The Daily Dividend

News, notes and insights from around the industry

SEPTEMBER 20, 2019
The CIO-CFO Relationship
By Mark Loehrke, Editor, Financial Managers Society

The CIO-CFO RelationshipThere’s been plenty of talk about the changing role of the CFO, and how he or she is often more involved in IT strategy and decision-making than ever before. But in those institutions with a full-time CIO, the chain of command on IT spending can be a little more complicated. Indeed, in most cases, the CIO is no longer seen as the person who simply buys PCs and servers, but rather a trusted decision-maker who can help to drive the institution’s strategic initiatives. So how does that affect the CFO?

Given the shift in perception and responsibilities, it’s more important than ever for the CFO and CIO to work out the parameters of their relationship, especially since the CIO will certainly be an integral figure in any digital transformation happening within the bank or credit union. In other words, communication and collaboration between these two roles must now be seen as a key priority going forward.

For CFOs, this means finding common ground and opening up the discussion to another important strategic voice, as opposed to simply leaning on the CIO for technical advice. On the CIO side of the equation, meanwhile, the focus should be on trying to shine a spotlight on how potential tech innovations and outlays will not only deliver a better customer or employee experience, but also how that will translate into value for the entire institution.

With these two positions working toward a common goal, the institution can benefit from the best of both worlds.
 

SEPTEMBER 19, 2019
FMS Webinar: BOLI: From Fundamentals to High Yield Potential
By Hilary Collins, Assistant Editor, Financial Managers Society

FMS Webinar: Strategic Implications of CECLPersistent low interest rates have resulted in some in-force BOLI policies losing their maximum efficiency. But even if your policies are optimized for yield, they may be lagging peers. Should you consider a Section 1035 exchange?

Review the pros and cons of an exchange on Wednesday, September 25, as Scott Richardson of IZALE discusses how to get the most from your BOLI program in his live session “BOLI: From Fundamentals to High Yield Potential.” 

This webinar is complimentary for FMS members. (Not a member? Join today!)

 

 

SEPTEMBER 18, 2019
The Risks of M&A
By Mark Loehrke, Editor, Financial Managers Society

The Risks of M&AAn upcoming story for the November-December issue of forward on the state of the M&A market for banks and credit unions had us poking around the web on the topic, leading to this interesting piece about some of the less-heralded risks of M&A. While there’s nothing necessarily new under the sun here, it serves as a worthwhile reminder of some of the “hidden” issues that often arise as potential deals work their way through the due diligence process.

In fact, due diligence (or lack thereof) is kind of the thrust of the piece – because once the financial numbers start getting thrown around in most deals, the less-glamorous potential risks often get buried under starry-eyed visions of growth, efficiency and synergy. The wake-up call here is that some of those risks are likely just as dangerous to a potential deal – if not more so – as any poor financial data might be. 

So where are these hidden risks – those that go beyond common areas of financial concern? Well, for one thing, they’re probably not as hidden as one might believe. One of the common areas that continues to get short shrift, for example, is cyber diligence. While companies now routinely survey the IT capabilities and redundancies of a potential acquisition, they may not be paying as much attention as they should be to things like a target’s cybersecurity and data privacy capabilities. The issue, of course, is that once a deal goes through, the target’s problematic areas become your problematic areas – and the same goes for troublesome IT vendor contracts. Beyond IT, additional M&A risks may lurk in an acquirer’s ability to retain key employees or successfully integrate two disparate corporate cultures. 

Risks like these generally don’t generate enough concern to drown out the drumbeat of a deal that looks good from a financial standpoint, but they’re exactly the kind of unforeseen issues that can upend a company’s best-laid M&A plans down the road. And they offer yet another reminder that in the search for a good deal, due diligence cannot be shortchanged.
 

SEPTEMBER 17, 2019
The Innovation Index
By Hilary Collins, Assistant Editor, Financial Managers Society

The Innovation IndiexIt’s always helpful when making strategic decisions to have a feel for what your peers are doing in the same areas. That’s part of the reason why we put out our own proprietary industry research, to help banks and credit unions benchmark their efforts against those of their peers. 

Along those same lines, ACI Worldwide and Ovum now publish a global Culture of Innovation Index to track the various approaches to innovation and business transformation across sectors globally, employing an interactive self-assessment tool to help users see how their organizations stack up. With around 1,200 enterprises surveyed, here are a few of the interesting takeaways from the research as a whole:

96% of retail banks and 94% of corporate banks globally report that they will develop new and innovative services on top of their investment in real-time payments in 2019 and 2020
82% of corporate banks, 74% of retail banks and 84% of fintechs globally plan to move mission-critical workloads into public cloud infrastructures in this year and the next
Companies in the U.S. are polarized between “laggards” and “trailblazers,” with 34% falling into the former category and 16% into the latter, showing a growing gap between more traditional merchants and digital natives
Innovation in payments is focused on areas designed to enhance the customer experience – new payment options, a focus on mobile (especially in-store) and a stronger, more seamless cross-channel payment experience
 

SEPTEMBER 16, 2019
FMStv: A More Efficient Month-End Close
By Mark Loehrke, Editor, Financial Managers Society

FMStv: The Importance of a CECL Implementation RoadmapAre the important strategic projects in your institution getting enough attention? Or are you constantly pushing off those longer-term and bigger-picture items because your staff is bogged down by the inefficiencies of common tasks like the month-end close?

In our latest FMStv episode, A More Efficient Month-End Close, Nancy Wu of SkyStem presents a step-by-step process to automate and streamline your closing process in order to free up resources for more strategic and variable work.
 

SEPTEMBER 13, 2019
Why Real-Time Data Matters
By Hilary Collins, Assistant Editor, Financial Managers Society

Why Real-Time Data MattersRemember the days when checking your balance could only be done when your bank or credit union’s doors were open? Now customers have instant access to their accounts 24/7, as institutions have evolved over the years to deliver information to their customers and members in real time.

In some areas, however, financial institutions still suffer from data lag, often from slow or outdated legacy systems. In a world where Uber can summon a car nearly instantly and Amazon can drop whatever you can imagine at your door within 24 hours, anything slower than real-time data stands as a significant competitive disadvantage. Here are three ways that real-time data can make a big impact:

Enhanced customer experience
At this point, allowing your customers to see their balance online at any time is expected, so it takes a real-time data flow to be able to build a customer experience that will truly impress. Research shows that leaders in customer experience achieve a level of business growth roughly double the level achieved by non-leaders.

Improved decision-making
Data analysis has been touted as essential to making sound business decisions for years, but real-time data allows for dynamic decision-making driven by what’s happening now rather than what happened the last time someone pulled a report for the quarterly meeting.

Operational advantages
Almost everything a financial institution does can be done better with real-time data: portfolio optimization, fraud protection, wealth management, regulatory compliance...the list goes on. Recently, a major U.S. bank moved from performing fraud detection as an overnight batch process into a one-second window as the customer swipes his or her card. Credit card customers, merchants and the system as a whole benefit from greatly reduced chargebacks and lost sales.

While the advantages of real-time data are clear, getting from basic data analysis to a real-time data flow isn’t easy. For larger, older, traditional institutions, it can be an incredibly long and difficult process to pivot to constant, immediate feedback. But with such unquestioned benefits, it’s definitely worth exploring.
 

SEPTEMBER 12, 2019
FMS Webinar: Spreadsheet Risk Management
By Mark Loehrke, Editor, Financial Managers Society

FMS Webinar: Strategic Implications of CECLThanks in large part to the power and flexibility they provide, spreadsheets have become an integral tool for businesses of all sizes. But as more departments throughout an organization generate more and more spreadsheets, this unchecked proliferation can also present a significant risk.  

Discover how growing spreadsheet creep in your institution can impact your business on Wednesday, September 18, as Jeremy Condie of ClusterSeven discusses how to better manage the risks in his live session “Better Spreadsheet Risk Management for Better Business Management.” 

This webinar is complimentary for FMS members. (Not a member? Join today!)

 

 



Contributors


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




Hilary Collins
Assistant Editor and Publications Manager
Email: hcollins@FMSinc.org