Best American Banker Magazine stories for 2023

December 26, 2023 12:00 PM

American Banker Magazine has a long history of producing great journalism, and 2023 was no exception.

Reporters covered important topics ranging from the banking crisis and the potential fallout from that, the effects of redlining that are still being felt today, the Most Powerful Women in Banking and Finance, the state of credit union-bank mergers and the fifth anniversary of the asset cap on Wells Fargo.

Here are just 10 stories from American Banker Magazine from this year. For complete magazine coverage, please visit here.

Dangerous hackers hack into corporate servers.They often have mu

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Hack me if you can

This feature from the January/February issue explores the world of ethical hackers who seek out system vulnerabilities for good, rather than evil. The top three motivations cited by white hat hackers was learning, earning an income and having fun, according to data from HackerOne, a hacking-for-hire website, cited in the story. One source interviewed for the piece, Shubham Shah, got into hacking as a teenager so he could beat his brother at video games. He has since continued with his hacking, though at a more sophisticated level by breaking into highly secure systems built by financial institutions and others by invitation. He is now paid to uncover key vulnerabilities.

"When I was probably 14, I submitted my first bug to PayPal, and the payout they had for that was around $1,500," Shah said. "That was more than what I had made working eight months in the fast-food industry at the time, so I never showed up to that fast-food job again."

Still, utilizing ethical hackers requires a high level of trust from banks and credit unions, and at times there can be disputes over whether a company is acting fast enough to fix a security issue that's been uncovered.

All of this is covered in this fun and highly detailed story, which can be found here.

New strategy for old bank: All-digital and ‘pro-America’

Financial institutions targeting a certain market or offering services tied to a certain cause is not new. That's the mission of Old Glory Bank though with a slight twist: The institution is working to reach customers who are "pro-America." Old Glory was formerly known as First State Bank in Elmore City, Oklahoma, before it sold to a group of investors who rebranded the institution and added their patriotic spin on its strategic direction.

"There's probably half the country that is pro-America, a patriotic crowd that doesn't have a financial services firm out there that really resonates with them," said Eric Ohlhausen, chief operating officer of Old Glory Bank. "First responders, military, hard-working farmers … the people who really get things done in this country. We feel that this is a bank that they can be proud of doing business with, a bank they feel respects them for what they are and what they do."

Critics have questioned whether this pro-America niche has distinct enough banking needs for Old Glory to succeed.

"The concerning focus is: Do consumers who care about patriotism and freedom have unique banking needs?" said Ron Shevlin, chief research officer at consulting firm Cornerstone Advisors. "Not to say that there aren't, but I really struggle to understand the unique banking needs of people who care about patriotism and freedom … I see the value of a niche strategy, but this niche I don't get at all."

Regardless of the naysayers, the institution's founders are giving it go. Read more about the bank's transformation here.

The Paycheck Protection Program’s legacy

More than three years ago, COVID-19 upended the lives of millions of Americans and others around the world. Nonessential businesses shuttered their doors, workers were laid off and Congress scrambled to minimize the damage. From that, the Paycheck Protection Program was born.

Banks helped administer the program, which was overseen by the Small Business Administration, by getting funding into the hands of business owners so that they could keep the lights on and pay their staff members. In many ways, the initiative was a success — in 2020 alone, more than $500 billion in funding was disbursed through PPP.

"PPP mostly worked, despite its flaws," said Keith Leggett, a retired American Bankers Association economist. "We were looking into the economic abyss and the program provided a lifeline to main street businesses."

Still, the program has been riddled with accusations of loose oversight at some lenders and there is much speculation about how much fraud occurred through the program. Estimates have ranged from just over $34 billion to more than $180 billion.

Some lenders have already paid fines to settle claims that PPP loans were made to applicants who didn't qualify. There is the potential for even more fallout in the years to come.

"It's my opinion that lenders should be held more accountable," said Linda Miller, former deputy director of the Pandemic Response Accountability Committee. "Lenders provided a service that the government needed and, to some degree, took advantage of the opportunity to profit off fees and gain new customers."

To read American Banker Magazine's cover package on the legacy of PPP, visit here and here.

Defiance and resilience: Ukraine’s financial sector

The war in Ukraine has now been raging for more than a year. Thousands of civilians have died in the conflict and millions have been displaced since Russia invaded the country in February 2022. And yet those who work in the financial services sectors there have remained resilient. These workers, who have managed to persevere under incredibly difficult circumstances, are looking forward to a time when the fighting has ceased and rebuilding the country has begun.

"We are definitely preparing for the time after the war," said Anastatasiya Shevchenko, a general partner at Lugera, a Kyiv-based human resources and recruitment company that serves financial institutions.

American Banker reporter John Adams deftly handles this emotional topic in a moving feature in the April issue of the magazine. The feature also included photographs from Ukrainian workers who have witnessed the devastation firsthand. For the complete story, visit here.

FedNow is finally here

After years of development, FedNow, the real-time payments system created by the Federal Reserve, finally went live this summer. Instant payment settlement is expected to be a sea change for banks, with American Banker reporter John Adams likening it to how ride-sharing apps transformed the taxi industry. And FedNow is expected to make the technology more widely adopted.

"Uber and Lyft, for example, came on the scene in ride-sharing and changed how taxis worked. You can see FedNow and RTP having that kind of impact in the U.S. payment market," said Mike Jorgensen, head of emerging solutions and strategy at U.S. Bank Global Treasury Management, who was also referring to the impact that ride-sharing apps have had on payment companies, which for years have tried to emulate the "Uber experience."

But concerns still linger about the potential drawbacks of instant settlement, especially in a year that witnessed several bank runs and three of the largest bank failures in U.S. history. Some are concerned that if transactions are cleared in 20 seconds or less, future bank runs could happen even faster.

"You're working on a real-time payment system that's ripe for a problem like this with Twitter," Rep. Blaine Luetkemeyer, R-Mo., told Fed Vice Chair for Supervision Michael Barr during a March 29 House Financial Services Committee hearing on the bank crisis.

American Banker Magazine ran this comprehensive package about FedNow's launch in its April issue. Read the full coverage here and here.

Most Influential Women in Fintech

American Banker launched its inaugural Most Influential Women in Fintech in 2023. The package includes profiles on 20 dynamic women who are making a difference in this sector. Overall, women continue to be greatly underrepresented in this field, with less than 2% of all venture capital funds going to female-founded startups in 2022, according to Pitchbook data cited in the package.

This year's honorees included Amanda Abrams, who as CEO of the investment firm Cohen Circle has helped create Radiate Capital. It's a new fund that will launch in 2024 and will focus on investing in financial services firms and health care companies. Jo Ann Barefoot, CEO and co-founder of Alliance for Innovative Regulation, was also featured. Barefoot has spent more than four decades working in financial regulation, including stints as a U.S. Senate staffer and deputy comptroller of the currency.

For the full list and profiles of each honoree, please visit here.

Redlining to remediation

In many ways, the United States is still reckoning with its history of racially discriminatory policies, and the financial services industry isn't immune to scrutiny over its practices. Redlining was common throughout much of the 20th century until the Fair Housing Act of 1968 made it illegal to discriminate in lending based on race. This legacy has shaped many urban areas throughout the U.S. Buffalo, New York, is one such city, and its segregation partially explains how a grocery store there became the site of a racially motivated shooting last year.

"The mere fact that someone can research, 'Where will the greatest number of Black people be … on a Saturday morning,' that's not by chance," said Franchelle Parker, a community organizer and executive director of Open Buffalo, a nonprofit focused on racial, economic and ecological justice. "That's not a mistake. It's a community that's been deeply segregated for decades."

This deeply thoughtful cover story by Allissa Kline explores this difficult topic and includes original photography commissioned by American Banker to more fully capture the spirit of the Buffalo community. For the complete story, visit here.

When being the best isn’t good enough

The banking crisis in the spring was the topic of much coverage this year, including American Banker's annual look at the top-performing banks with more than $50 billion of assets. Oddly enough, the best performing banks, based on year-end 2022 data, included a number of institutions, such as Western Alliance in Phoenix, Arizona, that had their stock prices hammered in the wake of the three large bank failures. (The ranking is based on three-year average return on average equity for each institution.) It seems as if this historical strong performance wasn't enough to quell concerns from investors.

"They've decided that the world has changed, so they've sold those top performers off," said Claude Hanley, partner at Capital Performance Group, the consulting firm that compiled the data for American Banker. "Investors are simply not emphasizing what these institutions have done in the past, and they're raising fundamental questions about the viability of their profitability."

Although bank stocks have rebounded some since this ranking and story were published, American Banker reporter Polo Rocha's piece still remains an important read. It's a reminder that no institution is immune from the fears of customers and investors alike, and everyone must be prepared to handle a crisis at any moment. For the full story, read here.

The turnaround artist

In the wake of the industry's previous crisis — the 2008 financial crisis — emerged a class of executives with the ability to pull troubled institutions from the brink of collapse. Thomas O'Brien is one of them. He has led Sterling Bancorp in Southfield, Michigan, as chairman and CEO since June 2020. Prior to that, O'Brien had stints at State Bancorp in Jericho, New York, and Sun Bancorp in Vineland, New Jersey. Both had significant issues when he took over. O'Brien was able to resolve many of these concerns before the banks were sold.

"It kind of opens doors for you," O'Brien said. "I believe that. I've seen it. Somebody looks at your resume and says, 'This guy's been through that, they've experienced it and done it successfully.'"

"You fix one and all the sudden there's another one," he added.

Reporter John Reosti's profile on O'Brien highlights the work he has done throughout his decadeslong banking career and hints at what could be next for the veteran banker. Read the complete story.

The credit card climate crisis

There are near continuous warnings about the long-term effects of climate change and pollution. The financial services industry has found itself to be part of the problem through a variety of ways, including the issuing of new plastic cards. Each year there are 3 billion new plastic cards shipped out to customers, enough to wrap around the Earth six times when laid end to end, according to ABI data. The old cards end up in landfills for hundreds of years, hurting the environment for generations to come.

But a number of card issuers are taking steps to right this wrong by using greener and more sustainable options instead of virgin plastic.

"It might take a little bit for it to take hold, but hopefully in the long run it's going to take hold and we'll be one of the first to have made that leap," Eric Carter, digital solutions and innovations officer at Bank of New Hampshire, said about the sustainable card movement.

American Banker editor Daniel Wolfe discusses these concerns and what is being done about it in this informative feature on the long-term environmental impacts of plastic cards. It's a topic that many bankers have maybe not fully considered. This September cover story also utilizes original American Banker research into what's motivating card issuers in terms of switching to more sustainable plastic card options. For the full details, read here.