The Daily Dividend

News, notes and insights from around the industry

MARCH 21, 2018
FMS Webinar: How to Increase Profitability with Funds Transfer Pricing
By Mark Loehrke, Editor, Financial Managers Society

FMS Webinar: Strategic Implications of CECLIs FTP just a “nice-to-have” in your institution, or is it an integral piece of a robust profitability strategy?

If it’s the former, you may not be doing a very good job of measuring profitability at all. So be sure to join us on Wednesday, April 4 for our latest webinar presentation How to Increase Profitability with Funds Transfer Pricing, as David Green of Exequor Group explains how a comprehensive and well-functioning FTP framework can help your institution increase loan and deposit profitability and more effectively manage interest rate, liquidity and credit risk.  


This session is scheduled for two weeks from today, so be sure to reserve your spot now – like all of our webinars, it’s complimentary for FMS members. (Not a member? Join today!)

MARCH 20, 2018
Putting Talent First
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Putting Talent FirstIn a candidates’ market, where traditional practices for attracting and retaining talent are falling short, what should leadership do? A new book offers some answers for executives that see the importance of putting talent first.

Put human capital first

Is human capital just as valuable as financial capital? The authors of Talent First advocate for the CEO, CFO and the chief human resources officer putting their heads together to acknowledge and explore the intersection of talent and finance. In other words, the talent discussion shouldn’t be happening after the finance discussion, but rather in concert with it – they’re inextricably interwoven.


Bring the board on board
Getting the board of directors involved is a critical move for any endeavor, but especially for an effort to move talent to the forefront. Recent research shows that most directors think they bring a lot to the table when it comes to strategy, but little when it comes to talent development and cultural enrichment.


Hone top talent
Focus on your key players to maximize results. By determining the people who deliver the greatest value, leadership can really focus on developing their talents and keeping them happy. This perspective may yield some surprises in terms of who is really bringing value to the table – that is, it’s not always the brightest shining stars, but sometimes the people working behind the scenes that enable everything to run smoothly. Leaders may also be surprised by how few of their people are truly essential to the organization, as the authors suggest that it may only be around 2% of the total workforce.

MARCH 19, 2018
Blockchain and Audit
By Mark Loehrke, Editor, Financial Managers Society

Blockchain and AuditIf you’re like most people, you’re probably still trying to get a handle on what blockchain even is – let alone what impact it might have on your institution (FYI – help is on the way in the upcoming May/June issue of FMS forward, so stay tuned). But a recent whitepaper published by the AICPA offers some good food for thought on the potential effects of blockchain on audit and accounting functions.

In short, the combination of peer-to-peer networking technology and cryptography afforded by blockchain can allow organizations to automatically confirm and record transactions in real time, seemingly rendering the necessity of an audit somewhat moot. However, the AICPA report notes that just because a transaction is considered sufficiently documented and recorded in blockchain, there may not be satisfactory evidence as to the nature of that transaction – which is precisely where audit and accounting professionals can continue to provide a much-needed layer of assurance.   


While blockchain will undoubtedly streamline the audit process and likely diminish the importance of some roles, the report goes on to note that the new technology will also foster new roles in the audit and accounting areas, such as auditors of smart contracts, access-granting administrators and dispute-settling arbitrators for private blockchain participants.


Is this brave new world of blockchain right around the corner? Probably not. But as anyone in the banking industry well knows, technological change is not matter of if, but when – and it’s better to be informed and aware before the “when” of blockchain arrives.

MARCH 16, 2018
Good Vibes
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Good VibesNewly released research from the Federal Reserve Bank of New York’s Center for Microeconomic Data shows that customer expectations about their personal financial situations are increasingly optimistic. These consumers join CFOs and other banking professionals in donning the rose-colored glasses, with only 10% expecting to be worse off in a year, down from 12.5% in January.

About 40% of respondents in the New York Fed survey think they’re better off than they were a year ago – the highest percentage since the survey was first launched back in June of 2013 – as median expected household income growth rose slightly from January, back to its peak from November of 2017. Elsewhere, respondents believed it less likely that they would be fired from or quit their jobs in the next year, a symptom of the healthy job market.


Based on this data, it seems that bankers aren’t the only ones feeling the good vibes in 2018.


MARCH 15, 2018
Friction: Fact and Fiction
By Mark Loehrke, Editor, Financial Managers Society

Friction: Fact and FictionWhile many organizations might prefer a CFO who helps calm the waters, there’s another school of thought that argues for a leader who not only isn’t afraid of friction, but actively works to foment it. The latest lesson emerging from this particular school comes courtesy of a new report from Deloitte, which explains how fostering friction can lead to better organizational performance.

Of course, there’s much more to fostering friction than simply lighting a bunch of fires and hoping for the best. The key is in recognizing the differences between friction that leads to strategic breakthroughs and friction that simply results in chaos and infighting. The right type of friction – defined by Deloitte as group members' willingness and ability to challenge each other's ideas and assumptions – can drive groups to reexamine assumptions, test constraints and push boundaries.


A CFO looking to benefit from productive friction among his or her team members should first understand the characteristics that cultivate such a working dynamic, including:


Diversity over homogeneity

Different voices lead to new ideas and new ways of thinking.


Energy over harmony

When everyone gets along just fine – all the time – there’s little chance of anyone stepping forward to challenge the status quo.


Challenge and discussion over approval

If every idea is getting through without much debate, chances are you’re not going to see a lot of game-changing ideas.


Transparent thinking

Take the ideas generated in small working groups and open them up to a wider audience – like the whole organization – for feedback and discussion.


Thinking made tangible

Put those ideas down on paper – the more they’re studied and examined from different viewpoints, the more they’ll be dissected, debated and challenged.  


With a culture defined by the above characteristics in place, leaders can go about trying to create the type of friction that can lead to new levels of productivity by actively embracing complexity and seeking out challenges. The Deloitte report goes into greater detail about how to take this approach and how to weave more friction into an organization’s current workgroup practices, arguing that calm waters may, in fact, be precisely what a CFO should work very hard to avoid.

MARCH 14, 2018
Internal Audit and the Customer
By Hilary Collins, Specialist, Publications and Research, Financial Managers Society

Internal Audit and the CustomerWhen it comes to building trusting, long-lasting customer connections, most people probably don’t think about internal audit. But as an essential link in the chain that enables the trust and longevity of strong, profitable customer relationships, rethinking how internal audit plays into this dynamic can bring value to both the customer and the institution as a whole. Here are some of the ways IA should be serving the customer:

Safeguarding customer resources

Internal auditors are the gatekeepers who ensure that the appropriate controls are in place. Whether making sure the customer is indeed the one opening the account, making sure the customer is indeed the one performing the transaction or making sure customer information is protected from thieves, internal audit acts to shield the customer from harm.


Earning customer trust
Beyond simply protecting identities and accounts, internal audit should be monitoring institutional culture and sales practices. Aggressive sales tactics or misleading marketing messages are just as corrosive to the customer relationship over time as an outright hack or breach, which is why IA should have controls in place to create and support a transparent and considerate customer service culture.


Communicating problems to leadership
Without buy-in from the top, internal audit can work 24/7 and still not see results. Clearly communicating risks to the board and executives is maybe the most important task IA has. This analysis should include the fact that the end does not justify the means – and in fact, using faulty tactics to achieve a short-term result can have detrimental consequences in the long run.


While internal audit might not be the smiling face most customers associate with a trusted banking relationship, it’s important for IA to understand that connection and to do everything possible to protect customers’ best interests from harm – inside the institution and out.

MARCH 13, 2018
Forging Ahead to the Forum
By Mark Loehrke, Editor, Financial Managers Society

As spring break approaches and the weather starts to approximate warmth once again (for most folks, anyway), thoughts are turning to summer – and The 2018 FMS Forum. This year’s 70th anniversary bash is sure to once again be a terrific mix of timely industry education and fun and relaxation in Orlando, Florida.

And now you can get a jump on your plans for this great event by leafing through our just-released Forum brochure – your complete virtual guide to getting the most out of your visit to the Sunshine State. So give it a look, set your agenda and take advantage of our preferred rate when you register today.


We’ll see you in June!


Mark Loehrke
Editor and Director, Publications and Research

Danielle Holland

Hilary Collins
Specialist, Publications and Research