The Daily Dividend

News, notes and insights from around the industry

JANUARY 14, 2020
The Future of Blockchain
By Hilary Collins, Assistant Editor, Financial Managers Society

The Future of BlockchainBitcoin fans claim its price will skyrocket in 2020, and though the blockchain job boom is down slightly, demand is still strong. How will this roller-coaster industry fare in the coming year? An expert shares a few of his predictions:

Blockchain will speed up
Blockchain today can be compared to dial-up internet. The blockchain of tomorrow will be like broadband. As clunky and time-consuming processes speed up, the global adoption of blockchain will kick into overdrive.

Supply chain is the future of blockchain

Major retailers are investing in blockchain as a way to reduce their own operating costs while protecting their customers. From Louis Vuitton to Nestle, companies see ways to create supply chain solutions while killing the $1.8 billion counterfeit goods market.

Facebook’s Libra will not go live

Trust in Facebook (especially during an election year) has plummeted, and regulators are unlikely to let Libra see the light of day in 2020. But some good has come from Libra’s inauspicious appearance: regulators and lawmakers are finally having big conversations about blockchain and how oversight should be conducted.

Whenever and however blockchain finally breaks through into the mainstream, it will have major implications for financial institutions of all sizes. And this expert says 2020 will be the year.
 

JANUARY 13, 2020
FMS Quick Poll: 2020 Priorities
By Mark Loehrke, Editor, Financial Managers Society

FMS Quick Poll: 2020 PrioritiesAfter a period of tremendous loan growth and increasing competition, the quest for deposits is clearly still on the minds of community bank and credit union executives heading into 2020, but perhaps not to the degree that it has been recently. Twelve months after deposit growth was a runaway number one area of focus among FMS members in our annual Quick Poll heading into the coming year, it once again found itself at the top of the list – but this time with a considerably smaller percentage of respondents, and with heated competition from two other emerging categories.   

Read all about it in our first Perspectives piece of the New Year, “FMS Quick Poll: 2020 Priorities,” as we examine the areas FMS members plan to focus on in the coming year. From technology upgrades to M&A considerations, community bank and credit union leaders at institutions across the country shared their most pressing priorities for 2020 – see how your institution’s most pressing issues measure up.
 

JANUARY 10, 2020
Does the Succession Plan Need to Evolve?
By Hilary Collins, Assistant Editor, Financial Managers Society

Does the Succession Plan Need to Evolve?With qualified talent in high demand, succession planning is a hot topic these days (all the top publications are covering it, after all), but is the concept as a whole outdated?

There’s an argument to be made that perhaps focusing on specific replacements for specific leadership spots is an insufficient approach given the state of the talent pipeline in 2020. Multiple unexpected departures, for example, can throw even a seemingly solid succession plan into disarray. Instead, organizations may want to consider a fresh approach to leadership transitions, looking at “pathway planning” as a potentially better way to deal with today’s challenges and incorporating ideas such as:

Thinking holistically
Instead of developing one successor for one leader, it may make better sense to focus on the organization’s needs on a larger scale. Looking to fill skills and knowledge gaps rather than seats might be a better approach to talent development.

Developing a deeper bench
By providing promising employees with development opportunities and consistent, meaningful leadership training, organizations will find themselves with a wealth of well-prepared successors when the time comes.

Anticipating changes

While some departures might be planned, others might be unexpected – and a changing business environment will only exacerbate the issue. What if a competitor snags your CFO just as your CEO is retiring? And what if major changes in the industry or economy mean your organization needs a different kind of leader when that time comes? A proactive succession plan can provide the foresight to help steer a company through this type of transition.
 

JANUARY 9, 2020
Tightening the Breaches in 2020
By Mark Loehrke, Editor, Financial Managers Society

Tightening the Breaches in 2020Data breaches are a massive and costly headache in almost any industry, but recent research indicates they tend to result in more widespread damage when they happen in financial services companies. Using data compiled by the Identity Theft Resource Center (ITRC) and the Ponemon Institute, data protection firm Bitglass found that the financial services industry was responsible for 62% of exposed data in 2019, despite only suffering 7% of reported data breaches for the year.

Not surprisingly, much of that exposed data came from a handful of high-profile incidents at megabanks like Capital One and SunTrust, but financial institutions, in general, seem to have a greater capacity for significant losses from similar breaches. In fact, the financial services industry ranks second only to health care in terms of cost per breached record, at an average of $210 per record (compared to a whopping $429 average in health care). Beyond those hard costs, of course, are the reputational and regulatory hits that affected banks or credit unions are sure to endure in the wake of such an incident. 

As a result of the growing issue of cybercrime in the industry, nobody should be surprised that lawmakers will be looking to tackle the problem in 2020 and beyond with new regulations and customer protections, while many institutions themselves will be focusing on upgraded security and privacy measures in the months ahead. Several larger banks have already begun tightening third-party access to data, and it seems inevitable that further down the asset stream, institutions of all shapes and sizes will be taking a hard look at their data practices and security measures to try and find the right balance of safety and convenience for their customers. 

Because if a breach happens, the cost for a bank or credit union might turn out to be much higher than the dollar amount involved – it could mean a loss of trust that spells lasting, irreversible trouble for the institution.
 

JANUARY 8, 2020
New Year’s Resolutions for Internal Auditors
By Hilary Collins, Assistant Editor, Financial Managers Society

New Year's Resolutions for Internal AuditorsThe cynical can say the start of a new year is just another turn of the calendar as opposed to some type of magical rebirth, but for plenty of folks it’s a great time to learn from the year before and set goals for the year ahead. Those internal auditors in the latter group might glean some ideas from Richard Chambers, the CEO of the Institute of Internal Auditors, as he shares his resolutions for 2020. Here are some starting points:

Have painful conversations with the board
Research shows that boards are often overconfident in their organization’s risk management practices, and auditors should resolve to bring them down to earth in 2020. While these conversations may be unpleasant, it’s important that leadership make decisions based on a realistic framework.

Delve into data’s ethical risks
Customer data use will be central to business decisions in 2020, and internal auditors should be prepared to educate stakeholders on the potential ethical risks associated with data gathering. If for no other reason, both regulatory oversight and public scrutiny are likely to be on the rise in the near future.

Find new ways to tell your story
Internal audit often faces a significant challenge in communicating its value to the organization. Auditors should seek out new ways to tell a clear story with an enterprise-wide perspective to risk over the long-term – and make it clear that only a robust internal audit function can provide that viewpoint.

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JANUARY 7, 2020
The Evolving CFO (cont.)
By Mark Loehrke, Editor, Financial Managers Society

The Evolving CFO (cont.)While nobody can know for certain all that 2020 may have in store, finance executives can probably bank on the continuing evolution of the CFO role – hardly a new development, of course, but one that will increasingly be defined by its relationship to the outsized importance of data in today’s business environment.

Financial data has naturally been a major aspect of the CFO role all along, but as digital transformation continues apace for banks and credit unions, the emphasis on data of all kinds – and the CFO’s integral responsibility for how that data gets organized, analyzed and strategically deployed – will only continue to gain prominence. The CFO is, in effect, becoming a de facto IT position, which is why current and aspiring CFOs need to be prepared for what comes next. Here are four areas to focus on to start thinking like a Chief Data Officer:

Data stewardship
The CFO needs to act as a strategic liaison between the IT and finance departments, setting up financial data structures that ensure the right reporting gets to the right people within the organization to help them make decisions. This means establishing a data governance framework across the company for the collection of common data like expense reports or invoices – one that helps confirm that only consistent and trustworthy data is being used to draw quick and comprehensive insights, respond to the rapid pace of change and mitigate potential fraud. 
  
Data culture
The CFO should look to take the lead in working with department heads across the organization to determine where data must be integrated and to set data standards for the business to comply with moving forward. This is an area where a CEO-in-training mindset will come in handy – forging relationships and demonstrating effective collaboration in the context of workplace culture.

IT knowledge
While the institution may have a dedicated IT team, it’s no longer acceptable for the CFO to pass off data-intense projects as “IT’s job.” The importance of understanding the language and inner workings of IT only figures to grow in the years ahead, so there’s no time like the present to build that knowledge and nurture those key relationships.

Say “no” to silos
The breaking down of silos between departments is another aspect of business that will likely accelerate in the coming years, and the CFO can and should be the one to lead this charge – especially where finance and technology are concerned. After all, if success is going to be predicated on integration and collaboration, it will be much easier to get there if data is more freely shared among departments and everyone in the organization is on the same page with respect to how that data impacts the company’s strategic goals.
 

JANUARY 6, 2020
Hiring Trends for 2020
By Hilary Collins, Assistant Editor, Financial Managers Society

Hiring Trends for 2020Finding talented people has been a struggle in recent years, and there’s no reason to think that things will change dramatically on this front in 2020. However, organizations are likely to find new ways to cope with talent shortages – including the following four shifts.

Technology will change the search
The considerable time that managers spend interviewing job candidates could be better allotted to many other responsibilities. Experts foresee major improvements in digital recruitment, enabling leaders to spend less time sifting through applications and get the right person in place faster.

Adaptability will be highly prized
The skills gap isn’t going anywhere, but experts say 2020 may be the year where employers finally invest in upskilling workers. With that cost in mind, candidates who show a willingness and talent for growth and creativity will rise to the top.

Cultural fit will be more important than ever
Experts estimate that 77% of people think company culture is extremely important and are less likely to stay in jobs that don’t have the right cultural fit. Hiring teams, therefore, may be wise to start putting more legwork into making sure candidates not only have the right qualifications for the job, but are a good match for the organizational culture as well.

Flexible work schedules will be the norm

A 2019 survey showed that 80% of employees would choose a job with a more relaxed office hours policy. In other words, organizations that don’t offer flexible schedules or work-from-home arrangements may find themselves on the outside looking in when it comes to attracting top talent.