Annual Survey of Bank Reputations

ANNUAL SURVEY OF BANK REPUTATIONS

July 2017 | americanbanker.com

TALENT REFINERY UNDER STEVEN BRADSHAW, BOK FINANCIAL IS ENGAGING EMPLOYEES AS NEVER BEFORE BY INVESTING HEAVILY IN TRAINING AND DEVELOPMENT. DON’T THINK CUSTOMERS HAVEN’T NOTICED.

001_ABM_0717 1 6/9/17 1:11 PM In banking, “can do” does.

At U.S. Bancorp, we’re committed to the unique debt financing needs of the banking industry. We take pride in developing and executing tailored financial solutions that best meet your institution’s needs. Our goal is to make your possible a reality.

Durant Bancorp, Inc.

$125,000,000 $120,000,000 $100,000,000 $65,000,000 Term loan Subordinated notes Subordinated notes Subordinated notes $15,000,000 Sole lead placement agent Joint lead placement agent Sole book-running manager Revolving credit facility Joint lead arranger

September 2016 November 2016 March 2017 August 2016

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0C2_ABM0717 2 6/9/2017 3:50:18 PM Contents JULY 2017 / VOLUME 127 / NO 7

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16 21 24 REPUTATION SURVEY Brieﬁ ngs BankThink 4 Lakeland’s Swamp 21 AI Is the Answer 10 Be on Your Best Behavior N.J. bank learns painful Life is about to change in a Wells Fargo aside, the industry overall has lessons about politics and big way for asset managers, reason to be pleased with the results of our social media says Hazel Moore of the annual survey of bank reputations. One key 6 Mother’s Big Helper London investment bank insight: Displaying strong ethics is an effective FirstCapital New mothers were leaving way to improve what people think of your bank. Fifth Third at twice the rate of other female employees. BackPorch Here’s how it responded 16 Talent Reﬁ nery 24 Quotes from AIG’s Brian Under Steven Bradshaw, BOK Financial is 6 Spinoff at Eastern Duperreault, Goldman’s engaging employees as never before by Why this community bank’s Lloyd Blankfein, and more investing heavily in training and development. innovation lab is now its Don’t think customers haven’t noticed. own company IN EACH ISSUE BankTechnology 3 Editor’s Note 7 The Parent App With Current, parents get more control over how kids spend their allowance

American Banker (ISSN 2162-3198) Vol. 127 No. 7, is published monthly by SourceMedia, One State 8 Worlds Collide Street Plaza, 27th Floor New York, NY 10004. Subscription price: $119 per year in the U.S.; $139 JPMorgan Chase’s for all other countries. Periodical postage paid at New York, NY and additional U.S. mailing of ces. POSTMASTER: send all address changes to American Banker, One State Street Plaza, New York, surprising partnership with NY 10004. For subscriptions, renewals, address changes and delivery service issues contact our Customer Service department at (212) 803-8500 or email: [email protected]. Send editorial digital currency innovators inquires and manuscripts to American Banker, One State Street Plaza, 27th Floor, New York, NY 10004. This publication is designed to provide accurate and authoritative information regarding the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering nancial, legal, accounting, tax or other professional service. American Banker is a registered trademark used herein under license. © Copyright 2017 SourceMedia, Incorporated and American Banker. All rights reserved. www.americanbanker.com.

JULY 2017 AMERICAN BANKER 1

001_ABM_0717 1 6/9/17 11:27 AM What’s going on americanbanker.com @ Keeping nancial services professionals updated on vital developments and focusing sharply on their most important concerns

MOST READ MOST SHARED PODCAST Banks in Arms Race USAA: ‘We Are Seeking How to Catch ‘Rogues’ To Upgrade the ATM Fair Value’ on RDC Threatening Your Bank Big banks are investing heavily A dozen years after it pioneered Some of the biggest risks to reinvent a boxy machine that remote deposit capture as a facing any bank come from has gracefully reached middle convenience for active-duty within. Risk management age even as the industry turns military members, the company consultant Andrew Waxman its attention to much hipper now says any bank or credit discusses how cognitive technology like blockchains union using RDC is infringing psychology and augmented and arti cial intelligence. on its innovation. intelligence can help. Preferences on the go Widespread adoption Consumers' priorities in the past two years have shifted USAA wants to be compensated for remote away from branch-centric conveniences and more toward deposit capture, its widely used innovation digital and ATM banking 2016 2014 U.S. institutions offering RDC Leading online/mobile 6K No foreign-ATM fees 5K Branches near me 4K Lots of branches, ATMs 3K ATMs near me 2K Convenient branch hours 1K Telephone banking 0 Other 2009 2010 2011 2012 2013 2014 2015 2016 0 20 4060 Source: Novantas surveys (Note: Excludes incomes under $25,000) Source: Celent's State of Remote Deposit Capture 2017 report

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002_ABM0717 2 6/8/2017 5:06:57 PM Editor’s Note BY BONNIE McGEER

Myth Busting’s Part of Job in Impact Investing Scott Davis has faced so much skepticism about what he does at U.S. Trust that It launched in 2010 around a suite of in- he now welcomes the chance to challenge people’s misconceptions. vesting products that took onto account “I’m actually starting to enjoy getting the question” about returns on impact invest- diverse environmental, social and gov- ing, says Reeves, a portfolio manager at the Bank of America Wealth Management ernance factors, he said. But a few years unit. “It really gives us the opportunity to highlight the benet of our approach, and in, U.S. Trust found that many of its high- why our approach can lead to better investment outcomes.” net-worth clients started to “cluster” The question is usually phrased with a negative spin: Don’t impact investments their attention on specic themes. — which are made with the intention of fostering social or environmental benets — “As a result, starting in 2013, we devel- underperform? oped two new portfolios that are much Put another way, don’t you have to sacrice prots for purpose? more focused in nature, one of which Reeves and others involved in the impact sector answered with a resounding “no” is called our Women and Girls Equality during a recent conference titled “Diversity Driving Revenue” that the investment Stratey — we call it WAGES for short — bank Big Path Capital hosted in New York City. and the second is our Human Rights and Interest in impact investing is expected to continue growing, fueled in part by wom- Recognition Stratey — which we call en and millennials, and more nancial institutions are taking notice. But the idea is H2R for short,” Reeves said. “And those still outside the mainstream, so ttingly a portion of the panel discussion with Reeves are really kind of extensions of our diver- focused on the myths that participants spend the most time debunking. Disbelief sied approach with just a greater focus about nancial worthiness is one they all seemed to have in common. on diversity, inclusion, social justice and Sunwoo Hwang, the founder and chief executive of Sixup, said he doesn’t empha- the like.” size the social mission behind his San Francisco startup, partly to avoid that extra Despite the social goals, Reeves said layer of skepticism. the team is entirely data driven and gath- Sixup is an online lending platform that aims to help high-achieving, low-income ers insight from many sources. “We con- students attend four-year colleges. Borrowers can get $5,000 to $15,000 a year to ll sider ourselves to be quantitative inves- the gap between the nancial aid they recieve and the cost of their tuition. tors really,” he said. This target group carries a lot of stigma in the nancial community, Hwang said. But two questions they ask about every “These students get lumped into subprime, loser prime, risky prime,” he said. potential investment likely dier from To get past the preconceived notions, Hwang started using the term “future prime” those of mainstream portfolio managers. instead, which he said has helped overcome some initial resistance to his pitch about The rst is, do companies have the why these students are a worthwhile investment. right intentions? In other words, “do they For Elizabeth Chou, of New Markets Venture Partners, a bias in favor of established have the right policies around things like funds is her biggest hurdle. family benets?” Reeves asked. “Are they “Everyone thinks that investing with small managers or emerging managers is transparent about their hiring practices risky,” she said. and their track record around hiring and But large rms rely on track records established over the years by fund managers promotions?” who might no longer be involved in that portfolio, said Chou, who is a partner at The second is, are those policies actu- New Markets. And sometimes the interests of large rms do not align with those of ally leading to the right outcomes? investors. An emphasis on both intention and re- “I spend my life telling people that investing with established managers is actually sults helps weed out pretenders that are riskier,” she said. just “green washing,” Reeves said. “You Reeves is part of the socially innovative investing team at U.S. Trust — S2I for short. can’t cheat the hard numbers.”

JULY 2017 AMERICAN BANKER 3

003_ABM_0717 3 6/9/17 11:42 AM Brieﬁ ngs ly bad news can swamp nancial institutions, even small banks and credit unions SOCIAL MEDIA | WORKPLACE CULTURE | COMMUNITY BANKING that generally aren’t in the cross hairs of by activists or political provocateurs. At issue are claims by Saily Avelenda, a former senior vice president and assistant general counsel at Lakeland, who said that she was pressured to leave after Joseph O’Dowd, a board member, received a letter from Rep. Rodney Frel- inghuysen, RN.J. The letter, which was posted by WNYC, was a form-letter plea for fundraising but included a handwrit- ten note from Frelinghuysen that accuses a bank employee of being a “ringleader” of NJ 11th for Change, a local political group that is opposing the congressman. “Needless to say, that did cause some issues at work that were di cult to overcome,” Avelenda told the radio station. The bank posted a two-paragraph response that did not con rm whether Avelenda had worked at the bank. “We recently received communications from members of our communities and customers concerning a news report involving an individual who identi ed herself as a former employee and noted her outside civic involvements,” the bank posted on Facebook in May. “Lakeland Bank does not comment publicly on the status of our current or The accusations, initially aired by former employees.” ‘Do You Understand Your WNYCFM 93.9 public radio, gained trac- It then emphasized that its employees tion on liberal-leaning websites and soon have the right to political expression. The Brand Is Being Destroyed?’ turned into a restorm for the bank. bank said its code of ethics “speci cally A Facebook post by Lakeland, which provides that it is the philosophy of Lake- largely skirted the issues involved, was land Bank to promote our employees’ deluged with dozens and then hundreds full awareness and interest in civic and How a New Jersey bank IT’S A SITUATION THAT HAS BECOME of comments, most of them calling for a political responsibility such that each ended up in a political and depressingly familiar for big banks. A boycott of the bank. employee has the opportunity to sup- social media ﬁ restorm negative story makes the rounds on the “Do you understand the speed and port community activities or the politi- internet and quickly turns viral. power of social media?” Mike O’Brien cal process in the manner that she or he By Kate Berry But a relatively small bank, the $5.2 of Bloom eld, N.J., wrote on Facebook. desires.” billion-asset Lakeland Bank in Oak Ridge, “Do you understand that your brand is But the response appeared only to N.J., found itself in that position after a being destroyed, right now, today, and in ame the public, which responded former bank executive said she resigned that you have maybe ve hours to get in with hundreds of comments taking the because a top House Republican tar- front of this thing? Do you think that this bank to task. “Shame on you,” “Get out” geted her in a letter to a member of the kind of stu y corporate legalese is going and “Move your money” were common institution’s board of directors. The bank to put out the re? Get serious.” themes in the responses. is a unit of Lakeland Bancorp. The episode demonstrates how swift- Thomas Shara, the bank’s president

4 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 5

004_ABM_0717 4 6/9/17 9:43 AM ly bad news can swamp nancial institu- and chief executive, did not return a of employees. “There are multitudes of tions, even small banks and credit unions call and email seeking comment. Frel- problems, because they are getting into that generally aren’t in the cross hairs of inghuysen, who chairs the powerful employment law and a situation where by activists or political provocateurs. House Appropriations Committee, and an employee is using freedom of speech,” At issue are claims by Saily Avelenda, O’Dowd also did not return calls seeking Eliason said. a former senior vice president and as- comment. sistant general counsel at Lakeland, who Frank Eliason, a partner at the con- said that she was pressured to leave af- sulting rm BrainTrust Partners and a ter Joseph O’Dowd, a board member, former head of global social media at Citi- received a letter from Rep. Rodney Frel- group, said the bank’s response invited inghuysen, R N.J. The letter, which was more questions and criticism. Ensuring posted by WNYC, was a form-letter plea “The juicy story is a House Repub- for fundraising but included a handwrit- lican forced a bank employee out, and you have the ten note from Frelinghuysen that accuses that taps into social media anger,” Elia- a bank employee of being a “ringleader” son said. “This is one of the problems Advantage of NJ 11th for Change, a local political banks have in general, which is that they group that is opposing the congressman. are not really viewed as being one with Advantage “Needless to say, that did cause some society, and it plays into the views that issues at work that were dicult to over- people have of the GOP and the banking Partner Program come,” Avelenda told the radio station. world generally that they are ‘in’ with Vantiv Advantage makes The bank posted a two-paragraph politicians.” everything easier for response that did not conrm whether Jennifer Abernethy, president of So- partners by protecting Avelenda had worked at the bank. cially Delivered, a global social media and growing your brand, “We recently received communica- management rm, said Lakeland is get- tions from members of our communities ting linked to President Trump and the keeping you ahead and customers concerning a news report message is “for consumers to get their of market innovation, involving an individual who identied money out of there. It doesn’t look good.” making it easier for you herself as a former employee and noted The bank did not appear to have a to refer business and her outside civic involvements,” the bank Twitter handle, which likely was anoth- build relationships, and posted on Facebook in May. er strike against it. “Right now people driving customer loyalty “Lakeland Bank does not comment are buzzing about them on Twitter, and publicly on the status of our current or they’re not there,” Abernethy said. “The and proﬁ tability. The accusations, initially aired by former employees.” subliminal message that sends is, ‘We WNYC FM 93.9 public radio, gained trac- It then emphasized that its employees don’t care; we’re not up to speed,’ and Learn more at: tion on liberal-leaning websites and soon have the right to political expression. The they’re not modern enough to partake of www.vantiv.com/ turned into a restorm for the bank. bank said its code of ethics “specically the conversation.” A Facebook post by Lakeland, which provides that it is the philosophy of Lake- Getting caught in a social media brou- merchant-solutions-ﬁ largely skirted the issues involved, was land Bank to promote our employees’ haha can be particularly tricky because deluged with dozens and then hundreds full awareness and interest in civic and of the politically charged nature of public of comments, most of them calling for a political responsibility such that each discourse these days. boycott of the bank. employee has the opportunity to sup- “No matter what you write or say, “Do you understand the speed and port community activities or the politi- you’re going to oend 50% of your cus- power of social media?” Mike O’Brien cal process in the manner that she or he tomers,” Abernethy said. “Staying silent of Bloomeld, N.J., wrote on Facebook. desires.” is the worst thing to do. They need to let “Do you understand that your brand is But the response appeared only to everyone know that they are working being destroyed, right now, today, and iname the public, which responded with the utmost integrity and ethics to that you have maybe ve hours to get in with hundreds of comments taking the resolve this situation.” front of this thing? Do you think that this bank to task. “Shame on you,” “Get out” But Eliason said the bank may have kind of stuy corporate legalese is going and “Move your money” were common inadvertently caused more problems to put out the re? Get serious.” themes in the responses. by describing its ethics policy as one The episode demonstrates how swift- Thomas Shara, the bank’s president that does not limit the political activity

4 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 5

005_ABM_0717 5 6/9/17 9:43 AM ident at the nonprot Catalyst Research Fifth Third Center for Corporate Practice, the ma- Will a Spinoff ternity concierge program is unique to Delivers Fifth Third. She doesn’t know of other Pay Off? Maternity concierge service programs quite like it, though she said Eastern turns its innovation boosts retention of moms forward-thinking companies are making lab into a separate company greater eorts to include men in their as employees parental leave policies and to help new EASTERN BANK’S LATEST ENDEAVOR IS WHEN KATIE OCKERMAN WAS PRE¦ moms transition back into the workforce a story of gain — and loss. paring for the arrival of her twin daugh- after the birth of a child. The $9.8 billion-asset Eastern has ters last summer, she was concerned Fifth Third already oers six paid spun o Numerated Growth Technolo- about balancing the demands of mother- weeks of medical leave for new moth- gies, a startup that lets banks make small- hood with her job at Fifth Third Bancorp. ers and will add another four paid weeks business lending decisions in as little as But a unique new program at the Cin- to that beginning in August. But women ve minutes. The venture, with the - cinnati company eased her concern. who had recently completed maternity nancial backing of FIS and several com- The maternity concierge program leave still left the bank at twice the rate munity banks, has raised upwards of $9 is akin to a personal assistant who can of all other female employees. Women million in seed money. handle any task a new mom might nd make up 60% of Fifth Third’s total work- But as a condition of the deal, East- overwhelming, whether nding a pedia- force, but just 23% of its senior managers ern Labs, the Boston mutual’s 3-year- trician, planning a child’s birthday party and executives. old innovation unit led by Dan O’Malley, or grocery shopping. Maternity leave alone was not cutting joined the spino. To ensure success, It launched in January and within ve it, so Tanner turned to the mothers at “the whole existing lab team needed to months more than 170 women had tak- Fifth Third for some insight. She started go with the new company,” said O’Malley, en advantage of it, said Teresa Tanner, with a simple question: “What’s hard?” Numerated’s chief executive and East- Fifth Third’s chief administrative o¡cer. As they listed the responsibilities asso- ern’s former chief digital o¡cer. Though the $140 billion-asset company ciated with a new child, Tanner realized Eastern has been using Numerated’s already had a maternity leave policy, it the company could help by taking some technolo¢y to market Business Express was not enough to keep some women of those tasks o their to-do lists. Fifth Loans of up to $100,000, generating from dropping out, even if they might Third already had been working with nearly $100 million of volume since late have preferred to keep working. Best Upon Request to oer its Cincinnati- 2015. Now, Eastern envisions a bigger “We’ve had all these programs around area employees general concierge ser- earnings stream from oering the service for decades now, but we’re not getting vices, like grocery shopping and vacation to other institutions to help them com- results,” Tanner said. “We’ve got to step planning, so she approached the compa- pete against ntech rms that are luring back and say, ‘What are we missing?’” ny about building out a service for moms. borrowers with quick application and ap- Ockerman, a branch manager who has The rm has embedded two full-time proval processes. been working at Fifth Third for 10 years, employees inside Fifth Third’s headquar- Numerated works by using client in- said it was helpful to have someone she ters to help moms of newborns and kids stitutions’ credit policies to underwrite could call on for things like meal prep, up to a year old. Fifth Third declined to real-time loans. At the same time, it party planning or nding child-friendly say how much the service costs, but de- sends email and direct mail to whip up activities in her neighborhood. scribed it as a “six-gure investment.” demand. “When you become a mom, you have Tanner advised other companies in- Eastern is Numerated’s biggest inves- all these concerns about, can I do both?” terested in retaining women to ask them tor, with a minority stake that could de- Ockerman said of parenting and working what the barriers are to staying in the liver signicant rewards if an initial pub- full time. “This made me feel like they workforce after the birth of a child and lic oering is held. supported their employees, they under- how the company can better support So far at least three banks have li- stand, and they gave us something to new mothers. censed the technolo¢y, including First lean on. That just makes my drive for this “If we want diversity at the most se- Federal Lakewood in Ohio, which is also company even higher. I want to work for nior level of the company — and we do — one of Numerated’s investors. Eastern, them if they’re supporting me. It made a we have to gure out how to keep women which did not reveal Numerated’s other big dierence.” and allow them to grow their careers,” investors or clients, said it intends to re- According to Julie Nugent, a vice pres- Tanner said. — Laura Alix build its innovation unit. — John Reosti

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006_ABM_0717 6 6/9/17 9:43 AM BankTechnology

Goldman Sachs’ president and co-chief No Cash to Pay Kids for operating o cer. Another is the Expa entrepreneurship lab, which is led by Chores? Just Tap the App Uber co-founder Garrett Camp and Four- square co-founder Naveen Selvadurai. The Current app links to a parent’s bank account and comes with a Visa deb- Ex-trader says his 8-year-old SOME PARENTS NEVER SEEM TO it card issued by Metropolitan Commer- daughter was the inspiration have cash on hand to pay their children’s cial Bank in New York. Parents can set up for a joint account allowances. Others worry that the cash recurring payments — say, $10 a week — they hand over could be spent on alco- By Penny Crosman and one-time payments from their bank hol or worse. But now there’s an app account to the Current account. to help.. Parent and child can see the current Current is the brainchild of Stuart balance and all transactions in the app, Sopp, a former top trader at Morgan along with geographic data that lets par- Stanley, Citigroup and Deutsche Bank ents check out an unfamiliar retailer. who has attracted several high-pro le Through the app, parents can block investors. certain types of merchants, prevent the One of his backers is David Solomon, card from being used at an ATM, and set

JULY 2017 AMERICAN BANKER 7

007_ABM0717 7 6/8/2017 5:13:43 PM spending limits. A “pause the card” fea- signed to facilitate payments on the Slack Instead, his team will use the same Applying that technolo¢y to Quo- ture means if the child loses it, all trans- messaging service. Sopp now describes cryptographic techniques to add a “secu- rum would allow tokens (representing actions can be blocked. that as a short-term experiment to prove rity layer” to Quorum, the system JPMor- real-world nancial assets, say, shares in Current will charge $36 a year for its the startup could exchange value through gan is developing to run smart contracts. Apple) to circulate throughout the net- service. third-party messaging. In their most basic form, blockchains work, rather than be conned to bilateral Sopp said there’s a need for a joint ac- “That was successful, but it was only allow all participants in a network to see agreements between banks, without sac- count that can be managed with a smart- a building block,” he said. “We made a who has done what. But that transpar- ricing privacy. phone app. “Children now get their rst conscious decision to focus on retail and ency has been a turn-o¦ for nancial in- Dimon has famously predicted that smartphone at the average age of 10.3. consumers rather than the B-to-B play.” stitutions, which don’t want to tip their decentralized currencies like bitcoin — Normally it’s a hand-me-down iPhone, Sopp said he became aware of the al- hands to competitors, or reveal conden- which let anyone with an internet con- and they’re getting regular allowances lowance problem at home. tial client data. nection send money anywhere in the and having less and less time for extra- “I have a daughter who’s 8 and I was “Existing smart contract systems on world without the permission of an in- curricular jobs because they’re studying starting to see problems around this replicated shared ledgers are unable to termediary — are doomed. According to to get scholarships in college,” he said. whole thing, so I was inspired by that provide data privacy — transactions and published reports, his bank has expressly Teenagers lack a digital payment solu- and thought about how I would want to smart contract state data are exposed in forbidden banks it does business with to tion that’s safe and secure, Sopp said. manage my money with more control in the clear on the replicated shared led- work with digital currency exchanges. “They’re using cash from their par- a way that was more automated,” he said. ger,” JPMorgan said in a white paper for “Virtual currency, where it’s called a ents on an ad hoc basis because the par- Quorum published in November. bitcoin vs. a U.S. dollar, that’s going to ents have less and less cash on them,” he Quorum was designed so that a be stopped,” Dimon said in 2015. “No said. “The kids don’t trust the parents Worlds smart contract would be visible only to government will ever support a virtual because they say, ‘Hey I’ll pay you $10 for the parties, not the whole network. But currency that goes around borders and mowing the lawn,’ but they don’t have Collide that, by itself, precludes the contracts doesn’t have the same controls. It’s not the cash and they forget.” JPMorgan’s surprising from involving assets that could later be going to happen.” And the incumbent solution, the pre- blockchain alliance transferred to other participants in the Around that time, JPMorgan and paid card, is expensive and easily lost, network. “You can’t prove to Charlie other banks had begun to investigate the Sopp said. BLOCKCHAINS MAKE STRANGE BED that Bob is the legitimate owner of an as- possibilities for their business of block- The Current app provides kids with fellows. set while concealing that Alice was the chain technolo¢y, which was originally three buckets for their money: spend, For years, Jamie Dimon has derided previous legitimate owner,” Wilcox said. developed to prevent double-spending of save and give. Current has connected to digital currencies. Now, his company has (“Alice and Bob” are regular characters in bitcoins. One advanced use case is smart all 2 million U.S. 501c charities, so a child teamed up with the creators of one of the the hypothetical examples given by cryp- contracts, which theoretically can cut can give $10 to World Wildlife Fund and most prominent “altcoins” to build pri- tographers.) costs in the nancial system by automat- the parents get the tax deduction. vacy features for a blockchain platform. The Zcash developers plan to en- ing much of the work done by lawyers, The account will help young people JPMorgan Chase’s partnership with able Quorum smart contracts to trade compliance o¤cers, syndication desks, learn about the value of money and how Zerocoin Electronic Coin Co. is perhaps transferable, resellable tokens, through and others. to use a PIN before they hit 18, Sopp said. the most surprising alliance yet as tra- a cryptographic method called zero- “Smart contracts on a replicated, “You get to vote, you’re probably driv- ditional nancial institutions co-opt a knowledge proofs. These allow someone shared ledger hold the promise of im- ing, you’re going to college and doing all technolo¢y originally developed to route to prove that a statement is true without proving e¤ciency and lowering costs these other things and you have no idea around them. ZECC’s founder, Zooko conveying any other information. compared with existing enterprise sys- how cards work and how this system Wilcox, was part of the 1990s cypher- In the Zcash currency, for example, tems based on duplicated business logic works,” he said. punk movement, which sought to de- zero-knowledge proofs provide assur- and consensus by reconciliation,” the By establishing a relationship with fend individual privacy through strong ance that users are only spending mon- bank’s Quorum white paper said. young people, Current will have a head cryptography. Last year his rm released ey that they have without revealing on JPMorgan participated in several of start on banking them in their college Zcash, a cryptocurrency designed to be the public ledger how much they have the industry alliances that are working years and beyond. more anonymous than bitcoin. received from or sent to others. Partici- to develop blockchain solutions for - Within the next year, Sopp said, the Just that phrase “more anonymous pants can selectively decrypt such details nancial services, though it recently quit company will have products designed for than bitcoin” might send shivers up the about their own transactions, however, the R3 consortium. The bank decided to college students and other demograph- spines of some bank compliance o¤cers, making it possible to comply with audits model Quorum on another open-source ics. He’s already gotten requests for cards to say nothing of regulators. So, just to be or court orders. Otherwise, the ledger is platform, the bitcoin rival Ethereum. for college students as well as for nannies clear: JPMorgan isn’t using Zcash. “This just a list of timestamped transactions, While Zcash started as a “fork,” or and elderly and inrm parents. is solely a technolo¢y transfer agree- with the senders, recipients and amounts modied version, of bitcoin, Wilcox’s Current’s rst iteration was an app de- ment,” Wilcox said. obscured. company has joined the Enterprise Ethe-

8 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 9

008_ABM0717 8 6/8/2017 5:13:44 PM Instead, his team will use the same Applying that technoloy to Quo- reum Alliance, of which JPMorgan is also enterprises. cryptographic techniques to add a “secu- rum would allow tokens (representing a member. “We can point to the thing running rity layer” to Quorum, the system JPMor- real-world nancial assets, say, shares in Wilcox said the Zcash currency has live in the wild as proof that it works and gan is developing to run smart contracts. Apple) to circulate throughout the net- served as a showcase of sorts for the tech- we can deliver,” he said. In their most basic form, blockchains work, rather than be conned to bilateral noloy his company has been pitching to — Marc Hochstein allow all participants in a network to see agreements between banks, without sac- who has done what. But that transpar- ricing privacy. ency has been a turn-o for nancial in- Dimon has famously predicted that stitutions, which don’t want to tip their decentralized currencies like bitcoin — hands to competitors, or reveal conden- which let anyone with an internet con- tial client data. nection send money anywhere in the “Existing smart contract systems on world without the permission of an in- replicated shared ledgers are unable to termediary — are doomed. According to The truth provide data privacy — transactions and published reports, his bank has expressly smart contract state data are exposed in forbidden banks it does business with to about Millennials the clear on the replicated shared led- work with digital currency exchanges. ger,” JPMorgan said in a white paper for “Virtual currency, where it’s called a and banking. Quorum published in November. bitcoin vs. a U.S. dollar, that’s going to Quorum was designed so that a be stopped,” Dimon said in 2015. “No smart contract would be visible only to government will ever support a virtual the parties, not the whole network. But currency that goes around borders and that, by itself, precludes the contracts doesn’t have the same controls. It’s not from involving assets that could later be going to happen.” transferred to other participants in the Around that time, JPMorgan and network. “You can’t prove to Charlie other banks had begun to investigate the that Bob is the legitimate owner of an as- possibilities for their business of block- set while concealing that Alice was the chain technoloy, which was originally previous legitimate owner,” Wilcox said. developed to prevent double-spending of (“Alice and Bob” are regular characters in bitcoins. One advanced use case is smart the hypothetical examples given by cryp- contracts, which theoretically can cut tographers.) costs in the nancial system by automat- The Zcash developers plan to en- ing much of the work done by lawyers, able Quorum smart contracts to trade compliance ocers, syndication desks, transferable, resellable tokens, through and others. Millennials think of a financial institution as a process—not a a cryptographic method called zero- “Smart contracts on a replicated, place. When dealing with money, the truth is they’d rather push knowledge proofs. These allow someone shared ledger hold the promise of im- a smart phone key than go through a door. They think fast, make to prove that a statement is true without proving eciency and lowering costs decisions, tell their friends, and then go on to the next thing. conveying any other information. compared with existing enterprise sys- In the Zcash currency, for example, tems based on duplicated business logic D+H has produced an exclusive Power Talk series featuring zero-knowledge proofs provide assur- and consensus by reconciliation,” the the award-winning Millennial expert Jason Dorsey. ance that users are only spending mon- bank’s Quorum white paper said. ey that they have without revealing on JPMorgan participated in several of the public ledger how much they have the industry alliances that are working WATCH AT DH.COM/MILLENNIALS2 received from or sent to others. Partici- to develop blockchain solutions for - pants can selectively decrypt such details nancial services, though it recently quit about their own transactions, however, the R3 consortium. The bank decided to making it possible to comply with audits model Quorum on another open-source or court orders. Otherwise, the ledger is platform, the bitcoin rival Ethereum. just a list of timestamped transactions, While Zcash started as a “fork,” or with the senders, recipients and amounts modied version, of bitcoin, Wilcox’s ©2017 D+H USA Corporation. All rights reserved. D+H is a trademark of D+H Limited Partnership. obscured. company has joined the Enterprise Ethe-

8 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 9

009_ABM0717 9 6/8/2017 5:13:45 PM BE ON Of the 39 banks evaluated in this year’s survey, more than half of them received “excellent” marks from their existing customers, up from just under a third of the banks in the 2016 survey. Perhaps more tellingly, over 30% received YOUR “strong” ratings from noncustomers, versus zero in last year’s survey. Stephen Hahn-Griths, an executive vice president at the Reputation Institute, said that while providing quality products and services is obviously important, it’s a com- BEST pany’s governance — or how it conducts business — that can make or break a reputation these days. Wells Fargo is an obvious case in point. In last year’s survey, Wells scored a respectable 67.3 in the overall ranking, BEHAVIOR outpacing many of its peers. This year its score went into free fall, plunging to 48.6, by far the lowest of any bank. (A score under 50 is considered “weak.” Scores between 60 and 69 are “average;” between 70 and 79, “strong;” and above 80, “excellent.”) “Wells Fargo is the poster child for bad behavior,” said Hahn-Griths. Creating fake accounts to meet sales targets is “an egregious act that goes against everything good governance stands for. It’s not ethical. It’s not honest. It’s not transparent.” He suggested that the reputations of other banks — rather than being tarnished by the Wells scandal that made headlines for months — might have been reinforced in a positive way. “In many ways, it’s kind of rearmed the loyalty to your anks are still working to rebuild their other banks,” Hahn-Griths said, “because you start to say, reputations following the nancial ‘At least my bank isn’t Wells Fargo.’ It’s a bit of a reverse crisis and, luckily for them, the phony- psycholo¢y play, there.” Wells Fargo aside, the accounts scandal that erupted at one of Whatever the reason, banking now has moved ahead of the nation’s most prominent retail banks some other industries that had it beat reputationally last didB not drag down the broader industry. year, including the health care and ener¢y sectors. Banking industry overall should While Wells Fargo’s image is in tatters — and will also moved ahead of the broader nance industry, which be pleased with the results likely remain so for some time — what people think scored a 69. of our annual survey of of banks in general continues to improve, according Across the 17 industries the Reputation Institute tracks, to the latest American Banker/Reputation Institute consumer goods had the strongest reputation, with a score bank reputations. One survey. of 76.5, and ener¢y the weakest, with a score of 59.7. key insight: Displaying The overall banking industry scored a 70.8 on a Within the banking industry, the regionals are faring 100-point scale this year, meaning it edged ever so particularly well. Eight of the 10 highest-scoring banks in strong ethics is an effective slightly into the “strong” category. Its score had been the overall ranking — including Synovus Financial in the “average” last year at 67.1. top spot — have less than $50 billion of assets. The other way to improve what Better delivery of products and services has two, USAA and Northern Trust, are niche banks. USAA is an people think of your bank. helped, as has looser lending practices. But the big- online-only bank that serves members of the military and gest inuence has been banks’ behavior. their families, and Northern Trust caters to the wealthy. Simply put, banks are acting more responsibly Three of the country’s four largest banking companies, with customers — no longer processing transactions Citigroup, Bank of America and Wells Fargo, placed in the BY SEAN SPOSITO in a way that will more quickly trigger overdrafts, for bottom ve of the overall ranking. Of the big four, JPMorgan example. They also are making their community ac- Chase ranked highest, with a score of 69.2. tivities more prominent. And these eorts are paying The survey rates banks in seven categories: products and o in higher reputation scores. services, innovation, leadership, workplace, performance,

10 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 11

010_ABM_0717 10 6/9/17 12:39 PM Of the 39 banks evaluated in this year’s survey, more OVERALL REPUTATION RANKINGS than half of them received “excellent” marks from their existing customers, up from just under a third of the banks in 2017 2016 Change

the 2016 survey. Perhaps more tellingly, over 30% received 1 Synovus Financial 80.7 73.8 6.9 “strong” ratings from noncustomers, versus zero in last 2 USAA Bank 80.3 n/a n/a year’s survey. 3 BOK Financial 79 69.4 9.6 Stephen Hahn-Gri ths, an executive vice president at 4 Cullen/Frost Bankers 78.8 72.5 6.3 the Reputation Institute, said that while providing quality products and services is obviously important, it’s a com- 5 First Tennessee 78 n/a n/a pany’s governance — or how it conducts business — that can 6 Northern Trust 76.8 67.4 9.4 make or break a reputation these days. 7 Webster Bank 76.4 n/a n/a Wells Fargo is an obvious case in point. In last year’s sur- 8 BMO Harris Bank 75.9 67.1 8.8 vey, Wells scored a respectable 67.3 in the overall ranking, 9 First Citizens 75.6 n/a n/a outpacing many of its peers. This year its score went into 10 BankUnited 74.4 n/a n/a free fall, plunging to 48.6, by far the lowest of any bank. 11 People's United 74.2 n/a n/a (A score under 50 is considered “weak.” Scores between 12 BNY Mellon 73.7 66 7.7 60 and 69 are “average;” between 70 and 79, “strong;” and 13 Zions Bank 73.3 69.2 4.1 above 80, “excellent.”) “Wells Fargo is the poster child for bad behavior,” said 14 CIT Bank 73.1 n/a n/a Hahn-Gri ths. Creating fake accounts to meet sales targets 15 Associated Bank 72.8 67.6 5.2 is “an egregious act that goes against everything good gov- 16 Discover Bank 72.8 n/a n/a ernance stands for. It’s not ethical. It’s not honest. It’s not 17 BBVA Compass 72.5 65.1 7.4 transparent.” 18 Union Bank 72 66.6 5.4 He suggested that the reputations of other banks — 19 Regions 71.7 73.9 -2.2 rather than being tarnished by the Wells scandal that made 20 Huntington Bank 70.8 66.5 4.3 headlines for months — might have been reinforced in a 21 PNC 70.3 68.5 1.8 positive way. 22 Bank of the West 70.3 66.6 3.7 “In many ways, it’s kind of rea rmed the loyalty to your other banks,” Hahn-Gri ths said, “because you start to say, 23 Ally Bank 69.7 69.7 0 ‘At least my bank isn’t Wells Fargo.’ It’s a bit of a reverse 24 Chase 69.2 68.4 0.8 psycholoy play, there.” 25 TD Bank 68.9 68.2 0.7 Whatever the reason, banking now has moved ahead of 26 Comerica 68.8 68.8 0 some other industries that had it beat reputationally last 27 Capital One 68.6 68.8 -0.2 year, including the health care and enery sectors. Banking 28 BB&T 68.4 66.9 1.5 also moved ahead of the broader nance industry, which 29 M&T Bank 68.3 66.6 1.7 scored a 69. 30 U.S. Bank 67.6 67.7 -0.1 Across the 17 industries the Reputation Institute tracks, 31 Citizens Bank 67.5 65.1 2.4 consumer goods had the strongest reputation, with a score of 76.5, and enery the weakest, with a score of 59.7. 32 SunTrust Banks 67.4 68.8 -1.4 Within the banking industry, the regionals are faring 33 KeyBank 66.6 72.4 -5.8 particularly well. Eight of the 10 highest-scoring banks in 34 Fifth Third Bank 65.5 62.7 2.8 the overall ranking — including Synovus Financial in the 35 Citibank 65.4 64.4 1 top spot — have less than $50 billion of assets. The other 36 Santander 64.8 59.7 5.1 two, USAA and Northern Trust, are niche banks. USAA is an 37 HSBC 63.2 56.8 6.4 online-only bank that serves members of the military and 38 Bank of America 57.2 55.9 1.8 their families, and Northern Trust caters to the wealthy. 39 Wells Fargo 48.6 67.3 -18.7 Three of the country’s four largest banking companies, Citigroup, Bank of America and Wells Fargo, placed in the Excellent/Top Tier Above 80 Strong/Robust 70-79 bottom ve of the overall ranking. Of the big four, JPMorgan Average/Moderate 60-69 Chase ranked highest, with a score of 69.2. Weak/Vulnerable 40-59 Poor/Bottom Tier Below 40 The survey rates banks in seven categories: products and Source: American Banker/Reputation Institute Survey of Bank Reputations 2017 services, innovation, leadership, workplace, performance,

10 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 11

011_ABM_0717 11 6/9/17 12:39 PM 2017 SURVEY OF BANK REPUTATIONS

citizenship and governance. A strong reputation can pay o RANKINGS BASED ON CUSTOMER SCORES Which categories most heavily in myriad ways, in uencing peo- A Big Weak Spot in uence people’s perceptions of ple’s willingness to buy products 2017 2016 Change banks can shift from one year to from, invest in and even work for a Once again large banks as a group 1 USAA Bank 87.5 n/a n/a the next, and the three categories company, according to the Reputa- showed no progress on improving the 2 First Tennessee 86.7 n/a n/a weak reputations they have among that proved to be the top reputation Institute’s research. 3 BNY Mellon 86.3 74.8 11.5 noncustomers tion drivers this year are gover- Of respondents who thought of nance, followed by products and a company as excellent, 85% said 4 BOK Financial 85.2 76.4 8.8 LARGE BANKS services, then innovation. they would buy products from it, 5 CIT Bank 85.1 n/a n/a “The No. 1 thing people are and 68% would invest in it. 6 Synovus Financial 84.9 81.4 3.5 looking for in terms of reputation Banks with excellent scores are 7 First Citizens 84.4 n/a n/a of a bank is ethical behavior,” said also more likely to attract talent, 8 Cullen/Frost Bankers 83.9 81.8 2.1 72.1 51.9 Hahn-Griths. though perhaps not as easily as 9 Northern Trust 83.7 75.7 8 Banks that embrace transpar- they once could. Last year, 73% of 10 BMO Harris Bank 83.6 76 7.6 -3.7 -2.6 ency and fairness will nd it can be respondents said they would work 11 Webster Bank 82.9 n/a n/a a real dierentiator over the next for the top-rated banks, but this 12 Associated Bank 82.6 76.8 5.8 year or two, he said. year that gure fell to 65%. 13 SunTrust Banks 82.6 81.8 0.8 REGIONAL BANKS Among the banks whose repu- Hahn-Griths oered two pos- tations beneted from rising gover- sible reasons for the decline. First, 14 Huntington Bank 81.5 78 3.5 nance scores were BOK Financial, he said, many job seekers these 15 People's United 81.3 n/a n/a BNY Mellon and BBVA Compass. days are unwilling to consider cer- 16 BBVA Compass 81.2 76.3 4.9 80.6 67.4 Reymundo Ocañas, BBVA Com- tain employers until they know for 17 BankUnited 81.1 n/a n/a pass’ director of corporate respon- sure that a company’s values line 18 Zions Bank 80.7 76 4.7 sibility and reputation, said that the up with their own. Also, “millenni- +2.1 +5.2 19 BB&T 80.5 73.7 6.8 brand is top of mind for executives als in particular are looking beyond 20 Regions 80.3 85.7 -5.4 at the bank, which is a unit of the a career job at a large corporation 21 Citizens Bank 80.1 78.5 1.6 Spanish banking giant Banco Bilbao and thinking about other forms of NONTRADITIONAL BANKS Vizcaya Argentaria. (BBVA Compass employment, such as starting their 22 Union Bank 80 79.6 0.4 is a Reputation Institute client.) own company,” he said. 23 U.S. Bank 79 79.4 -0.4 For example, he pointed to a Attracting talent is more chal- 24 Discover Bank 78.6 n/a n/a ve-year commitment the bank lenging for those with less-than- 25 HSBC 78.2 73.2 5 82.0 69.0 announced in 2014 to invest $11 bil- stellar reputations. Only 22% of 26 Capital One 77.9 82 -4.1 lion in low- and moderate-income respondents said they would seek 27 PNC 77.3 80.7 -3.4 -0.3 +7.3 communities within its seven-state employment with the average com- 28 Bank of the West 76.9 79 -2.1 footprint. In its rst full year of panies and just 11% would apply for 29 TD Bank 76.7 80.9 -4.2 that commitment, it made $1.2 bil- jobs with the weak ones, according 30 Ally Bank 76.7 80.7 -4 ALL BANKS - INDUSTRY AVERAGE lion in loans to more than 24,000 to the Reputation Institute. small businesses and $819 million Attracting new customers also 31 Chase 75.8 80.2 -4.4 in mortgage loans, providing hous- gets progressively tougher for 32 M&T Bank 75.1 74.7 0.4 ing for more than 5,400 families. companies in the lower reputation 33 Fifth Third Bank 74.9 71.8 3.1 79.6 65.5 Investments aimed at improv- categories. While 59% said they 34 Comerica 74.8 79.4 -4.6 ing the workplace culture (its head would buy products at the compa- 35 Santander 74.1 72.2 1.9 of human resources is now called nies with strong reputations, only 36 Citibank 72.9 77.1 -4.2 +1.2 2017 Gap = 14 pts +5.0 the “chief talent and culture execu- 37% would do so at the average 37 KeyBank 72.4 84.6 -12.2 tive”) and the customer experience companies. And that drops to 19% 38 Bank of America 71.5 75 -3.5 (it acquired the mobile-only bank for the weak companies. Scores from customers Excellent/Top Tier Above 80 39 Wells Fargo 62.2 77.7 -15.5 Scores from noncustomers Strong/Robust 70-79 Simple in 2014) also have helped Wells Fargo, for example, has Average/Moderate 60-69 to enhance BBVA Compass’ repu- seen a sharp decline in new ac- Excellent/Top Tier Above 80 Increase from 2016 Strong/Robust 70-79 Weak/Vulnerable 40-59 tation. Even a portion of senior count openings since the scandal Not a meaningful change Average/Moderate 60-69 managers’ bonus compensation is broke last year. Consumers opened Weak/Vulnerable 40-59 Poor/Bottom Tier Below 40 tied to the bank’s reputation, Oca- 35% fewer checking accounts at Source: Survey of Bank Reputations 2017 Source: American Banker/Reputation Institute Survey of Bank Reputations 2017 ñas said. Wells in March than they did in

12 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 13

012_ABM_0717 12 6/9/17 12:39 PM Products & Services Innovation USAA 80.5 Synovus 79.5

Synovus 80.1 Cullen/Frost Bankers, Inc. 78.7

Cullen/Frost Bankers, Inc. 79.2 Bok Financial 77.9

Bok Financial 78.5 Eastern Bank 75.2 First Tennessee 77.9 A strong reputation can pay o First Tennessee 75.0 RANKINGS BASED ON CUSTOMER SCORES RANKINGS BASED ON NONCUSTOMER SCORES Workplace Governance in myriad ways, in uencing peo- Synovus 79.8 Synovus 80.0 ple’s willingness to buy products 2017 2016 Change 2017 2016 Change Cullen/Frost Bankers, Inc. 79.3 USAA 79.0 USAA 77.8 First Tennessee 78.3 from, invest in and even work for a Bok Financial 77.6 Cullen/Frost Bankers, Inc. 78.3 71.0 72.4 73.8 75.2 76.6 78.0 1 USAA Bank 87.5 n/a n/a 1 Synovus Financial 77.9 67.1 10.8 First Tennessee 77.5 Bok Financial 77.8 company, according to the Reputa- 2 First Tennessee 86.7 n/a n/a 2 USAA Bank 76.2 n/a n/a Citizenship Leadership tion Institute’s research. Synovus 80.1 Synovus 80.0 3 BNY Mellon 86.3 74.8 11.5 Of respondents who thought of 3 Cullen/Frost Bankers 75.6 62.7 12.9 Bok Financial 79.3 Cullen/Frost Bankers, Inc. 79.4 4 BOK Financial 85.2 76.4 8.8 Cullen/Frost Bankers, Inc. 78.8 USAA 78.9 a company as excellent, 85% said 4 BOK Financial 75.4 62.4 13 USAA 78.2 Bok Financial 78.9 they would buy products from it, 5 CIT Bank 85.1 n/a n/a 5 Northern Trust 74 63.3 10.7 First Tennessee 77.3 First Tennessee 78.4 6 Synovus Financial 84.9 81.4 3.5 Performance and 68% would invest in it. 6 First Tennessee 73.6 n/a n/a Cullen/Frost Bankers, Inc. 80.0 Banks with excellent scores are 7 First Citizens 84.4 n/a n/a Synovus 80.0 7 Webster Bank 72.4 n/a n/a Bok Financial 78.6 also more likely to attract talent, 8 Cullen/Frost Bankers 83.9 81.8 2.1 8 First Citizens 71.9 n/a n/a First Tennessee 77.9 though perhaps not as easily as First Tennessee 77.9 9 Northern Trust 83.7 75.7 8 9 BMO Harris Bank 71.8 61.1 10.7 they once could. Last year, 73% of 10 BMO Harris Bank 83.6 76 7.6 10 BankUnited 70.4 n/a n/a respondents said they would work 11 Webster Bank 82.9 n/a n/a 11 People's United 70.4 n/a n/a for the top-rated banks, but this 12 Associated Bank 82.6 76.8 5.8 year that gure fell to 65%. 12 Zions Bank 70.2 64.4 5.8 Hahn-Griths oered two pos- 13 SunTrust Banks 82.6 81.8 0.8 13 BNY Mellon 69.3 61.4 7.9 sible reasons for the decline. First, 14 Huntington Bank 81.5 78 3.5 14 Union Bank 68.8 61.5 7.3 he said, many job seekers these 15 People's United 81.3 n/a n/a 15 Associated Bank 68.5 61.3 7.2 days are unwilling to consider cer- 16 BBVA Compass 81.2 76.3 4.9 16 CIT Bank 67.7 n/a n/a tain employers until they know for 17 BankUnited 81.1 n/a n/a 17 BBVA Compass 67.1 58.8 8.3 sure that a company’s values line 18 Zions Bank 80.7 76 4.7 18 Bank of the West 67 61.3 5.7 up with their own. Also, “millenni- 19 BB&T 80.5 73.7 6.8 19 Regions 66.9 65.3 1.6 als in particular are looking beyond 20 Regions 80.3 85.7 -5.4 20 Discover Bank 66.5 n/a n/a a career job at a large corporation 21 Citizens Bank 80.1 78.5 1.6 and thinking about other forms of 21 Comerica 66.1 62.7 3.4 employment, such as starting their 22 Union Bank 80 79.6 0.4 22 Ally Bank 65.6 64.9 0.7 own company,” he said. 23 U.S. Bank 79 79.4 -0.4 23 M&T Bank 64.4 63.1 1.3 Attracting talent is more chal- 24 Discover Bank 78.6 n/a n/a 24 Huntington Bank 64.3 60 4.3 lenging for those with less-than- 25 HSBC 78.2 73.2 5 25 KeyBank 64.2 60.9 3.3 stellar reputations. Only 22% of 26 Capital One 77.9 82 -4.1 26 TD Bank 64 62.4 1.6 respondents said they would seek 27 PNC 77.3 80.7 -3.4 27 PNC 64 59.4 4.6 employment with the average com- 28 Bank of the West 76.9 79 -2.1 28 Chase 62.2 60.5 1.7 panies and just 11% would apply for 29 TD Bank 76.7 80.9 -4.2 29 Citizens Bank 61.8 60.9 0.9 jobs with the weak ones, according 30 Ally Bank 76.7 80.7 -4 to the Reputation Institute. 30 BB&T 61.4 63.7 -2.3 Attracting new customers also 31 Chase 75.8 80.2 -4.4 31 Fifth Third Bank 61.1 58.9 2.2 gets progressively tougher for 32 M&T Bank 75.1 74.7 0.4 32 SunTrust Banks 59 60.7 -1.7 companies in the lower reputation 33 Fifth Third Bank 74.9 71.8 3.1 33 Citibank 58.9 57.8 1.1 categories. While 59% said they 34 Comerica 74.8 79.4 -4.6 34 Santander 58.9 49.9 9 would buy products at the compa- 35 Santander 74.1 72.2 1.9 35 Capital One 58.6 58 0.6 nies with strong reputations, only 36 Citibank 72.9 77.1 -4.2 36 HSBC 58.2 51.8 6.4 37% would do so at the average 37 KeyBank 72.4 84.6 -12.2 37 U.S. Bank 58.1 61.2 -3.1 companies. And that drops to 19% 38 Bank of America 71.5 75 -3.5 38 Bank of America 43.3 44.9 -1.6 for the weak companies. 39 Wells Fargo 62.2 77.7 -15.5 Wells Fargo, for example, has 39 Wells Fargo 37.1 59.9 -22.8 Excellent/Top Tier Above 80 seen a sharp decline in new ac- Excellent/Top Tier Above 80 Strong/Robust 70-79 Strong/Robust 70-79 Average/Moderate 60-69 count openings since the scandal Average/Moderate 60-69 Weak/Vulnerable 40-59 broke last year. Consumers opened Weak/Vulnerable 40-59 Poor/Bottom Tier Below 40 35% fewer checking accounts at Poor/Bottom Tier Below 40 Source: American Banker/Reputation Institute Survey of Bank Reputations 2017 Source: American Banker/Reputation Institute Survey of Bank Reputations 2017 Wells in March than they did in

12 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 13

013_ABM_0717 13 6/9/17 12:39 PM 2017 SURVEY OF BANK REPUTATIONS

the same month last year and credit card applications were How banks rated in the seven reputation categories down 42% year over year. Those steep drops are among the Customers Noncustomers reasons prots in its retail banking unit fell 9% in the rst ce Prod nce Produc an uct rma ts/ quarter from a year earlier, to $3 billion. orm s/S fo Se rf e er rv e r P ic P vi e c s Joo-Yung Lee is a managing director and regional head of 7 e 2 6 .4 8 s 0. 8 8 .5 p 7 .9 7 i p h i s I Fitch Ratings’ North American nancial institutions group. h r n s I n e n r n d 6 o e 0 . 7 o 6 v d . a

8 a v e She said that while reputation is not a key component in a 7 4 5

t a L 6 e . .

7 i

7 t 3

determining a bank’s rating, it is something she has to pay

7 6

C 5 C 6 i attention to because a poor one can aect areas such as loan t . it . i 5 9 z 7 iz 3 e . e . n 5 n 8 e growth, client acquisition and referrals. s 7 e s 6 c h 7 c h 6 la ip 6.7 la ip 6 .8 p p rk Her team put Wells on a “negative” outlook following rk o o W Go W Gov the scandal. “We do pay attention to brand and the rm’s vernance ernance reputation in the context of how it plays a role in the bank’s The top scorers for each of the reputation drivers franchise and the business model,” Lee said. Wells Fargo has taken steps to repair its image, from re- Customer Noncustomer

tooling its entire sales program to establishing a dedicated Products & Services Products & Services oce to oversee a companywide Rebuilding Trust Program. USAA 85.1 USAA 77.9 BNY Mellon Synovus And, so far, the bank has refunded nearly $3.3 million 84.8 77.6 First Tennessee 84.1 Cullen/Frost Bankers 76.4 to customers for fees incurred as a result of “potentially Synovus 83.9 BOK Financial 75.7 unauthorized” deposit accounts, credit cards and lines of Cullen/Frost Bankers 83.5 Northern Trust 75.6

credit, according to a recent one-sheet from Wells outlining Innovation Innovation its progress. Cullen/Frost Bankers 83.3 Synovus 77.8 First Tennessee 82.1 BOK Financial 75.8 Like all banks in the reputation survey, Wells performed Synovus 82.0 Cullen/Frost Bankers 75.8 better with its customers than with noncustomers. Among BNY Mellon 82.0 Webster Bank 71.8 customers it scored a 62.2, lowest among the 39 banks but BOK Financial 81.4 First Tennessee 71.4

still in the range of “average.” Its noncustomer score was Workplace Workplace 37.1, which is “poor.” Synovus 84.6 Synovus 76.8 Cullen/Frost Bankers 84.5 USAA 76.3 Less than half of its customers say they would recom- BNY Mellon 82.5 Cullen/Frost Bankers 76.1 mend the bank to others, and less than a quarter of noncus- First Tennessee 82.4 BOK Financial 75.5 tomers would do so. BOK Financial 81.1 First Tennessee 75.1 But Wells’ recovery eort is starting to pay o. The Repu- Governance Governance tation Institute runs monthly assessments for Wells, which Synovus 84.0 Synovus 77.5 First Tennessee 83.9 USAA 76.3 is a client, and Hahn-Griths said its scores are up slightly USAA 83.7 First Tennessee 75.4 since spring, when the annual Survey of Bank Reputations Cullen/Frost Bankers 83.2 BOK Financial 75.2 was elded. BNY Mellon 83.0 Cullen/Frost Bankers 75.1 “It’s going to take a while; there is no overnight cure,” he Citizenship Citizenship said. “It’s all about rebuilding trust and credibility one cus- Synovus 84.6 Synovus 77.3 First Tennessee 83.4 BOK Financial 77.0 tomer at a time and doing the right thing.” BOK Financial 83.1 Cullen/Frost Bankers 76.2 Cullen/Frost Bankers 82.8 USAA 75.7 USAA 82.7 First Tennessee 74.2 SURVEY METHODOLOGY Leadership Leadership COMPANY SELECTION: Synovus 84.1 Synovus 77.3 Companies drawn from the Federal Reserve’s list of large First Tennessee 83.9 USAA 76.6 commercial banks, with final selections by American Banker BOK Financial 83.9 Cullen/Frost Bankers 76.6 based on total assets and deposits Cullen/Frost Bankers 83.8 BOK Financial 76.0 BNY Mellon First Tennessee Only those with significant retail brands were considered 83.5 75.5 Performance Performance RATINGS: Cullen/Frost Bankers 84.5 Synovus 77.6 Ratings were collected via online questionnaire CIT Bank 83.8 Cullen/Frost Bankers 77.2 in the spring of 2017 Synovus 83.7 BOK Financial 76.1 All companies were rated by at least 100 First Tennessee 83.5 USAA 75.2 BNY Mellon First Tennessee customers and 100 noncustomers 82.9 75.1 Each respondent was very or somewhat familiar with the companies they rated Source: American Banker/Reputation Institute Survey of Bank Reputations 2017

14 AMERICAN BANKER JULY 2017

014_ABM_0717 14 6/9/17 12:39 PM IMPROVING MORTGAGE LOAN PROCESSING THROUGH AUTOMATION An educational Q&A with Michele Rothkin, Financial Services Industry Marketing Specialist, Canon U.S.A., Inc. In an age of customer expectations for fast, convenient digital solutions, the mortgage loan process remains highly paper-based. The processing cycle can be rife with bottlenecks and the risk of costly errors. Across the industry, executives say they must improve the customer experience and internal efficiency to be com- petitive, and are seeking to shave days off cycle times. To shed light on these challenges and possible solutions, Canon’s Michele Rothkin discusses how business process automation can help mortgage originators become more efficient.

What is the state of automation in Overall, an ef cient process leads to a shorter cycle time. A the industry today? shorter cycle time helps originators close within the initial rate lock period and avoid fees to extend rate locks. An ef cient pro- Companies are trying to cut out cess can also lead to a better customer experience. Satis ed manual work with the help of online customers can lead to more referrals and fewer bad reviews. application portals they can use to up- load documents. The problem is that What does the mortgage loan document process of the future when documents come in, someone look like? still has to look at them — information needs to be veri ed. As such, the process may never be Document collection and data review involves a human element. 100% automated. The key is to insert documents into an The game-changing challenge here is, with a process that has orderly workow that can help track the mortgage package to be somewhat manual, how do you organize work for a loan throughout the cycle and prompt mortgage professionals to processor who has a lot of critical responsibilities? complete necessary tasks in a timely manner. The biggest struggle for processors is remembering everything What are the biggest risks and pain points for originators they have to do, and that’s where a well-designed automated in the mortgage loan processing cycle? solution comes in. When you need to collect paystubs, the system can remind you to call the borrower. It can ag documents that Not surprisingly, regulatory compliance is an ongoing are close to expiring and give ample time to collect new ones. If concern. For example, when loan terms change, new something changes in a document, the technology can call atten- disclosures must be issued within strict time limits. tion to it. The proper technology solution keeps processors mov- Documents, such as paystubs, must also be current at ing within a workow to help reduce errors and improve ef ciency. the time of closing. A well-constructed automated system can help alert staff to possible problems so they can be How is Canon involved in helping mortgage bankers reduce addressed before they become an issue. cycle time and improve the customer experience?

Reputational risk also can’t be ignored. Inef cient pro- Canon’s service is customizable and allows an administrator cesses with heavy manual components can expose orig- to set up a digital workow behind the scenes. As a leader in inators to oversights like missing information, requiring imaging technology, Canon has the technology, personnel and them to contact customers multiple times for the same know-how to help automate manual, paper-intensive processes. document. Originators that achieve a high level of service by streamlining communications with borrowers can The service helps manage tasks at each stage in the process, distinguish themselves from competitors. from appraisals to customer follow up on income and assets. Having these tasks structured in a workow queue helps keep Many loan processing executives continue to invest in mortgage professionals on point. technology and process improvements and seek to shorten processing cycles. What is driving the activity? The service comes with robust data analytics that allows for tracking throughout the process, including cycle time. It also pro- Primary drivers of ongoing improvements in the loan provides document storage, incorporating Canon’s optical character cessing area are compliance, cost savings and customer reader (OCR) – scanning and indexing – technology. satisfaction. With mortgage providers having expended a great deal of time and energy on compliance in the past few To learn more, please visit: years, they are expanding their focus to creating and main- usa.canon.com/advancedsolutionsfor nancialservices or email taining more ef cient processes throughout the loan cycle. [email protected]

Copyright 2016 Canon U.S.A., Inc. Canon U.S.A. does not provide legal counsel or regulatory compliance consultancy, including without limitation, Sarbanes-Oxley, HIPAA, GLBA, Check 21 or the USA Patriot Act. Each customer must have its own quali ed counsel determine the advisability of a particular solution as it relates to regulatory and statutory compliance.

Produced by SourceMedia Research | American Banker Magazine

015_ABM0717001_ABM_0717 15 1 6/9/20175/31/17 2:01:40 1:41 PM PM 16 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 17

016_ABM_0717 16 6/9/17 12:43 PM Talent refinery

BY ALAN KLINE PHOTOGRAPHY BY ADAM MURPHY 16 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 17

017_ABM_0717 17 6/9/17 12:43 PM Bradshaw saw it, development was cru- How all this plays outside of BOK is succeeded by sticking to what it does cial to keeping the best employees from hard to know, but it is likely not a uke best — enery lending — while opportu- eeing to competitors and grooming that the company’s climb up our annual nistically moving into new markets and the next generation of leaders at a time reputation rankings coincides with the adding business lines, such as mortgage when BOK’s, and the industry’s, bench talent development eort. banking, wealth management and trea- strength had become dangerously thin. Stephen Hahn-Griths is a managing sury management services. Not many “There was a period in the 1990s director at the Reputation Institute, the banks can boast that nearly half of their where there was not a lot of internal de- Cambridge, Mass., rm that compiles the revenue is generated by fees. velopment going on, so there’s this gap — rankings for American Banker each year. In the late 1980s and early 1990s, Steven Bradshaw had some fresh ideas and it’s like this at a lot of banks — where He said BOK “is setting itself apart” from “the bank suered from the regional about how to maintain BOK Financial’s there are a lot of us who are over 55 and others in the industry by “investing in downturn in the Southwest, and we did momentum when he replaced Stanley a signicant amount of talent among the its people and building a workplace and not want that same outcome” in the next SLybarger as chief executive in early 2014. under-40 crowd, but not a lot of talent culture where people want to work.” downturn, said Lybarger, who remains Lybarger, who led the Tulsa, Okla., in between,” explained Bradshaw, who While this is not the only contributor on BOK’s board. “How do you maintain a company for nearly a quarter of a centu- is 57. “We’re going to see a pretty signi- to BOK’s improved reputation, it is cer- reputation? By building a company that ry, is a towering gure in banking, cred- cant change in leadership … in a lot of tainly a factor, particularly in its standing is recession-proof.” ited with transforming the small enery areas of the bank over the next decade with customers, Hahn-Griths said. It also helps to be a model corporate lender with less than $2 billion of assets and we need to make sure we have peo- “Inspired employees make for hap- citizen, and Mark Graham, the president into a regional powerhouse, and deliv- ple who are prepared to take over those pier customers,” he said. and CEO of the Tulsa Area United Way, ering consistent prots to shareholders responsibilities.” said that BOK has few peers in that re- largely by maintaining strong credit dis- A key initiative is an executive and gard. Bradshaw himself is the current cipline and building a diverse base of fee- performance coaching program geared OK — which placed eighth in chairman of the Tulsa Area United Way based businesses. It is a point of pride at specically for up-and-coming managers last year’s rankings — came in and last year, along with his wife, Marla, BOK that the company never lost money who senior leaders see as having execu- third overall in the 2017 rank- co-chaired a fundraising campaign that or laid o employees during the nancial tive potential. There is also an advanced B ings, with a score of 79 (out brought in $25.3 million, a near record crisis and was one of just a handful of leadership program for midlevel manag- of 100). Of the 39 banking companies for the nonprot. regionals that refused to accept money ers, another management program for included in the Survey of Bank Reputa- “BOK’s ngerprints are literally all from the federal government’s Troubled newly hired or recently promoted em- tions this year, only Synovus Financial over Tulsa,” said Graham, noting the Asset Relief Program. ployees and a series of online classes and in Columbus, Ga. (80.7), and USAA Bank company’s heavy investment in eco- Yet there is always room for improve- one-day boot camps. in San Antonio (80.3) scored higher nomic development and its employees’ ment, even at the most respected, best- The early results of BOK’s invest- than BOK. signicant involvement in area nonprof- performing companies, and one area ments in talent development have been BOK also posted the largest year-over- its. “It sets the bar here, and that’s say- where Bradshaw believed he could promising. Turnover is down, employee year increase in its score, 9.6 points. ing a lot because Tulsa is a hugely philan- change the $33 billion-asset BOK for the engagement scores are up and, perhaps That was propelled by an improve- thropic community.” better was in nurturing talent. For years, most important, existing employees are ment in how it is viewed by both custom- BOK has had some hiccups. Last year, BOK had been adding employees at a lling more of BOK’s job openings. Last ers and noncustomers. BOK is one of just the company paid a $1.6 million ne to rapid clip, primarily by acquiring other year, one in four vacant jobs went to an four companies to show a double-digit the Securities and Exchange Commis- banks, going into new business lines and internal candidate, versus one in eight increase in its score with noncustomers sion for allegedly covering up the misuse expanding existing ones, but it had no just three years ago. and its 8.8-point increase in its customer of funds related to a bond issue. BOK formal training program designed to re- That’s because more employees have score was second only to the BNY Mel- said the fraud was perpetrated by an ex- tain all that talent or prepare the most gained the skills and the condence to lon’s 11.5-point jump. ecutive in its corporate trust department promising employees for senior roles. apply for positions that may have once This is not to suggest that BOK was in who is no longer with the company. BOK had created an oce of talent considered to be out of reach, Bradshaw some desperate need of a reputation re- Even so, BOK generally enjoys a and organizational development in late said. “They are condent to raise their boot. Financial performance is an impor- strong reputation with its customers, in- 2012 under Lybarger, but training took hands, and they are condent that we as tant driver of reputation and few compa- vestors and people who live in its com- on greater urgency under Bradshaw, an organization will consider them,” he nies have performed as consistently well munities. To understand why, it helps to one of Lybarger’s longtime deputies. As said. as BOK over the last two decades. It has know about its ownership structure and

18 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 19

018_ABM_0717 18 6/9/17 12:43 PM How all this plays outside of BOK is succeeded by sticking to what it does its ties to the Kaiser Family Foundation. sharply curtailing enery lending and, in hard to know, but it is likely not a uke best — enery lending — while opportu- The billionaire oil executive George some cases, exiting the sector entirely. that the company’s climb up our annual nistically moving into new markets and Kaiser bought the then-ailing company But BOK took a dierent tack, opting reputation rankings coincides with the adding business lines, such as mortgage in 1991 and today he and his family foun- instead to give many of its clients ample talent development eort. banking, wealth management and trea- dation own roughly two-thirds of BOK’s time to work through nancial troubles Stephen Hahn-Griths is a managing sury management services. Not many stock. Despite their vastly dierent mis- brought on by falling prices. The compa- director at the Reputation Institute, the banks can boast that nearly half of their sions — the foundation is chiey focused ny had survived down cycles before and, Cambridge, Mass., rm that compiles the revenue is generated by fees. on childhood poverty and early-child- as its executives have said repeatedly on rankings for American Banker each year. In the late 1980s and early 1990s, hood education — there is little question recent earnings calls, it was not about to He said BOK “is setting itself apart” from “the bank suered from the regional that the foundation’s spirit of giving back abandon its customers when they need- others in the industry by “investing in downturn in the Southwest, and we did has seeped into BOK’s culture. ed their bank most. its people and building a workplace and not want that same outcome” in the next “When you think of BOK, you think Underscoring its commitment to the culture where people want to work.” downturn, said Lybarger, who remains of George Kaiser, and when you think of battered sector, BOK has continued to While this is not the only contributor on BOK’s board. “How do you maintain a George Kaiser, you think of Kaiser Fam- actively pursue new enery business — to BOK’s improved reputation, it is cer- reputation? By building a company that ily Foundation,” said Graham. “All are it has added $900 million of oil and gas tainly a factor, particularly in its standing is recession-proof.” signicant players in the development of loans over the past 12 months — and last with customers, Hahn-Griths said. It also helps to be a model corporate this community, in pushing us forward.” year even bought an enery-focused in- “Inspired employees make for hap- citizen, and Mark Graham, the president vestment advisory rm. pier customers,” he said. and CEO of the Tulsa Area United Way, “We’re a committed and unapologet- said that BOK has few peers in that re- ith Kaiser and the founda- ic enery bank, and we understand that gard. Bradshaw himself is the current tion owning such a large commodity prices can be volatile,” said OK — which placed eighth in chairman of the Tulsa Area United Way chunk of the publicly trad- Stacy Kymes, BOK’s head of commercial last year’s rankings — came in and last year, along with his wife, Marla, W ed company’s stock, BOK banking. “Being reactive in the short third overall in the 2017 rank- co-chaired a fundraising campaign that can go about its business relatively free term isn’t going to result in a positive B ings, with a score of 79 (out brought in $25.3 million, a near record from investor pressure, said Brady Gai- outcome for the bank or the borrower,” of 100). Of the 39 banking companies for the nonprot. ley, a managing director at Keefe, Bruy- he said. included in the Survey of Bank Reputa- “BOK’s ngerprints are literally all ette & Woods. Jared Shaw, an analyst at Wells Fargo tions this year, only Synovus Financial over Tulsa,” said Graham, noting the BOK’s leaders “are not managing Securities, said investors and analysts in Columbus, Ga. (80.7), and USAA Bank company’s heavy investment in eco- the bank for the next quarter or even have generally been comfortable with in San Antonio (80.3) scored higher nomic development and its employees’ for the next year; they are focused on that stance because BOK has such deep than BOK. signicant involvement in area nonprof- creating value over the next ve to 10 expertise in enery lending. The com- BOK also posted the largest year-over- its. “It sets the bar here, and that’s say- years and beyond,” Gailey said. “A lot of pany is prudent in its underwriting — the year increase in its score, 9.6 points. ing a lot because Tulsa is a hugely philan- banks don’t have that longer-term focus loan to value on its enery loans typically That was propelled by an improve- thropic community.” because they have big rosters of institu- ranges from 50% to 60% — and most of its ment in how it is viewed by both custom- BOK has had some hiccups. Last year, tional investors that want results now, loans are for exploration and production ers and noncustomers. BOK is one of just the company paid a $1.6 million ne to not later.” and therefore collateralized by the oil and four companies to show a double-digit the Securities and Exchange Commis- Gailey said — and BOK executives gas in the ground. As Shaw pointed out, increase in its score with noncustomers sion for allegedly covering up the misuse concurred — that the ownership struc- the banks that suered the steepest loss- and its 8.8-point increase in its customer of funds related to a bond issue. BOK ture is a big reason BOK was able to be es on enery loans were those nancing score was second only to the BNY Mel- said the fraud was perpetrated by an ex- so patient with customers in the enery businesses that provide oil eld services, lon’s 11.5-point jump. ecutive in its corporate trust department industry when oil and gas prices started such as rigs and other heavy equipment. This is not to suggest that BOK was in who is no longer with the company. plummeting in late 2015 and early 2016. Shaw said investors are not bothered some desperate need of a reputation re- Even so, BOK generally enjoys a As enery-related businesses were that BOK continues to write new loans at boot. Financial performance is an impor- strong reputation with its customers, in- struggling to repay their loans, many a time when many other banks are tak- tant driver of reputation and few compa- vestors and people who live in its com- banks responded just as investors and ing a pause. “Even though enery prices nies have performed as consistently well munities. To understand why, it helps to analysts wanted them to: by quickly have come down a lot, the loans BOK is as BOK over the last two decades. It has know about its ownership structure and writing o or unloading troubled credits, putting on its books are actually better

18 AMERICAN BANKER JULY 2017 JULY 2017 AMERICAN BANKER 19

019_ABM_0717 19 6/9/17 12:43 PM loans because the pricing assumptions ‘We’re a committed and unapologetic ener y are so much more conservative,” he said. bank,’ said commercial lending chief Stacy Kymes. ‘Being reactive in the short term isn’t radshaw believes there is a going to result in a positive outcome for the link between BOK’s decision to stand by its enery clients dur- bank or the borrower.’ B ing this most recent downturn and its improved reputation score. A former manager in the company’s nd to be most benecial. Though the BOK has operations in nine states, information technoloy group, McQueen idea of lending in Canada was ultimately including Texas, Colorado and Missouri, was promoted in January to director of scrapped, many other ideas are accept- and about 80% of its oces are in mar- bank operations, a senior-level post in ed, and it is up to presenting teams to kets “that have some level of reliance which she oversees operations for a wide help put the ideas into practice. That can on the enery industry,” Bradshaw said. range of functions, including lending, be heady stu for a midlevel manager. “When you work with your customers, retail banking and wealth management. “They get the opportunity to work that permeates within the communities, She admits she likely would not have with the executive team” to implement and it is a point of pride with employees. even applied for the position if she had the idea, Tiger said, “and you can imag- Our customers know that we are loyal not gone through the executive training ine how great that is for employee en- and that we are not in this business casu- program in 2014. gagement and morale.” ally and therefore not going to exit it ca- A key component of the training is a McQueen, who is coming up on her sually. That builds a stronger reputation.” research project in which the class par- 10th anniversary with BOK, said that He sees a link, too, between its talent ticipants are broken up into teams and Bradshaw’s focus on employee engage- development e orts and the improved asked to come up with a solution to a re- ment has indeed boosted morale across perception of BOK in its markets. He said al-world problem or question. McQueen the organization. She pointed not only to the commitment to education and train- and her team, for example, were asked the formal talent development programs, ing has “energized” the employees, and to look into the feasibility of BOK expand- but also to the dozens of informal co ee that is helping to lower turnover and, ing its enery lending into Canada. After meetings Bradshaw holds with rank-and- ultimately, improve relations with cus- months of research, she ultimately con- le employees each year. tomers. Among employees BOK views as cluded that such a move would be too “Regardless of what your role might being a “high performer” or having “high risky, and as part of the program, had to be, he wants to hear what’s on your potential,” turnover was 7% last year, explain the decision to a panel of senior mind,” McQueen said. “It’s been a posi- down from 8% in 2015. Further minimiz- executives. That access to Bradshaw and tive, impactful thing. It makes people feel ing turnover among these two employee other senior leaders was invaluable, Mc- like their voices are being heard.” groups is a top priority, and sometimes Queen said, and ultimately gave her the Bradshaw began hosting the meetings that means giving talented workers an condence to not only apply for the bank when he took over as CEO three years opportunity to stretch themselves even operations job, but seek their input be- ago. They have no agenda and one of the before they are ready. fore she even interviewed for it. only rules is that senior leaders are not al- “No one is really 100% ready for their “I got to know them and some of their lowed to attend because Bradshaw fears next role, but it’s important that we as thought processes, so when this became their presence might discourage honest leaders give people the opportunity to available I felt very comfortable in going discussion. do things that might be outside of their to talk to them about what their expecta- “They give me feedback on what they comfort zones,” Bradshaw said. tions for this role would be,” she said. see as a priority but don’t see us work- Christine McQueen was one of the Stacy Tiger, BOK’s director of talent ing on, and I can tell you it’s been pretty rst BOK employees selected to partici- and organizational development, said enlightening,” said Bradshaw. “I’ve prob- pate in a 10-month executive education much of the training is focused on devel- ably learned more about the company program, and the experience changed oping “soft skills,” but it’s those “stretch from these sessions than I had in my 20- the trajectory of her career. assignments,” she said, that participants plus years here.”

20 AMERICAN BANKER JULY 2017

020_ABM_0717 20 6/9/17 12:43 PM BankThink BY HAZEL MOORE

Is artificial intelligence the future of capital markets?

Before the internet arrived, I used to be an equity analyst. I’d spend my days An asset manager friend of mine agreed. nding and arranging metaphorical jigsaw pieces to come up with a complete picture He also said there’s no way he’d go public and an investment recommendation, which the sales guys would disseminate by about using this stratey; he’d prefer telephoning their favorite clients rst, and the ones they didn’t like so much a bit later. investors think how great his team was at Today, at asset management companies and other nancial institutions, there are stockpicking! still large teams of analysts and portfolio managers, sifting through data, developing Change is already underway. One of investment theses and making asset allocation decisions. The dierence is that we are the most high-prole companies in this deluged in data. Not only is the amount of data available to us accelerating, the nature space is Kensho, which is backed by of it is changing, with new sources of information being seen as potentially relevant Google, Goldman Sachs and S&P Global. for analysis. For example, the location-based data that comes from your mobile phone Kensho uses AI to scan vast data sets shows whether you are in a mall. Scaled over the whole of the country, this could much more quickly and accurately than allow us to see what is happening to footfall, which would help with understanding analysts, and sells the information to retail sales in real time. The footage from closed-circuit television that shows what’s banks and other nancial institutions. happening in transportation is another example. Or social media analysis of events One competitor is Senti, which takes happening in real time from people on the ground. Or weather data. The list goes on. in data from thousands of sources, then The reality is that there is just too much data for humans to be able to lters it for accuracy. use. Opportunities go wasted because a team of humans just cannot create The founder got the a sophisticated response to all of this. Of course, funds have been using OPINION idea after the nuclear complex algorithmic-driven trading strategies for years, but this is largely For more viewpoints disaster at Fukushima, conned to market data. Imagine if we could take all the data that’s coming on industry issues, visit when an investment the BankThink page on from the real economy and use that to discern price, predict performance, manager friend griped AmericanBanker.com understand risk and make better investment decisions. The only feasible that it would take three way to do this is to use computing power to ingest the data, understand weeks of sifting through correlation and causation, and deduce rapidly enough how to respond. Articial seemingly unconnected data to work intelligence has now advanced to the stage where this is possible. While this gives rise out the implications of this event on his to some interesting opportunities to radically transform investment management and portfolio. capital markets, it will be very disruptive for people who work in the industry. One hedge fund taking articial Let’s assume that you use very sophisticated AI-driven models to scan data from not intelligence to the next level is Numerai just the market but a whole plethora of other sources to dene, implement, monitor, — which doesn’t even employ the AI rene and adjust your trading strategies. What kind of people do you now need to talent! This San Francisco fund encrypts employ? Performance will come down to how well your combination of engineers, its trading data and then crowdsources scientists and market people can dene and improve those models. The kinds of AI-based algorithms from anyone who people employed in the industry will change; we will need people who can model data, wants to have a go. Contributors who and others who can validate the models and the results. And we will not need so many develop algorithms that successfully people. Much of the dialogue around the types of jobs that will disappear because of improve performance get paid in bitcoin. articial intelligence has centered on relatively unskilled jobs, but in nancial services It’s a long way from when I used to it will be expensive, highly educated Wall Street-types nding themselves out of work. analyze company reports, scan articles in actual newspapers and use old-fashioned Hazel Moore is the chairman and co-founder of the London investment bank FirstCapital, methods like the telephone and company which specializes in high-growth technoloy companies. visits to develop my investment ideas.

JULY 2017 AMERICAN BANKER 21

021_ABM0717 21 6/8/2017 4:30:18 PM Index of Advertisers COMPANY PHONE PAGE Marketplace Showcase Advertising Contacts WEB SITE Welcome to the premier monthly showcase of products, services and solutions for the Banking and Financial Industry CANON 631-330-5213 15 PUBLISHER MIDATLANTIC/ MA, RI, NH, VT, ME usa.canon.com/advancedsolutionsforﬁnancialservices SOUTHEAST BRAD BAVA DAVID CLEWORTH One State Street Plaza LEGAL – FOUNDATION NOTICES SUBSERVICING 1160 St. Pauls Parrish Lane New York, NY 10004 D+H 09 Johns Island, SC 29455 Tel: 212.803.8829 Tel: 843.640.3713 Fax: 646.264.6800 NOTICE DH.COM/MILLENNIALS2 Fax: 843.640.3966 [email protected] [email protected] The annual report of THE MILLENNIUM NY/NJ/CT/PA WEST DIGITAL LENDING + INVESTING 212 803-8456 C4 LIESBETH SEVERIENS SARA CULLEY for the calendar year One State Street Plaza 173 Spreading Oak Drive FOUNDATION TRUST DigitalLendingInvesting.com New York, NY 10004 Scotts Valley, CA 95066 Tel: 212.803.8691 Tel: 831.438.8408 ended December 31, 2016 is available at its Fax: 646.264.6800 Fax: 831.438.8407 REPRINTS 212 221-9595 C3 [email protected] [email protected] principal of ce located at C/O Meltzer, Lippe, SourceMediaReprints.com MIDWEST/SOUTHWEST CLASSIFIED ADVERTISING SHELLY SCHMELING DOMINIQUE GAGEANT Goldstein & Breitstone, LLP, 190 Willis Avenue, One State Street Plaza One State Street Plaza New York, NY 10004 New York, NY 10004 US BANK 646.935.4511 C2 Tel: 312.932.9392 Tel: 212.803.8882 Mineola, New York 11501, (516) 747-0300 for [email protected] [email protected] www.usbank.com SERVICE CUSTOMER SERVICE inspection during regular business hours by any DIGITAL ACCOUNT SERVICES SOURCEMEDIA ALEX FELSER One State Street Plaza citizen who requests it within 180 days hereof. VANTIV 05 One State Street Plaza New York, NY 10004 Tel: 800.221.1809 www.vantiv.com/merchant-solutions-ﬁ New York, NY 10004 The Principal Manager of the Foundation is Tel: 212.803.8671 Fax: 212.292.5216 [email protected] [email protected] Mr. Lewis S. Meltzer.

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American Banker delivers world class banking and financial content to a top C-Suite audience of influencers, while offering unparalleled coverage of all the key issues facing the world’s financial sector. With unique insights and analysis, in-depth industry coverage, and a unique banking industry database, American Banker stands out one of the most comprehensive and respected voices in the financial media. AMERICAN BANKER A TRUE INDUSTRY LEADER

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022_ABM0717 22 6/9/2017 4:33:37 PM Index of Advertisers COMPANY PHONE PAGE Marketplace Showcase Advertising Contacts WEB SITE Welcome to the premier monthly showcase of products, services and solutions for the Banking and Financial Industry CANON ADVERTORIAL 15 PUBLISHER MIDATLANTIC/ MA, RI, NH, VT, ME BRAD BAVA usa.canon.com/advancedsolutionsforﬁnancialservices SOUTHEAST DAVID CLEWORTH One State Street Plaza LEGAL – FOUNDATION NOTICES SUBSERVICING 1160 St. Pauls Parrish Lane New York, NY 10004 Johns Island, SC 29455 Tel: 212.803.8829 Tel: 843.640.3713 Fax: 646.264.6800 NOTICE Fax: 843.640.3966 [email protected] [email protected] D+H 09 The annual report of THE MILLENNIUM NY/NJ/CT/PA WEST DH.COM/MILLENNIALS2 LIESBETH SEVERIENS SARA CULLEY for the calendar year One State Street Plaza 173 Spreading Oak Drive FOUNDATION TRUST New York, NY 10004 Scotts Valley, CA 95066 Tel: 212.803.8691 Tel: 831.438.8408 ended December 31, 2016 is available at its Fax: 646.264.6800 Fax: 831.438.8407 [email protected] [email protected] US BANK 646.935.4511 C2 principal of ce located at C/O Meltzer, Lippe, MIDWEST/SOUTHWEST CLASSIFIED ADVERTISING SHELLY SCHMELING DOMINIQUE GAGEANT Goldstein & Breitstone, LLP, 190 Willis Avenue, www.usbank.com One State Street Plaza One State Street Plaza New York, NY 10004 New York, NY 10004 Tel: 312.932.9392 Tel: 212.803.8882 Mineola, New York 11501, (516) 747-0300 for [email protected] [email protected] SERVICE CUSTOMER SERVICE inspection during regular business hours by any VANTIV 05 DIGITAL ACCOUNT SERVICES SOURCEMEDIA ALEX FELSER One State Street Plaza citizen who requests it within 180 days hereof. www.vantiv.com/merchant-solutions-ﬁ One State Street Plaza New York, NY 10004 Tel: 800.221.1809 New York, NY 10004 The Principal Manager of the Foundation is Tel: 212.803.8671 Fax: 212.292.5216 [email protected] [email protected] Mr. Lewis S. Meltzer.

The Definitive Home for CRA INVESTMENTS Banking Intelligence

Visit us at www.AmericanBanker.com/Magazine

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023_ABM0717 23 6/9/2017 2:01:42 PM BackPorch

ERIC DEZENHALL GUO “People don’t want to have their chops busted SHUQING among the people they eat quiche and drink “The banking system Chablis with.” currently shows Expert in damage control, saying JPMorgan Chase CEO Jamie symptoms of using a Dimon likely faces less social pressure to quit advising President Trump than Tesla founder Elon Musk bullpen to cage a cat.” China’s top bank regulator, in a reference to the country’s overly BRIAN loose regulations that he intends DUPERREAULT to rein in JEROME BRENDAN POWELL “We want the boards of DICKINSON directors to focus on their “Insurance is still main job of overseeing primarily distributed by and holding accountable 59-year-old men whose “I didn’t the management, not top skill is being able to come here running the company and write upside down.” to break the not getting tied up in a lot of checklists.” Partner at the venture capital company up, firm Canaan Partners, saying Federal Reserve governor, on technology is about to change I came here his plan to ease the regulatory distribution and underwriting in to grow it.” burden by eliminating specific a sector that lacks innovation American International directives for board members Group’s new CEO, promising to keep the insurance giant intact LLOYD and expand it for the LEE BRAINE BLANKFEIN first time since the “Almost every week financial crisis new ideas in blockchain “Today’s decision is a set- appear.” back for the environment and for the U.S.’s leader- Barclays’ chief technology officer, saying that just staying ship position in the world. aware of the constant flow #ParisAgreement” of blockchain initiatives takes Goldman Sachs’ CEO and instantly time and effort for banks, popular Twitter newbie, in his very Photo: Business Wire regulators and startups first tweet, on June 1, which got 28,000 likes and 12,000 retweets WARREN BUFFET “If you go to a dentist, if you hire a CHRISTOPHER plumber, in all the professions, there YORK is value added by the professionals as a group compared to doing it yourself “I would characterize or just randomly picking laymen. In the it as the sixth of nine investment world, it isn’t true.” innings.” Billionaire investor, saying fund managers aren’t JMP Securities analyst, worth their fees and urging people to stick with index describing where CIT Group funds instead

is in its turnaround BLOOMBERG NEWS

24 AMERICAN BANKER JULY 2017

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