Archive for category: Resources

, , ,

Building Bridges: Strategies for Reaching and Supporting Hispanic Customers

By Katie Reiser

The Hispanic community is one of the fastest-growing demographics in the United States, projected to reach 30% of the population by 2060, according to the U.S. Census Bureau. In Wisconsin, Hispanics already make up a significant and growing portion of the population, creating both an opportunity and a responsibility for banks to better serve this vital community. By adopting culturally responsive outreach strategies, banks can foster trust, improve financial literacy, and grow their customer base.

In September, the Federal Deposit Insurance Corporation’s (FDIC) Alliance for Economic Inclusion (AEI) and BankOn Greater Milwaukee hosted a conference, Promoting Economic Inclusion in Milwaukee’s Hispanic and Latino Community, which helped shine a light on what financial institutions, non-profit organizations, and the FDIC are doing to build these bridges. Many of the bankers interviewed for this article participated in panel discussions during the conference or shared important data.

Note: The terms Hispanic and Latino are often used interchangeably but have distinct meanings. Hispanic refers to people connected to Spanish-speaking countries, while Latino emphasizes connections to Latin America, regardless of language. In this article, we have chosen to use the term Hispanic for consistency, unless an interviewee specifically used the term Latino.

Here are some proven strategies and actionable tips to consider, combined with insights from bankers and professionals who are making an impact in Wisconsin.

Develop Bilingual Resources and Services
Language barriers are a significant hurdle for many Hispanic customers, especially those who are recent immigrants or first generation Americans. Offering bilingual services, both in person and online, is a foundational step to improving accessibility.
• Hire bilingual staff: Having employees who can communicate fluently in Spanish demonstrates respect and commitment to serving the community.
• Translate materials: Ensure that brochures, websites, mobile apps, and marketing materials are available in both English and Spanish.
• Leverage technology: Provide live translation services or chatbots that can assist Spanish-speaking customers in real time.

Across the board, the language barrier remains the highest hurdle. Jennifer Lamb, loan officer with Great Midwest Bank said, “Providing bilingual materials, having actual staff members or customer service representatives that speak the language, and online resources can definitely alleviate some of the language barriers that we see.”

It goes beyond simply having a few brochures and forms translated into Spanish. Lamb said, “Many Hispanic families nowadays, they’re tech savvy. A lot of them are starting to use digital platforms and digital services like mobile banking.” She recommends a robust online platform, along with the option for the families to do their banking in person.

Sara Fameree, retail sales office manager with Bank of Luxemburg, said, “In my branch, there are three of us who speak Spanish, and we are very much in that community. So that has been essential for us to be able to assist those customers.” She added, “Beyond that, even in the call center you need to have adequate staff to be able to assist those customers because they’re not just opening up checking accounts, they’re getting mortgages, getting business loans.” She shared, “To have that language available to them, customers are just going to feel so much more comfortable and more welcomed to work with you.” Fameree revealed that often customers are initially shy due to the language barrier, but “You see their face light up and they react like ‘oh my goodness you speak my language.’”

Build Trust Through Financial Literacy Programs
Many Hispanic individuals come from cultures with different financial systems or may have had limited access to banking services. Providing financial education can help demystify banking and encourage long-term relationships.
•  Offer free workshops: Host community events on topics like budgeting, credit building, home buying, and small business loans.
•  Partner with local organizations: Collaborate with Hispanic chambers of commerce, community centers, non-profits, or churches to co-host educational events.
•  Create youth programs: Partner with schools to teach financial literacy to young students, helping families build intergenerational wealth.

Sanjuana Maqueda, loan officer with North Shore Bank, stressed the importance of good listening skills and respect when it comes to cultural differences. “You can be Hispanic but come from many different countries. We do have the Spanish language in common, but so much depends on the person’s background and past financial experiences in their country.”

Another issue to be aware of that Maqueda has noted while working extensively with Hispanic customers is that often customers will feel more secure when they have a lot of cash on hand. This sometimes stems from distrust in the U.S. financial system. Her bank works to educate customers and increase their faith in the security of U.S. banks. Maqueda has also found that some customers’ beliefs about banking and what is possible for their own financial futures are heavily influenced by others. Customers will say to her, “Oh my friend said this, or my mom, my grandma, my uncle, or my coworker.” Maqueda shared she asks questions to reveal the origins of their concerns, uncover misinformation, and then will explain, “You know you can do this [alternative bank product] and it might be more beneficial for you based on your own case.” She stresses that each individual is unique and that despite what customers may have heard from their inner circle, what has worked for a relative may not be the best financial fit for them.

Maqueda described the bank’s successful partnerships with local community organizations like: United Community Center, Housing Resources Inc., Acts Housing, La Casa de Esperanza, and Hispanic Round Table.

Gina M. Sanchez Juarez is the director of the Center for Financial Stability at La Casa de Esperanza, Inc. The Center’s Financial Stability Initiative is a collaborative of for-profit and non-profit organizations, with the goal of assisting families in attaining financial stability and building wealth. Sanchez Juarez shared a personal story related to cultural awareness that recently impacted her own banking experience. After detecting fraud on her account, she needed to open a different account and pointed out to the banker that she has two last names (common with Hispanics). The banker unfortunately brushed her warning off. She encountered difficulties cashing checks with the new account because her name had been entered incorrectly despite her request.
Sanchez Juarez said, “There’s a lot of differences in the socioeconomic and cultural factors with many of our clients. They have a lack of trust, especially if they are either going through a legalization process in the U.S. or possibly if they have an ITIN or even if they don’t.” Based on their prior experiences in another country, they may not feel confident about the safety of their money or the ease of accessing their money in a financial institution.

Engage Through Culturally Relevant Marketing
Effective outreach to Hispanic customers requires understanding cultural nuances and crafting marketing messages that resonate.
•  Highlight shared values: Focus on themes like family, community, and hard work, which are highly valued in Hispanic culture.
•  Celebrate cultural events: Host or sponsor events such as Hispanic Heritage Month, Día de los Muertos, or local festivals.
•  Advertise in Spanish: Place ads in Spanish-language media, including newspapers, radio stations, and social media channels.

Lamb shared, “Engagement initiatives like sponsorships of local events within the Hispanic community can foster trust and a sense of belonging.” She added, “A sponsorship is a good thing, but you actually have to show up to community events,” further explaining, “you can’t just send a check and think that that’s going to work.” Lamb emphasized that typically the Hispanic community wants to know who they are working with and recommends that bank professionals “actually hit the pavement and get out in the community and be seen along with the sponsorships and workshops.” She believes this goes a long way because the Hispanic community tends to prefer engaging with people who they know and feel comfortable with.

Kathleen Rolfs, VP/chief marketing and communications officer with PremierBank, wrote an informative article which is still accessible on the WBA website, “Serving Increasingly Diverse Communities” for Wisconsin Banker a few years ago outlining the innovative work being done by their Bilingual Initiatives Committee, a group comprised of several bilingual bankers along with marketing and retail banking officers. The goals for the committee include “identifying opportunities that exist within our communities for strategic community partnerships, and collaborative education within our organization to ensure all our bankers are equipped to understand and anticipate the needs of the rapidly growing, ethnically diverse Hispanic community.”

Provide Tailored Banking Products
Hispanic customers may have unique financial needs that require customized banking solutions.
•  Simplify account opening: Make it easier to open accounts by accepting alternative forms of identification, such as Individual Taxpayer Identification Numbers (ITINs).
•  Offer remittance services: Many Hispanic customers send money to family members abroad. Providing affordable, reliable remittance options can meet this critical need.
•  Design targeted products: Consider savings accounts for immigration-related expenses or low-interest loans for small businesses in Hispanic communities.

Sanchez Juarez described a successful co-branded product, La Casa de Esperanza Loan Program Powered by Peoples State Bank. La Casa has been serving the community since 1996, so “we’re trusted by many folks.” This low-interest emergency loan program is for people with credit challenges or no credit to borrow $1,000 to $3,000. Criteria considered: Has the applicant been working a year or more at their job? Are they able to afford a loan payment? The rate is 3.99% with a 36-month payback term, and financial counseling is paired with the loan. Sanchez Juarez suggests that there are many positive programs that can be done in partnership with local organizations, “if you just have more conversations about the needs of the people in your community.”

Build Long-Term Community Relationships
Trust is built through consistent and meaningful engagement. Showing up for the Hispanic community beyond transactional interactions demonstrates a genuine commitment.
•  Hire from the community: Employing local staff members who reflect the community fosters familiarity and trust.
•  Sponsor community events: Support local parades, festivals, or sports teams that are popular within the Hispanic community.
•  Create advisory councils: Establish Hispanic advisory boards to guide the bank in making culturally sensitive decisions.

Sanchez Juarez recommends patience when offering workshops and educational sessions in the community in collaboration with local organizations, “You’re not going to see big turnouts in the first three or four sessions.” It may be just a few people attending initially, but she believes consistency pays off.

Fameree also stressed the importance of banks showing a long-term commitment, “With the Hispanic community it really boils down to word of mouth. If you are doing something right, that positive word of mouth is going to reflect that.”

FDIC’s Insights and Resources
At the Milwaukee AEI conference these top responses were shared from Hispanic participants in the FDIC’s National Survey of Unbanked and Underbanked Households 2021 who were asked what their main reasons are for not having a bank account:
•  Don’t have enough money to meet minimum balance requirements
•  Avoiding a bank gives more privacy
•  Don’t trust banks
•  Don’t have personal identification required to open an account

The FDIC’s Money Smart program is a good entry point for banks considering engaging with the Hispanic community in their area but may be unsure of how to tap into resources, especially when it comes to Spanish materials. Not only is the Money Smart collateral translated into Spanish, that entire portion of fdic.gov is available in Spanish (Programa Money Smart). Sanchez Juarez spoke highly of it, “They have curriculum, they have instructional workbooks, and they have online options banks can use.”

Beyond Personal Accounts, Banks Perfectly Poised to Foster Business Growth
Oakleigh Ryan, founding principal of Whiton House, a management consultancy and engagement institute based in Janesville, has partnered with PremierBank through her board work with Forward Janesville and its Foundation. Ryan believes banks are in a perfect position to build bridges in the Hispanic business community. Ryan said banks partnering with their local chamber is a “great way to make sure Hispanic businesses feel like they are part of the bigger economic community in their town.” Ryan explained, “The largest growing sector of consumers in the United States are of Latino descent, so if you’re in business it makes sense to figure out how to work with this important population in our community.”

Ryan described feeling like she had hit a goldmine when she initially met with Silvia Donday-Selenske, residential loan officer with PremierBank, because Donday-Selenske was incredibly well-connected in the community and it was obvious that PremierBank had intentionally increased their Spanish language capacity and concentrated on engaging with the Hispanic community in a very visible way. Part of Donday-Selenske’s job is getting to know new business owners, with priority placed on in-person communications, which resonate more with the Hispanic community. Ryan described successful classes that have been hosted at PremierBank, including classes on how business owners can use credit and be smarter about energy efficiency and a class on obtaining business loans.

Looking Ahead
Reaching the Hispanic community is not just about inclusivity — it is a smart business decision. According to a report from Nielsen, Hispanic consumers wield $1.9 trillion in purchasing power annually. By addressing barriers, investing in financial education for customers, professional development for staff, and celebrating culture, banks can play a pivotal role in the financial empowerment of this growing demographic while expanding their own market share.
As Wisconsin bankers look to the future, building bridges with Hispanic communities can ensure everyone has access to the financial tools they need to succeed. By learning from each other and sharing best practices, Wisconsin banks can create a landscape that is as inclusive as it is prosperous.
Lamb suggest focusing on prioritizing diversity and inclusion to stand out. Increased business and stronger customer loyalty will follow for banks after “creating that space and building a reputation for fairness and transparency.”
When asked what is most gratifying about her job, Lamb shared, “Success for me is knowing that the families that I work with now have the tools to create generational wealth. I’ve had the opportunity to help entire families.” She added, “It’s gratifying because they accomplished something they looked forward to — becoming homeowners, and now they are hyped up and are starting their business, paying down debt, or finally building their forever home after their small first home. They were able to take advantage of the tools and resources that we offered.”

/by
, , ,

Executive Letter: The Value of Your Network

From the Desk of Rose Oswald Poels

By Rose Oswald Poels

The value of the network of other bankers whom you surround yourself with is priceless. We hear it time and time again from the membership: the need for time on conference agendas to allow for peer networking. As we turn the page to 2025, I wanted to share some information about powerful networking opportunities that are available to you and your teams through your WBA membership.

Wisconsin CEOnly and CFOnly Network 

This annual membership network is open to all CEOs and CFOs currently employed at a Wisconsin-chartered bank. The group, which focuses on networking and idea sharing related to Wisconsin’s banking industry, provides bankers with the platform to anonymously ask questions and receive compiled responses via email as well as connect with peers at up to three in-person networking events. More than 100 Wisconsin bankers participate in this network and find great value in both the email services as well as getting together for the in-person meetings hosted in three different locations around the state each year.

Learn More About the Network

National Society of Bank Executives 

Founded in 2022 by WBA and 15 other state bankers’ associations, the Society was formed to provide a space for c-level bankers to connect across state borders to learn together and build a network. Each year the Society selects one key focus area, with the 2025 topic being Leading Change. Members will be connected with other c-level bankers from across the country for virtual peer groups, participate in two webinars focused on Leading Change, and participate in the October 22–-24 in-person summit in Miami, bringing together members in person for networking, learning sessions, roundtable discussions, professional and personal development activities, and more!

Learn More About the Society of Bank Executives

As a way to spread awareness for the Society, the February 2025 virtual forums will be complimentary for all WBA members to experience! These virtual forums will be professionally facilitated, interactive online sessions that allow senior bank executives to connect with peers outside of their competitive market, learn new perspectives, gain insights from others, expand their knowledge base, and focus on topics important to them. Here’s the information and registration links for the first round of sessions scheduled for February 2025:

  • February 6, 2025 – Chief Human Resource Officer Peer Group, facilitated by Greg Beckwith, AI Mastery – Register here
  • February 13, 2025 – Chief Financial Officer Peer Group, facilitated by Dale Sheller, The Baker Group – Register here
  • February 20, 2025 – Chief Operations Officer Peer Group, facilitated by Tom McGill, Profit Resources, Inc. – Register here
  • February 27, 2025 – Chief Executive Officer Peer Group, facilitated by Sean Payant, Ph.D., Haberfeld – Register here

All virtual events will be held via Zoom at 12:30 p.m. CT. The Zoom link will be emailed to attendees prior to the event.

WBA Connect Peer Groups 

The WBA Connect Peer Groups are an excellent way for your staff members to develop their networks as well!

WBA Connect is a collection of banker-only peer communities designed to keep bankers connected and help one another grow. Membership in each WBA Connect group comes with access to that group’s exclusive online peer-to-peer email, set up using Google Groups. Certain groups will also coordinate in-person networking meetings as desired by the group’s membership.

The following WBA Connect Peer Groups are available:

  • Allies for DEI in Banking
  • Bank Trainers
  • Commercial Lending
  • Enterprise Risk Management
  • Human Resources & Organizational Development
  • Marketing
  • Retail Banking
  • Small Business Bankers
  • Technology & Operations
  • Treasury/Cash Management

Start Connecting!

/by
, ,

Putting Your Institution’s Best Foot Forward for a Lower-Rate Environment

Sponsored content by BOK Financial Capital Markets, a WBA Gold Associate Member

By Kent Musbach, senior vice president, and Marc Gall, senior vice president and asset/liability strategist, BOK Financial Capital Markets

After four years of hiking rates and then keeping them high, the Federal Reserve has now started lowering rates, hitting the ground running with a large cut of 50 basis points (0.50%) in September. As rates continue to fall, it’s important for management teams to understand how lower rates will impact their institutions’ income statements and to take steps to better position themselves for the even lower-rate environment likely to come.

Past, present and future conditions

First, let’s consider where we are now and how we’ve gotten here. Over the past few years, federal and consumer spending have been driving economic growth, despite higher interest rates. However, with many consumers now having used up all their excess savings from COVID—and then some—and also having record credit card debt, it’s questionable whether consumer spending can last at these levels. Meanwhile, unemployment has risen, which has raised concerns about weakening in the job market, even though unemployment is still relatively low on a historical basis. Given all these factors, the market is now forecasting a large number of Fed rate cuts, and some investors are wondering if the Fed can still pull off a soft landing or if a recession is in the making.

Preparing for 2025

Against this backdrop, each decision your management team makes in the last quarter of 2024 will be impactful for 2025. For instance, one important question to consider is when to begin cutting deposit rates. As financial institutions assess their ability and willingness to do so, margin and liquidity position will be important considerations. The news cycle also may aid decision-making this time around, as the Fed cuts likely will be well covered by the media. Consider reviewing rates against wholesale funding rates regularly and be prepared to adjust deposit rates frequently. Conversely, intermediate Treasury and wholesale funding rates have already fallen. To the fullest extent possible, attempt to hold loan rates higher for longer until the cost of funds begins to recede. Frequently, we see a race to the bottom on loan rates, so be prepared to fight for every basis point! This strategy may allow your institution to manage net interest margin from both sides of the balance sheet.

Understanding your interest rate risk position

With a significant inversion in the yield curve between Fed Funds and intermediate Treasuries, a non-parallel yield curve shift may be a more likely outcome. This may be led by the front end coming down more significantly than any changes in term Treasury rates that have already accounted for expected future rate cuts. If your institution has substantial risk around falling rates, you may be wondering if it is too late to manage your position given the inversion in the curve. What if you will benefit at some point from a steeper lower yield curve? Can you wait it out? With these questions in mind, you may want to take some proactive steps to hedge the risk of the market being wrong.

Investment portfolio conundrum

The current yield curve challenges investors to diversify risks. Although keeping large amounts of cash or short securities can generate the highest yield today, doing so could result in significant yield erosion if or when the short end comes down. Equally, the decision to lock into investments further out on the curve may give up immediate earnings for possible future benefit.

Instead, a balanced investment strategy could allow your institution to add a mix of securities that average a yield close to the Fed Funds rate with an allocation to call-protected assets. We urge management teams to consider the trade-off of investing in only the highest yield options compared to the potential benefits of adding assets with call protection that could result in an unrealized gain when the Fed lowers rates further.

Finally, it’s important to keep in mind that repeating the past is unlikely, but it’s still essential to learn from it. Understanding the choices that your institution made and then making informed decisions for the future is how your institution can and will put its best foot forward.

Contact Information

Contact BOK Financial Capital Markets at 866-440-6514 to discuss the latest economic outlook and timely considerations. We can help guide a unique, well-conceived strategy that considers many variables and potential outcomes.

bokfinancial.com/institutions

Disclosure

The opinions expressed herein reflect the judgment of the author(s) at this date, and are subject to change without notice. The information provided has been obtained from sources believed to be reliable, but not guaranteed. Forward‐looking statements contained herein are based on current expectations and the economy in general, and are not guarantees of future performance. Likewise, past performance is not a guarantee of future results.

BOK Financial® is a trademark of BOKF, NA. Member FDIC. Bank dealer services offered through BOK Financial Capital Markets, which operates as a separately identifiable department of BOKF, NA. BOKF, NA is the bank subsidiary of BOK Financial Corporation. Investment products are: NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE

/by
,

Making a Case for Third-Party Loan Origination

By Jeff Schmid, CRCM

Jeff Schmid

Not long after FIPCO created a business model for shared compliance and risk management in 2019, the demand for shared loan processing and origination spiked. It only made sense as in the years that followed, we saw the lowest mortgage loan rates in nearly a decade. Unfortunately, our ShareFI services were not equipped to offer this assistance back then, even though our ShareFI team had more than twenty years of experience managing loan processing and origination departments in both large and small institutions.

Fast forward to 2025, and I think we will see the next cycle of low rates with high refinances, especially as a recession is possibly on the horizon. Think back to 2020 when loan processing departments across the country were swamped with loan
applications. It was very dynamic too because loan processors were mostly working remotely and the concept of PPP loans created quite a stir within our commercial departments. For the first time, we had to prioritize customers in both loan products. I am not sure if we have all recovered, but more importantly, I am not sure banks are ready for the next low-rate cycle. In this article, we explore the case of outsourcing third-party origination (TPO) to help you prepare.

The case for compliance: while most Loan Origination Software (LOS) vendors tout their systems as the most compliant with federal regulations, we all know it really comes down to knowledgeable staff making the right decisions. When you have an inexperienced staff who process less than five mortgages a month, will they be able to keep up loan demand next year while at the same time, keep your bank from regulatory scrutiny? TPO services can keep you compliant and so can ShareFI.

The case for staffing: look around and ask yourself, “do we have the same level of staffing as we did in 2020, even though loan demand has declined sharply?” If this is true in your bank, I offer you the concept of TPO services and saving your capital. After all, the next cycle will not last long and then you are back to overstaffed departments again. Or conversely, did you find a void in loan processing and now wondering where you are going to find talent to help you through the next cycle?

The case of backup: maybe you are part of the lucky few who are currently right sized with your loan processing department. But what happens when one or two processors, especially those who survived 2020, decide that being retired is much less stressful. We know it can take weeks, if not months, to find a replacement who is just as talented. And do not forget how expensive training can be. There is no additional staff training necessary when you deploy TPO.

The case for profitability: instead of purchasing all software origination modules, with extraordinarily high annual costs, consider a TPO partner who has made the capital investment and ride their wave into the next refinance craze. The costs associated with outsourced processing and origination do not have to rest with you as the lender. Consider passing on this cost to the borrower as compensation for speed and delivery.

The case for efficiency: well, readers get my point. Sharing professional services, whether its compliance, risk management, or loan processing, bank management teams across the country will find value in low cost, high yielding solutions. Whether it is today, tomorrow, or even next year, planning for TPO services now will give you the competitive advantage as demand begins to soar. You just simply need to make the case.

Whether you are a small bank with minimal origination or a large bank with high loan volumes, our ShareFI team is ready to partner you with the right TPO vendor. While this can be as simple as loan documentation preparation (which FIPCO has done for customers for years) or full-scale processing, we are ready to help you make the right decision.

To learn more about TPO or shared professional services, please contact Jeff Schmid at jschmid@fipco.com or 608-
441-1220. There is value in ShareFI.

Schmid is director of compliance and management services at ShareFI. FIPCO is a subsidiary of WBA and a WBA Gold Associate Member.

 

 

/by
,

Association Update: Banking Leaders: Start the New Year with New Access to Insights and Idea Sharing

By Daryll Lund

In today’s rapidly changing economic and regulatory landscape, the need for strong, reliable banker networks has never been more important. The Wisconsin Bankers Association (WBA) remains committed to empowering success in the banking industry, and one of the most impactful ways we do that is by fostering crucial connections through our CEOnly/CFOnly Networks. These networks offer Wisconsin’s CEOs and CFOs unique opportunities to tap into a wealth of knowledge, best practices, and practical recommendations by connecting with peers across the state.

Built on the foundation of collaboration and knowledge sharing, the CEOnly/CFOnly Networks provide exclusive access to a confidential Q&A service via email, along with invitations to three networking events each year. Those in-person events include complimentary breakfast and lunch as well as a guest speaker. Members consistently praise the value of this community, noting that the shared expertise helps them anticipate and navigate challenges more effectively — both on a local level and within the broader industry.

For several years, hundreds of Wisconsin’s banking leaders have experienced the significant benefits of being part of the CEOnly/ CFOnly Networks. Last year alone, members exchanged over 100 questions. Those questions then yielded many valuable insights, underscoring the depth and breadth of knowledge within this peer network. By joining this dynamic and supportive community, you’re not just preparing for today’s challenges — you’re building the foundation for future long-term success.

Bankers looking to renew or begin their membership for the 2025 CEOnly/CFOnly Networks can expect the same excellent value — three annual networking meetings and the continued Q&A service — all for only $300 a year. Banks registering both their CEO and CFO will receive the discounted price of $500.

As a reminder, WBA’s CEOnly/CFOnly Networks run on a calendar year basis starting January 1, and with the 2025 calendar year right around the corner, membership renewal is quickly approaching. All CEOs and CFOs serving a Wisconsin-chartered bank are encouraged to join the exclusive network for this unique opportunity to stay informed and connected.

If you are interested in joining the network or learning more about what the CEOnly and CFOnly programs can offer your bank, please contact me at dlund@wisbank.com or visit wisbank.com/ceonly.

Save the Dates!
Three CEOnly/CFOnly Network-excusive events will take place on:
•   Friday, March 7, 2025 – Hilton Garden Inn, Wausau
•   Friday, June 20, 2025 – DoubleTree by Hilton Madison East
•   Friday, October 17, 2025 – Glacier Canyon Conference Center, Wisconsin Dells

Lund is WBA executive vice president – chief of staff and president of EBC and MBIS.

/by
,

Banking on Baby Boomers

By Malcolm McDowell Woods

The rust belt is graying, as the swell of baby boomers reach retirement age, and Wisconsin is ahead of the trend. The state is among several states experiencing a larger than average increase in the percentage of its population hitting 65 and older.

That aging workforce has serious implications across all industries, but Wisconsin-based banks and other businesses in the financial services industry face an additional — and perilous — challenge: an aging and dwindling customer base fueling an unprecedented transfer of wealth.

Jim Perry is a senior strategist at Market Insights, a Seattle-based consulting firm. He has been traveling the country the past year and a half delivering a presentation entitled Demographic Disruption. “I think it’s necessary to keep raising this issue, especially to financial institutions,” he says. In his presentation, Perry shows a map of the United States that is broken down to the county level and illustrates the expected change in each county of the population aged 65 and older between now and 2028. “About 15 percent of the counties in Wisconsin are going to have greater than 30 percent of their population in that age group, and about 40 percent of the counties that will have more than a quarter of their population in that age group.”

Perry’s predictions continue a trend. The country is aging. The percentage of the American population aged 65 and older went from 12.4% in 2000, to 13% in 2010, and to 16.8% in 2020. But Wisconsin is aging faster. In 2020, 17.7% of the state’s population was 65 or older. In fact, from 2010 to 2020, according to U.S. Census Bureau figures, Wisconsin saw an increase of 41.7% in the share of its population aged from 65-84 and a 7% jump in the Wisconsin population 85 and older between 2010 and 2020.

“You’re seeing a pretty dramatic shift (in Wisconsin), especially given that Wisconsin’s population hasn’t been growing as rapidly as the rest of the country.” The demographic shift is even greater among some of the state’s most rural counties. In some counties in the far northern part of the state, close to 30% of the population is between the ages of 65 and 84, with a growing proportion aged 85 and older. Aging baby boomers are just one part of the story. Younger residents departing for greater opportunities in urban areas and the continuing migration of people away from the rust belt and northeastern states to states in the south and west compound the issue.

The trends present several challenges particular to financial institutions. “As those counties shrink and age, it makes it especially difficult for the financial institutions that are trying to serve those communities,” notes Perry. “Most bankers can tell you the average age of their customer base, because that’s long been a standard way to measure their ability to meet the needs of their customer base, but they can’t always tell you the number of actual customer households that fall into the 65 or older bucket.” When his firm examined account holders for some Wisconsin banks, it found cases in which anywhere from 30 to 50 percent of the account holders were in the 75 and older age group.

“And we all know what that means,” he adds. “We know how that story ends: this great transfer of wealth that is going to be happening in the United States in the next 20 years.” And, due in large part to those demographic shifts, it often means that wealth is going to be leaving the state. That’s because the children of those aging account holders have either left the state or moved to larger, urban areas. For affected banks, the loss of customers is one thing, but the loss of that income stream will bring a second impact. As homes are sold and retirement savings spent, older customers transition from asset accumulation to asset spend down, causing a further erosion in the deposit base for financial institutions.

The bad news, from the perspective of Dennis Winters, chief economist and director of the Bureau of Workforce Information for the Wisconsin Department of Workforce Development, is that this demographic shift is neither new nor easily remedied. “We’ve known about this trend for quite a while,” he notes. “We knew when, why, and how it was going to happen.” The swollen Baby Boomer generation affected the country’s economic structure when it arrived, spurring housing starts and new school buildings and engorging the workforce, and it’s causing an equally disruptive effect as it ages out of the workforce.

The impact of a diminishing workforce was highlighted by the COVID pandemic. “That was a crystalizing event,” says Winters. “Suddenly, we couldn’t find enough help. There just weren’t enough people (to take jobs) and there still aren’t. You see it in health care, you see it in education, restaurants, everywhere.” And it’s not just Wisconsin. The overall workforce across the nation is shrinking.

“You know, the main focus on labor, whether it’s in education, business, or government, is trying to attract and retain workers,” notes Winters. But neither the situation nor the usual solutions are unique to Wisconsin. He points to neighboring states Michigan and Minnesota. “They’re not going to let us attract all their people, right? So, they’re going to try the same things.” The shrinking labor force is an example of a macroeconomic problem, he explains, while the typical solutions are microeconomic. “You can do all the things that you want to try to attract someone to your firm. You can raise wages, you can give more benefits, offer flexibility, child care and so on, all those kinds of things. And that’ll get the person to your firm. Well, now I have to go out and find somebody, right? So, I do the same thing and attract them from somebody else’s firm, and around and around it goes.”

Unfortunately, beyond hoping for a population explosion — and even that wouldn’t have much of an impact for a couple of decades — leaders of the state’s financial institutions are going to have to brainstorm microeconomic solutions. Perry says there are numerous ways banks can work to survive the changing demographics.

Foremost is relationship building, with the children and grandchildren of those account holders, and even with their spouses. Citing the fact that wives often outlive their husband, he notes that at many older, traditional banks, the people in charge are older men, who have mostly dealt with their male clients. Relationship building is critical now to help ensure that some of those assets remain in your communities.

Providing education and services to the generation about to inherit that wealth transfer is critical as well. “It really kind of pushes some financial institutions to be more aggressive in terms of financial education and wellness. A lot of folks have come to that rather passively, perhaps offering some advice or some articles or something like that on their website, but it’s really going to involve them making more of a human connection.” He cited an example of a client bank in Michigan that had a long volunteer relationship with the local Habitat for Humanity, organization, helping construct housing. Bank leadership realized they could perform another vital role — providing financial education and coaching to the housing recipients. “It takes finding new ways to leverage your community connections, to make yourself that trusted resource for information,” says Perry. “It’s requiring banks to get out from behind the desk and to do more to engage the folks that they hope to reach most directly.”

Community banks, says Perry, need to do a better job recruiting young customers, who are currently opting for national banks and financial technology firms (fintechs) such as Chime. The fintechs, he explains, examined pain points customers had with traditional banking and developed innovative ways to answer customer needs. “I think right now, community banks only have about a six percent share of those new accounts … we have to do better on that front.”

Education is critical here as well, and Perry adds that banks may need to be more imaginative in how they deliver that material. In-person seminars and lunch and learns may not cut it. “If you’re not out on social media, or if you’re not delivering it in bite-sized segments,” he notes, “you’re not going to be giving these younger adults the information they need in the way that they need it.”

In addition to developing strategies to attract and retain younger customers, banks may need to look to other markets to replace those assets. How are banks going to replace those customers, Perry asks? “That really requires a long-game strategy of making sure first of all that they have the digital tools they need and the functionality to attract younger customers over time, but it also invites them to expand their business models.” That may mean working to expand their commercial base or even stretching beyond their geographic boundaries by developing digital tools that can be accessed and utilized from anywhere.

Remote banking leads to another strategy that may help stem banks manage the more direct challenge of an aging workforce, that of replacing retiring workers. Banks are going to have to wrestle with the concept of remote work, Perry states, especially given some of the specialized skill sets that are needed to deal with the digital transformation underway within the industry. He cited a Pacific Northwest bank that employs a third of its staff remotely. They did what they had to do to recruit the talent needed to remain competitive, he says.

Of course, bank leadership may elect for a more drastic solution, Perry adds. “Because this all can seem a little daunting, especially with everything else that banks are having to deal with — cyber security issues, the rate environment, all of that — the industry overall is anticipating that some institutions are going to say, ‘All right, maybe it’s time to look for a merger opportunity, maybe it’s time to sell.’ You’ve got some bank boards that have been doing this for a very long time and have gone through the Great Recession and they went through COVID and all rest and they’re thinking, ‘Do I have the strength to continue growing our institution and doing everything that it’s going to take to actually do that?’ There is a lot of anticipation in the industry that that we’re going to begin seeing a significant wave of consolidation over the next decade.”

A drastic solution, perhaps, but, as Winters with the Department of Workforce Development maintains, this really isn’t a problem that will be solved with microeconomic solutions.

“That’s the thrust of my argument: micro solutions won’t work on the macro problem,” he concludes. But be first or be best with those micro solutions, and you may buy yourself valuable time. “You’ll have some advantages, right?” He notes. “And the clever ones will stay out in front as long as they can.”

McDowell Woods is a freelance writer and an instructor of journalism and media studies at the University of Wisconsin–Milwaukee.

/by
,

Executive Letter: Cybersecurity Awareness Month Underscores the Importance of Staying Informed and Vigilant

By Rose Oswald Poels

October is Cybersecurity Awareness Month and this year’s theme is “secure our world.” However, as Rob Foxx, director – infosec and IT audit services for FIPCO, astutely pointed out in a WBA staff meeting this week, “If you’re doing it right, every month is cybersecurity month.”

According to Forbes, cybercrime is surging. 2023 saw a notable increase in cyberattacks, resulting in more than 343 million victims.

I know leaders at many member banks are concerned about the ever-increasing costs of cybersecurity and the growing threat of reputational damage. WBA understands the challenges facing the industry and can offer support on several fronts.

Consider sending your key employees to WBA events on the topic, like the annual Secur-I.T. Conference recently held in Wisconsin Dells. Attendance can keep your team up to date on the most recent trends in cybersecurity and incident response techniques.

WBA’s Best Practices Library housed on our website features a robust list of security and financial crimes resources.

WBA’s subsidiary FIPCO offers an IT Audit & Security service. This service, which includes tests, audits, and resources, helps your financial institution stay one step ahead in mitigating high-risk areas. FIPCO’s team can also provide consultation and advice to ensure that your cybersecurity strategy is complete.

Additionally, Midwest Bankers Insurance Services (MBIS) provides cyber insurance for your bank to help guard against losses. In their 2024 Cost of a Data Breach Report, IBM Security calculates that the average total cost of a data breach is $4.88 million, a 10% increase over last year. Because of this risk, comprehensive insurance coverage is crucial in the event of an attack. MBIS offers an extensive list of insurance coverages, including cyber liability. The insurance carriers for cyber liability policies also provide extensive resources that MBIS recommends be immediately engaged in the event of any cyberattack.

Additionally, FIPCO’s Loan Processing Central service provides a resource you can retain ahead of time to immediately step in if a bank experiences a disaster, including a cyberattack, to help continue the processing of your loan documentation.

Cybersecurity is covered in Wisconsin Banker articles. In case you missed them:
•   Guarding the Vault: Strategies for Banks to Combat Ransomware Threats
•   Embracing a Culture of Cybersecurity

Foxx’s column for Wisconsin Banker often includes relevant cybersecurity information:
•   How Do Business Leaders Protect Data?
•   Passwords: Ensuring Secure Data

Several cybersecurity webinars are currently available to WBA members including:
•   The Top 6 Controls to Reduce Your Risk of a Cyber Incident, October 15 and on demand
•   Preventing & Addressing Crime: Cyber, Human Trafficking & Disaster Relief, on demand

Technology is ever-evolving, and so are the skills of cybercriminals. That is why it is crucial to stay informed and vigilant to protect your bank’s reputation and preserve your customers’ trust. It is WBA’s aim to be an active partner in ensuring your bank and your employees are equipped to protect against the threat of cyberattacks.

If you are interested in finding out more about the protections WBA can help you implement at your bank, please contact Rob Foxx (FIPCO) at rfoxx@fipco.com or Jeff Otteson (MBIS) at jeffo@mbisllc.com.

/by
,

The Continued Importance of Succession Planning in Community Banking

Sponsored content by Wipfli, a WBA Silver Associate Member

By Robert H. Zondag 

Successful banking teams, as well as regulators, recognize proactive succession planning as a key governance tool. The right planning can promote a bank’s resilience, especially during challenging times, and positively impact shareholder value. 

What are specific ways that succession planning positively impacts a community bank? 

  • Risk mitigation: Effective succession planning minimizes disruptions caused by leadership changes. By reducing uncertainty for all stakeholders, succession planning promotes continuity, a key disruptor to achieving an institution’s long-term strategies 
  • Talent development: Succession planning demonstrates a commitment to employee development, attracting and retaining top talent in key functional areas. 
  • Business continuity: A well-prepared succession plan helps ensure smooth operations even when key leaders transition. Institutions are facing the need to document institutional knowledge or various procedures that have been the dominion of long-tenured employees. 

What are some challenges institutions face in succession planning? 

Community banks often face unique challenges, such as: 

  • Pipeline of qualified candidates: Without a pool of qualified candidates, it can be difficult to identify, recruit and nurture potential leaders. Rural or geographic concerns often create challenges in identifying candidates. 
  • Providing competitive salaries: Tight margins and budget strains impact the ability to offer competitive compensation to retain talent. 
  • Cultural fit: Balancing succession with maintaining the bank’s cultural characteristics is becoming more common. 
  • Widening range of skill sets: The complexity of managing a banking operation has increased the range and depth of skills needed for leadership. This large range of skills can also force an institution to consider outsourcing as an alternative to recruitment. 

It starts with a timeline and the need to document. So, what are the steps for effective succession planning? 

  1. Assess and map talent needs: Understand short- and long-term talent requirements for the institution. Each institution is unique, so the talent map will vary based on need. 
  1. Identify potential leaders: Look within the organization and consider external candidates. Often, a third party can provide an unbiased assessment of individuals. 
  1. Develop leadership skills: Using your talent map, understand what training and mentorship needs to be provided. 
  1. Develop a succession pipeline: Determine what steps can be taken to ensure a pool of qualified successors. 
  1. Regularly review and update: Review your documented plan consistently. What needs to be adapted to changing circumstances? 
  1. Involve the board: From both an operational and regulatory perspective, the engagement of the board in succession discussions is critical. (Note: Board succession is a separate matter from internal succession planning.) 
  1. Communicate the plan: Transparency is crucial for buy-in and alignment for all stakeholders. 

Community banks must prioritize succession planning to navigate leadership transitions effectively and maintain stability. By doing so, they safeguard their future success and the stakeholders they serve. 

How Wipfli can help 

If your community bank is dealing with succession planning challenges, our financial professionals are ready to help. We can assist in drafting a road map to a more secure outlook for your organization. Talk to one of our advisors today to get started on a plan for the future. 

/by
, ,

Association Update: WBA EBC Offers Benefits That Your Employees Want and Need

By Daryll Lund

As banks across the state are developing their budgets for 2025, it’s an ideal time to talk about how tapping into the benefits offered by WBA’s subsidiary, Wisconsin Bankers Association Employee Benefits Corporation, Inc. (WBA EBC) makes sense from a financial standpoint but also underscores your commitment to prioritizing employee health, well-being, and their own financial best interests. WBA EBC’s comprehensive offerings of health benefits (dental insurance, medical insurance, prescription drug plans, and vision) and life and disability insurance can help make your bank a sought-after employer.

WBA EBC is able to offer member banks high-quality benefits at attractive pricing, which is typically only available to large employers because of the combined purchasing power of Wisconsin banks.

WBA EBC knows banks! The team understands how competitive the job market is and that benefit packages play a key role in the attraction and retention of top talent in the financial industry. Their focus is on finding solutions and then providing unparalleled service when it comes to answering questions and ensuring member satisfaction. Additionally, WBA EBC has pulled together the information you need in an online portal that is easy to navigate and serves as a one-stop-shop for enrollment and billing administration.

Beyond providing employees of Wisconsin banks with access to competitively priced and flexible medical and vision coverage through WBA EBC’s Association Health Plan, which is serviced by UnitedHealthcare, employees and their covered spouses have the opportunity to each earn $1,000 through UHC Rewards. UHC Rewards participants can earn rewards in many ways: tracking daily steps, taking a health survey, getting an annual checkup or biometric screening, etc. The program is included in UHC health plans at no additional cost.

Helping your employees earn rewards as they reach their health and wellness goals is a win-win and shows that your bank is dedicated to the success and healthy futures of employees.

Offering employees enhanced peace of mind is another way to distinguish your bank from others. WBA’s partnership with Lincoln Financial Group offers competitive pricing on high quality life and disability insurance with value adds like Travel Connect and Life Keys (with life insurance) and an employee assistance program (with long term disability insurance).

To learn more about WBA EBC’s varied and robust options for your bank, please contact Brian Siegenthaler at bsiegenthaler@wisbank.com.

Lund is WBA executive vice president – chief of staff and president of EBC and MBIS.

/by

Outsourcing:  Getting to Go/No-Go

Key Considerations for Choosing a Strategic Growth Partner

Sponsored content by Ascensus, WBA Associate Member

If retirement plan administration isn’t a core capability or key business objective, it can still be a positive lever for your business. Large and small institutions are finding a flexible partnership model enables them to reduce or eliminate the cost and risk of functioning on outdated systems, while freeing revenue and capacity to focus on higher value relationship management and cross solutioning. Wherever you’re at in your decision tree, and whatever administration pain points you’re encountering, the most recent white paper from Ascensus reviews key questions to ask and capabilities to look for in a strategic growth partner.

Read White Paper

 

 

/by
Wisconsin Bankers Association logo

questions@wisbank.com

608-441-1200

4721 S Biltmore Ln.
Madison, WI 53718

Get our Newsletter!
Subscribe