Strategic
Insights for
Banking Success

Banking

As we’ve grown from our first relationship with Consumers National Bank, we’ve come to understand the differences between community banks, large regional or national banks, credit unions and fintechs.

In community banking, a key performance indicator is often the “efficiency ratio.” As a result, many organizations in this sector tend to hire “just too late,” resulting in leaders wearing multiple hats. Contributing to this challenge, the constant regulatory burden means community bankers are frequently preparing for or undergoing internal and external reviews. These conditions challenge prioritization, time management and decision-making/delegation skills.

Further, given the relationship-based nature of the industry, emotional intelligence and communication skills are vital.

Lastly, when you enter a room full of executive community bankers, one word often comes to mind – older. Leadership teams in the organizations are also often flat and stable for long timeframes, potentially stifling younger teammate development and growth – driving them out of banking. The industry must prioritize developing its people under a comprehensive succession plan, one that extends beyond a regulator’s focus on continuity of operations. According to a senior leader at a Texas banking convention, the lack of succession planning drives around 80% of all bank mergers and acquisitions.

By addressing these issues, community banks can better prepare for the future, ensuring a smoother transition of leadership and improved overall performance.

Recommended programs

Customized leadership development programs, tailored to align with each bank’s mission, products/services, and unique customer base are critical. These programs must encompass emotional intelligence, communications, and delegation/decision-making skills. Further conflict management, as an aid in relationship management, and embracing change are important. We observe far too many community bankers siloed in whatever function they support (retail banking, lending, deposit operations, etc.), with the result being a lack of organizational awareness in what “moves the bank” as a whole.

Finally, community banks need succession and emergency plans, but 21% have only an emergency plan, 5% have no plan at all​ (according to ABA Banking Journal). Upon detailed review, we find the plans that do exist are narrowly focused on the CEO/President and other executive leaders. This, we believe, should be expanded to incorporate a larger target audience – one that reaches into the organization and develops the next generation for more senior leadership.