Truist out to prove it can best the megabanks in tech
One of the biggest challenges facing Truist Financial will be reshaping customer perceptions about regional banks' ability to deliver state-of-the-art technology.
Kelly King, chairman and CEO of BB&T, made that argument during a shareholder meeting Tuesday to vote on the Winston-Salem, N.C., company’s agreement to buy SunTrust Banks in Atlanta. The $28.2 billion deal, which was endorsed by investors on both sides but still requires the OK of federal regulators, would create a $442 billion-asset company.
The way King sees it, BB&T has terrific technology platforms. But the nation’s four biggest banks — JPMorgan Chase, Citigroup, Bank of America and Wells Fargo — have been able to convince people that their offerings are superior.
“The megabanks have spent billions of dollars telling people they have all the services they need … and that perception has become reality,” King, who would be chairman and CEO of Truist, said at the BB&T shareholder meeting in Greensboro, N.C. “We need the capacity to go toe-to-toe with those banks.”
King said that 40% of members of the Gen X and millennial generations have an account with one of the four biggest banks, and 60% of all new accounts in big cities are going to those institutions.
BB&T’s investors in separate votes approved the deal and a bylaw change that will allow the company to be renamed Truist. Roughly 98% of BB&T's voting shares backed the merger, while about 96% supported the name change. At the SunTrust meeting, nearly 99% were in favor of the merger.
BB&T executives say they remain on course to complete the merger by the end of this year. King provided another justification for it besides technology investment, pointing out the need to keep up with the accelerated pace of global change.
“Why go through all this?” King asked rhetorically. “The world has changed, and it has continued to change at a very rapid pace. … It is incredible when you back away and see how fast it has changed.”
King told attendees of the BB&T meeting, who were mostly company employees and directors, that they will hear him talk more about T3, a term he used to stress the importance of (personal) touch, technology and trust in gaining and keeping customers.
“There was a sea change … ten years ago, where the retail [banking] space moved to demand for real-time satisfaction,” King said. “It has changed the definition of value. It used to be if you had good touch you had good quality. … Now quality is about touch and technology, and having a high level of trust.”
King fielded just one shareholder question during the 25-minute meeting. The investor simply wanted to know more about the Truist branding plan.
There was a negative reaction to the Truist name when the companies introduced it in June. An informal online survey by American Banker found that nearly three-fourths of respondents hated the new brand.
“We still haven’t figured out how we’re going to brand" the company, King said, tossing out Truist, Truist Financial and TFC as possibilities. “We’re still working on that.”
Still, King assured attendees that the company would quickly prove itself. “We’ll start out of the shoot very profitable because of the economics, but we’ll also have the capacity to move forward” effectively, he said.
Both shareholder meetings started with a 5-minute video telling the history of SunTrust and BB&T, noting that the two companies have a combined 275 years of history.
William Rogers, chairman and chief executive of SunTrust, said its employees are very supportive of the combination.
“There’s a great deal of excitement,” Rogers said in an interview after the SunTrust meeting, which lasted 10 minutes. “They feel like they’re part of something important.”
Although BB&T is the acquiring company, employees feel that the combination is a true merger of equals, Rogers said. BB&T is buying SunTrust, but the two sides have done their best to make it appear as an equal partnership and picked a neutral site, Charlotte, N.C., as the headquarters.
“From my first conversation with Kelly [King], we said if it couldn’t be a merger of equals, then we couldn’t do it,” Rogers said,
The scale of the combined companies will allow for greater investments in employees and technology, Rogers said. That’s what persuaded Michael Sullivan, a retired SunTrust director of international trade financing and a shareholder, to embrace the deal.
“I was somewhat perplexed when I first heard about” the merger, Sullivan said after the meeting. “But I’ve come around to seeing how it will work. I can’t think of a better merger partner than BB&T.”