3 minutes
Don’t let directors add drag.
Excerpted and adapted with permission of the publisher, Wiley, from Bankruption: How Community Banking Can Survive Fintech by John Waupsh. Copyright (c) 2016 by John Waupsh. All rights reserved. This book is available at all booksellers, starting today.
Barnacles create such significant drag that the U.S. Naval Academy estimates they increase the Navy’s petroleum expenditures by $250 million a year. Community financial institutions can have their own barnacles, and they typically come in the form of an aged, unimaginative, unresponsive, disinterested board. This is a shame, because a great board can positively transform an organization—as early PayPal CFO-turned-Sequoia-Capital-Lead Roelof Botha suggests, “Good board members act as shock absorbers.”
At a time when the nimbleness of smaller boats would be an advantage, the would-be community FI trawlers have significant hull drag. For once, small isn’t small enough. There’s something smaller and faster than you.
These days, board members are required by regulators to be deeply involved with their institutions. Unfortunately, barnacles hide behind this fact, and use it as an excuse to require undue reporting, which ultimately increases expense and frustration.
A friend of mine is CEO for a $300 million community institution with five branches. In my opinion, its biggest challenge is 12 washed-up centenarian guys who took an econ class in high school but are respected because they own the businesses their fathers gave them (car dealership, funeral home, plumbing supply business, etc.). They demand a monthly board kit of 200 pages analyzing every aspect of the bank. Every aspect, that is, but the bank’s future and its competition.
Board barnacles love to talk glory days, opine risk mitigation, and associate blame for transactions long passed. They are not interested in pushing your institution forward, helping you find the talent you need, or learning about contemporary data-marketing techniques. Conversely, consider a paradigm change that is statistically more effective.
The coming “bankruption” introduces even more challenges for those of us in the community banking industry. As community institutions are those who are most at risk for disruption, you will need a team that’s stronger than ever to thrive in the new environment. Push accountability of banking knowledge and institutional goals to your teammates, and treat your employees like an evolving team and not like permanent family members. Perhaps most importantly, reduce drag on your hull as soon as you can; you’ll be better off without it.
John Waupsh is chief innovation officer at Kasasa and author of Bankruption: How Community Banking Can Survive Fintech.
