank does not proactively suggest solutions

2

I keep getting the runaround

3

I can get better rates elsewhere

4

The staff at my bank are not trained well enough

5

My bank treats me like a number

6

I get charged too many fees

7

The bank is not responsive enough

8

The online/mobile technology is bad

9

My bank is too pushy about new services

10

The staff are not friendly

If you would like to see what the drivers of switching are in your trade area or your bank, or would like to see what percentage of your customers are about to leave the bank, please contact our analytics team at info@cescx.com.

Bruce Paul is president and CEO of Customer Experience Solutions, which produces the semiannual Mid Atlantic Banking Benchmarks.

MEASURING THE VULNERABILITY OF YOUR CUSTOMERS Understanding how many of your customers are vulnerable to switching can be difficult. Of course, it would be easier if customers had the common courtesy to tell you that they are leaving before they do. But we know this almost never happens: they simply open accounts elsewhere and gradually draw down their balances with you. So how do you know your vulnerability? There are 3 main ways, each with its own merits. You can: 1. Conduct an ongoing Attrition Measurement program like the largest US banks do. This involves contacting customers that have already left and heavily incentivizing them (usually $500-$1000 each) to give you honest feedback on the reasons they left. This can be very expensive, but will have a very high ROI if you can learn the reasons and cut your attrition significantly.

2. Survey your own customers and ask them how likely they are to leave. This is a good option if you already have people on staff who are experienced in building and managing market research programs. The results will be skewed since your happier customers are far more likely to respond to surveys than unhappy or ambivalent ones, but it can be a useful tool for tracking trends.

3. Subscribe to a syndicated Customer Experience measurement service if you have a local tracker that covers your institution. The results are more accurate and less expensive, but they may be less flexible than doing it yourself.

May/June 2019 | BANKING MID ATLANTIC

25

DI D YOU S EE?

Banking Mid Atlantic publishes a weekly digital newsletter that rounds up the latest news and information about, you guessed it, banking in New Jersey, Pennsylvania and Delaware. Here are a few stories from recent editions. If you would like to subscribe to, share your news to, or advertise in the Banking Mid Atlantic newsletter, contact us at info@ambizmedia.com.

BENEFICIAL EMPLOYEES FEEL LEFT BEHIND FINANCIALLY

Employees of Philadelphia-based Beneficial Bank are upset by a delay in a takeover by WSFS Financial Corp. of Wilmington, Delaware. They say their employee-stock-ownership program, also known as a KSOP, is becoming less valuable to them but execs will be paid in cash for completing the deal.

According to an article in the Philadelphia Inquirer, by the end of last year, Beneficial’s KSOP reported holding 4.4 million shares, or more than 6 percent of the company. That’s when CEO Gerry P. Cuddy said he was selling the bank for $1.5 billion in cash and stock to WSFS. For veteran Beneficial employees it looked like a great deal. WSFS would pay for the deal mostly with its own shares, then worth a near-record $55 each. KSOP members and other 26

BANKING MID ATLANTIC | May/June 2019

Beneficial owners would trade their shares for WSFS stock at a fixed ratio (plus a little cash). If that price held, Beneficial employees would finally realize significant gains on the stock they had been awarded, which had lagged other bank stocks since the formerly depositor-owned bank first sold shares.

But WSFS shares dipped on news of the deal, then fell more as U.S. stock markets declined in November and December and haven’t much recovered. By March 1, when WSFS concluded the deal, the buyer’s share price had fallen to $42, shaving 24 percent from its value when the sale was announced.

M&T TO ADD 200 TECH JOBS IN DELAWARE

M&T Bank has announced plans to add 200 positions in Wilmington, Delaware. It’s part of the bank’s plans

to boost information technology hiring by 1000 positions along the East Coast.

Economic development officials in Wilmington are pleased by the additional high-tech positions.

According to Delaware Business, the hiring will bolster Wilmington’s status as a financial technology “fintech” hub for a number of financial institutions. Banks are building their fintech presence in response to growing demands for accessing accounts and making transactions via mobile devices.

M&T’s planned hiring investments include: • More than 1,000 permanent technology roles, including software engineers, web developers and other digital positions, over the next five years. The first 250 of these technology positions will be posted and filled throughout 2019.

• Approximately 1,000 of the jobs will be located in M&T’s headquarters city of Buffalo, N.Y., while 200 permanent technology positions will be located at the company’s Wilmington Plaza, a nearly 300,000-square-foot office building the company owns in downtown Wilmington.

In addition to the technology positions, the company currently has approximately 1,900 open positions across its footprint, including retail and business banking, commercial lending, corporate operations, as well as Wilmington Trust’s Institutional Client Services and Wealth Management divisions.

NEW M&A PREDICTIONS FOR BUYERS IN PHILADELPHIA

Mergers and acquisition could be heating up in Philadelphia as the year progresses and there are a few potential buyers to keep your eye on.

There are several smaller banks in central Pennsylvania — Citizens & Northern Corp., Mid Penn Bancorp, Centric Financial Corp., Orrstown Financial Services — that have inched eastward toward or into the Philadelphia market. And they could continue to pursue M&A on a smaller scale.

There are five banks that could be potential buyers, based on conversations with numerous industry insiders. They range in size from $8 billion in assets to $33 billion, so none of these institutions would most likely be interested in buying a $500 million-asset bank.

The five banks selected are not an all-encompassing list of potential buyers. And they might not have tons of options in this market as there are only a few handfuls of local banks with between $1 billion and $5 billion in assets that could attract their interest. But they do seem like some of the most likely bets.

CROSS RIVER BANK TO EXPAND IN N.J.

Cross River Bank was awarded Grow New Jersey Credits by the New Jersey Economic Development Authority in late 2018 and now plans to expand in Fort Lee, NJ. The bank also plans on hiring 250 new

employees.

The site will be the workplace for 200 employees from the bank’s current Fort Lee headquarters and it will hire another 250 people who will be employed there.

“The state’s support will enable us to expand within New Jersey instead of leaving the state we have always called home,” said Gilles Gade, President and CEO of Cross River.

“Governor (Phil) Murphy’s focus on supporting companies that look to the future and take advantage of innovative new solutions is exactly what New Jersey needs right now.”

CUSTOMERS BANK THE LEAD PENNSYLVANIA MINORITY LENDER

The Pennsylvania Housing Finance Agency has named Customers Bank as the top minority lender for the second year in a row.

PHFA ranked Customers Bank ninth out of more than 80 institutions in Pennsylvania in terms of overall volume of originated residential mortgages.

Customers Bank originated $26.5 million in Community Reinvestment Act qualified loans to 287 homebuyers through its programs in 2018, of which 138 loans for a total of $11.6 million where PHFA loans.

PHFA also named Customers Bank’s Elsie Maduro, vice president and CRA mortgage officer, as the top originator of loans to minority homebuyers in 2018. This marks the second year in a row that Maduro has received this distinction.

“This is a tremendous honor for everyone at Customers Bank and wonderful recognition of our commitment to helping neighbors achieve their dreams of homeownership,” said Richard Ehst, president and chief operating officer of Customers Bank.

PHILADELPHIA, NEW JERSEY AT FOREFRONT OF BANNING CASHLESS STORES

Earlier this year, Philadelphia and the state of New Jersey banned cashless stores. They felt too many residents were unbanked and needed the ability to pay in cash.

The Associated Press reports that

while cashless stores and restaurants aren’t widespread now, the practice could expand to more services, including some that cater to lowerincome customers. Walmart-owned Sam’s Club opened its first cashierless store in Dallas last year, using technology that allows customers to scan and pay for items with their smartphones. Kroger has installed similar technology in about 400 stores nationwide.

Advocates for cashless bans worry technology is moving too fast for the 6.5% of American households — 8.4 million — that do not have a bank account, according to figures from the Federal Deposit Insurance Corporation.

There are opponents to the ban.

“To call this a trend is a bit of an exaggeration. There are a handful of retailers trying this in certain situations here and there, but it’s not something the average customer would expect to see at every store at the mall any time soon,” said J. Craig Shearman, a spokesman for the National Retail Federation in Washington.

There is no federal law that requires stores to accept cash, so lawmakers are working on the issue at the state and city level.

According to AP, the issue got some high-profile attention recently when retail giant Amazon bowed to pressure from activists and agreed to accept cash at more than 30 cashless stores, including its Amazon Go convenience stores, which have no cashiers, and its book shops. Amazon declined to say when the change would happen.

There is no federal law that requires stores to accept cash, so lawmakers are working on the issue at the state and city level. Massachusetts pioneered the concept 40 years ago.

May/June 2019 | BANKING MID ATLANTIC

27

MID TIC ATLAN

TRY TO KEEP UP LOCAL PROFESSIONALS MAKING THEIR MARK IN MID ATLANTIC BANKING

OceanFirst Appoints Svizeny Greater Philadelphia Regional President

OceanFirst Bank has appointed Susanne Svizeny as president of the Greater Philadelphia Region. She was most recently executive vice president & division manager, commercial banking, at Wells Fargo Bank for markets in Pennsylvania, Delaware, Western New York and Eastern Canada.

Svizeny will lead OceanFirst’s expansion in the metropolitan Philadelphia market area, which is a strategic priority for the $8 billion Susanne Svizeny asset bank. Her responsibilities as include growing commercial relationships along with treasury management, retail banking and trust and asset management services.

At Wells Fargo, she successfully led her teams through four bank mergers spanning two decades, with the last merger including up to 1,600 members of the wholesale and retail teams during the Wells Fargo acquisition of Wachovia in 2008. Also, during her tenure at Wells Fargo, she founded the Women’s Market Growth strategy for Middle Market Banking and was appointed to lead the Middle Market Banking Diversity & Inclusion Council.

Svizeny currently serves on the board of directors and executive committee of the Chamber of Commerce for Greater Philadelphia, as well as the CEO Council for Growth. She is a graduate of The College of New Jersey and is serving her second term as chairman of its board of trustees.

Penn Community Names Benedetti Chief Marketing Officer

Penn Community Bank, the state’s second-largest mutual bank, has appointed Karen Benedetti as its chief marketing officer. Also holding the title of executive vice president, Benedetti brings more than 30 years of marketing experience gained at various financial institutions throughout New England.

Prior to joining Penn Community Bank, she spent 12 years directing the marketing department for a $3 billion global credit union based in Portsmouth, Karen Benedetti New Hampshire, and she has experience working at regional banks, multi-national banks and community banks. She most recently served as vice president of marketing and community relations for the fastest-growing bank in New Hampshire.

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BANKING MID ATLANTIC | May/June 2019

Benedetti has experience creating, implementing and measuring strategic, multi-faceted financial marketing programs. She has developed brand messaging, managed digital marketing and social media campaigns, leveraged strategic sponsorships, marketed new product lines, and served as an organization spokesperson and liaison to the community.

Benedetti received a bachelor’s degree in economics from the State University of New York College at Cortland before going on to earn an MBA in finance and information systems from Pace University.

Active in several professional and community organizations over the years, Benedetti is a former board member of the New England Financial Marketing Association. She is past chair of America’s Credit Union Museum National Marketing Committee.

Donovan Joins BMT As Senior Vice President

Bryn Mawr Bank Corporation. parent of The Bryn Mawr Trust Company, announced that Jim Donovan has joined the organization as senior vice president, head of commercial & industrial banking. He will report to the president of BMT Banking, Kevin Tylus, and will be based with the commercial lending group in Wayne, Pa. Donovan will focus on BMT’s expanding commercial and business banking services and oversee the C&I, Small Business and SBA lending groups.

He held positions of increasing responsibility throughout his time at CoreStates, Meridian and, most recently, M&T where he spent more than 20 years and oversaw its Pennsylvania Business Banking Division.

Donovan is a graduate of Shippensburg University with a bachelor’s degree in business administration and received his MBA from Saint Joseph’s University. Active in the community, he has served and volunteered regularly including previous roles with the Schuylkill Chamber of Commerce, the Eagle Foundation, Big Brothers Big Sisters of Harrisburg, United Way of Schuylkill County, and treasurer of Junior Achievement of South-Central Pa.

WSFS Bank Promotes Wechsler To SVP Of Corporate Development

Jim Wechsler of WSFS Bank has been promoted to senior vice president of corporate development reporting to Rodger Levenson, president and CEO of WSFS. Since 2015, Wechsler has been a member of WSFS’ Corporate Development team that successfully executed the company’s recent mergers and acquisitions (M&A), fintech partnerships, and fee-income diversification strategy. His leadership has been instrumental in the success of WSFS’ combinations with Pennsylvaniabased Alliance Bank and Penn Liberty Bank, and two boutique

wealth management firms, Powdermill Financial Solutions and West Capital Management.

Most recently, Wechsler played a critical role in leading the due diligence and evaluation of WSFS’ combination with Philadelphia-based Beneficial Bank, a deal that closed on March 1, 2019, creating the largest and longest-standing community bank headquartered in the Greater Delaware Valley.

Wechsler joined WSFS in 2010 as Jim Wechsler a Commercial Credit Analyst and held various underwriting and Customer-facing roles in the Commercial Banking Division until 2015 when he joined the newly created Corporate Development team.

Riverview Bank Appoints Ehrlich To Chief Strategy Officer

Brett D. Fulk, president and CEO of Riverview Financial Corporation, the holding company of Riverview Bank, announced the appointment of Steven A. Ehrlich as senior executive vice president and chief strategy officer. Prior to Ehrlich’s appointment, he was president and served on the board of First Priority Financial Corp, where he also served as president and CEO of First Priority Bank.

Ehrlich has an extensive background in banking, including serving as the founder, chairman, president and CEO of Affinity Bancorp, Inc. and its subsidiary Affinity Bank of Pennsylvania, a bank headquartered in Wyomissing, Berks County, Pennsylvania, which opened in 2003. Prior to starting Affinity, Ehrlich served as the chief lending and chief credit officer for Main Street Bank, formerly Berks County Bank.

Ehrlich’s experience within the banking industry was developed over the course of 34 years in the industry, with extensive knowledge in all aspects of commercial banking, including but not limited to generating capital, commercial lending, retail banking, operational oversight of finance, deposit and loan operations, compliance, human resources and information technology.

He is involved in many charitable and non-profit activities and currently serves on the Board of Directors of the Wilson School District.

DeHoratius Named Human Resources VP

The $2.1 billion TruMark Financial Credit Union in Fort Washington, Penn., named Rachelle DeHoratius vice president of human resources. In her new role, DeHoratius will lead the human resources specialties team, which includes recruiting, talent management compensation, payroll, employee relations and performance management.

DeHoratius brings more than 15 years of experience in the human resources field, most recently serving Rachelle DeHoratius as a consultant for MHD Consulting in Doylestown, Penn. Prior to working at MHD Consulting, she spent a large part of her career with Mars Wrigley Confectionery, Inc. as part of a team that partnered with senior leadership to provide support for more than 19,000 associates across the globe.

DeHoratius, a Temple University graduate with a Bachelor of Business Administration – Human Resource Management and Marketing, is also a certified human resource management professional.

Peapack-Gladstone Bank Selects New Head of Commercial Banking

Peapack-Gladstone Financial Corporation and PeapackGladstone Bank announce the hiring of Gregory M. Smith as executive vice president, head of commercial banking. Smith takes ownership of commercial and industrial (C&I) lending across the organization.

Smith joins Peapack-Gladstone Bank from Capital One Bank where, for the last seven years, he served as the group sales executive for the Northeast and Mid-Atlantic regions, responsible for the $2 - $25 million business banking segment from Virginia to Massachusetts.

During his more than 15 years with Capital One Bank, Smith held several senior-level strategic, sales and team leadership roles, where he was responsible for generating millions in Gregory M. Smith new business, including both loan and deposit generation.

Prior to Capital One Bank, Smith worked at Summit Bank for 15 years, moving up the ranks to senior regional vice president, responsible for directing a significant segment of the NJ market.

A resident of Medford, New Jersey, Smith holds an MBA in Business Administration/ Finance from Rider University, where he graduated Suma Cum Laude, and a BS in Finance from Fairleigh Dickinson University, where he also graduated with distinction.

First National Bank Promotes Kirsch to Chief Digital Officer

First National Bank, the largest subsidiary of F.N.B. Corporation, has promoted Samuel D. Kirsch to chief digital officer. In this role, Kirsch will oversee the development and execution of FNB’s overall digital strategy by continuing to strengthen the bank’s digital capabilities and ensure consistency across all digital properties in accordance with the company’s objective to build an innovative and consultative client experience.

In addition to the planning and implementation of digital strategies for FNB’s customer-facing lines of business, such as retail banking, wealth management, business banking, commercial banking and insurance, Kirsch will focus on technological advancements, including the growth of the company’s multi-channel Clicks-to-Bricks strategy, which integrate the online, mobile and in-branch banking channels for a seamless and convenient customer experience.

Under Kirsch’s leadership, FNB customers will experience enhanced access to the fully digital banking platform currently deployed to customers of FNB’s Retail Bank, including interactive demonstrations and the ability to compare products and services side-by-side online, via a mobile device or in the branch. He also oversees the introduction of new products and services, including strategic upgrades.

Kirsch joined FNB in 2011 as director of digital channels and payments for the consumer bank and reports to Barry Robinson, FNB’s chief consumer banking officer. Previously, he spent 25 years at BNY Mellon serving in a broad range of consumer banking leadership roles including eCommerce, electronic banking, product development and operations. He earned both his Bachelor of Arts in Psychology and Master of Business Administration from the University of Pittsburgh.

May/June 2019 | BANKING MID ATLANTIC

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ANYTH I N G B UT B ANK ING

| By Joe Dyton

Duncan Campbell,

President & CEO, Pennsylvania Bankers Association Harrisburg, PA

As president and CEO of the Pennsylvania Bankers Association, Duncan Campbell oversees the organization’s goals of being the state’s top banking trade association and supporting service providers’ diverse needs in the Commonwealth. Campbell recently spoke with Banking Mid Atlantic about what he does when he’s not helping serve Pennsylvania bankers.

FAVORITE SPORT (TO WATCH OR PLAY) I love watching baseball and I loved playing baseball through high school and college. There is so much more to the game than 450-foot home runs—moving runners up with a well-placed bunt, grounding a ball through the hole during a perfectly-executed hit-and-run, throwing a 2-0 change-up to get a pop-up to end an inning. Those 450-foot home runs are fun to watch, too, unless you are the person responsible for giving one up (thank you, Jason Varitek).

FAVORITE SPORTS TEAMS I grew up a die-hard Philadelphia Phillies fan (I remember watching the Phils win the World Championship in 1980 as if it were yesterday) and I remain a dedicated fan to this day. Being from south central PA, we’re all about Penn State. My wife graduated from the University of Virginia, so I find myself cheering for the Cavaliers, too, especially during March Madness. And, I have to root for my alma mater (Cornell Big Red) in good times and in bad.

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BANKING MID ATLANTIC | May/June 2019

“Win with class; lose with dignity.”

FAVORITE ATHLETES I grew up wanting to be Mike Schmidt.

Really, that entire 1980 Phils team was pretty special to me as a kid. As a pitcher, I always respected Nolan Ryan and his work ethic and his leg kick—talk about drive! My son loves the Milwaukee Bucks, and so I have grown to appreciate (really marvel at) the athleticism of Giannis Antetokounmpo. And, how can you not love former Nittany Lion and current New York Giant Saquon Barkley?

FAVORITE BANDS, SINGERS, SONGS I grew up on the fringe of that classic rock era—I could listen to The Who for hours and hours (or miles and miles). I have two boys, and as they have been growing up, they request that I sing one of three songs to them before they go to bed: Led Zeppelin’s “Stairway to Heaven,” Styx’s “Come Sail Away” or the Eagles’ “Hotel California.”

FAVORITE MOVIES, ACTORS, ACTRESSES There are a few movies that when they come on, I simply have to watch them: “The Untouchables”; “Midnight Run”; “Shawshank Redemption” and “Johnny Dangerously”. Will Ferrell makes me laugh—he just does. Check him out in HBO’s “Ferrell Take the Field”—hilarious! Jason Bateman and John Cusack are two other actors I find entertaining.

FAVORITE TV SHOWS “24,” “The Goldbergs,” “The Office,” “Taxi” and original “MASH” with Trapper John and Colonel Blake

WHAT TV SHOWS, IF ANY, HAVE YOU EVER BINGED ON TO CATCH UP? “Ozarks,” “Game of Thrones” and “Homeland” HOBBIES? Having 8- and 12-year-old boys, I enjoy spending time helping with their sports teams and watching them play baseball, basketball and everything in between. I hack up a golf course from time to time, but not as often as I would like.

BEST VACATION EVER I spent the summer of 1991 playing baseball in France, Sweden and Austria. I guess I would call it a “working vacation.”

It was a remarkable nine weeks traveling through Europe and meeting some truly wonderful people. I was 19 at the time, and so I would chuckle a bit when an old guy (old being 35) would come out to learn baseball for the first time. I tried to speak German to the teenagers, and they begged me to speak English so that they could understand me. Humbling to say the least!

ADVICE YOU GIVE TO OTHERS Win with class; lose with dignity.

SOMETHING CO-WORKERS DON’T KNOW ABOUT ME: I started college as a German major but quickly shifted to government/history after being placed in an intense 300-level literature course my freshman year. I lasted three weeks in that class. I was the only freshman and I’m pretty sure the only person in the class who wasn’t born in Germany, Austria or Switzerland.

American Government and European History were much more understandable.

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