The Daily Dividend

News, notes and insights from around the industry

MARCH 25, 2019
Intelligent Auditing
By Mark Loehrke, Editor, Financial Managers Society

Intelligent AuditingBig data isn’t just transforming the ways in which banks and credit unions understand and interact with their customers – it may soon help internal auditors more effectively uncover key trends and facts that may have otherwise gone undetected. By taking advantage of emerging self-service business intelligence tools, IA can expand its toolkit from mere questionnaires and sampling to mining entire data populations to now access data sources such as telecommunications, email, internet usage, security incident logs and electronic point-of-sale transactions – many of which may have previously been manual records.

The transition to big data is, of course, by no means a simple one – especially for institutions with limited resources. Not only are new tools required in order to extract and cleanse the kind of data that will ultimately prove useful in an audit, but staff members need to have the training to know exactly what they’re looking for and what it all means. But for those organizations willing to make the commitment, using advanced data analysis to uncover errors, fraud and potential cost savings holds the possibility to radically transform the internal audit function.

MARCH 22, 2019
CFOs and Data Culture
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

CFOs and Data CultureNew research shows that 96% of executives plan to increase their investments in big data, yet only 28% say they have a “data culture” in their organization. While no one disagrees that an effective data analytics program is a huge competitive and strategic advantage, many organizations still have not meaningfully adapted to a data-driven culture. And CFOs are uniquely positioned to drive that adaptation – here are a few ideas for how they can do it:

Foster agility
CFOs should embrace collaboration and flexibility and teach those values to their team. By breaking down silos and promoting nimble decision-making, this will help build a culture that adapts quickly.

Fill in the blanks
With the right team, the finance department can provide data-driven insights that will improve the organization as a whole. To get there, CFOs should be hiring to fill the knowledge gaps on their team, focusing on strategic know-how and technological savvy as well as traditional accounting and finance skills.

Rethink your methods

The old tools and methods may no longer be sufficient if you want major results, which is why CFOs should be reconsidering their approach to data. Finding the right people and upgrading their tool set can vastly improve the speed and quality of analysis.

As CFOs continue to evolve from number-crunchers to strategic leaders, staying ahead of the curve on data analysis is essential to decision-making. By leading the shift to a data-driven culture, CFOs can help their organizations stay relevant and successful for the long haul.

MARCH 21, 2019
Keeping Transformation on Track
By Mark Loehrke, Editor, Financial Managers Society

Keeping Transformation on TrackWhen it comes to strategic priorities for banks and credit unions in the coming years, digital transformation is undoubtedly high on most institutions’ lists. But aside from the very real questions of what exactly that means and how exactly it should unfold, it’s also important to remember that the move to a digital customer experience is, at its core, a business transformation like any other – which is why as plans are considered and budgets are debated, it’s also worth keeping in mind the basics of just how to keep a business transformation on track

Because big, exciting projects often have a way of losing steam as time marches on, leadership needs to take steps to ensure that everyone stays on the same page and maintains their enthusiasm for the work to be done. A few things to watch for include:

Communication breakdowns
The longer a project takes, the more likely it becomes that keeping everyone up to date on the latest developments, successes and, yes, even setbacks will fall by the wayside. Teams need to understand what’s happening and why, and everyone in the organization need to be occasionally reminded why this is all happening in the first place. Change is never easy – it’s that much harder when people feel like they’re not getting the full story. 

Motivational lags
It’s not enough to just to throw a bunch of deadlines out and expect people to remain enthused and engaged over the course of a long project – especially when things may not be going as planned. Make sure that tasks are clearly tied to the goals of the transformation in order to make sure staff members keep their eyes on the prize and understand their important role in the process.

Long haul
See both points above – most businesses don’t tend to throw the word “transformation” around lightly. Such undertakings are more complex and usually more difficult than a typical project, and by keeping the lines of communication open and making sure everyone stays motivated and productive, the organization will have a better chance of seeing a transformation through to completion.

MARCH 20, 2019
Customers Want Better Security
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Customers Want Better SecurityFor most financial institutions, building security processes for mobile and online banking involves walking a delicate line between keeping customers’ data safe while not overly inconveniencing them. While all customers want to know their information and finances are secure, many aren’t willing to go through a three-step authentication process every time they check their balance.

But new research from fintech provider Entersekt shows that people may be more willing to jump through hoops for increased security. Some major takeaways from the survey:

Many respondents were interested in an extra step of approval before a transaction goes through in their account. 90% of U.S. adults said they’d like the ability to approve some transactions before they’re completed, while 71% would prefer the ability to approve all transactions.

A smaller percentage thinks that approval should come via biometrics: 22% said they’d like to be able to use fingerprint ID to approve a mobile-initiated transaction, and 7% favor a facial ID for the same purpose.

One of the main reasons customers want their institution to ask their approval is to flag activity that could negatively impact their credit score, with 80% expressing a desire to be notified at point of sale if their credit score would take a hit because of the transaction in question.

MARCH 19, 2019
FMS Perspectives: Facing a Pause, Bank Managers Must Stay Vigilant
By Mark Loehrke, Editor, Financial Managers Society

Facing a challenging operating environment characterized by rising funding costs, fully-enriched balance sheets and tightening risk-adjusted returns, bankers must work hard to focus on the fundamentals if they hope to deliver sound, profitable growth. 

In his new FMS Perspectives piece, Facing a Pause, Bank Managers Must Stay Vigilant, Scott Hildenbrand of Sandler O’Neill + Partners offers up eight helpful best practices for creating franchise value late in the economic cycle – from aligning incentives with desired outcomes to pricing loans for late-cycle risk – and stresses the importance of proactively communicating strategic and tactical shifts with all stakeholders.

MARCH 18, 2019
FMS Webinar: How to Measure the Cost of Technology in Banking
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

FMS Webinar: Strategic Implications of CECLAccording to FMS research conducted in 2018, 75% of community institutions consider technological innovation an important factor for growth. But with approximately 20% of their operating budgets going to technology, most still have no sustainable technology cost measurement system.

If this sounds like your institution, join us this Wednesday, March 20, for the live webinar session “How to Measure the Cost of Technology in Banking.” Jane Blake, president of MacDougall & Black, Inc., will share measurement techniques, how to identify useable data, unit cost controversies and more – helping you to get a better handle on just how much all of that innovation is costing your bank or credit union. 

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

MARCH 15, 2019
The Reality of AI
By Mark Loehrke, Editor, Financial Managers Society

For many banks and credit unions, the notion of artificial intelligence (AI) probably fits right alongside other seemingly far-off sci-fi concepts like jetpacks for employees and robot tellers. But the truth is that legitimate uses of AI to improve their day-to-day operations may be a lot closer than they think.

As opposed to being some wild, far-off technological concept, most of what is considered AI these days is really just the process of applying pre-defined algorithms to a pile of data and using the results to make decisions or recommendations. And that certainly sounds like the kind of thing that a bank or credit union – with the right training and processes in place – could start using in the here and now to improve its efficiencies and perhaps uncover some cost savings. 

The key, as with any other dive into technology, is to have a solid plan in place before going down the road of AI. What problem are you trying to solve? How will AI help address that problem? Do you have the right people and expertise in place to get started? 

The institutions that begin to explore these questions now and start to get a better understanding of the small steps they can take to wade into AI (as opposed to waiting around for some big splash) are going to be far ahead of the game once the technology becomes standard in the industry – while those that hesitate and wait to see how things pan out may be too far behind to catch up.


Mark Loehrke
Editor and Director, Publications and Research

Danielle Holland

Hilary Collins
Specialist, Publications and Research