Read Special Focus for an article about payable on death accounts in Wisconsin. Next, turn to Regulatory Spotlight for information on regulatory agencies' request for comment on risk-based capital reporting and use of alternative data and modeling techniques in the credit process. Finally, turn to Compliance Notes for information about President Trump's Executive Order requiring every federal agency to establish a Regulatory Reform Task Force to alleviate unnecessary regulatory burden.

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By, Amber Seitz

If you've been keeping up with news stories about the economy lately, you may have heard that the "Fed" has been raising rates, and is likely to do so more often in the future. What does this mean, and how will it impact the average consumer? 

Who is "the Fed"?
The Federal Reserve is the central bank of the United States, which means it is owned by private banks and operates independently of the U.S. government. It is led by a Board of Governors who are appointed by the President. The Fed has three mandates: maximize employment, stabilize prices and moderate long-term interest rates. It accomplishes those mandates by raising or lowering the Federal Funds Interest Rate (the basis for every other interest rate out there), which is managed by the Federal Open Market Committee (FOMC). The FOMC meets eight times per year and issues a statement about the general U.S. economy and if the Fed will raise its rate. Yesterday's increase was just the third hike since 2006 (the first was in December 2015, the second in December 2016).

Does the Fed Funds rate impact me?
Yes. Even though consumers do not directly borrow money from the Fed, the banks that provide their car loans and mortgages do. Since the Fed Funds rate is the basis for other rates (by being the cost of what your bank must pay in order to get money) raising and lowering it affects the rates you, the consumer, can get from your bank. So, if you're in the market to buy a house and you hear that the Fed may be raising interest rates soon, you know to act quickly so you can secure a lower interest rate for your mortgage.

So are high rates bad?
No. While low interest rates on large purchases like homes are good for consumers, extended low interest rates (like we've seen over the past 10 years) means that the economy isn't growing very fast and consumers aren't earning much on their savings. When the Fed Funds rate goes up, depositors see increased interest rates on their savings accounts and CDs, so higher rates are a bonus for savers. It's also important to note the Fed raises rates a little at a time (usually only 0.25%) and the higher rates only affect new loans and loans with adjustable rate terms. Higher rates also mean the FOMC sees signs that the economy is getting stronger, which is good for everyone. 

If you have any questions about how the Fed raising interest rates will affect your finances, be sure to speak to your bank. They'll be able to offer specific advice according to your accounts and circumstances.

An archive of Consumer Columns is available online at

By, Amber Seitz

Strategies to align branches with customer needs

Banking is an industry built on trust, and the majority of consumers still seek that human interaction through visits to brick-and-mortar branches. A recent Accenture survey found that branches are still the second-most preferred channel for banking (behind online) and that 25 percent of consumers still visit a branch at least weekly. In-branch banking isn't going away, but it is changing. The challenge for banks is to ensure their customers receive the same fluid, convenient experience however they choose to do their banking, whether that's online, via mobile, or in a branch. 

"What's required is to shift the thinking about branches from transactions to engagement," said David Peterson, CSO and founder of i7Strategies. "Think about what you want people to do in the branch, and then the physical transition follows." In order to effectively transform their branches into customer engagement centers, banks must first establish clear strategic goals and ensure those objectives are aligned with the target customer base. "Building a bank culture is key," explained DeAnna Tittel, senior vice president of retail, Bank of Luxemburg. "Set expectations of what the customer experience should look like and sound like." While a bank's exact goals for the customer experience will vary depending on the institution's own strategic plan, in general customers want education or advice delivered in a convenient, efficient format during their branch experience. 

Begin by Educating

"The biggest strength of a community bank is the trust the local community places in them," said Barry Thompson, managing partner, Thompson Consulting Group, LLC. "By becoming their financial advisor, banks will find that their marketplace will expand." Bank customers establish that trust through their interactions with frontline staff, often the first in-person interaction they have with the bank. "We find that our customers appreciate the knowledge they can get from a frontline employee," said Tittel. 

However, the traditional branch layout (long teller lines with counters that divide customer from banker) doesn't foster engagement; it's designed to be transactional. To transition from transaction to engagement, banks should consider training frontline employees to teach customers about the various technology channels the bank makes available to them. "Have education sessions for your customers to come and learn how to use your tools, or make an appointment if they're having a problem," Peterson recommended. "Over time, you'll change the minds of the customers in your service area of what a branch experience is." In addition, Thompson advises banks to consider devoting time and resources to community education. "We're seeing more programs on elder fraud, on basic fraud, and school programs where bankers go into the schools and discuss things like social engineering and the problems that can occur over the internet," he said.

This knowledge-delivery strategy not only allows the bank to gain maximum returns on its investments in technology channels such as online and mobile banking through increased adoption rates, it also positions the bank to be a resource for customers and encourages engagement. By providing technology like tablets in the branch for customers to try out with staff assistance, the bank encourages adoption of its digital products and reduces customer hesitancy, especially among those who are not digitally savvy, while also delivering on the efficiency that many customers expect from their banking experience. "Our customers lead busy lives," said Tittel. "Empowering them to perform so many functions at a time that fits their schedules is key. Ensuring they feel comfortable and confident using all of those tools is a great benefit to them."

Create Convenience

Technology can also enable staff to deliver efficient service within the branch. "Today's technology of online banking, mobile deposit, et cetera, not only assists the customer in getting things done quickly and at their fingertips, but internal software programs that allow accesses for frontline employees to obtain information quickly for the customer is key," said Tittel. "Giving those permissions to the right employee to fulfill that customer request creates a very positive impact when the customer can leave with an answer in hand."

Reimagining the physical space of the branch can also aid in creating the efficient, convenient experience most bank customers want from their branch visits. Peterson advocates envisioning the bank branch in a similar way to how Apple envisions its retail stores: as a place for customers to engage with staff and learn about the products they're interested in buying. "There's no register, no place to check out, because they want you to do everything on the devices, either theirs or yours, so you learn how to use it or you're encouraged to buy it," he explained. Peterson also recommends taking some of the space gained by removing excess teller/CSR space and converting it into something more community-facing. "Create a thinking lab that people from the community can reserve and use, or maybe install a 3D printer," he suggested. "Use that space for innovative community value-add to show you're both innovative-thinking and invested in the community." It can be as simple and low-budget as a meeting room with a whiteboard that the bank's customers can use as brainstorming space. 

Designing a branch with teller pods and/or interactive teller machines allows staff to interact with customers in new ways and creates operational efficiencies for the bank. "Having a universal banker that can cover multiple functions and perform multiple customer requests can help reduce staffing and payroll budgets while keeping efficiency ratios in line," Tittel explained. However, Thompson strongly cautions against understaffing to the point where it becomes a safety or security hazard. "A branch should not operate with fewer than three people," he stressed, recommending interactive teller machines for banks that want to downsize their smaller locations, combined with service from a call center. "For rural community banks, the interactive teller machines are a giant leap forward," Thompson said. 

Recent survey results from Accenture.

Ultimately, any significant branch transformation must begin with staff training; no amount of remodeling will impact the customer experience as much as their interactions with bankers. "You have to have transformation not just of your physical space, but of your people first," Peterson explained. "It's not just customer service, but engagement – asking the right questions, listening, and being able to make recommendations based on the customers' responses. That 'consultative selling,' along with education and problem solving, are all high-engagement activities." By shifting the focus from transactions to customer engagement, banks can transform their branches into a place their customers—and potential customers— want to visit, rather than someplace they have to. 

By, Amber Seitz

Talent management plans develop your people for enterprise-wide ROI

One of the most important investments an organization can make is to develop its staff. A recent Gallup study found that companies that have implemented strengths-based management practices have more engaging and productive workplaces, leading to increased profits of 14-29 percent. Lower turnover also helps these companies maintain performance levels. "The organizations that do talent management well have consistent performance year-in and year-out," said Tom Hershberger, president of Cross Financial Group. "If you don't develop talent you'll miss opportunities." 

A strategic talent management plan also provides a solid foundation for succession planning: "Talent management puts teeth into a succession plan," said Jennie Sobecki, co-owner of Focused Results, LLC. A strong talent development and succession plan will improve the bank's ability to hire and retain top talent, ultimately benefitting the institution's performance. "Overall talent management has a huge impact on both recruitment and retention when it comes to succession planning," explained Jenna Atkinson, president of Jenna Atkinson Consulting. "Investing in your team's individual success shows that you care about your people and helps build ties and reduce turnover. It'll help you recruit and retain top talent even in today's competitive hiring market."

Train & Retain

Talent retention is an important priority in today's highly competitive job market. Honey Shelton, president of InterAction Training, says talent development can help banks keep their competition from recruiting away their best performers. "I think every company has a 'short list' of best performers who you just don't want to lose," she said. "Sharing the reward of being a high-performance bank is really critical." That reward doesn't always need to be monetary, either. Recognition and growth opportunities are equally important to many workers, so clearly laying out each employee's growth trajectory is an important component of talent management. "When you incorporate performance development and enhancement into performance reviews it provides a pathway and you'll have more satisfied employees," said Sobecki. Those satisfied employees are far less likely to leave the institution in order to advance their careers, according to Atkinson. "If they know what their internal opportunities are they are less likely to seek those opportunities at another organization," she said. Using a talent management strategy to reduce turnover directly benefits the bank as much as the employees. "Ultimately, you end up with lower operating costs because you're not hiring and training as much," Hershberger explained, noting that the bank's customers will also benefit as bank staff deliver more consistent service.

Engage & Recruit

On the recruitment side, Shelton explains that engaged employees can be the bank's most effective recruiters. "Your greatest recruiters can come from your payroll, if they're highly satisfied," she said. Investing in staff development can even be a component of overall brand management for the bank. "Rather than investing in projects that don't deliver direct ROI, consider investing in your people," Atkinson suggested. "Instead of investing in a billboard, invest in 50 walking billboards: your employees. It's the best marketing that you could ever buy." In addition, an established training and development program makes for a less stressful and more confident place of work by reducing the uncertainty that can arise from less well-defined succession plans. "If there is ongoing talent management and development in the organization, that makes selection and placement of the next leader much easier," said Hershberger. "No one can move past their current responsibilities until someone else knows how to take on those current activities." 

Develop Your Talent Management Plan

With these benefits in mind, how should bank management and/or human resources personnel go about creating or improving their talent management plan? First, create development goals for every position within the bank. If your institution doesn't have a talent management plan, your instinct might be to first identify areas of the bank (or specific positions) to relegate to the back burner or skip over entirely. "That's like asking which part of the ship is best to have a hole in," Atkinson pointed out. "There's not a good place to have gaps." A comprehensive approach to talent development also means you're developing your "bench strength" throughout the institution. "A succession plan isn't just for the top team," Sobecki clarified. "If your branch manager ever wants to be the retail administrator, they first need to make sure that someone can take over the branch manager position."

Second, it's critical to establish clear lines of communication and feedback for managers and employees. "It's important for everyone to be on the same page and provide the amount of feedback that your employees' want," said Sobecki. Managers must be trained to work with their employees to define expectations and evaluate results. "Great managers make the discussion of performance expectations and reviewing outcomes part of their ongoing management practices," said Hershberger. This is especially important at community banks where the org chart tends to be very flat – upward growth is difficult when there are only three or four layers to the institution. "When moving up isn't an option, you can't develop someone and give them the opportunity to take on more responsibility without setting clear expectations for growth and performance and then measuring that," Hershberger explained. Since feedback goes both ways, Atkinson also stressed the importance of giving due consideration to any comments received from employees. "If no action is taken, it's more damaging and discouraging than not accepting feedback at all," she warned. 

Third, incorporate talent development into annual performance reviews, ideally with periodic check-ins throughout the year. In today's banking industry, training and development often falls to managers, where in the past many institutions employed full-time trainers. "The best way to replicate that kind of development is to incorporate it into the performance review and include quarterly milestone updates," said Sobecki. Managers should incorporate tangible, trackable indicators into their reviews and identify resources their employees will need in order to achieve their targeted goals. "When you get down to performance indicators, things that can be tracked, evaluated and monitored, it makes evaluation real," Shelton said. "That's how you develop self-managed people. They know what they're shooting for and that they have someone in their corner giving them what they need to get there."

Finally, ensure the talent development plan aligns with the bank's overall strategic plan. "Place the importance on talent management and recruiting according to your strategic plan," Shelton advised. "What is the bank trying to become, and what do you need more or less of?" The answers to those questions should inform the bank's approach to talent development and succession planning. "Succession planning is a long-term, continuous process that should be employed in every area of the organization," said Hershberger. "How can you plan for the future success of the organization without taking a candid look at who will be leading that staff, project and corporate direction?"

So, where to begin? The first step will differ for every institution based on its current development practices and talent needs. Shelton recommends evaluating the bank's current practices to identify a starting point. "Each bank has to decide what they think is working, what isn't working, and how they know it," she said. "Then, prioritize where to begin."

Learn more:

Jennie Sobecki will lead a Train the Trainer workshop on April 6 in Madison designed to equip attendees to train frontline bank staff on Listening for Opportunities, a Center for Financial Training (CFT) module. The morning is devoted to learning about how to train for impact and a review of the Listening for Opportunities content. The afternoon will focus on how to transfer skills to the job for employees, test presentations by attendees, and receive feedback from the instructor. For more information or to register for this seminar, please click here


By, Amber Seitz