Congrats to HSBC's and Popular's Digital Banker of the Year finalists
Digital driver: With so much focus now on user experience and design, investing in bank technology is taking on a new dimension. "Digital used to be about coding and IT; now it's becoming a people business," said Mary Kate Loftus, the head of multichannel for retail banking and wealth management at HSBC's U.S. unit. Over the past few years, Loftus has spearheaded a $131 million digital initiative to improve the customer experience, deepen relationships and attract more of HSBC’s target consumer segments. She was selected as one of our two Digital Banker of the Year finalists for 2018.
When being innovative matters most: As chief information and digital officer at Popular Inc., Camille Burckhart’s role is mostly in the office and boardroom. But in the aftermath of Hurricane Maria this past fall, she and her team spent days in the field, figuring how to get banking services to those who needed them. One challenge was how to allow customers to withdraw the cash they urgently needed, without an operating network in place. "To me, this is innovation at its best," said Burckhart, who was selected as our other Digital Banker of the Year finalist. "It's about devising new ways of solving real-life problems.”
Fired: Blair Fleming, the U.S. CEO of RBC Capital Markets, has been fired for having an affair with an employee, a violation of company rules. Though the relationship was reportedly consensual, policies governing personal conduct in the workplace are being enforced more vigorously because of the #MeToo movement. “As recently as this time last year, a violation of this nature might have only warranted cursory or minor discipline,” said Andrew Kofsky, a labor and employment counsel at Simpson Thacher in New York.
Now hiring: Citigroup said it intends to get more aggressive about increasing the number of female executives and black employees it has. Citi’s U.S. staff is mostly female, yet women are underrepresented at the top, making up 32% of the executives (an improvement from 24% in 2016). Its black diversity is decreasing, with the ratio of black workers now down to one in 10, after dropping for the eighth straight year. Other big banks have the same issues. At Wells Fargo, 29% of the executives are women, down from 37% in 2016, and at Goldman Sachs, the ratio of female executives remains under 22%. About 12% of the overall U.S. workforce is black, and banks often fail to match that ratio in their ranks. Blacks make up 13% of employees and 5% of the executives at Wells Fargo, and 5.4% of employees and 2.9% of executives at Goldman Sachs.
The digital evolution: Banks need to rethink how they approach digital. Rather than merely powering transactions, figure out how to curate digital experiences for customers, advised Jennifer Roberts, head of Chase Pay and digital products at JPMorgan Chase. “It’s about how do we help a customer not just finance a car, but own a car,” she said during American Banker’s Digital Banking conference. “And what does that mean for the end-to-end experience and how can the bank support them in that.”
Threat alert: Banks are asking for trouble if they adopt artificial intelligence without first considering the consequences, such as potential biases in its decision-making, warned Cathy Bessant, Bank of America’s chief operations and technology officer, in a separate session at the Digital Banking conference. “It’s not about what can AI do, but what should AI do,” Bessant said. “We need to find the balance between how we use AI and how it uses us.” Bessant also said innovation must be driven by what customers want, not by what banks think they want. In its pursuit of innovation, BofA employs roughly 4,500 “inventors” around the world that create and file patents on behalf of the bank.
No ifs, ands or bots: Wells Fargo has begun to roll out Apple Business Chat, and though it envisions using AI-powered chatbots to improve the service eventually, humans are doing all the work for now, said Shari Van Cleave, head of Wells Fargo Digital Labs. The chat service, now being piloted in three states, is based in iPhone users’ Messages app as a Wells Fargo-branded text message thread. Customers can use the app to text questions to a banker, without the inconvenience of manual authentication. “We want to be balanced with creating a human-designed experience, but we also realize customers want something really quick and simple. So that can maybe be a bot that can answer one question and a human that answers another,” Van Cleave said. “Right now, as we start this, it's just a human.” She hopes to take the chat service national by next year.
#Warren2020?: In a fiery speech that is likely to fuel speculation of a presidential run, Sen. Elizabeth Warren slammed the Trump administration for easing bank regulations imposed in the wake of the financial crisis. “They go on and on about how 'big government' restricts freedom and makes it harder for businesses to succeed,” Warren said. “That’s a big, greasy baloney sandwich — a greasy baloney sandwich that has been left out in the sun too long and has started to stink.” But in contrast to Warren, some Democrats on the campaign trail in red states are touting how they helped roll back the Dodd-Frank Act, among them Sen. Heidi Heitkamp, D-N.D. It’s evidence of how the opposition party continues to suffer from an identity crisis on banking policy.
Charter challenge: New York State Department of Financial Services head Maria Vullo is escalating a legal battle with the Bank of Tokyo Mitsubishi UFJ over what she describes as a case of “regulatory arbitrage.” Last fall, just as her department was preparing to reprimand the bank for compliance failures from 2014 to 2017, the Japanese bank switched its New York branch from a state charter to a federal charter under the Office of the Comptroller of the Currency. The bank attributed the switch to its plan for a U.S. growth push. But Vullo contends it was to evade the consequences of its compliance failures. In her latest court filing, Vullo said the bank held “secretive discussions” with the OCC, in which it “began negotiating the means by which it could avoid being prosecuted for its misconduct by absconding to a new regulator.” She wants the court to order the bank and the OCC to produce their communications with each other.
How to boost savings: Many people aren’t saving enough and banks’ current offerings aren’t helping, according to Common Cents Lab co-founder Kristen Berman. Banks should apply basic behavioral science principles to design a simple savings product and encourage customers to build more positive savings habits, Berman said. The ways that banks make things needlessly complex “range from small design choices like placing automatic transfer forms under multiple navigation menus online to larger strategic choices like charging people overdraft fees for transfers between accounts,” she said. “Both place the burden to navigate complexity and uncertainty on the customer.”
CIT Group has appointed Wahida Plummer as its chief risk officer. She succeeded Robert Rowe, who is leaving to pursue other opportunities. In addition, Chief Credit Officer Marisa Harney has taken on an expanded role, overseeing all areas of credit risk. Both Plummer and Harney now report directly to Chairman and CEO Ellen Alemany and have been added to the executive committee.
MetaBank in Sioux Falls, S.D.,has promoted Kathy Thorson to the newly created position of community banking president. Thorson retained her role as president of the Sioux Empire market, but now has responsibility for overseeing business strategy in all four of Meta’s markets. The $4.3 billion-asset Meta has 10 branches in Iowa and South Dakota.
Mellody Hobson, the president of Ariel Investments who joined the JPMorgan Chase board in March, will become vice chair of the Starbucks board when Howard Schultz steps down. At the 2015 Starbucks annual meeting, Hobson offered a lot of insight into her personal story and called on corporate America to prioritize diversity, saying, “Let’s be color brave.” This transcript is worth reading.
Maureen Clancy, a director at New York Community Bancorp since 1999 and the chair of the compensation committee, has opted not to stand for re-election to the board. Shareholders of the $49.7 billion-asset company voted at its recent annual meeting to reject the executive compensation plan – for the third time. Collyn Gilbert, an analyst with Keefe, Bruyette & Woods, attributed the vote to the company's underperformance in recent years. Its stock is down more than 8% over the last year while the KBW bank stock index is up more than 21%.
Betty Liu has been named as executive vice chairman of the New York Stock Exchange, effective July 9. Liu is joining the NYSE as part of its acquisition of Radiate Inc., a company she founded in 2016. Radiate’s library of 2,000 short video lessons from CEOs and thought leaders is expected to be available on the NYSE platform after the deal closes this month. Liu’s appointment comes shortly after Stacey Cunningham became the NYSE’s first female president.
Shahira Knight, the deputy director of the National Economic Council, is leaving the White House to join The Clearing House Association as its head of public affairs.
A matter of timing: Women who have their first child between the age of 25 and 35 tend to be unable to close the pay gap with their husbands, according to Census Bureau research. But women who have their first child before or after that window — before their career has really taken off or after they have established themselves in their field — eventually do close the divide. The ages between 25 and 35 are both prime career-building years and prime child-bearing years, and apparently that is the time when having it all can be the most elusive.
Say what?: In asking Serena Williams if she’s ever been intimidated by anyone on a tennis court, a magazine editor framed the question by mentioning that, after her loss at Wimbledon 14 years ago, Donald Trump claimed Williams had been intimidated by Maria Sharapova’s “supermodel good looks” and “incredibly alluring shoulders.” Cue the collective cringe.
Swimsuits as social reform: The Miss America pageant is doing away with the swimsuit part of its competition, and Time offered this surprising history on how such competitions were viewed when first introduced at seaside resorts in the 1920s. It was considered liberating for women to show off bare limbs, at a time when they were expected to dress modestly even at the beach. “In some ways, you could say women were participating in these contests because they saw them as vehicles for a degree of sexual liberation,” said historian Blain Roberts. There was enough controversy that Atlantic City canceled its competition from 1928 to 1932, because local community leaders considered it unacceptable for women to stand around in swimsuit.
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Chental-Song Bembry contributed to this report.