Tag: Small business

Inspired by the entrepreneurship of lemonade stands, Scottsdale Community Bank created a microloan program. Photo by Brandon Sullivan

De novo Scottsdale Community Bank set out to provide microloans to small and mid-size businesses, family organizations and nonprofits—a project that was inspired by the humble lemonade stand.

By William Atkinson

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Scottsdale Community Bank is the first new community bank in Arizona in 14 years, and it already has the capacity to make more than $100 million in loans.

Why? The $28 million-asset community bank in Scottsdale, Ariz., embraces a combination of the latest technology and traditional beliefs about finance and business growth. The technology it uses allows it to maximize efficiency while minimizing costs in its operations.

“[Small businesses] need a place that will listen to their financial needs and to their dreams of being independent, having financial security, contributing to the community and providing resources for their families.”
–George Weisz, Scottsdale Community Bank

But for all its embrace of technology, the community bank took its inspiration for an innovative lending program from an old-school tradition: kids’ lemonade stands.  Scottsdale Community Bank’s Lemonade Stand Loan Program offers microloans—up to $25,000 each—to small businesses and individuals who own businesses or operate nonprofit organizations.

With its microloans, Scottsdale Community Bank offers small businesses within the community an opportunity for new growth. “They need a place that will listen to their financial needs,” says George Weisz, chair of the board, “and to their dreams of being independent, having financial security, contributing to the community and providing resources for their families.”

The aim of the program is to help small businesses take advantage of time-sensitive opportunities where funds are needed quickly and sustain their existing organizations or reach the next level. The community bank provides the same amount of due diligence to these microloans as it does for all other loans but with ease in application and process. It also customizes the terms of the loan based on factors such as business goals and financial history.

A business bank with personal service

Scottsdale Community Bank, which opened in January 2022, was the result of a decade of work by Weisz and his colleagues on their vision for a cutting-edge business bank. The community bank specializes in providing top-line banking services to small and mid-size businesses, family businesses and nonprofits. The diverse board, staff and leadership team aim to implement a plan of “doing well for investors by doing good for the community.”

“We are a dynamic bank for a dynamic community, and we conduct business in one of the fastest-growing areas of the nation,” Weisz says. “We are changing the face of business banking in Arizona by combining cutting-edge fintech technology with true relationship banking.”

Besides using the latest technology, Scottsdale Community Bank relies on truly personal service. In fact, every client has the cellphone numbers of Weisz and bank president Neill LeCorgne.

As well as being the inspiration for Scottsdale Community Bank’s microloan program, the humble lemonade stand has special significance for Weisz, who has had a miniature model of one in his office for more than 40 years.

“It reminds me of my roots in many ways,” he says. “My first exposure to business, when I was probably six or seven years old, was hawking lemonade in front of our home, earning a small amount to give me a feeling of accomplishment and teaching me the value of earning money and saving money.” It also helped build confidence, people skills and trust, he says.

Never out of sight

The model, one of his most prized possessions, is a constant reminder for Weisz of the importance of interacting with people, gaining confidence and respect for others, starting an enterprise and the hard work involved in success. Since childhood, Weisz has always firmly believed and told anyone who will listen: “Never pass up a lemonade stand.” He explains his reasoning: “One never knows whose life one might change, encourage or help succeed by buying a cup or a generous pitcher of that sweet elixir and having a nice conversation.”

“We have a vision of public-private partnerships, which, if created appropriately, can be a win-win for both local governments and their communities.”
—George Weisz, Scottsdale Community Bank

Since the Lemonade Stand Loan Program is a recent introduction, it’s still too early to gauge its success. However, it has already generated interest among Scottsdale’s business community. In the meantime, the community bank is meeting with local business associations and government entities with the goal of creating a consortium of community banks to extend microloan opportunities to local businesses and organizations.

Scottsdale Community Bank leadership has also met with government entities to see how community banks can creatively partner with state and local agencies to provide microloans to small businesses throughout the community.

“We have a vision of public-private partnerships, which, if created appropriately, can be a win-win for both local governments and their communities,” Weisz says. “In fact, we have several revitalization areas in which simple microloans may provide the horsepower for small businesses to survive and then thrive.”

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William Atkinson is a writer in Illinois.

[ICBA LIVE is] an opportunity to continue training up the next generation, so I would encourage community bank leaders to join us and bring your rising community continuators with you.

The passion I have for community banking was born at ICBA LIVE 2011, which was my first ICBA convention as an adult. I thought I already loved community banking, but I didn’t realize how much until then. Thousands of community bankers convening in one room; motivating videos playing; leaders of the association delivering speeches of who we are and why it matters; keynote speakers inspiring with stories of beating the odds and thriving. It gets your blood pumping, and once you go to one, you’ll never be the same.

Because when community bankers assemble, remarkable things happen. We realize that we’re all facing the same challenges and opportunities and recognize that we’re all part of something bigger. We share firsthand experiences, advice and support to help each other succeed.

For example, when my bank was looking to replace our core, we spoke with potential partners in the expo hall, but we also talked to bankers who had used those solutions. In fact, a casual conversation between our bank’s CFO and another banker led to us leaving LIVE with the name of a consultant we ended up using to assist us with the core search. We’ve also found social media monitoring and rewards checking products through recommendations from our peers at LIVE.

There also is no better educational event for community banks. It’s an opportunity to continue training up the next generation, so I would encourage community bank leaders to join us and bring your rising community continuators with you.

From a business perspective, the experiences you have at LIVE ensure your bank grows and evolves. The ideas we pick up from the program, lessons-learned conversations and new knowledge of today’s landscape all stem from LIVE’s educational sessions and networking events. There simply is nothing better than being together in person, and the convention is carefully crafted to set us up for success.

But above all, ICBA LIVE is like a homecoming. I think back on my own journey, walking into that first convention knowing no one except people from my home state, and now I have banker friends throughout the country. It’s like a big family reunion that grows each year. It helps me remember that we are all connected, standing for a mission bigger than ourselves, serving as protectors of Main Street. It makes me proud to be a community banker.

So, when you attend LIVE in Hawaii this year, make sure you look me up. I’ll be the guy exuding enthusiasm for this community, and I would love to meet you. I look forward to seeing you there!

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Brad Bolton, Chairman, ICBA
Brad Bolton is president and CEO of Community Spirit Bank in Red Bay, Ala.
Connect with Brad @BradMBolton

Photo by Rido/Adobe

Maximizing each step in the innovation journey, including the fintech evaluation process, will set you on the right path to a fruitful fintech partnership.

By Charles Potts, ICBA

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When it comes to innovation, understanding how we do it may be even more important than why. With technology upgrades and customer experience consistently ranking as chief priorities for community banks, there’s no question that innovation serves as a strategic imperative. But the best tactical implementation approach remains uncertain.

In truth, the answer comes down to finding the right partner. And you’ll want to maximize each step in the innovation journey, including the fintech evaluation process. Ensuring you have the answers to the following three questions will set you on the right path to a fruitful fintech partnership:

1. Does the solution resonate with a need at your bank? Many fintechs have flashy offerings, but if what they provide doesn’t instantly solve a problem for your bank, it isn’t an immediate fit. Prioritize deeper engagement with those companies that offer solutions that fit your business needs, address the challenges you face and provide the opportunities you’re looking for as a bank.
2. Who within your bank needs to be engaged? Once you’ve been intrigued by a product demo, you need a deeper dive into the solution. Bringing in your internal subject-matter experts from day one will make it more efficient. Depending on the product, you may need technology leaders, marketing experts, risk and compliance teams, back-office operations, customer support representatives, and other team members engaged in the decision-making process, so loop them in early for the biggest benefit.
3. Who’s using the solution, and where are the referenceable use cases? Even when you’re engaging at the earliest stages of a new product, fintechs will have proof of concept and pilot examples. Lean on those references and reach out to peers who are using the solution. Those conversations will give you a better understanding both of cultural fit and where the pitfalls may lie.

These questions are a good starting point as you engage in vendor discussions, so the sooner you start, the more you can maximize your time. And, with ICBA LIVE around the corner, these questions have the added benefit of preparing you for the all-star ThinkTECH Accelerator showcase, where select alumni will demonstrate their solutions.

In addition, information from ICBA’s new digital transformation education series, which is a part of Community Banker University and will be unveiled at LIVE, will provide guidance to support the next steps in fintech engagements.

This is the year of innovation in action. At ICBA, we’re upping our innovation game, and we know you’re ready to roll up your sleeves and do the same. We’re entering the phase of implementation, where the question becomes not why innovate, but how. And in today’s landscape, that’s precisely where we need to be.

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Charles Potts (charles.potts@icba.org) is ICBA executive vice president and chief innovation officer

Photos: Tyler Anderson/ProSport Management

First Bank of Alabama partners with Talladega Superspeedway track to host a hands-on educational STEM program event for seventh graders.

By Christyna Yang

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Talladega, Ala., is home to $900 million-asset First Bank of Alabama, but it’s also home to the Talladega Superspeedway, a famous NASCAR racetrack. It’s fitting, then, that Chad Jones, president and CEO, and Mitch Key, executive vice president and COO—both of whom grew up in or near Talladega—have developed a relationship with the superspeedway folks.

The two businesses partnered to develop a STEM (science, technology, engineering and math) program event for local seventh graders that’s hosted at the racetrack. “[The superspeedway management team] approached us with the idea of sponsoring a day at the racetrack,” Key notes. “The events are typically on Friday of race weekend, where we bring in young people from across our footprint, which is six counties in east-central Alabama.”

“In Talladega, we can show them one of the biggest sports that has all types of jobs. You don’t have to be a racecar driver to be associated with NASCAR.”
—Mitch Key, First Bank of Alabama

Jones is a big advocate for sharing real-life opportunities within STEM fields. In his hometown, NASCAR presents a range of opportunities. With the program, he wanted to show the students that NASCAR isn’t just about the driver. It’s a collaboration of the entire team.

“These are just some of the opportunities we wanted to put forth that are right here in our backyard,” he says. “In Talladega, we can show them one of the biggest sports that has all types of jobs. You don’t have to be a racecar driver to be associated with NASCAR.”

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On these special Fridays, about 500 students get a glimpse of the different jobs available throughout NASCAR. First Bank of Alabama employees serve as their tour guides, taking them through stations where they get to see positions varying from crew chief to engineer, car hauler and more. They also learn how to build a race car and what it takes to run a racetrack.

Applying what they’ve learned in the classroom to each station at Superspeedway is integral to the STEM program. One of the most popular stations involves the spotter, located at the highest point of Superspeedway. Spotters communicate with the drivers to assist them during the race. Students can try on the headset and learn about radio communication and the importance of technology for racing.

As a final station, the students get the chance to talk to Daniel Hemric, driver of the No. 11 Chevrolet for Kaulig Racing in the NASCAR Xfinity Series. At age five, he began go-karting and realized his passion for racing. Now a NASCAR driver of eight years, he spends 33 weekends out of the year racing in the Xfinity series. The students are thrilled to ask questions that keep Hemric on his toes.

The life lesson

At its core, the collaboration between First Bank of Alabama and the Talladega Superspeedway brings STEM to life in a fun way. The community bank understands how to make learning hands-on and enjoyable.

“This was just a perfect tie in between young people, the racetrack and First Bank of Alabama,” says Key. “We’re excited, our employees are excited about it, they’re all anxious to go do STEM, because we recognize the impact it’s having. So, it’s just been a win-win all the way around.”

“[Children] have leaders within their community, like First Bank of Alabama, the Talladega Superspeedway and other individuals involved, pulling for them.”
—Daniel Hemric, NASCAR

Aiming to pique the students’ curiosity and demonstrate that careers don’t have to be mundane, Key wants to leave them feeling inspired. “I hope the community will see that First Bank of Alabama is committed to our young people and growing our communities,” he says. “Our young people are our future. I think as much as we can pour into them, and as much as we can do to help them be successful … I just don’t know of a much greater calling than that.”

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The event has generated much positive feedback and attention from parents, teachers, administrators and students. Students are even asking Jones for autographs. “Their thank-yous, the letters that I’ve received where they’ve either drawn pictures or handwritten notes, are proof of appreciation,” Jones says. “It’s good to see that we still have good in the communities that we serve.”

Confident of the event’s impact on students, Hemric hopes that his perspective on leadership and community resonates with them.

“They have leaders within their community, like First Bank of Alabama, the Talladega Superspeedway and other individuals involved, pulling for them,” he says. “People are trying to do everything they can to make sure they have a successful journey through life, and people have their backs. I know that was important for me growing up, and it’s a huge part of what First Bank of Alabama is about.”

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Christyna Yang is an editorial assistant for Independent Banker.

Photo by Zutik by Andoni/Stocksy

Data analysis can illuminate patterns and trends in your customers’ transactions. Community bankers and industry experts share how to best put this data to use.

By Colleen Morrison

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Data is the new currency for Big Tech, business, banking and beyond.

“All data creates a competitive advantage. Google is not in the search engine business for the money; they are in it for the data,” says Tina Giorgio, president and CEO of ICBA Bancard. “Knowing what transactions are being performed and how your customers are performing them is invaluable information.”

But having the data and knowing how to draw accurate information from it are two different things. According to a recent Bank Director survey, nearly half of financial institutions report not effectively using their available data, which leaves potential strategies untapped.

“One of my favorite quotes says data is only as good as the insights it provides and the leaders willing to put the action behind it,” says Chad King, director of payments at $3.8 billion-asset First State Community Bank in Farmington, Mo. “Most places have more information than they know what to do with, and they’re not understanding the insights that it is actually providing, and they’re not putting the action behind it.”

That may be because data analysis is complicated. While it provides line of sight into customer actions and behaviors, how it’s interpreted and applied matters, and there are ways to approach its review to inform payments strategies and ensure an accurate picture of trends.

“You’ve got to zoom in and zoom out on the tapestry,” says Kari Mitchum, vice president, payments policy at ICBA. “Yes, there are going to be individual threads that are making up your whole picture, but you also need to make sure that you’re not stereotyping.”

To use data effectively, community bankers need to balance the information with what they know to be true about their customers. Applying it will take some finesse, but a few guideposts exist to help navigate this slippery slope and unearth a goldmine of potential. The dos and don’ts of data analysis can make the difference in a bank’s payments strategy (see sidebar below).

Applying data

Data can support community banks in helping their customers better manage their finances. Mitchum shares an example of a bank that monitored customer credit card activity, homed in on those customers who were making minimum payments each month, and then created a targeted campaign that showed the value of adding just $5 to the minimum payment to pay down the balance sooner.

The results? Customers made an average addition of $20 to the minimum payment, supporting a better payoff strategy.

Data analysis can also help community banks track where there are opportunities to cross-sell or reposition offerings.

For example, if a customer’s payment activity shows loan payments to outside firms or Venmo or PayPal payments, perhaps it’s time for their bank to discuss its loan and P2P payment options with them.

“We’ve got this massive amount of data, and we have to do something about it,” says Greg Ohlendorf, president and CEO of $207 million-asset First Community Bank and Trust in Beecher, Ill. “Once you determine what your transactions look like, then strategically, you can decide if you want to be in any of those businesses. Or if we’re in those businesses, we need to discover why our customers haven’t chosen to get that service with us, rather than competitors.”

Ohlendorf speaks to data as a route for solving deposit leakage, or the migration of deposit account funds to other providers. For example, as PayPal, Venmo and similar payments platforms encourage clients to leave balances in their holding accounts, funds that would have traditionally been in a bank account are in these outside environments, disintermediating the bank.

In addition, funds may be leaving the demand deposit account (DDA) to pay an outside loan service or investment fund, removing resources that may have stayed within the bank if the customer had used its services.

“I have to look at where your spend is going, and the question is, ‘What do I do about that?’,” Ohlendorf says. “That’s what that data is about.”

Avoiding data pitfalls

Data serves as a great resource, but as community bankers dive into it, they risk going down a rabbit hole of findings and subjecting themselves to analysis paralysis where the continued evaluation of data leads to inaction. King advises staying true to the original goals.

“Don’t allow the data to force you to make assumptions about your customers,” he says. “Prioritize what’s most important to you, what’s going to give you the biggest return, and build your payments strategies around them.”

Mitchum agrees. “You’re never going to have perfect data, and you want to be able to make decisions and move forward. Data is always going to be coming in, and you’re constantly making sure you’re on the right path. Don’t be afraid to change if you need,” she says.

Experts caution that when data is used to label behaviors, it introduces stereotyping. Referred to as confirmation bias, this approach runs the risk of surfacing false assumptions about customer needs. Tapping into the relationship banking model and aligning what the bank knows to be true about its customers with data points will support the right combination of data and personal connection.

“If all you do is study the data, you will develop confirmation bias,” King says. “You automatically assume that you know what customers need, as opposed to using that data to open up and have great conversations with them. We avoid that by using the data upfront to guide who we’re going to talk to and what we’re going to talk to them about, and then have a good conversation.”

Where to start

Today, only 14% of banks report having a data scientist on staff, which means most community banks need to be considering where they can find support. Resources exist to provide varying degrees of data review, starting with core providers and other third-party partners, including fintechs that specialize in data analytics and industry consultants who are familiar with both banking and data analysis.

“If a bank has access to its data through a data warehouse, ad hoc reporting is the fastest way to access the data.” Giorgio says. “If the bank does not operate in a data warehouse environment, there are providers who will ‘scrape’ the data from existing reports.”

And no matter what steps community banks take to get there, harnessing data for greater insights will help them in identifying next steps for deepening customer engagement and launching new products and services.

“The data tells the story,” King says. “The question is, ‘Are you going to do something with it?’”

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Colleen Morrison is a writer in Maryland.

Photo by Nina Lawrenson/peopleimages.com/Adobe

Here are 12 ways to light up your February and find your focus.

By Lindsay LaNore, ICBA

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The nights are still long and spring hasn’t yet sprung, so don’t blame yourself if you’re feeling sluggish. But how do you keep productivity up when your workload is showing no signs of hibernating? The theme for next month’s ICBA LIVE is “Light the Fire. Light the Way.” So, with that in mind, here are 12 ways to light up your February and find your focus.

1. Eliminate distractions. Studies suggest we’re constantly distracted by our devices, so make a point of hiding your phone in a desk drawer or turning off notifications. Switch off Microsoft Teams, make your inbox disappear and close your browser.
2. Make a to-do list. If it’s daunting, break it down into smaller chunks for the day—or even the hour—ahead. End the day by mapping out tomorrow’s list.
3. Prioritize. Not everything on your list is urgent. Tackle the most important work first.
4. Break it up. If a project is labor intensive, divide it into smaller sections. Outline a plan, establish deadlines and check each piece off as you progress.
5. Schedule focus time. Research has shown it can take an average of 23 minutes to refocus on a task after you’ve been interrupted, so carve out some dedicated work time. Consider using tools like Microsoft Viva Insights to help. And listen to the natural reactions of your mind and body, scheduling focus time when you perform best.
6. Manage the noise. Some of us like perfect silence. Others prefer classical music or even white noise. Wear noise-canceling headphones or crank up some Mozart—whatever works for you.
7. Keep a distraction notebook. When an idea pops into your head or you remember something you might forget again, write it down and don’t let it cloud your focus time.
8. Take breaks. Scheduling a full day of focus time isn’t healthy either. Listen to your body and beat the fatigue by giving yourself breaks to stand, stretch and eat.
9. Look up. Your mind can start to blur, so look away from the screen from time to time. Follow the 20‑20-20 rule: Every 20 minutes, take 20 seconds to stare at something 20 feet away.
10. Change the scenery. Use a conference room instead of your desk or find a quiet spot in a neighboring department. Changing your environment can trigger productivity.
11. Take a productivity challenge. If you know a colleague has a deadline as well, set a friendly challenge to get past your respective roadblocks. You can even schedule lunch at the end of it to make it more appetizing.
12. Don’t forget to sleep. While it may be tempting, this isn’t an excuse to nap at work! Instead, invest in healthy slumber habits. A well-rested mind will help you dig in and get that work done.

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Lindsay LaNore (lindsay.lanore@icba.org) is ICBA’s group executive vice president and chief learning and experience officer

Digital media gives community bankers a platform for advocacy, and ICBA’s Virtual Advocacy Primer details how you can put it to work.

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How can a community banker best connect with a member of Congress? With the growing number of virtual options—whether it’s email, social media or video calling—community bankers can bridge the gap and advocate for the industry’s best interests, whether that’s cannabis-related business financing, small and rural business credit, or credit unions’ unfair advantage.

After COVID changed how we all do business, senators and representatives have expanded their presence across technology by livestreaming on social media, posting Q&As and running email or phone campaigns. According to a 2020 Congressional Management Foundation report, constituents reported their representative and/or senator used online platforms either “more” or “significantly more” since the pandemic began.

So, how can you take advantage of this reinforced media connection?

Lay out a plan

ICBA’s Virtual Advocacy Primer explains how community bankers can use digital options to take grassroots action for the benefit of the industry. With these social and digital platforms, you have new points of contact for your representative.

Before making contact with your representative, first ask yourself why. What’s your end goal? Are you trying to raise awareness about a certain policy or bill affecting community banks? Are you trying to prevent it from being passed?

Once you have that goal in mind, schedule a virtual meeting. Find the representative’s or senator’s scheduling process on their official website and follow every step.

Your meeting request should cover:

• Your plan (either a tour or a meeting)
• The subject of the meeting and the specific topic you’re discussing
• The participants (including zip codes)
• Background information regarding the subject (reports, one-pagers, etc.)

After making the request, call the member’s office to discuss and finalize the length of the meeting and any software preferences (such as what virtual platform you will use for the meeting). Wait a week for a response and then follow up if necessary by phone, Facebook message and/or Twitter direct message. Once you hear a response, thank them and notify any bank staff who will be involved.

Be thorough about preparation

Before the meeting, study up on your Congress member by looking through websites, newsletters, news alerts and social media. Make sure other meeting participants from your bank do the same. You can even rehearse among yourselves to ensure the meeting is concise, informative and personal.

It’s also important to test out the meeting’s technical components, including the software platform (Zoom, Microsoft Teams, GoTo Meeting, etc.), lighting and sound. You may want to invest in an external light and/or microphone. Having a high-quality setup will guarantee that your message gets across and could help you stand out from the crowd.

Before the meeting, take 15 minutes to work out any of these technical kinks and provide everyone with a backup plan if the software fails (such as using a phone line).

When you join the scheduled meeting, thank your member of Congress using their proper title. Give them the what, why and how:

• What do you want them to do? (Only cover one or two issues)
• Why is this important to you?
• How will this affect the local area, district and voters?
• Provide a clear, direct and achievable request

Monitor your meeting’s runtime. Keep it concise, but don’t forget to leave time for questions. Afterwards, draft your follow-up and thank-you emails (see the ICBA template on our website).

As an expert in the community banking industry, be sure you use a tone that represents that.

Two days after the meeting, give yourself 30 minutes to complete the follow-up. Only 8% of constituents follow up in a timely, helpful way, according to Hill staff. By following up, you reinforce the importance of the issue.

Stay up to date

Once you successfully meet and talk with your Congress member, use these methods to keep up with their current events and updates:

• Set up Google news alerts
• Visit your officials’ websites and sign up for their newsletters
• Follow them on social media (Facebook, Twitter, Instagram, etc.)
• Attend virtual town halls

ICBA wants to hear about your advocacy efforts, too, and can help support you. Email John Coleman, ICBA’s director of advocacy, at john.coleman@ICBA.org regarding your meetings with Congress.

—Rachel Hatcher

Illustration by Jozefmicic/Adobe

The CFPB recently issued new guidance on overdraft fees that was unanticipated by community banks. Learn what this means for the industry and how community banks can stay in compliance.

By Mary Thorson Wright

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In October 2022, President Biden announced a crackdown on so-called junk fees, including new steps that effectively ban banks from imposing disclosed overdraft fees. Concurrently, the Consumer Financial Protection Bureau (CFPB) issued Circular 2022-06 guidance on “unanticipated overdraft fee assessment practices,” which complies with TILA, EFTA, Regulation Z, Regulation E and the prohibition against unfair, deceptive, and abusive acts or practices (UDAAP) in Section 1036 of the Consumer Financial Protection Act (CFPA).

Banks offer a variety of products or services designed to allow overdrafts on deposit accounts, including:

• Lines of credit
• A sweep of funds from another deposit account of the customer
• A courtesy period during which the customer can clear the overdraft
• An ad hoc decision to pay or not pay the overdrawn amount, or some other combination of allowances

Regardless of the type, the bank may choose to also impose a previously disclosed fee upon the overdrawn transactions as a deterrent to future activity or to cover costs incidental to administering the program. Fee disclosures are typically provided at account opening, the commencement of an overdraft feature, a change in terms related to the overdraft or account program, and any other subsequent disclosure trigger. Sound compliance management requires consistent written disclosures, procedures and actual practices.

Overdraft programs benefit customers by helping ensure transactions are still processed and that a payee is not notified regarding the customer’s account balance. Bank regulators have issued guidance and expressed concerns about how banks administer overdraft programs and the fees that are charged to customers. In March 2022, the CFPB noted in its blog that “overdraft fees can price people out of banking.”

The overdraft fee circular’s effects

Of late, the CFPB has been taking regulatory actions using novel tools including interpretive rules, advisory opinions and circulars, rather than formal rule changes. The circular is an example of this less-formal approach.

“The Circular will definitely have a regulatory impact on community banks, even without the supervisory oversight of the CFPB.”
—Rhonda Thomas-Whitley, ICBA

“The substance of the circular and also the manner in which it was established are of concern,” says Mickey Marshall, ICBA AVP and regulatory counsel. “ICBA believes this change should have been done through the rulemaking process. The circular was unanticipated by the industry, and the public and the industry didn’t get the opportunity to provide feedback or to consider its impact prior to implementation. The process did not promote transparency or give banks the opportunity to comment or explain their position prior to implementation.”

How the circular will affect community banks is not entirely clear. “The CFPB exercises direct supervision and examinations for banks with total assets over $10 billion, whereas most community banks are directly supervised by the FDIC, Federal Reserve or OCC,” Marshall says. “While the CFPB circular may not be technically binding on the other federal bank regulators, community banks need to consider that the publication and promotion of the circular is not happening in a vacuum. It’s reasonable to believe that examiners from those agencies may begin to apply this model for unanticipated overdraft fees in their community bank examinations.”

Rhonda Thomas-Whitley, ICBA vice president and regulatory counsel, agrees: “The circular will definitely have a regulatory impact on community banks, even without the supervisory oversight of the CFPB.”

While community banks have offered overdraft protection to their customers for decades and have been subject to compliance monitoring, internal and external audits, and federal and state bank examinations, the CFPB’s overdraft fee circular and public statements by the Biden administration now subject their programs to a change in standards.

“Examiners have scrutinized account disclosures, fee schedules, bank procedures and records of overdraft fees for years,” Thomas-Whitley says. “Now it appears that those same disclosures, fee schedules and their associated implementation may not be sufficient. It is difficult to conceive that overdraft fees and practices are unanticipated when they have been so thoroughly disclosed to customers and vetted by examiners.”

At the time of writing, CFPB had issued the first report of enforcement under the circular.

“Community banks have been dedicated to comprehensive reviews of their disclosures and procedures for years,” Whitley says. “Banks have found themselves in a situation where they are following the rules but are being scrutinized by the same agencies that make the rules. How do we capture and evaluate what will fall with the next shoe?

“Bankers are put in the position of monitoring trends and available guidance but may be in a holding pattern to see how they play out from anecdotal feedback or issuances from CFPB or their primary federal bank regulators.”

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Mary Thorson Wright is a writer in Virginia.

Illustration by Maïté Franchi

With educational sessions on hot‑button issues, inspirational speakers and beneficial networking opportunities, ICBA LIVE is the greatest community banking event in the country. Here’s a sneak peek of what to expect from the event, held this year from March 12–16 in Honolulu.

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3 ways ICBA LIVE will support your community bank’s 2023 plans

Each year, ICBA LIVE delivers a wide range of education and networking opportunities for community banks. But in today’s landscape, these benefits are amplified.

“If you look at LIVE’s education tracks, they are really focused on what continues to bubble to the top as the hottest issues for our bankers,” says Lindsay LaNore, group executive vice president and chief learning and experience officer at ICBA. “Everyone leaves the event with new information in hand to put into action back at their bank.”

Taking place in Honolulu from March 12–16, 2023, ICBA LIVE provides concrete benefits to community banks in three important ways:

1. New connections.

Attendees consistently point to the advantage of convening with their counterparts from around the U.S. Through receptions, banker roundtables and hallway conversations, new relationships develop and lead to product recommendations, program best practices and new ideas.

“Where else to meet other bankers than the greatest community banking event in the country?” LaNore says. “Once you make that connection, it does foster even deeper networks with other banks across the country.”

2. Personal and staff knowledge.

Tailored to the top priorities of community bankers, the educational programming at LIVE speaks to pressing topics such as workforce development, regulation and risk, and digital transformation and innovation. With more than 70 sessions scheduled, community bankers will have the opportunity to dive deep into detailed topics in 50-minute slots. For those who want to fit more in, new this year are quick-hit, 25-minute briefings of need-to-know information. In addition, the ThinkTECH All-Star Showcase (sidebar below) and Expo will introduce bankers to the newest technology solutions supporting community banks.

“You can expect to hear from bankers themselves,” LaNore says. “We ’re going to tell the stories of your peers dealing with these current topics and different issues across the industry.”

3. Bottom-line benefits.

Investing in training opportunities like those at LIVE has proven positive effects on financials. In fact, a survey from the Association for Talent Development found that organizations that offer comprehensive training programs have 218% higher income per employee than companies without it and a 24% higher profit margin than those that spend less on training.

“The greater we are vested in trends coming down the way, the more we are prepared for increased productivity, higher return on investment and higher profit margins,” LaNore says. “I think you see that by actively investing in your participation and your attendance at ICBA LIVE.”

With these benefits in mind, what should community bankers do to make the most of their LIVE experience? According to LaNore, it’s about staying thoughtfully engaged and applying the lessons learned in new ways.

“One of my biggest pieces of advice is to be present,” she says. “Spend that time taking your notes, digesting the information and making a plan to transfer that knowledge back to your bank.”

2023 speakers

Jessica Kriegel

For Jessica Kriegel, when it comes to employee retention, fulfillment wins over engagement every time.

“Engagement is not just about liking your job, it’s all about productivity—whether employees are able to focus on the task at hand,” says Kriegel, who is chief scientist of workplace culture for consultancy firm Culture Partners. “But an obsession with productivity leads to burnout, which leads to attrition, which we all have seen has led to the Great Resignation.”

According to Kriegel, the term “employee engagement” was invented in the 1990s to broaden the traditional measurement of job satisfaction, but it often left meaning and purpose out of the equation.

A more effective and sustainable way of managing employee sentiment, she says, is to focus on employee fulfillment. Are employees fully able to develop character and abilities within their careers at the organization? Is their purpose aligned with the organization’s purpose? How can leaders overcome barriers to fulfillment such as power dynamics and misplaced competition?

In her role, Kriegel uses this approach to help national and global organizations in the finance, technology, real estate and healthcare industries create intentional cultures that accelerate performance. In a banking space, you can leverage this to drive true motivation at every level.

“The more meaning and purpose employees find in their jobs, the more fulfilled they are,” she says.

Jessica Kriegel will discuss her “Culture Equation,” a tested model where strategy and culture are combined to deliver consistent results from employees, during the general session on Wednesday, March 15.

Alex Sheen

Alex Sheen wants to inspire others to become better at sticking to the commitments they make.

“It seems like a lot of people don’t keep their promises anymore,” says Sheen, founder of nonprofit Because I Said I Would. “It used to be that a handshake meant something. And think about the promises we even make to ourselves, about our health, family or work, that often go unfulfilled.”

The aim of Because I Said I Would is to help people build resiliency skills and develop character in order to honor promises. The nonprofit conducts programs at correctional facilities, including juvenile detention centers, and also runs after-school chapter programs at high schools.

Each school chapter holds monthly workshops focusing on character development as well as social and emotional skills. In addition, chapter members address needs in their local communities through initiatives such as literacy for youth, community beautification, social connectedness, food insecurity and care for cancer patients undergoing chemo treatments.

Because I Said I Would also recently acquired property for a summer camp for young people who have been abused, are experiencing suicidal ideation or are in bereavement. The nonprofit is working with school counselors to identify potential scholarship recipients.

See Alex Sheen during the general session on Wednesday, March 15.

Colin Coggins & Garrett Brown

“The greatest salespeople on the planet are not who people think of when they think of the word ‘sales,’” says Colin Coggins. “In reality, these people are not overly gregarious, but they are self-aware. If something they are saying to a prospect doesn’t land, they’re able to course-correct.”

Coggins, who cofounded Agency18 with Garrett Brown to help mission-driven organizations improve their employees’ leadership and sales skills, notes that sales skills are important even in a leadership role that has nothing to do with actual sales. He says a flexible and authentic approach like he describes above differentiates truly great leaders from those who pretend to be someone they’re not, even if it’s unintentional.

“They’re trying to be whatever version of themselves they think is going to be successful,” Coggins says. “They don’t think they can be their authentic self to do the job, but the opposite is actually true.”

Brown agrees that the average leader focuses strictly on the mechanics of their job: building rapport, overcoming objectives, asking for the close and even being an active listener. While those essentials are important, the most successful leaders focus most on being authentic.

“If you focus on the mindset and not just the blocking and tackling of how to sell [or persuade], you come across differently,” Brown says. “You’re actually someone who’s interested in the person, cares about them and genuinely wants to help them.”

Colin Coggins and Garrett Brown will discuss their innovative approach to leadership during the general session on Tuesday, March 14. Their book, The Unsold Mindset, is out now.

 
—Katie Kuehner-Hebert

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As we enter a new chapter and start a new financial statement cycle, know that ICBA will be there to support you with tools, resources and advocacy efforts.

The beginning of a new year feels like a fresh start, a new chapter in our stories. We have a blank page on which we can write our narrative over the course of the year, with new milestones filling the pages ahead. And with 2023, we have no shortage of adventures awaiting us.

Consider industry evolution. I’m amazed at the pace of change occurring in all areas of financial services, from instant payments to more digital solutions and beyond. This will be a pivotal year for embracing new opportunities and exploring how we can set ourselves up to succeed, even with looming challenges.

And think about the uncertainty of the economic environment. It’s a challenge to be sure, but it’s one that community banks have previously faced with strength. Time and time again, you have demonstrated resiliency in the face of difficult financial conditions. In fact, this is when community banks shine, bringing stability to customers simply by being relationship bankers who see them and know them. Looking at it through a different lens, there’s opportunity in this economic climate: It’s a way to double down on your strengths and unique people-first approach to banking.

Yet, amid these external influences, you may be asking, “What actions can we take to ensure we’re identifying the right next step for our bank?” That’s where ICBA can provide support. Whether it’s the information that comes in NewsWatch Today or Independent Banker, convening with other community bankers to discuss strategies at ICBA LIVE or proactive engagement with lawmakers at the Capital Summit, we offer opportunities to not just react but respond to this dynamic environment with your mission and vision at the center.

We have increased our offerings to support you and to further differentiate our industry. For example, we have moved the ThinkTECH Accelerator in-house to ensure year-round innovation programming and find new fintech partners who are bringing to market solutions that respond directly to community bank needs. We’re expanding classes and programs provided by Community Banker University, and as the government relations team prepares to welcome new members of Congress to D.C., they are ready and excited to tell your story and ensure your voices are heard.

So, as we enter a new chapter and start a new financial statement cycle, know that ICBA will be there to support you with tools, resources and advocacy efforts. Together, we will write our 2023 story, one that will set community banks up for success.

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Rebeca Romero Rainey
President and CEO, ICBA
Connect with Rebeca @romerorainey

Photo by Juan Moyano/Stocksy

The payments landscape is evolving, and customers’ needs are changing. Here’s how community banks can enhance their payments offerings.

By Colleen Morrison

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Payments account for up to 30% of bank revenue, and that income stream is under attack. Increased competition signals that the payment relationship with the customer is up for grabs by a growing group of challengers.

CB Insights revealed that Q3 2022 fintech investments in payments continue to dominate financial services, with early-stage deals reaching a record high even as overall funding begins to cool.

“What’s interesting to me is the macro environment,” says Marilena Lakoumentas, senior vice president and chief digital officer at $3.3 billion-asset Bank of Tampa in Tampa, Fla. “We’ve got capital market resets that are potentially happening, technology advancements and continued heightened digital expectations. People are looking at Amazon and how they’re transacting and how they’re making payments, and it just raises the bar for everyone.”

Top trends in payments

As 2023 kicks off, community banks can respond to today’s payments landscape by addressing five key trends.

1. Adopt faster payments.

Federal Reserve research shows that upwards of 60% of consumers want a real-time view of their account balance and immediate posting of payments they initiate. In addition, 70% equate some level of bank satisfaction with access to enhanced faster payment capabilities.

With FedNow, the Federal Reserve’s new instant payments rail, set to launch in mid-2023, community banks can link up to the system, monitor its volume and identify use cases to meet customer demands.

“Payments is not only the biggest challenge for banks but also brings the greatest value to our franchise.”
—Chris Doyle, Texas First Bank

“FedNow is obviously going to change the landscape for us, and I think it’s going to accelerate [digital development] for community banks,” Lakoumentas says.

“The trend to watch will be how quickly adoption and implementation start to scale in the marketplace throughout 2023,” shares Nick Denning, senior vice president of payments industry relations at ICBA Bancard.“The time to act is now, and banks should be in the process of defining their plans for instant payments.”

2. Embrace digital transformation.

The industry has discussed digital transformation for years, but 2023 will give way to actionable shifts. From core infrastructure modernization to plug-and-play solutions via application programming interfaces (APIs), community banks will become more assertive in identifying ways to implement solutions that fill customer voids.

“When it comes to payments, there are opportunities out in the market to partner with fintechs,” says Chris Doyle, president and CEO of $2.1 billion-asset Texas First Bank in Texas City, Texas. “You can ramp up a revenue source that you’ve not had in the past and offset some of the losses in revenue that we’ve experienced or may experience. If you’re not exploring those types of partnerships, it may be a good idea to start doing so.”

3. Create frictionless customer experiences.

A recent Salesforce study indicates that 88% of customers say the experience a company provides is as important as its product or services.

That means personalized, seamless digital capabilities will elevate community banks in their customers’ eyes.

“If I talk about Bank of Tampa’s vision, we want to be great at our personal relationships and upgrade our digital capabilities so that we get as close as we can to being a best-in-class digital bank,” Lakoumentas says. “The combination of the two could be something really powerful.”

Products like contactless payments, QR codes, tap-to-pay, virtual cards and other streamlined solutions increasingly will be deployed by community banks because they support the goal of simplifying payments for the customer, while keeping the bank central to the payment.

“A QR code can be converted to an ACH, a card or FedNow [payment],” says Tina Giorgio, president and CEO of ICBA Bancard. “I think the whole point is going back to the mantra we’ve been saying for years: Frictionless is key to success. The more frictionless the ability to pay becomes, the more consumers are going to migrate to those channels.”

4. Evaluate payments at the point of sale.

Emerging and traditional offerings are mixing at the point of sale, introducing both choice for the customer and opportunity for the community bank. “You have some interesting dynamics to keep an eye on with respect to legacy payments and emerging payment types: emerging inclusivity of instant payments as well as paying with buy now, pay later [BNPL] or other products,” Denning says.

For its part, BNPL has already had repercussions on the industry. According to a Lending Tree survey, 43% of Americans have used BNPL, up from 31% year-over-year. The same survey found that 42% have made a late payment and 70% have admitted to overspending. The growing unease with BNPL solutions provides an opening for post-purchase plans that support the end goal, but without added concerns.

“Post-purchase is more responsible to offer to cardholders,” says Rebecca Kruse, executive vice president and chief operating officer at ICBA Bancard. “It offers a payment plan based on a purchase they’ve made on an already approved line of credit, instead of these one-off loans.”

5. Address fraud and security.

According to “The State of Fraud and Financial Crime in the U.S.,” a report from Featurespace and PYMNTS on fraud and financial crime, 62% of financial institutions reported an increase in fraud volumes from 2021 to 2022. Across the board, nearly all payment types saw an increase in losses.

“If community banks aren’t highly focused on fraud, they should be,” Doyle advises. “Fraud is running rampant. Whether you’re talking about P2P, wires or washing of checks, every payment rail is getting pounded on when it comes to fraud. You really need to build a strategy on how to combat that, not just for the customers but for the bank as well.”

In 2023, experts agree that advanced screening technologies will be more widely deployed by community banks to help identify troublesome transactions before they are executed.

“Real-time behavior-based fraud detection before a payment is sent—it has to happen,” Kruse says. “If you’re going to implement instant payments, you have to have fraud detection before you send the payment.”

Interconnected developments

While these five trends offer individual concepts, they are deeply intertwined, and that’s precisely where payments strategies excel.

“I grew up hearing this from my father at the bank: Payments is not only the biggest challenge for banks but also brings the greatest value to our franchise,” says Doyle. “So, at our bank, we developed a payments strategy years ago and continue to develop that as things change.”

Yet, with today’s rapidly shifting industry, it can be hard to see the forest for the trees. For Texas First Bank, that meant engaging outside expertise for a neutral assessment of its options. “There’s a lot of really smart consultants out there who can help community banks with that strategy,” Doyle says.

“At the heart of every account you have in your bank is a payment,” says Giorgio. “When you think about it, if you have a new account, the first thing they do is make a payment via a deposit into that account. If I have a loan, what do I do? I make a payment every month. If I have a credit card, I make a payment every month. I get paid; there’s a payment going into my account every month.

“How easy it is for your customers to be able to respond to those required actions is going to drive their behavior as to how they facilitate those payments.”

In short, payments matter, and as the new year rolls on, their prestige and impact will grow. Experts advise getting a payments strategy in place to ensure preparedness for whatever comes next.

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Colleen Morrison is a writer in Maryland.

One of our greatest assets is our reputation as relationship bankers. When things get tough, people want to be able to talk to their banker.

I’ve always been a glass-half-full guy, and though 2023 is expected to be a challenging economic year, it also brings opportunity. We simply need to remember what makes us special as community bankers, and with that as our foundation, we can embrace this season of change in four primary ways:

1. Demonstrating the community bank difference.
One of our greatest assets is our reputation as relationship bankers. When things get tough, people want to be able to talk to their banker. They want to come into the bank and say, “We need your support to figure things out.” With community bankers by their sides, they have a real connection to someone who can help solve their problems, and we’re able to find creative solutions to work with them in trying times. That’s the community bank difference, and we should be proud to reiterate it throughout the year.

2. Gaining advocacy wins.
Community bankers have proven vocal advocates on numerous issues facing our industry, including pushing to advance a cannabis banking safe harbor, close the industrial loan company loophole, oppose an extension of Durbin Amendment restrictions to credit cards and shape the debate over the regulation of crypto assets. I encourage you to join us and lend your voice to supporting these and other advocacy efforts, which will shape the policy landscape.

3. Embracing innovative offerings.
Technology is a top focus, because we have to be ready to live where our customers live: on their phones. This climbing emphasis on digital solutions is why ICBA brought all ThinkTECH programming, including the Accelerator, in-house to ensure year-round support for community banks. ThinkTECH companies help us serve our customers better, expand our footprint into a more diverse customer base and create better adoption of services through technology.

4. Uniting with other community bankers.
I’m a big proponent of the power of many in advancing community bank goals and objectives. There is nothing more impactful than convening community bankers with a one-mission focus. This year, gathering for ICBA LIVE in Hawaii and bringing our collective forces to Washington in the spring to advocate for our priorities will aid in ensuring community banks continue to flourish.

While no one can predict just how the year will go, I know that by staying true to who we are as community bankers, we will come out on top. And that’s why I’m looking forward to all we’ll collectively accomplish in 2023.

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Brad Bolton, Chairman, ICBA
Brad Bolton is president and CEO of Community Spirit Bank in Red Bay, Ala.
Connect with Brad @BradMBolton

(L-R): Union Savings Bank’s executive vice president, Rick Judd; vice president of digital channels Chris Barlow; and director of USB Innovation Center Peter Scotch at USB’s historical Main Street Danbury, Conn., location. Photos by Mike Yamin

By partnering with fintechs, Union Savings Bank has rolled out an innovative digital tool that uses AI to help customers achieve financial wellbeing.

By Aileen McDonough

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Community banks have long been a bastion of relationship-focused service. But what happens when a community bank makes the decision to put technology—specifically, AI—at the heart of its customer service strategy? For Union Savings Bank (USB), a $3 billion-asset community bank in Danbury, Conn., it’s all about helping customers on their journey to financial wellbeing through innovative solutions and a friendly, supportive team.

USB recently launched Spending Insights, a solution that integrates with the community bank’s mobile banking app. It’s designed to automatically track and analyze customers’ spending habits, then offer opportunities to budget and save money.

So, how did a community bank whose headquarters still occupy the building where it was founded in 1866 become a tech-forward organization in the AI space?

USB worked with fintech partners FIS and Personetics on this project, and chose their solution in large part due to its ease of use, which generally results in higher adoption rates for personal financial management (PFM) tools. “Nearly 95% of our mobile customers are aware of [Spending Insights] or are getting insights, and 20% of those folks are actually clicking on and engaging on those insights themselves,” says Chris Barlow, USB’s vice president of digital channels. “We’re obviously still looking to grow that.”

“We never want to lose sight of the importance of good conversation. The AI tools just make it a deeper, more meaningful conversation.”
—Rick Judd, Union Savings Bank

The community bank has achieved nearly complete awareness and almost five times the typical rate of engagement for PFM tools, only six months into its launch. Alongside strong engagement numbers, the customer reaction to USB Spending Insights has been positive, with many leaving favorable comments, reviews and ratings of their experience, Barlow says.

Peter Scotch, director of the USB innovation center, says, “Our understanding of PFMs is that you typically get 4% to 5% engagement on them—again, because of the heavy lifting the customer has to do.”

The human factor

USB Spending Insights is part of a larger educational initiative at USB, FutureTrack, which offers goal-based financial coaching free of charge to USB customers. Customers can schedule in-person appointments with certified FutureTrack coaches to receive advice and establish accountability to their financial goals.

Rick Judd, the executive vice president overseeing FutureTrack, says the program “helps people along their financial journey.” The Spending Insights tool helps customers notice their habits, while equipping them with the understanding to have an informed, productive conversation with their banker about how to reach their financial goals.

“The educational piece complements well-trained staff,” Judd says. “Having an AI tool presents an educational opportunity, and coupled with good sound advice from people, it’s a perfect marriage of technology and the human component that we really value. We never want to lose sight of the importance of good conversation. The AI tools just make it a deeper, more meaningful conversation.”

Ambassadors to the digital world

In combination with USB’s relationship-banking practices, its new technology allows it to support the financial well-being of all its customers. As Scotch points out, “We stay relevant by continuing to roll out tools that make it easier for people who are more engaged digitally, and then tie that with the appropriate expertise in the bank that can talk to them when they’re ready.” The community bank employs digital experts at every single branch; it calls them digital ambassadors, a term that was chosen because it’s perceived as knowledgeable but approachable.

Judd says the digital ambassadors bridge the gap in technology know-how for both staff and customers. “We can have all these fantastic tools, but if there’s a gap between the tools and understanding, then it doesn’t really benefit the client; it doesn’t improve the customer experience,” he says. “Digital ambassadors are charged with being the educators, both of the team and the public. If we make things approachable, more people will get engaged.”

“We have this vision for improving the financial wellness of our customers, and we’re looking for the right solutions to support that vision.”
—Peter Scotch, Union Savings Bank

Barlow adds, “They are the go-to when a customer says ‘Hey, can you help walk me through this?’ They are also on the front lines with training the rest of the branch about our new capabilities. We hold periodic meetings and training sessions to make sure that everyone in the branch is aware of new technology rollouts and is prepared to take customer questions and comments when they come in.”

Continuing to innovate

This is not the end of technology innovation for Union Savings Bank. According to Barlow, USB is helping FIS evaluate fintechs and improve its customer approach. “We’re becoming known as the bank that is technology forward, ready to think about adopting new technology,” he says, “and we’re getting good feedback about that.”

In the end, “tech meets touch” has been the right approach for Union Savings Bank, because it enables the community bank to provide for the needs of the customer, keeping their financial well-being top of mind. Scotch says, “We have this vision for improving the financial wellness of our customers and we’re looking for the right solutions to support that vision.”

“The end result is they feel financially fit,” adds Judd, “and that’s important to us.”

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Aileen McDonough is a writer in Rhode Island.