The Daily Dividend

News, notes and insights from around the industry

MAY 17, 2019
Why Airbnb Should Matter to Financial Institutions
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Why Airbnb Should Matter to Financial InstitutionsOver the past two decades, technology has radically changed almost every industry. From Amazon changing how people shop, to Uber changing how people get from place to place, to Airbnb changing how people vacation, digitally driven companies have laid waste to traditional industries. But there’s an argument to be made that financial institutions aren’t taking the potential for radical digital change in their industry seriously enough.

Marriott, the largest hotel chain in the world, has just launched a Homes & Villas option to compete with Airbnb. It’s become clear to even this hospitality giant that customers are increasingly unwilling to spend big bucks on a cookie-cutter hotel room like they used to. Why book a room when you can get a whole home for a lower price? So Marriott is pouring money into competing with a company that has few assets other than its platform.

You could compare Marriott’s Homes & Villas to Marcus, Goldman Sachs’ digital banking platform, which has seen success and widespread adoption in its early days. Why go through the process of going to a branch for a CD when you can get it from your phone – and get a better rate to boot?

Financial institutions need to start approaching digital transformation with a fresh perspective and a sense of urgency – maybe taking a page from Marriott’s book.

MAY 16, 2019
The 2019 FMS Forum: CECL and Its Implications
By Mark Loehrke, Editor, Financial Managers Society

One of the looming challenges facing banks and credit unions is the continued march toward implementation of the Current Expected Credit Loss (CECL) accounting standard, which is why this major change will figure into several sessions on the program for The 2019 FMS Forum.

Dan Morrill of Wolf & Company and Ryan Henley of Stifel will be hosting one of these presentations, a Monday afternoon session entitled CECL and Its Implications Apart from Simply the Reserve, as they dig into the many ways the new standard will impact institutions in areas ranging from loan pricing models to risk-based capital to broader portfolio management.   

FMS: How will this session differ from other CECL presentations?

Morrill / Henley: We will be covering many issues outside of just calculating the reserve. We will take a look at reserve trends by asset class, how CECL may impact loan pricing and some implications that may result from acquisition accounting – all with an eye toward the impact on the capital stack.  

FMS: Why are the particular aspects of CECL you’re covering so important for institutions to consider?

Morrill / Henley: With so much of the focus on the CECL calculation, some of the issues we’re covering may be things that an institution hasn’t had time to focus on. We’re hoping to bring some of these to light.  

FMS: What are some of the actionable takeaways you expect audience members to leave with?

Morrill / Henley: Hopefully some strategies on managing the balance sheet, including having the appropriate mix of securities and loans based upon capital constraints and thoughts on holding or disposing of certain loan portfolio types based upon the unique risk-adjusted returns under CECL. In addition, audience members may find some practical solutions to managing the capital stack.

Be there for this session and all of the other great educational and networking opportunities in Boston – register today!


MAY 15, 2019
How Biometrics Can Change Branches
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

How Biometrics Can Change BranchesNo longer just the stuff of sci-fi or spy films, biometrics are now routinely used by people unlocking their phones with a fingerprint or their face. Now these technologies are poised to enter the brick-and-mortar branch – here are three ways biometrics could revolutionize the in-branch customer experience.

No surprise here – biometrics could offer revolutionary improvements to ID verification. Fake IDs are a common tool of fraudsters, but tellers may soon be scanning fingerprints or retinas rather than squinting at an old photo on a driver’s license.

Biometrics could offer a stronger layer of security for lockboxes or vaults. While the bank vault isn’t quite the favorite heist target it used to be, financial institutions could always use another layer of protection for their most valuable assets, like customer data.

Improved Self-Service
Customers are increasingly interested in self-service, and biometrics could help make the experience both more secure and more personalized. Smart ATMs are more popular than ever, and biometrics could improve the experience while eliminating the kinds of fraud that often take place at ATMs.

Biometrics could all but end many of the most common types of fraud and make daily tasks simpler and easier for employees and customers alike, but the technology has its weaknesses as well. Because biometrics involve accessing an enormous database of personal information, that database will create security concerns of its own. 

But within the next few years, using a fingerprint to order new checks or an iris scan to access a safe deposit box might seem as normal and routine as entering a four-digit PIN.

MAY 14, 2019
Constructive Criticism
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Constructive CriticismGiving feedback is an important part of leadership, but doing it the wrong way can be worse than not doing it at all. Here are a few dos and don’ts for leaders looking to offer constructive criticism.

DON’T be harsh
Even the heaviest critiques should be delivered respectfully and carefully. Harsh feedback can kill motivation and create a defensive attitude from the recipient.

DO talk about weaknesses
Leaders might worry that any negative feedback could inhibit growth, but research shows that feedback drives improved performance. Many successful leaders can look back on their own career paths and see times when constructive criticism drove them to improve.

DON’T focus on the negatives
Constructive criticism should be accompanied by positive feedback whenever possible. Coaching is as much about developing your team members’ strengths as working on their weaknesses.

DO use specifics
Research shows that delivering feedback based on specifics is more effective and less likely to provoke a defensive reaction. Leaders should point to specific events and behaviors rather than speaking in generalities – this goes for positive feedback too.

DON’T tell them how to solve the problem
After negative feedback, determining how to course-correct should be a conversation, not a proclamation. Ask questions and collaborate on a solution rather than telling a team member what to do to fix it.

MAY 13, 2019
How Would You Like Your Meet? Well Done.
By Mark Loehrke, Editor, Financial Managers Society

It’s Monday – time to check your calendar for the week and total up the number of hours you’ll be spending in meetings over the next five days. Well, that was probably depressing.

Of course, while meetings may not be anyone’s idea of a good time, they can be time well spent. Even in this age of constant communication and uninterrupted connectivity, there’s often still something to be said for the decision-making dynamic that can come from actually getting a group of people together in one place to share viewpoints and engage in smart, productive debates.

But how many meetings truly play out that way? Research from McKinsey & Company suggests not too many. What’s to blame for ineffective meetings? In most instances, McKinsey theorizes it’s a matter of claiming a spot on the calendar before answering three key questions:

Should we even be meeting at all?
Long-standing meetings, in particular, have a way of becoming little more than a tradition that loses effectiveness over time. What decisions are emerging? Is there a more efficient way to share the information without commandeering an hour (or more) of everyone’s precious time? When obligation trumps actual need, it may be time to scale back frequency or even eliminate those recurring dates.

What is this meeting for anyway?
While the topic of a particular meeting may be clear, the goal of the meeting is often not. Are these specific questions to be discussed or decisions to be made? When the meeting ends, will everyone be able to look back and say they accomplished what they set out to do with that hour? If what they set out to accomplish going in isn’t clear, the answer will probably be no. And sure enough, another meeting will be scheduled to try and remedy that. Better to have a solid idea of what you’re hoping to get done, and then send folks on their way with specific assignments, action steps and responsibilities.

What is everyone’s role?
Just as frustrating as a rudderless, meandering meeting is one in which nobody seems to have a clear idea of their role. Even with an iron-clad agenda, it’s important to make sure everyone is clear going in as to what they’re there for – be it making decisions, offering advice/recommendations or standing ready to execute/implement the decisions at hand.

Even a meeting that answers all three of these questions going in can still go off the rails, of course – they’re funny that way. But having a better idea of these answers will certainly give you a better chance of enjoying a meeting that is more productive than it is mind-numbing.

Now get going – you’re probably late for a meeting.

MAY 10, 2019
Achieving Cybersecurity Maturity
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Every institution has a cybersecurity program, but some are still in gangly adolescence — making mistakes and hopefully learning from them — while others have reached adulthood, with the attendant strength and wisdom. New research from Deloitte shows that mature cybersecurity programs share distinct traits, with three key elements distinguishing the strongest programs from the rest.

Leadership and the board are on board
The best cybersecurity programs have intense involvement from the highest levels of leadership, wherein executives and directors pay cybersecurity risks the same attention as they do other organizational risks. Further, the survey found that companies with mature cybersecurity programs invest heavily in organization-wide training and awareness.

Cybersecurity isn’t IT’s job
For organizations without a mature cybersecurity program, protecting against hackers and other threats is an IT job, and IT often reports to a chief information officer or chief compliance officer. However, organizations with more mature programs are increasingly separating cybersecurity from IT and even compliance, instead aligning their cybersecurity teams with operations and risk.

Strategy and cybersecurity go hand-in-hand
Daily business functions are ever more dependent on technology, and a cybersecurity breach can bring a financial institution to a grinding halt. Organizations with the best cybersecurity programs imbed cybersecurity experts at every level of strategic and transformational initiatives.

As anyone over the age of 21 can tell you, maturity isn’t a single point in time, but rather an ongoing process. That’s why even (and especially) the best cybersecurity programs focus on continual growth and adaptation.


MAY 9, 2019
The 2019 FMS Forum: Finding the Right IA Mix
By Mark Loehrke, Editor, Financial Managers Society

The 2019 FMS Forum is right around the corner, and in the run-up to Boston we continue to check in with some the great educational presenters that will be on hand next month. 

On the Internal Audit and Risk Management track, Grant Wheat will be drawing on his experience as VP of internal audit at Landmark Credit Union to discuss the process of finding the right balance of internal employees and third-party resources – and the costs and benefits of utilizing these resources – to complete a designed audit plan in his Monday morning breakout session, Third Line or Third Party: The Consideration of the Right Mix of Internal and External Resources for Internal Audit.

FMS: Can you offer a brief sneak peek of what you plan to cover in your session?

Wheat: My focus will be on some the key thoughts and decisions that go into addressing the staffing needs of an institution. The goal is to hopefully help some other people that might be experiencing these types of issues.

FMS: Why are the internal audit decisions you’re highlighting so important for banks and credit unions right now?

Wheat: Because internal audit has become such an important part of risk management and compliance, evaluating the costs and needs in this area is important for strategic planning.

FMS: What do you want attendees to leave with?

Wheat: The actionable item is one that should come from all internal audit – a potential answer to the simple question “is there a better way to do this?” If people find a way to solve that question, I think this presentation will have been time well spent.

Be there for this session and all of the other great educational and networking opportunities in Boston – register today!


Mark Loehrke
Editor and Director, Publications and Research

Danielle Holland

Hilary Collins
Specialist, Publications and Research