The freshest face on U.S. Bancorp’s executive committee is dreaming big about the future of consumer banking.
U.S. Bancorp for years has stood out for delivering strong shareholder returns. But at a time when larger banks are making waves in consumer technology, the Minneapolis company has faced questions about whether its cost-conscious formula for success will serve it well in a high-tech future.
Enter Tim Welsh. The new head of retail banking joined the $464 billion-asset company in July from McKinsey, where he spent nearly three decades as a consultant in financial services, retail and health care. In his current role, Welsh oversees all consumer products and call centers at U.S. Bancorp.
Welsh said that, in his first two months on the job, he has been thinking about how to use technology to make customers’ lives easier — and become a core part of customers’ daily habits. Among the questions he has been tossing around: Why not help cash-strapped customers with monthly budgeting, or alert them when a check has cleared? And how can the company better use technology to provide financial advice to customers?
“How can we help them be excited about the bank, in the same way that they are excited about Amazon?” Welsh said.
His appointment comes as profits in the company's consumer and small-business unit have slid, falling 4% in the second quarter from a year earlier, mostly because of lower mortgage banking revenue.
In addition to leading the retail bank, Welsh plans to take a significant public-facing role in U.S. Bancorp’s community development efforts. He is a founding member of the Itasca Project, a civic group that promotes economic development in the Twin Cities. He also serves as chairman of the local chapter of the United Way.
Over the long term, he will likely step into the philanthropic role that Richard Davis left behind. Davis retired as CEO earlier this year and serves as chairman. Davis was succeeded by longtime deputy Andy Cecere.
“As Richard goes off and does whatever he does, I’ll play much more of that role in the community,” Welsh said. “Andy will certainly play an important role, but I will be more involved on the things that Richard was historically involved in.”
American Banker sat down with Welsh recently to talk about his new gig. Here are five questions from that interview, which has been edited and condensed.
You talk a lot about making consumer banking more convenient. How are you doing that?
TIM WELSH: Well, I’m two months in, but let me tell you about what we’re thinking about. I think about it on two levels. So the first and most foundational is that the consumer must be in the center of everything.
So the first thing that you realize is that all of our processes [in the industry] are really painful — opening an account, getting a mortgage, getting a credit card, etc. Now what’s happening, as you well know, is we’re in the process of digitizing those.
You could imagine a world where we say we’re not only going to make the pipes better, but we’re going to change the entire consumer experience in a way that Amazon and Uber did. So, instead of expecting you to figure out how to balance your budget, we’ve got a lot of information about you — why don’t we use that to help you?
Does this mean creating a new mobile app, like Mint? Or what does it mean for USB five years down the road?
The thing I’m trying to figure out is, to do all of these things, we need to be central to the life of our customers. What I actually care about is helping them achieve whatever aspirations or dreams they have. For us to do that, we can’t be an ancillary thing in their life. For many people, their bank is just an ancillary thing.
I don’t know if this is an app. I don’t know if that looks like a partnership with Facebook. I don’t know if it looks like customers are doing so many things with us that they can’t imagine not pressing their app button. But the goal in my mind is really centrality, so I’m thinking of my bank as a partner because they’ve been partnering with me in managing my budget.
Switching gears, let’s talk about Equifax. What does the hack mean for consumers, U.S. Bancorp and the credit reporting system?
As a longtime observer of the financial services industry, I think it’s interesting that we’ve gotten to the point where we assume that personally identifiable information has been breached. These sorts of things have been going on long enough where we don’t identify you just based on stuff that is identifiable like Social Security information. So I don’t know the last time you had to be identified by a bank, but I suspect it was with your thumb.
We’re doing a lot of two-factor authentication. At some level this doesn’t affect that many of our customers. We’re seeing relatively modest anxiety about it, not that many calls, because people have just gotten used to this. ...
You could clearly hypothesize that issues [from freezing credit reports] may exist. But I will tell you again with the consumer lens on, I am as concerned that people don’t fully understand what they are doing when they freeze. What’s going to happen is they are going to apply for a loan, and then will be frustrated when they can’t get a loan easily.
In the scheme of things, I’ll be very curious about how many people are freezing their reports.
Over the long term, where do you want to expand the consumer bank? You have customers in New York and all over.
It’s exactly what we’re in the middle of sorting out. What I’m intrigued by is how Bank of America has been expanding. In Minneapolis, they’ve got somewhere between five and 10 branches, strategically located with high visibility.
They’ve created a presence. Are they everywhere? No. They have a fraction of the branches that we or Wells do. But in a digital world, why do you need 100 branches in a city?
Why don’t you pick 10, in New York or Houston or wherever. You could imagine expanding in a lot more digitally oriented way with a lot more visibility from a few high-profile branches. I think it’s intriguing. I think it’s worth exploring.
Any markets which look attractive to you, in particular?
I think about it as the smile around the U.S., which is sort of Seattle down. That’s where all of the people are, though we’re in California. Could we do it in ways that reflect distribution for the 21st century?