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c. myers live – Takeaways From the Fed’s Exploratory Analysis of Risks to the Banking System

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Regardless of the asset size of your institution, we encourage you to consider how the message in the Feds new analysis can help your organization plan for the future.  On February 15, 2024, The Federal Reserve released the Exploratory Analysis of Risk to the Banking System.  This iteration of analysis goes beyond typical Dodd-Frank Act Stress Test scenarios, and focuses more on the economic stresses which have been recently experienced in terms of higher interest rates and inflationary pressure.  In this episode of c. myers live, we dive into the 4 elements of the exploratory analysis, and continue the conversation of scenario analysis and testing potential impacts to help financial institutions make more informed decisions.  Open the Exploratory Analysis of Risks to the Banking System and follow along with us.

About the Hosts:

Rob Johnson

Rob, one of five c. myers owners, has a reputation for deep, original thinking on asset/liability management and every conceivable modeling methodology, as well as analysis of investments, liquidity, aggregate risk, concentration risk, and other related topics. While Rob is a familiar face to the managements and boards of many of the largest organizations, he has helped financial institutions of all sizes tackle some of their toughest challenges, such as rebuilding capital and navigating safely and soundly with the smallest of margins. He has become quite familiar to many leaders in the regulatory world, both as an educator and a thought leader.

Learn more about Rob

Dustin Wright

Dustin brings years of valuable experience from his myriad roles within the financial services industry.  He has worked for many financial institutions, including a community bank in Phoenix.  As the controller, he was responsible for regulatory financial reporting, ALM, budgeting, forecasting, and monthly financial and ALCO reporting.  Dustin’s variety of roles within the financial services arena, and first-hand knowledge of banks and credit unions, allow him to think strategically and offer the best solutions to our clients.

Learn more about Dustin

Other ways to listen to c. myers live:

listen on google podcasts listen on spotify listen on apple podcasts

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Harvesting Resilience From the Seeds of Disruption

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6 minute read – The following blog post was written by c. myers and originally published by CUES on January 3, 2024.

 

The nature of disruption 

The thing about disruption is that it’s always coming toward us.  No matter how well we’ve adapted to the last thing, there’s always a next thing.  Because disruption is part of the fabric of business, cultivating a mindset and practices that embrace disruption can help position organizations to be more resilient and successful. 

The seeds of most disruption can be seen far in advance.  For example, recent advances in artificial intelligence are not a total surprise, but many are trying to quickly come up to speed to understand which of the new capabilities should be adopted.  Even the Fed rate increases that started in 2022 were telegraphed months ahead of time, yet parts of the industry were slow to adapt. 

It’s not as much an issue of being surprised as it is of not being fully ready.  Being ready means having thought through and articulated how the coming disruption affects the business model, how any new solutions or practices will ideally be incorporated (if at all), and any mitigating actions that should be taken in order to prepare.  Some disruptions like Covid and 2022’s geopolitical upheaval were surprises.  In those cases, strong team leadership, resilient people, and the agility to pivot quickly, along with efficient operations with enough income and capital to weather a storm are key. 

It’s not about technology 

Disruption isn’t driven by technology; behaviors drive disruption.  When someone somewhere comes up with a way to solve the customer’s pain point (with tech or not) and people find it useful, they’ll adopt it.  If it doesn’t solve a pain point or provide a great new capability, they won’t.  Case in point:  the Razor Phone (not Motorola’s Razr) that was both a cell phone and an electric shaver.  This did not cause great disruption in the cell phone industry because the inability to talk on the phone while shaving was not a pain point that needed to be solved.  ATMs, however, solved a huge pain point – not being able to get cash outside of business hours, without cashing a check at the grocery store or some other willing business. The reason technology is commonly linked with disruption is because advances in technology often make it possible to solve pain points that couldn’t be solved previously. 

Think about the disruption to the talent arena that has been going on for the past few years.  It’s not driven by technology, rather it’s driven by the changing behaviors of newer generations that think about work and careers differently than previous generations.   

Behavior change never stops 

Part of the reason that disruption is always on the horizon is because behaviors will never stop changing.  Younger generations are known for their willingness and desire to engage differently, which is why it’s so important to understand what these new potential customers value, along with what your existing customers value.  Knowing this is what makes it possible to embrace disruption and sort out what is important to pay attention to. 

Intentional efforts to track potential disruption 

Conscious effort is required to ensure that potential disruption is efficiently tracked, discussed, and decided upon in a timely manner.  The process doesn’t require large amounts of time, but some time must be allocated, and individuals assigned to research.  A team could be created to meet periodically, perhaps quarterly, to discuss what’s on the radar and report on updates to the situation.  A dashboard or roadmap for future implementation could prove useful.   

Consider these questions to prompt productive discussions.  Not all the questions will apply to every situation: 

Tracking 

  • What disruption is happening now? 
  • What disruption might be coming? 
  • What does the timeframe look like? 
  • How big might it become?  How far-reaching are the consequences? 
  • Should we do a deep dive on it, high level investigation, or just keep it on the radar? 
  • Are there others who should be made aware or brought into the conversation? 

How important is it to us? 

  • How could it help us fulfill our mission? 
  • How could it damage our business model? 
  • What is the benefit?  Does it improve our target market’s experience or provide new value that they find meaningful?  
  • What pain points could it solve for our target markets?  

Positioning 

  • How far out on the adoption curve do we want to be – fast follower? Leading edge? 
  • How far out on the adoption curve do we NEED to be? 

Solutions 

  • Are there steps we should take to mitigate negative effects?  When? 
  • Are there decisions we should make about adopting new solutions?  When? 
  • What vendors are offering solutions?  Should we look for a partner that can help? 
  • Should we experiment with our own ways to alleviate the pain point?   
  • How are other organizations handling it and how is it working out?   

Embracing continuous disruption 

It’s easier to embrace disruption when it’s been recognized and planned for in advance.  Implementing practices for disruption tracking and analysis will not always result in seeing every disruption clearly ahead of time, but it certainly results in fewer surprises.  Change can be scary, but it can also be exciting, especially when you’re ready for it.  Having a forward-looking process can help shift mindsets from avoiding change, to welcoming it and using it to the organization’s advantage. 

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c. myers live – Mindful Dialogue: Integrating Critical Thinking into Conversations

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As leaders, we understand the value of time, and we recognize the significance of meaningful conversations.  It can be difficult to find balance between the two, but implementing critical thinking into everyday conversations is an action you can take immediately.  In this episode of c. myers live, we discuss different ways to have efficiency in conversations, while blending critical thinking and communication. 

About the Hosts:

Brian McHenry

brian mchenry headshotBrian, one of five c. myers owners, has worked closely with financial institution Boards and managements of all sizes in a variety of capacities. As a strategic planning facilitator, CEOs regularly praise Brian’s industry knowledge, calming communication skills, ability to authentically engage anyone with whom he interacts, and ability to keep discussions focused on linking strategy with desired measures of success.

Learn more about Brian

Charlene Leland

Charlene LelandSince joining c. myers in 2004, Charlene has become one of the most diverse facilitators within the industry, especially with regard to helping financial institutions of all sizes address three necessary business objectives: relevancy, differentiation, and sustainability. Over the years, she has honed her skills for facilitating various types of sessions, including Strategic Planning, Strategic Implementation, Member Journey and Experience Improvement, and Strategic Financial Planning.

Learn more about Charlene

Other ways to listen to c. myers live:

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180-Second Exercise: Micro-Practices Add Up

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Let’s start the new year off with a different kind of 180-second exercise.  Set a timer for 3 minutes and write down ten (or more) instances in which you are proud of how you showed up in 2023.  We’ll wait.  Were you able to come up with ten?  How did it feel to take time to reflect on your successes?   

For many of us, the new year marks a time to set goals for the coming year.  We tend to focus on how to be “better” and “fix our flaws”.  In fact, it could be argued that we live in a culture focused on our flaws, but we want to challenge you this year to make a mindset shift.  What if instead of focusing on your flaws or shortcomings, you spend the year seeing yourself as a work in progress?  Think of each day, each moment as an opportunity for continual optimization of self. 

It also seems that the goals developed this time of year are often quite large – for example, go to yoga practice every day when you haven’t stepped foot inside a yoga studio in years.  Such grandiose goals can set us up for failure.  What if instead, you identified a few micro-practices?  A forward fold when you first wake up each day.  Or finally changing that light bulb on the porch that you have been procrastinating for the last six months.  Or delegate something you typically wouldn’t.  (Nervous? Choose a low-risk option.)  Small things that build towards a larger goal, or a “for sake of what”, can feel more attainable which can help you stay on track towards that goal. 

Our final suggestion, for now, is to share this with someone else.  Encourage someone you know to take time to reflect on their successes of 2023 and perhaps lean on each other as accountability partners.  Having someone who checks in on your progress without recrimination can help you be more consistent with your practices even when life gets chaotic. 

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5 Practices to Urgently Elevate Your Leadership

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6 minute read – In this environment, it can be easy for finance leaders to lose sight of continuing their own leadership development.  With deposit outflows, liquidity pressure, and interest rate risk concerns, the business focus is very much on the financial structure.  For many, this may seem like it is “prime time” for numbers and analysis to ensure the safety and soundness of their institution.  While the focus on finance is necessary, finance leaders’ effectiveness will be lost without elevating their leadership abilities.

Said differently, finance is only part of the job description for financial leaders.  The other part of the job description is ensuring that they are developing their people, building their teams, and cultivating an organizational culture that will thrive in a landscape of constant change and competition.

Below, we’ve shared insights into 5 effective leadership practices that can help finance leaders thrive:

1. Critical Thinking/Problem Solving

In this ever-changing environment, finance leaders need to be adept at critical thinking and problem-solving.  One valuable technique they employ is the ‘5 Whys,’ which is a technique used to ensure effective and efficient problem solving.  Listen to our podcast on Characteristics of Critical Thinkers for a deeper dive into this topic.

Additionally, have the understanding that you have the right and responsibility to ask questions to gain clarity in a situation, and do so consistently.  Effective leaders assume positive intent when engaging in problem-solving efforts.  Instead of jumping to conclusions or assigning blame, they encourage a constructive and collaborative approach to find solutions that benefit the team as a whole.

2. Organization/Prioritization/Flexibility

Finance leaders must maintain a delicate balance between organization, prioritization, and flexibility. They excel in time management and effectively delegate tasks to accomplish workloads efficiently. Understanding how to prioritize responsibilities is crucial in ensuring that the team’s efforts are aligned with the organization’s goals.  Remind the team about overall company strategy and objectives and continue to refer back to them when assisting others with priorities.

Finance leaders are aware of the importance of flexibility.  They understand that needs can change rapidly in a competitive environment, and they are ready to pivot when necessary.  However, they also recognize the importance of managing stress and high output demands effectively.  They are open to discussing work overload and burnout, both for themselves and their team members, to ensure that everyone remains productive and healthy.

3. Communication

Clear communication is the cornerstone of any successful team.  Leaders should focus on ensuring that their communication is clear, concise, complete, considerate, correct, courteous, and concrete.  They understand that “clear is kind,” and they prioritize delivering messages in a way that minimizes confusion and misinterpretation.

Furthermore, effective finance leaders don’t just focus on talking; they are equally committed to active listening.  They encourage open and honest communication within the team, making sure that everyone’s voice is heard.  This two-way communication fosters a culture of trust and transparency, which is essential when navigating through challenging situations.

4. Relationship Building/Empathy

Effective leadership begins with building strong relationships and showing empathy towards team members, while finding creative ways to make connections.  A successful finance leader takes the time to understand the personal lives of their team members, including their families, aspirations, and challenges.  By doing so, they demonstrate a genuine interest in their employees’ well-being, building trust in the process.  This trust will also encourage team members to feel safe asking for help.

Moreover, such leaders find creative ways to connect with their staff members.  Whether it’s through team-building activities, one-on-one conversations, or open-door policies, they create an environment where employees feel comfortable approaching them for help when facing challenges.  This emotional connection fosters a sense of loyalty and commitment among the team, which is crucial in a competitive environment.

5. Inclusion/Belonging

Finance leaders must foster an inclusive workplace where every team member feels a sense of belonging, without lowering expectations.  This involves meeting employees where they are, identifying their individual preferences for treatment, and understanding their communication preferences. Effective leaders identify and implement reasonable accommodations, when necessary, to ensure that every team member can contribute their best.

In addition, finance leaders take the time to understand their own identity and how it impacts their leadership style.  By acknowledging their biases and actively working to mitigate them, they create a safe environment where team members can share their identities, drop covers, and belong.

In the world of finance, effective leadership practices are the key to thriving amidst constant change and competition.  A consistent theme in all the practices above is that they are about the leader and how they show up.  Doing so also positions the organization for better success even in today’s environment where there is constant and rapid change.