The Daily Dividend

News, notes and insights from around the industry

SEPTEMBER 20, 2018
The Value of Relationships
By Mark Loehrke, Editor, Financial Managers Society
Most people understand the value of relationships in their personal lives, but the business value of relationships doesn’t always get enough attention. Sure, banks and credit unions understand the importance of holding onto customers over the long term, but they don’t necessarily always prioritize building and maintaining those relationships over other, more concrete value metrics like share of wallet. 

Put simply, a solid, long-term customer is likely to hold more products at an institution, and the more products one holds, the less likely he or she is to consider switching institutions just because of a rate special or a new technology. But working up to that multi-product customer takes time and sustained effort, which is sometimes where impatience rears its head as easier, more immediate initiatives beckon.

Again, none of this is new for most banks and credit unions, especially at the community level, where the customer relationship is central to the business model and often the lynchpin of differentiation. Nevertheless, it’s always worth a reminder that no matter how many bells and whistles an institution rolls out, the ultimate key to success is often the amount of attention paid to not just bringing new customers in, but keeping them happy over the long term. 

For another take on just how important those customer relationships are to a healthy bottom line, be sure to join us on September 26 for the latest FMS webinar Relationship Profitability: The Holy Grail.
 

SEPTEMBER 19, 2018
Cybersecurity Confidence High
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society
Even as the number and complexity of cyber attacks continue to rise, new research from Accenture shows that financial institutions are holding their own amid the barrage. While the number of attacks has doubled since 2017, institutions have successfully stopped 81% – up from 66% a year ago.

But while this type of success may have financial institutions feeling relatively secure – 81% reported being confident or extremely confident in their ability to resume business after a breach – Accenture warns against getting too comfortable. While these latest findings signal marked improvement, the researchers also found that banks and wealth management services are less likely to invest in cutting-edge cybersecurity measures, such as AI or blockchain. In fact, only 38% of financial institutions surveyed intend to invest in automating their cybersecurity efforts, while 43% plan on investing in AI and machine learning.

So even as financial institutions take a little time to congratulate themselves on a job well done thus far, they should also keep in mind that a cybersecurity plan should not be static. Hackers are getting better every day, meaning institutions need to work just as hard to keep up with the latest threats and protective technologies out there.

 

SEPTEMBER 18, 2018
An Unorthodox Climb
By Mark Loehrke, Editor, Financial Managers Society
An Unorthodox ClimbThe climb up the corporate ladder used to be a fairly straightforward endeavor – simply identify the position you wanted and follow the linear path up the organizational chart until you got there. But as technology and shifting consumer preferences continues to reshape many companies, that path may not be nearly as clear as it once was.

In many nimble (read: successful) organizations, the skills needed to take over the top jobs are constantly shifting, which necessitates a shift in how professionals make their way up the evolving corporate ladder. Here are a few things to keep in mind:    

Be aware of the possibilities  
The next box on today’s org chart may not be the best path to your goal. How is the organization changing, and where will the best opportunities lie in the coming years? 

Identify new opportunities
In the action step tied to the above advice, find a way to best take advantage of those coming opportunities by adjusting your skill set or exploring an entirely new part of the company. For example, maybe your tried-and-true finance skills need the added boost of some IT experience in order to make you the best future CFO candidate for the institution.  

Get help
Sometimes the sage advice of old can prove to be relatively timeless. Every path to leadership still includes plenty of helping hands along the way – and at a time when the path may be less explicit than ever before, that type of guidance can prove even more crucial. You may need additional education or new connections in order to get where you need to go, so be sure you know who can help you get there.

Build your network
A good mentor is another asset that never goes out of style, no matter how much the ladder at your company may shift – one thing that may have changed, though, is where that mentor comes from. It may not be the person you might have targeted just a couple of years ago.
 

SEPTEMBER 17, 2018
World of Blockchain
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

The World Bank is financing blockchain experiments, seeing it as a new way to empower people and reduce poverty.

In a partnership with Consensys, World Bank is incorporating blockchain into an existing educational pilot program, as well as using it to gain insight into agricultural and pharmaceutical supply chains. However, the organization’s most concrete blockchain project is the cryptocurrency-backed bond it issued in partnership with an Australian bank, which so far has raised $80 million.

The goal of such blockchain bonds, according to a World Bank spokesperson, is to expand ease of access and increase financial transparency. This bond in particular is serving as an experiment that the organization hopes will lead to more and better uses of blockchain technology in international finance.
 

SEPTEMBER 14, 2018
The Transformation of the CFO
By Mark Loehrke, Editor, Financial Managers Society
New research from Accenture confirms what many FMS member CFOs have been telling us for years – their role is changing

While the numbers they deliver still matter, the CFOs in many organizations find themselves in ever greater demand as strategy drivers and change catalysts, with more than 8 in 10 in Accenture’s global survey seeing their ability to identify and target areas of new value across the business as a key responsibility. Calling the CFO “the CEO’s most trusted advisor,” the report points to the data to identify three priorities that stand out for the role in today’s business environment:

Digitize finance and harness the power of data
Lead digitization efforts
Develop future finance talent

In light of these new expectations and realities, the report also highlights the top five skills for today’s CFO:

Long-term strategic thinking
The ability to identify, anticipate and manage risk
Insight into and understanding of new technologies
The ability to identify, hire, develop and place the best talent
An embrace of agile and responsive ways of working       

How can CFOs best address the above priorities and develop these crucial skills? The report’s authors offer three recommendations:

Shift focus away from process by aligning finance activities to business outcomes and leveraging automation and analytics to gain more insights. 

Sharpen data storytelling skills to better educate, coach and communicate data outcomes to stakeholders and fellow executives, thus helping to forge new strategies across the organization while influencing and guiding existing business units.

Step outside of the finance function to find new ways to allocate resources, leverage skills and measure results.
 

SEPTEMBER 13, 2018
Cybersecurity Time
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Cybersecurity TimePreventing and surviving cyber attacks is a major business concern in 2018, with breaches holding the potential to exact enormous costs in terms of both resources and public trust. While most executives probably have a pretty solid understanding of the new world of cybersecurity and what to do when their institution is hacked, sometimes looking at things from a different angle can help. For example, it may be beneficial to start thinking of your institution’s defenses in terms of a concept known as cybersecurity time, which is comprised of protection time and exposure time. 

Protection time is the length of time an organization’s security can hold out against a cyber attack. That is, when all resources are brought to bear – all systems, procedures and personnel – how long can the institution protect itself from a cyber incident?

Exposure time, then, is the length of time it takes the organization to detect, contain and recover from a cyber attack. In the mathematics of cybersecurity time, if a company’s protection time is long enough and its exposure time short enough, it should be able to act quickly to protect information and other assets from hackers.

Protection time can be lengthened by spending more on barriers and detectors, of course, but it is limited not only by budget, but also by how business is conducted in 2018. Institutions have to balance the need to protect systems and information with the need to serve a customer base looking for fast, transparent service. While adding complex security procedures and firewalls may work to lengthen protection time, it may also frustrate customers and employees.

On the other side, institutions can focus on shortening exposure time. Assuming a cyber attack happens (and you really should be assuming that), how can your institution find and neutralize the threat as quickly as possible? A good cybersecurity plan should focus not only on strengthening fortifications against attacks, it should also work on achieving a speedy and effective shut-down for any bad actors that worm their way through.

Understanding cybersecurity time may not dramatically change an institution’s procedures, but it can help provide a helpful framework for measuring how effective they are.
 

SEPTEMBER 12, 2018
FMS Webinar: Relationship Profitability
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

FMS Webinar: Strategic Implications of CECLCan you identify your most profitable customer relationships?

On average, only 20% of relationships are creating economic profit, and only 1% of those create most of that value, yet many institutions cannot accurately rank their relationships based on profitability. A recent survey FMS conducted with Kaufman Hall showed that 91% of institutions thought they should be doing more to leverage profitability in their decision-making process. 

Join us on Wednesday, September 26, for Relationship Profitability: The Holy Grail, as Ken Levey and Roy Berelowitz of Kaufman Hall examine better ways to manage and analyze customer relationships, offering practical strategies for measuring progress towards strategic goals, how to price new business and much more.

As always, this webinar is complimentary for members. (Not a member? Join today!)

 



Contributors


Mark Loehrke
Editor and Director, Publications and Research
Email: mloehrke@FMSinc.org 



Danielle Holland
President/CEO
Email: dholland@FMSinc.org 




Hilary Collins
Specialist, Publications and Research
Email: hcollins@FMSinc.org