Episode 89: Neil Stanley

Jack Hubbard: I've had the privilege of being in and around banking for more than 50 years. Lots of changes during that time. We've gone from ledgers to laptops, typewriters to technology. One thing, however, remains the same. Banking is a people business. And I'll be talking with those people that make banking great here on, Jack Rants with Modern Bankers. Welcome to Jack Rants with Modern Bankers. It's brought to you every week by RelPro and Vertical IQ. After six decades in banking, well, it's time to give back, and I hope this program amplifies what I'm trying to do there. Every week, I feature top voices in financial services, bankers, consultants, best selling authors, and more. The goal here is simple. It's to provide insights, success practices, and to bring new ideas to the table that you can use to maximize your results. Raise your hand if you need deposits. Yep, looks like everybody at every bank and every credit union raise their hand. 

My guest today, Neil Stanley, can help. Neil, is the go to expert when it comes to gathering deposits and keeping them. Neil founded the core point in 2010. Their mission is to revitalize pricing strategies, or retail deposits. The core point is the industry standard for that, and that's for sure. Neil earned an MBA from Nebraska. He's a 30 year banking veteran as well. He's an economics instructor at Iowa State and serves on the faculty of three amazing banking schools. Neil is a senior executive with Sheshunoff Consulting. He owns two patents, and he writes and speaks often at banking conferences. Wow. When does this guy sleep? Well, I don't know that, but I do know this. When it comes to deposits, Neil Stanley is the real deal. He's my guest today on jackrance with modern bankers.

Here we go. Well, as I mentioned in the introduction, despite the fact that we're kind of in the middle of the year, deposits are king and queen, and I have the deposit king with us today. Neil Stanley. Good to see you, Neil.

Neil Stanley: Thanks, Jack. Great to be here.

Jack Hubbard: Well, we're going to talk a lot about deposits and your approach to helping banks, as you do with your company. And we're also going to talk a little bit about business, because I think a lot of times when we talk about deposits, it gets a little bit lost in the shuffle. So we'll talk about that. But you have a great company, corepoint. and I love to have you chat about what core point is, what it does, and who you help.

Neil Stanley: Thanks for that question. The origins of the core point were, from me being a banker for many years I worked at the holding company at First National bank of Omaha. It was a great place. We were so progressive. I didn't realize at the time how progressive we were, but we grew to be the largest, privately held banking company in the country. I should have had a clue that we were not typical. I was there for 22 years at the holding company. And what came out of that was that I got to research things that most bankers didn't get to spend time doing. And so, after being a CEO of a community bank in Iowa, I decided to launch my business. 

And the core point is all about helping bankers move from product pushers and order takers to trusted professionals who provide quality products and superior service. Because they understand the money management approach, they understand how their bank manages money, and they help their clients manage money. So many times, Jack, bankers have fallen into the rut of saying everything's the same. We have the classic checking, the classic savings and classic cds, and they're all the same. But we need to bring out, to draw out the value of those things, the utility, the value that the depositor gets. So basically, I built Bloomberg for retail bankers.

Jack Hubbard: Interesting. Well, what's the methodology? How do you go about doing that?

Neil Stanley: Well, we know that the process that bankers have, as I say, oftentimes, order takers, product pushers, hey, we have this slate of offerings. Let's just put it in front of people. The problem with that is it commoditized the things we do. We need to step back and talk about the process of engagement. Actually, commercial bankers are pretty good. Commercial lenders are pretty good at engaging with a process. They don't just hand out a rate sheet and say, here you go, do you want some? Instead, they talk about the business that they're involved with, that the customer is working with, and where they might be able to help and how they might be able to help. We've learned how to help retail bankers do that very same thing, Jack. So we do a consultative process. We give them new products, which is kind of audacious in banking, that there's something other than the classic savings and the classic term deposit. And we then help them with a sales platform. It looks a lot like a GPS might look to you today on your phone. Hey, don't just throw out a whole bunch of options, but help somebody get from here to there. And we give them the steps to do that with the process.

Jack Hubbard: Oh, that's wonderful. Well, you're helping a lot of banks, and it's really important. Here we are in the middle of the year already, and about a year ago, the FDIC came out with a report. It was basically that in the first time in the history of banking, deposits actually dropped, and it was a 4% drop. And that's a big deal when you're talking about trillions of dollars. So are we still in a deposit crisis, Neil? And if so, what do we need to do to get out of this thing?

Neil Stanley: I don't know that I would say we're in a crisis. We're in an evolving paradigm. The paradigm that we had was that, if we just put out the fact that we have a bank, people are just going to bring money to us because they don't really have other options. There's really not nowhere to go with your money. So if you want it to be safe, you need to put it in a bank. Well, folks, today the US government is a huge competitor with us because they're offering t bills, t notes, t bonds that are very attractive yields, relative to what we've experienced for the last 15 years. And so that's where a lot of that money went. It went away from the banks. They didn't really need the financial intermediary of a bank when they could simply and easily put the money to work in a treasury bill. So that's where a lot of that money went. Jack wasn't, it wasn't in people's mattresses. They were putting it to work. They were employing that money in an earning asset. And bankers have realized that if they are willing and able to compensate people with interest on their deposits, they'll keep money in a bank, but they don't want to do it unless they're going to get paid.

Jack Hubbard: Yeah, you mentioned, the Fed, and the government. So we've got inflation still, and the rates are still high, comparatively. How is the government inflation, for example, and the fed's actions, how are they, influencing customer behavior around deposits?

Neil Stanley: One of the things that I sometimes do is with my non-industry friends, my friends at church and other places, I'll just ask them questions about how they see the world. and it's so rare to find someone who realizes that when the Fed, open market committee meets and they announce the Fed fund's target, that that is the rate that a bank will get. If they take money that I deposit in the bank and they just invest it overnight, they're going to get that Fed fund's target rate or pretty close, but people don't. They've never really realized that if I put dollar 100 in the bank, that bank is going to get the Fed funds target rate. Most often, that's the opportunity cost for that bank. And so people are starting to realize, not because of the fed fund target rate, but just because of the competitors going, well, we can take those funds and we can invest them. 

And so we are getting more and more attention for depositors. And so the Fed, by its need to get rid of, what I referred to many months ago now, the negative real interest rate. So, Jack, when I was in college, years and years ago, if you ever talked about interest rates, you had to identify whether that was nominal or real. I think that's been dropped from the conversations that most people have, because you just talk about interest rates being nominal. But the real interest rate is the interest rate. Less inflation. And when inflation is greater than the interest rate, you have negative real interest rates, which incense, leverage. It encourages wealthy people to go out and do things that are making more money on the value of inflation than they are on the cost of interest. And that's unsustainable. That's what the Fed had to stop. We had to stop the negative real interest rate because it was causing a spiraling activity of inflation. And so they've taken those steps. and the good news for our economy is much more resilient, much more resilient than pundits talked about. When the Fed started raising rates, it was like, oh, we're going to create a crisis of high interest rates. Well, GDP continues to be strong. unemployment continues to be at levels that historically have been very appropriate, very acceptable. 

So the Fed's actions may have been slow, but then once they started, they were brisk in terms of the rate increases, faster rate rise than we've ever seen on a percentage basis before. So I know that's a lot about the economy, but basically what's happened is that the Fed has properly responded to match what the market would have done. So the feds are in place to help us with understanding what interest rates should be across a broad economy. But if you think about an economy where buyers and sellers can come together, if you have a savings account and you actually went directly to a borrower, who would you ever allow to borrow money at 0.25? Like, people want to get interested. But the government pushed those rates down to incent borrowing, and they disrupted the value that a healthy economy would have had. They basically told savers, you're not going to get anything, and we're going to give all the value to borrowers. And that existed for about 15 years, much longer than I would have anticipated. But it was because of the leverage of the great recession that we've lived in an environment that's really unusual for 15 years. We're actually getting back to something where buyers and sellers of money would say, well, that's a fair rate for my money. That's a fair price for my money. So the Fed is actually finally getting to where an economy where there's equal power on buyers and sellers of money would probably be more appropriately setting rates.

Jack Hubbard: and when I started banking in 1973, and my wife was at a savings alone, five and a quarter percent compounded daily was the going rate, and pretty much offered it. And there were very few options. You either went to a bank or you went to a bank, or your bank, or your mattress. And we controlled so much of the market share. So now here we are, 2024. Young people have so many options.

I'm curious, Neil, what are things like chime and those other non banks, neo banks, fintechs, what have they done to disrupt the deposits of banks?

Neil Stanley: Oh, absolutely. I mean, even, the amounts that are sitting in venmo accounts, there's all these options that people have to move money. And so they've really changed the paradigm, the way we think about things because of the ease and simplicity that we get from these things that weren't around the last time that we had interest rates anywhere, these levels. so it was interesting. We used to have, years ago, we had high interest rates. People will talk about the volcanic years, high interest rates. But we didn't have any cell phones, we didn't have any technology. So you had to manage that very, it took a lot of effort to move money around. And then just as we got technology, interest rates went to zero. It's so interesting how they came together. We got smartphones and low interest rates all at the same time. This is the first time in history that we've had motivational interest rates and technology to move the money very seamlessly, very, very frictionlessly.

Jack Hubbard: Yeah, it's a different ballgame, isn't it?

Neil Stanley: Indeed.

Jack Hubbard: Fascinating.

Well, you're a prolific writer and a very good one, and I know I read your stuff all the time and I appreciate you sending it to me. You recently wrote an article for the financial brand, which is just a great newspaper, and you discussed four questions that executives can use to examine their approach to deposit gathering. And I'd like to go kind of point by point with you, if I can. the first question you ask is, will it be perceived as fair and consistent by depositors and staff members? Talk about that.

Neil Stanley: So the interesting thing about a financial institution is we employ people who are helping people manage their money, and they're very aware of fairness. A lot of times. In fact, one of the things bankers have struggled with is helping the frontline understand how a bank makes money. And, I know in your schools, I'm sure you've done some of this, as I have done when I teach bankers, is that they tend to think that, every growth, opportunity is a great opportunity. Well, let's just keep growing the bank, grow, grow. But there is a net interest, margin, and there is a net income that we're trying to produce in a bank. And so we have to do things of value. 

We create value and we take a portion of that value. But the front line has a really strong sense of fairness. And of course, our clients have a sense of fairness, too. Hey, if you give them this, why wouldn't you give this to me? And all of a sudden, when we start doing things out of the norm, when our paradigms start to shift because of high interest rates and we go, oh, let's just do exceptional pricing. Well, if you give them that price, why don't you give them that price? And you start to get all of this angst about, are we being fair? Are we being consistent? In fact, there's a CFPB who's chartered with the responsibility of making sure to eliminate gross inconsistency and gross unfairness. 

But even beyond that, there's this emotion that's tied to successful organizations who feel like, hey, I'm going to use my energy to take care of people. We want to make sure we're consistent and doing it with people who are, we're giving them value and we're getting value in return. If we're biased, we get a little rebellion. Sometimes it's silent rebellion, but there's rebellion. There's certainly rebellion from the clients going, wait, wait a minute. You mean new money only? What do you mean, new money only? I've been banking with you for years and years, and I don't qualify for your great, great new deal. That's a problem.

Jack Hubbard: That is a problem. So if we ask the question and you gave a great answer and you talk about new money versus old money or existing money? What's the answer here? What have your clients done to be fair and even this whole playing field out?

Neil Stanley: Well, that's where we need some new products because the classic checking, the classic savings and the classic term deposit, we understand them. But basically, if you want to apply strategy, bank strategy to these things, it's really hard to do. If everybody in your bank is getting paid fed funds, that's your savings account, and we're paying them the fed fund target, where's the margin for profit opportunity? There's not. And so bankers have lagged. We talk about the beta. When interest rates go up 70, five basis points, we're only going to raise them 20 basis points. Okay, that's fine, if nobody walks. But what about the people who threatened to walk? 

And so that's where we get in. Well, let's make an ad hoc exception, or let's make new money only. We'll give them closer to fed funds, but everybody else gets, you know, 0.4%. So that's where this came about. Nobody talked about this issue when Fed funds were a quarter, because it was all kind of the same. Whether you had the highest rate or the lowest rate in the market, really didn't move the market. But now where you've got some people still offering savings rates, if you go pull a survey of rates for savings, you're going to find some point and you're going to find some fours and fives. So that's a huge margin for differential.

Jack Hubbard: Yeah. And when we were kids and just starting in the business, everybody offered about the same rate, and you didn't have an awful lot of options. Do you want five and a quarter at this bank or the bank across the street? Well, there's not a lot of options. And now, as we talked about, there's so many other options.

Well, the second question you ask you really started to talk about is my pricing strategy understandable for the customer and for colleagues inside the bank? Talk about that one a little bit.

Neil Stanley: Yeah. So the one thing, one, phrase that I picked up on long ago was simplicity. is the ultimate sophistication, Leonardo da Vinci. And so while we want to have a more sophisticated, more robust approach, we have to keep it simple, easily, intuitively understandable. And so what we've done is we've helped people move to a better process and a better product. So, for example, let's say that someone has a relationship with us and they have a term account and it's coming up for renewal. And they started shopping around and realized that they could go to Edward Jones and get 5%, but our renewal rate is 1.4. So they look at that renewal rate and go, well, okay, I can get 5% on my $100,000 and we're talking about enough money, but it's worth it for me moving the money. 

So banker, you're either going to match this or you're going to lose it. Now, that frontline person is in many cases not empowered to make that decision of match or lose. And for good reason. Because if they start matching it, remember, they're kind of advocates for the depositor, and if we start matching one, then we match them all and pretty soon it spirals out of control. So you need to make the pricing strategy easy to understand and execute. So many years ago, we decided that instead of matching or not matching and individual decisions made by, on, that, on that situation, let's build a product and a process that we can consistently use. And it doesn't reprice all of our money because that term deposit is coming up for renewal or leaving. Let's do this. Let's tell the front line, hey, give them some options, but if they don't like them, instead of matching or just telling them to take the money, we'll say something like this. 

Jack, you've had an account with us, you have a relationship, you've been with us for an amount of time that puts you in a category that qualifies you for an elite savings product. We call it limited edition savings. You're only eligible for it because you have a maturing term deposit with us. And I can give you a savings account that pays 4.7. It competes right up there with Marcus Synchrony and Ally. And I can give it to you today with all or part of your maturing account. And most depositors say, wow, I didn't know anything about this. I didn't realize you had it. Yes, we have it exclusively for relationships like yours, where you have a maturing account and you've told us that you're going to leave. We don't want you to leave. We want you to stay with us. 

Now, Jack, if we price that at the bank, if we price that at 4.7, given the fact we can put it in fed funds at 5.3, somewhere around 5.3 to 5.4, we're going to make money on this. But if we let them leave, we lost the funds, we lost any profit opportunity, and we're on the way of moving out of the relationship with that depositor. So these are the things that we make simple and easy. You can see a frontline person going, well, I got this in my hip pocket. If somebody threatens to leave, I don't have to call management. I don't have to call the Treasury. I have the power to move them into a product as long as they do the right things. If they never threaten to leave, there's no reason to upgrade them to limited edition savings if they're happy and they're comfortable.

We always do this. We talk about the fact that there are always three kinds of depositors in every financial institution. There's the content. Sometimes we'll call them sleepers. But you want to let the sleeper sleep because they are comfortable with the utility, the value of their accounts not being at the highest rate. They have other reasons. They bank for you or bank with you. So that's cruel. We want to keep those sleepers. We want to keep those content funds. And then, of course, you have today, the curious. And the curious are legitimately asking questions, well, how should I manage my money, Neil? What should I be doing? Those people you want to show respect to, and then the rate shoppers, which is somebody threatening to leave, you need to negotiate with them skillfully, and that's what we're doing with a product like limited edition savings. And every bank can have it, but only a handful do.

Jack Hubbard: Wow, that's interesting. I'm curious what percent of people stay. You must do data on this.

Neil Stanley: We do, and we typically find about 70%. Now, it depends on where you set that rate. So if they're leaving for a, 530 and you set your rate at 490, you're going to keep about 70% of it. If you set your rate at 3.2 and they're leaving for a 530, well, your percentage of retention is going to drop dramatically, and if you don't give it to them, then everyone who threatens to leave, only about 5% will say, I was just bluffing. I'm going to keep it here anyway. So it's a matter of really understanding the process, keep it simple and easy to execute. and that's when it's effective.

Jack Hubbard: So that must get to your third question, which is, is the tactic valuable to depositors and the institution?

Neil Stanley: Yeah. So I could use that example, or I could shift over to something like a teaser rate. teaser rates have been used for decades. Hey, we're going to do a promotional rate, but it expires. And there are some people who go, well, I see it. It's full disclosure. That's understandable. I'm going to take advantage of this. I'm going to move my money into that. You call it a promotional offer, a special promotion, but I know that at the end of that I'll be back to where I was. We used to see it a lot with credit cards where they would give us, hey, you don't pay any interest for twelve months. The credit card company would try to get people to build their accounts with them because it was not carrying any interest. But then of course there comes that date when it ends and the credit companies want you to start revolving then. So what we're doing with deposits is we're telling people, hey, we're going to give you something. It's either yield, access to your money, safety, convenience, all those things come to mind. But maybe it's going to change. We're not guaranteeing it forever. Okay. That to some depositor is very valuable. Other people go, no, that's a short term win. I want a long term win. So that's what we mean by a tactic that is consistently valuable, or in the short term valuable. They can be different.

Jack Hubbard: Interesting. And the last question you talk about really has to do with margins. Is the approach effective at attracting and retaining desired deposit volumes at healthy margins?

Neil Stanley: Yeah. So there are lots of things that people, that financial institutions can do, but the bottom line is, did it matter in the end? Did people respond and give you the opportunity to become, their primary financial institution? Because that's really what we're trying to do. We're trying to get attention. Hey, take a look at us. We're the place to bank. And in the end did all the things we try to do and say stick around when things normalized, when like the teasers expired or the relationship matured, what's the lifetime value of those accounts that you got when you applied the approach that you did to try to grow those deposits?

Jack Hubbard: Interesting.

So we talk a lot about technology, and it's great in banking. It's real, makes banking easy, etcetera. How do you blend in your approach, the technology that allows people to move their money before you even know it, with that human touch that you're talking about?

Neil Stanley: Yeah. So, so many organizations have become believers that technology is the way to go. And certainly we embrace technology, here at the core point. But what we have to avoid is this dichotomy of it's either personal or it's digital. I think it's a false dichotomy. technology accelerates whatever we're doing. Technology gives you the ability to scale, to have lots of volume very efficiently. But technology also accelerates bad things as much as it accelerates good things. And so if the design of a product and a process is healthy and you use technology to accelerate it, digitizing, that is wonderful. But currently I am unaware of any autonomous automation taking over the leadership of a bank. I don't think any generative AI is in charge. 

And so what that means to me, Jack, is that we still have leadership executives who are structuring the offerings and the processes and the technology utilization of their organization. And so what we have to do is ultimately understand that you're not going to just apply some sort of technological solution to a banking issue or question and all of a sudden, wow, this is just wonderful. We don't really need people anymore. We're just, our technology is all we rely on. There's always got to be someone who is able to articulate what we do and the why of what we do. What is it that makes us worthy of being the place that helps a client manage their money? And so I believe in technology, but what you'll find at the core point is we professionalize the engagement. We believe that there's somebody in the bank who is probably working off of legacy. We're a legacy industry. 

We're regulated, which makes us slow to adopt new ideas because we got to get regulatory approval on things. But ultimately, most things in banks, if you ask the front line or even middle management or senior management, why do you do what you do? If they're honest, they're going to say, we inherited it. We do what we do. Because when I came to the bank, that's the way it was. And we've made some incremental changes, but the fundamentals of what we do were here long before I arrived. So the industry is in a state of change, and the best and brightest are able to sort through why they do what they do. And they understand if we're doing it just because we inherited it, it needs to be reevaluated.

Jack Hubbard: Yeah. So we spent quite a lot of time talking about consumers.

Jack Hubbard: I think when the SVB thing hit the fan, one of the things I think people forgot was, okay, deposits are running out, we've got to stop them. And consumers have such a large part of the, is such a large part of the bank that there's the attack point. We got to stop the bleeding there. But I think a lot of people forgot about commercials. Now, here's the problem. Historically, within a lot of banks, commercial lenders don't have any deposit responsibilities. Now all of a sudden commercial deposits are leaving and loan demand is pretty low. So now we've got commercial bankers going out looking for loans and not deposits and a lot of people aren't borrowing. So what are you seeing in terms of commercial bankers getting deposit responsibilities and how is that working?

Neil Stanley: So the best way I can respond to that is that I spend a lot of time with the Sheshunoff organization. I'm the leader of the idea exchange. and when I go to these sessions we'll have anywhere from ten to 1617 people, CEO's in the room and we talk about what they're doing in this regard. And so there's a lot going into let's change the incentives, let's broaden that compensation strategy from hey, you're going to get this on your book of lending, you're going to get paid incentives on volume and profit, to a holistic approach. We've had people say we started calculating the loan to deposit ratio for every one of our relationship managers. Instead of just the bank's loan to deposit ratio, they're actually calculating the loan deposit and publicizing it internally, with hey, this relationship manager has this loan to deposit ratio and nobody wants to be one of those where they don't have enough deposits because of the emphasis. 

There's also a tendency to much improve the status of the treasury management services personnel. at one time they were like well that's just a functionary kind of role. no, it's more than just operations. It is very much a business development role in the treasury management services area. so those are things that are happening or changing incentives. We're changing the energy that's going into certain roles. My sense of it is that the recruiters in the world, the banking area recruiters are finding treasury management services to be every bank, hey, can you find somebody experienced that can come in and help us with treasury services? I think that's definitely changed. I'm guessing the compensation for treasury services will go up a lot. But one of the other things that talk about incentives, we're inventing the relationship managers to go out and get deposits. 

So that's changed. We're also changing the expectations that are explicitly input into the loan agreements. So I know you know that oftentimes when a credit comes to committee the conversation will be are we going to get the deposit accounts as we bring over this loan and the relationship manager is, oh, absolutely, we're going to go get those. And then, once they check that box, then we move forward, we book the loan and we go down the road. And after a while somebody says, did we ever get those deposit accounts? That's changing. In fact, one of our bankers said the other day that the relationship manager has 45 days to get those deposit accounts and be not only just a balance, there's some people who are doing, hey, you got to keep x number of dollars with our bank at all times. An average balance that you've got to keep every month with us. 

But what's the consequence if they don't? And so what this one banker, I thought was really interesting, this one banker said, hey, we put a 45 day window. And if at the end of 45 days, we have not become their primary financial institution and believe that we are basically handling their finances here, their money here, the loan will automatically go up 150 basis points. And the other bankers in the room, you can tell people are active and sometimes people are thinking and they're working on something different, but you can tell all the heads turn and go, ah, 45 days, or the rate goes up 150 basis points. I wonder why we're not doing that. So I think that's something that you're going to see more and more because, you know, Jackson, every management team is saying, go get those deposits along with the loans. But what substantively are they doing differently? 

That's what they're doing. They're putting it in the loan agreement and they're following up. Of course, the bankers in the room said, so if somebody complains, you got the loan on the books and are you going to really tick them off if you're going to raise 150 basis points? He said they had one person go ballistic. I'm ballistic. Hey, this is ridiculous. I'm paying a fair rate already. This 150 is ridiculous. And they said, well, tell you what, we'll give you another 45 days. If we don't, we are going to raise it. And they complied. They did, comply. Everybody else complied right away. But now they haven't been doing this long, Jack, I think they said in the last six, to eight months, something like that, that they were doing it, but they had no intention of going away from it. I can assure you that this banker was very happy with the results.

Jack Hubbard: Fascinating. Now there are banks who say, well, you know what, to put the deposit responsibilities on these lenders is untenable. They have to go out and get the business. They have to do the spreads. We're a community bank. We don't have a lot of credit analysts, so they have a lot of time to spend on this. What should we do? Well, I've seen a couple of banks do something called droves, deposit relationship officers. So they put these folks out in the field and they know who the deposit rich industries are, and they're targeting them, and they're going out. Now, they're not treasury management people, which I want to talk about, but they are business development officers. But their whole focus is looking for deposits. What are you seeing in the industry around something like that concept?

Neil Stanley: So you're maybe ahead of me in some of that. I'm not surprised at what you told me, but I hadn't heard about that dedicated commercial relationship. manager, on the deposit side, being separated from the lending side. so titles are one thing. It's the assignment of accountability, authority and responsibilities that are critical. So your team, whether they are specialists or generalists, somebody in the bank today has to take that responsibility of business development. On the funding side, funding can no longer be taken for granted. So commercial, nonprofit government, there should be someone in all those areas saying every day, what's my pipeline? Who do we think we have an opportunity to move? What are we doing about getting that business over here? The challenging thing, I just had a conversation with somebody. They, ah, said, actually, I'm going to meet with them. They're a client of mine, and they use all of our services. I'm going to meet with them on Friday. 

And when they use our services, we are helping them with the core retail, term deposits. But they want to know the things you and I are talking about right now. They came back and they said, we just want to get more non interest bearing commercial accounts. I said, like everyone else, you are rushing to get something that's a shrinking market. We are shrinking non interest bearing deposits as a society. And everybody today is focused on, let's go get those. So the volume is shrinking and the attention to them is growing. The more attention we get, the more likely the non-interest bearing is going to shrink, because what's going to happen is more companies like Intuit and Crescent. I don't know if you've seen, I know you're active on LinkedIn. 

Have you noticed Crescent showing up with commercial DDA accounts paying four to 5% interest? And intuit, which is quicken and QuickBooks, they're offering high, interest rates on accounts that you keep with them. These are all focused on business accounts. These are not retail accounts paying on those funds, sitting in those accounts, in the range of 5%. So I completely understand why the deposit relationship officers are coming into being, and I think there's a place for them. Certainly we probably have for the last 15 years just not prepared a generation of people. We basically atrophied, Jack, because why spend time and energy on something that we just checked the box for? Yeah, we got plenty of deposits and they're non-interest bearing.

Jack Hubbard: That's changed. Yeah, it has. When I was a young consultant, gosh, it's probably 40 years now. I had a guy tell me once, business goes where it's invited and stays where it's well served, it's a very simple concept, but so true. And you talked about something a little different than deposits, which I think people need to understand. It's funding. So the deposits fund the loans. And it goes back to your comment before about teaching bankers how banks make money and what the business of banking is all about. One of my colleagues at graduate school of Banking and yours starting in 2024, is a guy named Mike Weir. And Mike is from Nebraska, a great guy. And he teaches the business of banking, and he helps bankers understand funding and how the bank makes money. And so from a funding perspective, well, maybe it's commercial bankers, maybe it's deposit bankers, but what about the branch managers? We don't have a lot of traffic in the branches anymore. What are you seeing in terms of branch managers calling on small businesses? Maybe up to $3 million in sales. Not a lot of complexity, but decent deposits. What are you seeing around that in terms of branch managers making calls?

Neil Stanley: Well, I'm going to start super fundamental and then I'll work up to that because I think you'll appreciate this. Given our ages, you might relate to what I'm going to tell you here. When I was a young person, people made a living with a shovel, literally with a shovel. No more technology than the shovel today. If you're going to dig a ditch, you don't use a shovel. Nobody makes a living with a shovel. Now, they may use a shovel to finish off something they did with their ditch digger, their big machine that they're doing. And in what we do, nobody's going to make a living doing the basic transaction. It's all going to be automated. You don't need someone. I'm sorry, folks, if you think you're going to be a teller for the next 40 years, you're 20 years old and you think you're going to be a bank teller for 40 years, that's not going to happen. 

So what's happening is all of us are moving from, in the professional realm, from order takers, product pushers, transaction facilitators, to people who either are creative with ideas about ways to structure things and do things, or they're relationship focused. They are doing those invitations that you talked about, and they're welcoming people to stay with them. And so they're either inviting or building that relationship. And so what's going to happen with branch managers is the idea of a branch manager being purely administrative. It's just not going to work. If all you are is monitoring your people and administrative responsibilities of the building. that's a pretty light burden. The role will be, are you expanding the business? Are you building in funding? Are you helping, to get money into lending activities? Basically, we have four things our industry does, Jack, with people. We help people who need money they don't yet have, our borrowers. We help people who have money that they don't yet need, the depositors. We help people manage money, move money around, make payments just as they expect, and we keep track of all of it. We do the accounting and tracking for people. 

So those four things, loans, deposits, payments, and accounting, are the things that we do. And so branch managers are going to be more involved in the future in helping people be invited, welcomed into doing business with us. They're going to be business development people, because the other roles are going to be minuscule in comparison. The business of banking is going to be very vivid to branch managers. So I think you're right on target with branch managers' role changing from what it historically probably was, for decades, to being much more robust, outstanding.

Jack Hubbard: A couple more questions. you started to talk about treasury management a little bit. I'm curious what you're seeing around, the gearing ratio of treasury services folks to lenders and the proactivity level of treasury management folks. Is that changing at all?

Neil Stanley: Neil, you know, really, that question I should have posed to my associate, Julia Hernandez. She's a certified, treasury services specialist. She worked very closely with lenders at FNB when we were there. she would be able to articulate this much better than I could. But I know this, that it was all about the team effort, because when you went in with the relationship manager, the treasury management person was there to functionally validate that we could deliver all the things that they needed, whether it was positive pay for fraud, protection, whether it was sweep accounts at the time. Whatever was needed to help manage the finances of that business, that treasury management person was there to functionally deliver, to operationalize the ideas that maybe the relationship manager knew something about. But the depth in which the treasury specialist could get into was exactly what moved the needle. 

That's what made the business operator comfortable, that, yes, this is a viable option. We're not going to diminish our financial performance by making a switch to this bank. The thing about banking, the thing about human beings is that we make decisions and we don't want to go backwards in any way. Going backwards is very painful. Somebody said to me that if you ask people about the win-loss kinds of relationship, hey, if you just found $1,000, how does that make you feel? Well, it makes me feel great. Hey, I got an extra thousand dollars. But if somebody takes $1,000 away from you, that's much more painful to lose something. To lose something you became reliant upon is to win something that you didn't even think was on the horizon. 

So we have to use our team to make sure that everyone is comfortable with the transitions, the things that are going to change, because we all fear change. We all fear moving to a bank that maybe didn't have what we thought was there. Maybe they over advertised, they overstated their capability. I find that the treasury management people are the people who bring operational excellence to be very much, experience and realize and become comfortable that this bank can handle what I, what I have as challenges in running my business.

Jack Hubbard: Awesome. Well, Neil, you've been very kind with your time. I'm, you know, I've done a lot of work with Sheshen off over the years. and you are a very senior executive consultant. there, talk about what Shenov does and how people get involved with Shechenov.

Neil Stanley: Oh, thank you. Yes. Well, Chechnya celebrated 40 years of the CEO affiliation, last. Was it last? No, two years ago now. and it's a wonderful organization. I was invited to speak a few years ago and, I just love the environment of that peer CEO network. And so, it turned out that Gary Forehand, who was the idea exchange leader, was kind of looking at retirement. And, when I showed up and I did my session, I said, gary, can I just hang out and sit in on the sessions with you when you do the idea exchange? He said, sure. I said, I'll sit in the back. Kind of stay out of the way. And he said, you don't have to sit in the back. You can participate. Well, what I found was he was looking at transitioning away and was kind of auditioning me to be the idea exchange leader in that process, and was wonderful. For the last four years, I've been the idea exchange leader. And so it puts me in a position to talk to all sorts of progressive thought, leadership organizations where the CEO's come in, they share their ideas, they ask great questions of each other. But Sheshnoff, as I said, has been around a long time, and we invite more people to come. Usually get three or four sessions every spring and fall at wonderful locations. I'm headed to Amelia island, in two weeks to do the last session. and so looking forward to doing those sessions this fall. And, I think it'll be a great environment for bank CEO's.

Jack Hubbard: Yeah, it is. I had a chance to do three of them, one on sales management, one on commercial sales, and one on LinkedIn. And the audience is intimate, which is exactly what you want. But the engagement is very high. And so it seems like there's a lot more people in the room. So that's awesome. So you are always reading. You always are learning. You're always sharpening your saw. Who are some people? You're reading podcasts, you're listening to people you follow on LinkedIn to keep you sharp. Neil.

Neil Stanley: Well, in addition to you, I always like to check out Jeff Marsico. Jeff's book, squared away, is a really good book. In fact, I bought a number of copies of that book. and I'm happy to distribute those to people, electronically. so if anyone wants that, I would be. I've got some copies available. So in your audience, I would be happy to give away one of the squared away books. I love what cornerstone advisors does, whether it's Steve Williams or Ron Shevlin. and Sam Kilmer. They're all very prolific at getting stuff out, on LinkedIn. Rob Blackwell at, ah, peer intelligence. I love the way he engages. I think he's got a great audience. And so those are all things that people, that in the banking industry I listen to. I'm one of these people. I don't just pick, like, conservative or liberal in the world of media. I like to source all of that. I have. 

The New York Times sends me, every morning I get a blast. I got a blast from Bloomberg. And then from a faith standpoint. Skye Jethani wrote the book, I highly recommend it. It talks about reimagining our relationship with God. And I'm on the board of a seminary, it's a virtual seminary called Pillar. And so I really appreciate the way the world is, the impact that can be made by leaders who are really informed, about leadership in the Bible. And it's been a privilege to be on that board as well. So I've got some great endeavors with Sheshunoff and the pillar board and my activities at the core point. So we've got a lot going on and it's a fun time in the industry. I will tell you this. Jack started banking 40 years ago. There's never been a time that's more interesting or exciting than right now. For all the dynamics, we can help people so much and so it's just so much fun. I think this, even what you and I are doing here, 30 years ago, it wouldn't have been possible to do it, to touch the people that you touch, with this. And so I just keep looking for the opportunities.

Jack Hubbard: Well, that's great. Well, I thank you for being with us. The core point is a marvelous company and you are so smart when it comes to things like deposits. and I follow you as well. Talk about how people can get a hold of you, how they can get to maybe blogs or newsletters that you're writing, et cetera.

Neil Stanley: Well our company is the core point and our website is ah, thecorepoint.com. so you can get to that. Jack, I can send you my QR code that you could put on this, YouTube and you could put that out. That QR code will have my YouTube channel. you can connect with me on LinkedIn. you can get my email and all of those things. So those are the things that come to mind. you can email me at [email protected]

Jack Hubbard: Great. Well, thank you, Neil. I really appreciate your time and expertise and all the best going forward.

Neil Stanley: And to you as well.

Jack Hubbard: Thanks for listening to this episode of Jack Rants with Modern Bankers with Neil Stanley, CEO of the core point. When a banker calls and asks me about negotiation skills, there's only one person I refer them to, Joe Friedman.  And next week we chat about getting to yes, in a trust based way. This and every Jack Rants with Modern Bankers is brought to you by our great friends at Vertical IQ and RelPro, and we very much appreciate their support. Did you know that Jack Rants with Modern Bankers is a podcast too? Well, it is, and we're on Apple podcasts, Spotify, Google Play, iHeartRadio, and others. we would appreciate a review if you can visit our brand new website to themodernbanker.com for more information. And sign up for our free public library either at the modernbanker.com/publiclibrary or on the front page of our new website. And don't forget, whether it's gathering deposits, making loans, or earning fees, let's try to make today and every day a great client day.