With the changing political landscape, new regulations, shifting demographics, and economic uncertainty, getting the most up-to-date information from bank and credit union industry experts and peers has never been more important. Abrigo's 20th annual ThinkBIG conference brought together more than 600 financial industry professionals from 45 states to discuss the challenges and opportunities facing banks and credit unions. With a focus on community, connection, and impact, the conference's kicked off with a panel of experts sharing valuable insights on navigating the current economic landscape. Compliance, technology integration, and attracting younger customers were among the panel’s chief concerns.
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Key takeaways from ThinkBIG 2024: Insights for banks and credit unions
June 4, 2024
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Navigating credit quality, compliance, and technology integration
The ThinkBIG conference hosted by Abrigo fosters networking and professional development for bankers. Read some hot topics discussed by the conference's opening panel.
You might also like this on-demand webinar, "Navigating uncertain times: Strategies for risk management and compliance."
Takeaway 1
Banking professionals face challenges posed by interest rate changes. The ThinkBIG panel gave several perspectives on how to approach credit quality and deposit stability.
Takeaway 2
The panel encouraged banks and credit unions to change their approach to compliance and technology, getting compliance involved sooner in new initiatives to encourage safe innovation.
Takeaway 3
Attracting new and younger customers is a top priority for community financial institutions. The panel provided a few ideas on balancing services to meet these customers' needs.
Deposit environment
Managing credit quality in a fluctuating economy
A primary concern of attendees is the resilience of credit quality amidst economic fluctuations. Panelist Melissa Marsal, President and CEO of West Town Bank & Trust, emphasized the importance of vigilance. "We have to be sensitive to the cumulative effect of this cycle and be prepared for the fact that credit quality cracks slowly, but cracks quickly become fissures. We need to be careful in banking the right customers while staying aware of what's coming or already here."
The panel discussed deposit stability, the challenges posed by interest rate changes, and the importance of not becoming complacent. Panelist Roxanne Chance-Chin, BSA Officer at the Bank of Tampa, urged financial institutions to stay alert to the cumulative effects of economic cycles and be prepared for potential rapid shifts in credit quality. While acknowledging that, for the most part, credit quality is looking good for community banks, she highlighted the importance of managing deposit expectations and ensuring competitive rates to retain customers. The panel agreed that maintaining liquidity and finding innovative ways to attract and retain deposits are critical in the current economic environment.
Dave Koch, Director of Advisory Services at Abrigo, added, "We all look at the customer base pretty much the same way. However, some cracks are being seen now, particularly in areas like credit card debt, which may not have been main business lines but still impact us. It's crucial to prop up and align our future potential customer base."
Koch voiced his concerns about depositors' changing expectations. "The sleeping giant of depositors accustomed to zero interest rates is now awake and expects 5%. Managing this expectation while ensuring liquidity is a significant challenge."
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Redefining compliance as a value-add
Compliance may trigger a recoil reaction within financial institutions due to concerns about overzealous regulation, the potential for pitfalls, or last-minute questions hindering innovation. The panel addressed the negative perception of compliance in community banking, advocating for a shift in perspective. Banks can ensure regulatory requirements are met by involving compliance teams early in the decision-making process.
Chance-Chin encouraged viewing compliance as a partner. "Compliance is there to assist you in getting to where you want to go safely. By involving compliance teams early in the decision-making process, we can ensure regulatory requirements are met without hindering progress and foster a cooperative relationship," she said.
This sentiment was echoed by Laurie Stewart, President and CEO of Sound Community Bank. "Engaging the Senior Vice President of Compliance in all committees has been significant for our bank. Now, we think of compliance as a resource to show us how we will [a project],” she said. “Early engagement bridges the gap between compliance and client needs."
Retention through tech
Integrating technology while maintaining personal touch
As banks and credit unions adopt new technologies, maintaining a personal touch remains paramount. All four panelists emphasized the need for community banks to remain vocal about their contributions to local economies. As Abrigo CEO Jay Blandford pointed out, community banks make up the only physical banking presence in one in three U.S. counties. Community financial institutions are more than just service providers—they are integral to community development and support.
Chance-Chin elaborated on her bank’s digital strategy, which combines modern technology with close customer relationships. "We are looking at everything from online account opening to our banking platform's user experience. Customer surveys help us understand what our clients need and how we can provide that personal touch through technology."
Koch stressed the importance of using technology to enhance internal operations and service levels. "Leveraging data to understand customer behaviors, like transaction patterns, provides early warning signs of potential issues and helps us retain customers more effectively."
Finding balance
Attracting younger customers
The panelists agreed that appealing to younger customers through digital-first approaches is essential. Younger generations often prefer digital interactions, and banks need to offer seamless online and mobile banking experiences. Stewart shared a personal anecdote highlighting the generational shift in banking behaviors. "My nephew has never written a check in his life and lives by his debit card and Apple Pay. Understanding these preferences is crucial to developing relevant products and services."
However, financial institutions mustn’t ignore or neglect customers who may still prefer traditional banking methods. Some banks are exploring the idea of secondary digital-only brands to attract younger customers, but the panelists agreed that attracting younger customers requires a nuanced approach and that successful execution depends on a thoughtful strategy that aligns with the bank's overall goals.
"It's all about execution and understanding your business strategy,” Koch said. “How do you make it 'my bank' for a 16-year-old heading to college? It's hard work but necessary," he said. Koch recommended creating secondary digital banking entities aimed at younger demographics who may not want to interact in person, while Marsal mentioned that her bank has kept up its passbook system because customers across generations in her area seem to prefer it. The central theme across the panel was that each bank must examine its customer base and consider what will best serve those customers.
Conclusion
Takeaways from ThinkBIG 2024
Financial institutions can navigate the complexities of the current economic landscape while maintaining strong customer relationships by investing in community engagement, compliance as a value-add, technological integration, and understanding generational shifts. As the financial industry evolves, these takeaways will ensure resilience and growth.
This opening panel session of ThinkBIG 2024 was just one of many presentations from over 90 speakers this week. ThinkBIG 2024 provides a platform for sharing strategies and insights critical to the success of banks and credit unions. Learn more at abrigo.com/thinkbig.
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