11 bankers and disruptors to watch in 2020

In banking circles, the biggest story of 2019 was unquestionably the blockbuster merger between longtime rivals BB&T and SunTrust Banks. The merger was easily the industry's largest since the mega-mashups of the early 2000s, creating not just the nation's sixth-largest commercial bank, with roughly $470 billion of assets, but also an entirely new banking brand, Truist Financial.

Still, the deal was not just about scale. BB&T's Kelly King and SunTrust's Bill Rogers also pitched it as a tech play, promising to invest a large chunk of the estimated annual $1.6 billion in cost savings into difference-making technologies that would allow Truist to better compete with deep-pocketed behemoths like JPMorgan Chase and Bank of America. In 2020, investors, customers, regulators and rival bankers will be watching King and Rogers closely to see how well they manage the integration — and what they may have up their sleeves.

Another big story in 2019 was Wells Fargo's continued inability to move past the 2016 sales-practices scandal that has done untold damage to the bank's reputation and cost two CEOs their jobs. In 2020, all eyes will be on its newest CEO, Charlie Scharf, to see if he can deliver the turnaround his predecessors could not.

Others under the microscope this year include new CEOs of regional banks Santander, Comerica and KeyCorp, fintech disruptors with big ambitions in financial services and one governor looking to make good on a campaign promise to create what would be just the second state-owned bank in the continental U.S. Here are American Banker's leaders to watch in 2020.

Charlie Scharf, CEO, Wells Fargo
Charlie Scharf took the job that no other big-name candidates seemed to want. Now the pressure is on to deliver the turnaround that his two most recent predecessors could not.

When Scharf was hired last fall, he said that his top priority would be to resolve Wells Fargo’s regulatory issues. Shareholders remain antsy about when the Federal Reserve Board’s February 2018 asset cap will be lifted, but the bank is also dealing with several government investigations, including a Department of Justice probe that may soon yield criminal indictments of former senior bank executives.

Scharf’s bigger challenge may be reinstilling confidence inside a firm where three years of scandal have diluted the longtime focus on sales. In his first three months on the job, Scharf hired outsiders to serve as chief operating officer, controller and vice chairman of public affairs. Some high-level holdovers have already announced plans to depart. Expect more to follow suit.

Then there is the bank’s uninspiring balance sheet. Revenue has fallen in four of the last seven quarters, and loan balances have generally been stagnant. Reducing costs figures to be a challenge as long as the company’s regulatory woes continue. In third quarter of last year, Wells Fargo’s efficiency ratio ballooned to 69.1%, thanks largely to a $1.6 billion litigation accrual for sales scandal-related costs.

Scharf has pledged to keep the company’s universal bank model intact — preempting questions about whether he plans to sell off big pieces of the firm — but he’s otherwise played his cards close to the vest. The public may learn more about what he has in mind on Tuesday, when Wells Fargo releases its first quarterly earnings report since the arrival of its new CEO.
Ellen Alemany, chairwoman and CEO, CIT Group
Now that CIT Group has completed its acquisition of Mutual of Omaha Bank, the big question on the minds of investors is, what’s next?

The deal for the $8.3 billion-asset Mutual of Omaha was a critical one for Chairwoman and CEO Ellen Alemany in her ongoing quest to transform CIT from a commercial finance company to a more traditional commercial bank. The deal added some $4.5 billion of low-cost deposits, primarily from homeowners’ associations, and roughly $4 billion of middle-market commercial loans.

But, as Alemany herself said in August when the deal was announced, the addition of Mutual of Omaha Bank could also make the now $60 billion-asset CIT more attractive to a potential buyer.

“We think this transaction makes us actually more valuable to anyone,” Alemany said when asked if the deal would rule out any chance of a sale of CIT. “We’re very open to partners … in the future.”

It’s hard to say where CIT goes from here, but given those comments, will anyone be surprised of the company sells itself?
Bill Rogers, president and chief operating officer, and Kelly King, chairman and CEO, Truist Financial
Bill Rogers, left, and Kelly King
Closing the biggest bank merger in 15 years was the task in 2019. For 2020, the job facing Truist Financial CEO Kelly King and President Bill Rogers is managing the integration without a major misstep and proving that it was a good idea to combine.

The landmark merger between BB&T, where King was chairman and CEO, and SunTrust Banks, run by Rogers, created the nation’s sixth-largest bank, with about $470 billion of assets.

One important task they will face together is integrating separate information-technology systems while avoiding widespread outages or exposing customers’ personal data to hackers. Tech-related struggles are something both King and Rogers have faced. BB&T recently sued a former tech vendor for an equipment malfunction that led to a 15-hour outage. And a former SunTrust employee in 2018 illegally accessed 1.5 million customer accounts and shared the data with a criminal third party.

Beyond that, they’ll need to sell the public on the Truist brand — the name was widely mocked when it was announced in June — find additional cost savings to meet their target of cutting expenses by $1.6 billion annually and make good on their promise to use the savings to develop groundbreaking technologies that will help Truist better compete with behemoths Bank of America, JPMorgan Chase and Wells Fargo.

Expect government officials to be monitoring the integration closely. Former Federal Deposit Insurance Corp. Chairman and current director Martin Gruenberg has said that Truist, now the nation’s sixth-largest commercial bank, presents “very significant financial stability risks” to the banking system, and it’s up to King and Rogers to prove him wrong.

Other CEOs of regional banks will be watching closely as well. If the integration goes smoothly, expect them to engage in merger-of-equals discussions of their own with counterparts at rival banks. If it doesn’t, well, expect them to raid Truist for talent.
Curt Farmer, chairman and CEO, Comerica
Curt Farmer is starting his first full year as chairman and CEO of Dallas-based Comerica Bank.

He succeeded Ralph Babb as CEO of the $73 billion-asset bank in April and replaced him as chairman on Jan. 1. He is taking over at a time when profits could be squeezed by flat or shrinking net interest margins and more provisions are needed for its book of loans to oil and gas companies.

The bank had more than $1.8 billion in criticized energy loans at the end of the third quarter, up from $1.6 billion one year prior. The main issue facing the bank is a drying pool of private investment dollars in U.S. oil fields, which had buoyed prices lenders could get on the land and equipment they can get back when one of their borrowers goes through bankruptcy.

Farmer said in a recent interview that the problem would “work itself out over the course of the next couple of quarters” but that provisions for this book would remain elevated for a while. The bank could find itself a beneficiary of oil prices that have spiked in reaction to tension in the Middle East between the U.S. and Iran, which could boost profits for drillers in its home state.

Farmer is also optimistic about navigating through the period of low interest rates that have put a pinch on profits across the industry. Comerica has been busy putting in hedges on its portfolio of loans that mostly carry floating rates as a way to offset some of the lost revenue while the Federal Reserve has been cutting borrowing costs.

Comerica has a firm foothold in two states — California and Texas — that many competitors are eager to break into. Farmer has said while Comerica is focused primarily on growing organically, it could be a potential buyer if the right deal comes along in those states.

Comerica has not made an acquisition since it bought the $5.1 billion-asset Sterling Bank in Houston in 2011.
Max Levchin, CEO, Affirm
Max Levchin, CEO of Affirm.
By any measure, 2019 was a milestone year for the consumer lender Affirm and its founder and CEO Max Levchin.

The point-of-sale lender raised some $300 million from venture capital investors, forged a landmark partnership with Walmart, rolled out a new app that lets consumers create a virtual card that can be used at almost any retailer, and spun out a new company, Resolve, that applies Affirm’ pay-over-time consumer model for business purchases.

So what can we expect from Levchin in 2020?

A Silicon Valley luminary dating to his days as a co-founder of PayPal, Levchin is said to be looking to raise another $1.5 billion through a combination of debt and equity — funds Affirm would use to turbocharge its growth. The San Francisco-based firm already offers installment loans at checkout, online and in stores, for some 3,000 merchants and such a huge influx of funds would give it the resources to move even deeper into consumer lending.

Investors, which include some of the biggest names in venture capital, will also be watching Levchin closely for any indications that he might take Affirm public.

Affirm positions its installment loans as safer alternatives to credit cards because they offer clear pricing and no surprise fees. Levchin has frequently criticized the credit card industry for allowing interest on balances to compound and trapping borrowers in debt.

As Affirm grows, perhaps the biggest challenge it faces is funding future loans. It currently originates loans in partnership with Cross River Bank in Fort Lee, N.J., but the bank quickly sells those loans back to Affirm, which it then keeps on its balance sheet.

One way Affirm can free up capital is by securitizing loans and selling them to investors, and in 2020 it could be looking to do just that. On its website, the lender is currently listing multiple job openings for capital markets professionals with experience in securitization.
Jennifer Piepszak, chief financial officer, JPMorgan Chase
JPMorgan Chase CFO Jennifer Piepszak
Admit it — we’re all moths to the flame when it comes to speculating about succession planning at JPMorgan Chase.

Jamie Dimon & Co. are especially skilled at stoking the hot stove league of the C-suite with periodic — and purportedly calculated — shake-ups of the bank’s executive ranks that are said to be done in the interest of grooming future leaders.

So it was nearly obligatory to put Jennifer Piepszak — the bank’s chief financial officer and trending subject of future-CEO chatter — on our 2020 watchlist. Piepszak will be back in the spotlight Tuesday when JPMorgan presents fourth-quarter results, her third earnings call since becoming CFO last spring.

It felt like Piepszak had suddenly taken the lead — sorry, the sports lingo is irresistible — in the race to be Dimon’s heir apparent as CEO. She was new to the pack, and she assumed the job of Marianne Lake, who had been viewed as (and may still be) a leading contender. It was notable that Piepszak would report to Dimon and Lake to Chief Operating Officer Gordon Smith.

To be sure, it’s possible the crowd the Financial Times dubbed “JPMorgan Kremlinologists” misread the signals. Lake could still have a shot at the top spot. It had long been speculated that she would have to take a turn running a business line, and, indeed, she was named CEO of the consumer lending division. And there are other options: Executives like Smith or his co-COO Daniel Pinto could step in in a pinch, and JPMorgan has plenty of up-and-comers who could be added to the mix.

That said, Piepszak has earned a lot of brass in more than 25 years at JPMorgan Chase. She became CFO of the mortgage division in 2011. Later she was CEO of business banking, where she established a partnership with the online lender OnDeck. In 2017 she became the head of cards services, where she oversaw the launch of the Amazon Prime credit card and struck new card partnerships or renewed existing ones with big-name retailers. She is famous for emails that carry the tagline #GSD, which stands for “getting [expletive] done.”

Piepszak’s evolving role, and those of her colleagues, bear observation in the coming year.

Meanwhile — as Dimon himself has warned — other banks could attempt to hire away JPMorgan stars. And keep in mind that Dimon has said he plans to stay on the job till 2023, so there could be multiple executive shuffles to come.
Tim Wennes, CEO, Santander US
Santander CEO Tim Wennes
The newly minted CEO of Santander’s U.S. business should have an interesting year in 2020.

When Wennes joined Santander as president and CEO of its Boston-based bank in July, Santander US CEO Scott Powell hinted that the change would position the bank for new things to come.

Powell left in December to become the chief operating officer at Wells Fargo, and Wennes added CEO of the holding company to his responsibilities.

In a recent interview, Wennes said that Santander Bank will launch a new unsecured personal loan product early next year, to be followed later by a national digital deposit gathering effort. It will also focus on growing commercial lending, playing up its European and Latin American connections to appeal to companies with international operations.

Meanwhile, its auto lending unit, Santander Consumer, will continue to work with the bank to originate prime indirect auto loans. Santander Consumer also has a new president and CEO, Mahesh Aditya, and a new agreement preserving its preferred lender relationship with Fiat Chrysler.

Santander still has some challenges ahead, though. The company has resolved many regulatory matters in recent years but still has one more Federal Reserve order to settle. As a midsize regional lender, it will face stiff competition not only from bigger banks, but also from fintechs, Wennes said. He added that the company will also be challenged by the interest rate environment.

Yet Wennes was still upbeat. He said its relationship with its Madrid-based parent should give it a competitive edge with both tech spending and international business clients. And his outlook for the broader economy is generally positive.

“I’m optimistic for 2020,” he said. “We’re not planning for robust growth, but we’re also not anticipating we’re going to see recessionary signals in the near future.”
Chris Gorman, incoming chairman and CEO, KeyCorp
Chris Gorman
Over the course of his 21-year career at Cleveland-based KeyCorp, Chris Gorman has run the capital markets and corporate banking units, overseen the integration of Key’s 2016 acquisition of First Niagara Financial Group, and served as president of banking, a role in which he effectively had responsibility for all revenue-producing business lines.

So it hardly came as a surprise to investors when the $145 billion-asset Key announced in September that Gorman, 58, would take over as chairman and CEO when Beth Mooney retires later this year after nine years at the helm.

Gorman will officially succeed Mooney on May 1 and the consensus in the investment community is that he won’t undertake any major changes — at least not at the outset. Still, 2020 is expected to be a challenging year for regional banks as they contend with what could be soft loan demand, compressed net interest margins and intense competition from nonbank players, and investors will be watching Gorman to see how he navigates this landscape.

He also has pretty big shoes to fill. Under Mooney, Key’s assets climbed by more than 60%, thanks largely to the First Niagara acquisition, and its stock price, while still trading below pre-crisis levels, has more than doubled. Mooney has also been, in the words of lead director Sandy Cutler, a “transformational” leader whom he credits with “building a strong culture that attracts and retains talent … delivering value for our shareholders while maintaining a client focus [and] and creating a blueprint in how to effectively invest in our communities.”

Gorman, for his part, has said that he believes Key has the right strategy in place to effectively compete with other large and regional banks. Asked in December if Key might pursue a merger of equals — a la BB&T and SunTrust — to gain scale, he said: “The degree of difficulty in bank M&A, I think, is sometimes underestimated.”
Nic Kopp, U.S. CEO, N26
Nicolas Kopp N26
This year could be a turning point for the German challenger bank N26, which is trying to make it big in the United States. Its aim is ambitious: outdo existing American neobanks like Chime and Varo Money as well as fellow European challengers Revolut and Monzo, which have been preparing their own U.S. launches.

U.S. CEO Nic Kopp brings a millennial sensibility, a knack for partnering with trendy retailers and a large marketing budget to this grand experiment.

The digital-only N26 formally debuted in this country in August with a sassy marketing campaign. Billboards plastered on New York City taxis, subways and commuter trains and buses said things like “Finally, banking the way it should be — no sneaky hidden fees, no maintenance charges, no minimum account balance, and no foreign transaction fees.”

Opening an account on its basic banking app (which offers a federally insured checking account and a Visa debit card through Axos Bank) can take as little as five minutes. It offers rewards from popular retailers like the scooter rental company Lime, the online travel platform Booking.com and the skincare subscription service Curology.

N26 offers customers access to their paychecks two days in advance. It lets them set up subaccounts for savings goals calls "Spaces." A customer might have a Space for buying a laptop and a Space for a future trip to Bermuda.

Kopp, who has worked at Goldman Sachs, Lazard and Morgan Stanley, has said N26 differentiates itself from traditional rivals with an understanding of the millennial generation and an ability to build trust and offer simplicity.

“In trust barometers, banks rank second to last on the list of all industries, right above tobacco,” Kopp said in an interview a year ago. “There is this fundamental lack of trust.”
Gov. Phil Murphy, New Jersey
New Jersey Gov. Phil Murphy
Governor Phil Murphy official headshot in Trenton, N.J. on Tuesday, Dec. 19, 2017. (Governor's Office/Tim Larsen)
Bankers will want to keep an eye on New Jersey Gov. Phil Murphy, who campaigned on a pledge for a public bank and hasn’t backed off in the two years since.

Public banks hold municipal tax dollars and fee revenue as deposits and lend that money to small businesses, student borrowers and municipalities for affordable housing and infrastructure projects. Currently, the U.S. has just two public banks — the Bank of North Dakota and the Territorial Bank of American Samoa — but recent progress in New Jersey could provide momentum to efforts elsewhere.

Supporters often stress that public banks would work with — not against — community banks and credit unions, but they still face stiff opposition from state banking groups and the American Bankers Association.

Specifically, bankers will want to monitor developments out of New Jersey’s new Public Bank Implementation Board. The first real step toward a public bank in the state was Murphy's creation of that task force via executive order in November. Later this year, the 14-member board should deliver a plan for making a public bank happen, addressing capitalization needs, governance and operational structure.

The details of the plan could be copied in other states.

In California, municipalities now have a framework to create public banks thanks to a bill Gov. Gavin Newsom signed into law in October. The law initially caps the number of public banks at 10 statewide and limits the state to issuing two public banking licenses per year.

Meanwhile, activists in New York, New Mexico, Pennsylvania and several other states are pushing for legislation. And Stephen Smith, a West Virginia Democrat running for governor, is endorsing a public bank as part of a broader rural revitalization plan.