The Daily Dividend

News, notes and insights from around the industry

JANUARY 18, 2019
Back in the Thicket
By Mark Loehrke, Editor, Financial Managers Society

While technology was supposed to signal the death of the bank and credit union branch years ago, branches still appear to have quite a bit of life as we enter 2019. In fact, even as institutions continue to ramp up their online and mobile offerings while trying to pare back their brick-and-mortar networks, customers retain a somewhat confounding connection to the physical presence of a bank or credit union branch.

This is not to say, of course, that they’re visiting those branches with the kind of frequency they once did. But considering how many death-of-the-branch pieces have been written over the past several years, it may be surprising to learn that nearly 64% of consumers still visit a physical branch at least once a month. While many of these individuals likely make use of their institution’s online or mobile services as well, they nevertheless still find the time to walk through the branch doors every few weeks. In other words, while they may not need the branch the way they once did, they apparently want to make that physical visit from time to time. 

Does this portend a dramatic rebound in the viability of the branch to come? Probably not. While the rate of branch closures slowed in 2018, banks and credit unions will continue to be on the lookout for ways to cut costs – and brick-and-mortar branches sure seem like an obvious place to start. But what the staying power of the branch does demonstrate is that customers still like to have the option of talking with someone from their institution face to face every once in awhile, and still like to make the association between their bank or credit union and a physical place. 

The key to pleasing these customers going forward, then, will likely lie in an institution’s ability to hit that sweet spot of winning on both the digital and physical fronts – a strategy that is far easier said than done, of course.

JANUARY 17, 2019
Thought Leaders
By Mark Loehrke, Editor, Financial Managers Society

Thought LeadersWith the flurry of “what to expect in 2019” think pieces starting to subside with the year now well in motion, four MIT Sloan faculty members are taking a longer view, outlining several disruptive forces they believe have the potential to upend business for years to come.       

The Key to Effective Leadership
Senior lecturer Douglas Ready believes the nature of work is being fundamentally changed by technology, demographics, geopolitical developments and shifting cultural norms, requiring leaders who can foster an environment of trust during a period of tremendous upheaval. 

The Limitations of Big Data
While big data can provide leaders with insights that help them drive performance, cut costs, increase profitability and analyze their customer base, assistant professor of finance Maryam Farboodi says these benefits are often biased toward larger companies with more data and more resources. Smaller organizations, then, need to be aware of this imbalance and double-down on their data efforts to help close the gap. 

The Ethics of AI
As with most truly revolutionary technology, much of the debate swirling around artificial intelligence involves the gap between how AI can be used and how it should be used. With meaningful AI still far off for many smaller companies, this type of ethical dilemma may not be top of mind, but digital economy expert Thomas Davenport says it’s just a matter of time before these discussions filter into almost every organization’s boardroom.  

The Ubiquity of Dashboards
Every finance and accounting pro knows the value of a good dashboard, but digital economy research fellow Michael Schrage says the future of the dashboard is a “KPI everywhere” climate – think smart watches, mobile phones and home digital assistants. Is there such thing as too much information? We may soon find out.

JANUARY 16, 2019
What's Ahead for Blockchain
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

What's Ahead for Blockchain2018 was full of dizzying heights and horrifying plunges for cryptocurrencies and blockchain companies. But what does 2019 have in store for the new technology, which some believe could be a disruptor on the level of the internet? Blockchain consultant Ed Sappin has a few ideas on what to expect in the coming year.

Most blockchain companies will fail
Some cryptocurrencies and blockchain groups will go under because they just couldn’t hack it, while others will die because they’re bad actors and their scams have been uncovered. Industry insiders estimate that fewer than 5% will actually turn out to be major players.

Blockchain users will multiply
The number of developers and “miners” on blockchain networks continues to rise steadily, a clear sign that the usefulness of blockchain is not necessarily tied to the rise and fall of cryptocurrencies. Established players, including big banks, are investing in the technology as well, further boosting its legitimacy and potentially uncovering new uses.

Regulators are stepping in
The SEC and DOJ are promising more substantial enforcement measures against bad actors in the blockchain arena, a move that will further legitimize the blockchain world. This could also hasten the fall of questionable players that are sullying the reputation of the technology.

A year of development
Sappin says that 2019 will be “evolutionary, not revolutionary” for blockchain, as more functional products and prospects for real value start to emerge. While the headlines might not be as eye-catching as those of 2018, the year ahead promises to be a good one.

JANUARY 15, 2019
By Mark Loehrke, Editor, Financial Managers Society

If the results of our latest Quick Poll on priorities for 2019 are any indication, plenty of FMS members are going to be working through their plans for CECL implementation in the year ahead. For these institutions, a new Q&A document from the FASB may prove helpful.

In this new release, FASB staff covers a number of issues raised over the past several months, particularly in regard to the weighted average remaining maturity (WARM) method for estimating credit losses, which uses an average annual charge-off rate as a foundation for estimating the credit losses for the remaining balances of financial assets in a pool on the balance sheet date. The Q&A provides guidance on the use of WARM in relation to CECL, including examples of how it could be used. 

Presumably, more of these types of guides will be on the way from FASB as we get closer to implementation deadlines for the new standard. In the meantime, for more information and advice on CECL, be sure to check out the latest additions to CECL Central.

JANUARY 14, 2019
FMS Quick Poll: 2019 Priorities
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

FMS Quick Poll: 2019 PrioritiesWhen we were putting together “The War on Deposits” cover story for the March-April 2018 issue of FMS forward, it became clear that concerns about deposit growth for community institutions would not be subsiding quickly. Almost a year later, when we took the pulse of our membership about top priorities in 2019, it remains a major challenge.

Read all about it in our latest Perspectives piece, “FMS Quick Poll: 2019 Priorities,” as we delve into the areas that your fellow members plan to focus on in the coming year. From technological issues to CECL implementation, your peers at institutions across the country shared their most pressing goals for 2019 – take a look to see how your goals measure up.

JANUARY 11, 2019
FMS Webinar: 2019 CFO Outlook
By Mark Loehrke, Editor, Financial Managers Society

FMS Webinar: Strategic Implications of CECLIt’s no secret that the CFO role at banks and credit unions has been undergoing a significant shift over the past several years. What was once a job focused largely on simply “crunching the numbers” has developed into one of the key strategic posts within the institution, with a hand in everything from technology to risk management.

Whether you’re a current CFO or just looking to make that leap someday, join us for an FMS webinar on Wednesday, February 6, as Ken Levey and Bryan Ridgway of Kaufman Hall delve into the results of their recent executive survey in “2019 CFO Outlook: Insights and Recommendations.” This is a terrific opportunity to learn more about where the CFO role stands today when it comes to things like performance analytics and budgeting priorities, and where it may be headed in the near future.

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


JANUARY 10, 2019
Slow Growing
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Slow GrowingAfter the heady pace of growth in 2018, a panel of chief economists expects a slower economic growth rate in 2019. A new outlook from the Economic Advisory Committee of the American Bankers Association predicts that economic growth will slow to 2.1% this year, and drop to 1.7% in 2020, making the current expansion the longest in history. Among the other predictions they offered:

Unemployment is predicted to decline further, dropping to 3.5% by the end of the year, and average earnings should get a boost.

The housing market is expected to take a hit from rising rates, with the growth in home prices estimated to drop to 4.4% nationally.

Surprisingly, they don’t foresee a recession in the next two years – but they do note that the uncertainty surrounding market volatility, trade tensions and other factors will take its toll.


Mark Loehrke
Editor and Director, Publications and Research

Danielle Holland

Hilary Collins
Specialist, Publications and Research