Staying Close…Remotely

Transcription:

Nick Miller (00:09):

Good afternoon everybody. I'm Nick Miller with Clarity Advantage, joined by David Burch and Jason Tarr. This is connecting remotely.

David Burch (00:18):

We still got the music on. I mean, I could do this with the music on it might be fun for everybody.

Jason Tarr (00:26):

There we go. Okay.

Nick Miller (00:28):

I'm still Nick Miller. This is still David Burch and Jason Tarr. So David is the Head of specialty Sales, sales and specialty banking at Huntington National Bank. Part of his role involves leading a team of remote business bankers and Jason Tar is a sales and strategy executive who's an expert in business line transformation, but he has a specific expertise in remote sales forces, which he has done for a number of institutions in small business business banking and wealth management. So the reason that we're doing this session is that there are a number of banks, and you may be among them who have tried hybrid workforces, remote workforces, as well as in person for dealing with your small business or business banking clients. And our experience is that those trends sort of come and go. And so we thought it was worth revisiting again with two people who've done both David and Jason have done this in multiple institutions with multiple focus points. So the idea is for them to share a bit about how they think about it and give you a chance to ask some questions if that would be helpful. So David and Jason, would you like to say anything more about your, speak to us about who you are.

David Burch (01:34):

I am just coming off the tail end of a cold, so I normally don't sound like a boxer, but I spent about 20 years with B of A. He's moving off to the side. We already gave you a big hug in the hallway, so it's not much mattering at this point. Masks are optional. So I spent about 20 years at B of A. I helped start there at Bank of America. I helped start their practice finance group and then the last four or five years at Bank of America, I ran a portion of the country for small business and business banking, like zero to 10, 15, 20 million. I came to Huntington Bank to help them start their practice finance business, and then have now been helping lead the business banking team for the last four years along with the practice finance team and as well as our dedicated business relationship management team, which is probably where we'll focus in today. I've been doing that for the last year or so.

Jason Tarr (02:29):

Sure, sure. I know how LeBron James feels now sitting up here. I did not take the last shot, so I have about 18, 20 years. I started in sales stockbroker back in the nineties when that was what we were called, did business banking, cash management, and then had a chance when I was at Citizens to move to the back of the house and start to focus on segmentation and strategy and support. I've been with Capital One Key Bank and Santander, and for this specifically, I've stood up six virtual centers, a few on the business banking, small business, a couple on wealth and a private banking one.

Nick Miller (03:08):

So the path through this discussion is we're going to start with how did you start this? What was the intent that you started with, and then how is the day-to-day work organized and then performance measurement and then some takeaway lessons. And I hope that will leave some time for questions. So David, maybe I'll start with you. What led to the creation of this virtual or remote business banking team? How did that all come together?

David Burch (03:34):

So at Huntington it was a little of a different story. We had some new leadership come into the bank about six years ago, and one of those leaders had formed a remote team previously, and so very smart guy came in with the idea and it landed like a lead balloon in the whole entire bank. Nobody was interested. Huntington, if you're familiar with how we go to market, it's local first, even though we're about $190 billion bank local first is the whole mantra and nobody can understand how you could have someone, we're out of Columbus, we have customers in the northern hand of Michigan, how are you going to handle that customer? Nobody.

(04:17):

It was a challenge for us to accept that. So we actually launched that business independently, kind of funded it ourselves and got the business going. The primary driver was if you want to build business, you can't have your business builders holding on to 200 customers. It just doesn't work. And most of our bankers had 200 or so customers that they were trying to manage and there's a lot of management that goes on with 200 customers from ACHs to Annual renewals. There's a lot that goes on and that I think was the primary driver for it. Plus we were having some attrition and so because of those reasons, we kicked off a small team that found very quick success and then continued to grow that team.

Nick Miller (05:06):

And your team focused on what you were calling the business banking segment, right?

David Burch (05:11):

Yeah, at Huntington recently we've expanded our reach a little bit, but for majority of the time that I've been there, it was about a million to 2 million up to 20 million. The branches typically are handling business between zero and one or 2 million. Right.

Nick Miller (05:27):

So Jason, in your case it was a different focus, same idea, but focused on the smaller end. What was the founding story for the team you put up?

Jason Tarr (05:34):

Sure, sure. And I'll speak a little broadly across a couple organizations. So certainly field capacity is one, as David spoke to, there's a lot of servicing. Those of you guys that have rms that manage books of business is a lot more servicing than sales. So to help free up the banker capacity, you could create the virtual channel that can take some of that burden off of those folks so they can go out there and either hunt or move up market and try to bring in some of those larger businesses. We have also stood up for things such as if you're skinning your branches down, if you're exiting markets. One of the banks that I was at completely exited some large markets. So a way to try to hold on and retain some of those clients is to set up a virtual center that can manage anywhere in the country.

(06:22):

You might also be a national player or be looking to go national. That is one of the only ways you can do that unless you're going to be like Ben and try to scale up to Chase. You can only do it two ways digitally and virtually when you go national. And then finally the last piece is if you want to get out of the field business. So having RMS on the street is very labor intensive. Oftentimes when you isolate it, it actually doesn't make money versus having a more efficient team that is centralized in one or two locations.

Nick Miller (06:54):

So Jason, stay with you and then we'll come back to David on this. So how did you organize that? I mean I'm thinking specifically of the efforts you've done to focus on the small end of the segment. How did you organize the team? What did they do? How did the branches work with them?

Jason Tarr (07:12):

Sure. So most recently at Santander we tried something different. So we organized the team as a team. So oftentimes when you see this, it's still a one-to-one relationship, which in reality you get a little bit of efficiency because I'm not driving from branch A to branch B, east side, west side. But when you're in a one-to-one relationship, there are still going to be times where the branches can't get ahold of you. The clients can't get ahold of you. So I leveraged a contact center methodology, so I'm sure you all have probably an internal contact center for your branches and field to call. You also probably have an external one for clients to call. Just imagine if either side of those only had one person, if Nick was the only one that I could need. When I need help as a branch or a client, I probably don't have a good likelihood of getting Nick.

(07:59):

That's why they leverage that telephony to be able to have the next agent up. So when you call it routes to that agent, that was the method that we used at Santander because we did a lot of research internally and externally with clients. And when bankers and small businesses want you, they want you, they don't want to get your voicemail. They don't want to hear like, well, Thursday I could squeeze you in. So this way when you called the 800 number, we had an internal one and an external one, it would route to the most available business banker. So you might've got Patty, you might've got our heni, you might've got Jen all equally skilled. But the point was you got somebody who was there to be able to handle all of your needs.

David Burch (08:37):

Yeah, I think we organized as R, our group works, the internal team could work relationships up to 15, 16, $17 million in revenue. We transition When it comes to maybe complexity of credit, there's other types of money moving complexities. They can manage all high risk tm, but there's a relationship complexity that would get us to move. But we do have dedicated, I mean you have a base of customers and typically right now it's about 170, we're moving that to 200. The bankers can handle a little bit more capacity and then they have some support folks. So we also have, just as you are speaking to an 800 business numbers, if you just want to quick solve something, you can quick solve something for the 800 business number. But they have what's called a relationship service specialist too, back some up can handle some of the day-to-day, pieces of the account relationship errors or issues that just arise. We have built similar as well where we have a manager and we have bankers. They lead about 12 people one to 12. As we grew the organization, we started to place them across the footprint. So we have 60 going to 70 right now. It's not like we have 70 people sitting in Columbus. We have a group that's in southeast Michigan. We have a group that's up towards Cleveland. We have a big contingency in Columbus, so it brings them a little closer to market, which was one of those things that the organization was looking for.

(10:16):

And we don't go past, we probably don't like to go to 12, but we're at 12. That's about how big the team gets.

Nick Miller (10:22):

So I'd love to know how you staffed your organization or how do you manage the staffing for that versus your field Salesforce, and then the assignment of clients. And Jason, I'll ask you that as well.

David Burch (10:33):

Well, it is actually probably one of the best advantages to having a team like this. We all know we've got high powered branch folks that are looking to probably make a move, branch managers leading branches that are responsible for business banking activity. It is a movable middle kind of organization. So high performing branch managers can roll into here. We have other support roles that support in and around the business bankers. They can move into that role. And then these folks, our dedicated team are one of the first they go to go out. So we have staffed these by promoting, I would have to say we've had the program for five years and maybe it was some attrition, 80 people through the organization. I bet you 70 of them came from right inside our organization. So promotion opportunities, we have six leaders today. All six leaders were previously except for the first person who helped us launch.

(11:35):

All of them came from that team. So there's promotion ability and then they move out. Biggest struggle I would say is, and all of you know this, if you're leading business banking teams, there's a distinct difference between an incredible servicer salesperson who's a servicing person and a hunter. And so we have had some folks that were tremendous in the dedicated role that moved to the outside role and couldn't hunt to save their lives. And all of you probably you care about your people. We took them back, we took them right back in, batted them on the back, said, Hey, listen, come on back. We're happy to have you brought them back into the team and they've gone on to perform again. And that's usually, what was the other question you had? Did I answer both of them?

Nick Miller (12:19):

You got one that was good. It was about the clients. So what I recall from our conversations is that in addition to having flexibility on the staffing, you've also got flexibility on how the clients are assigned.

David Burch (12:31):

So each year we do a transfer. We open up the transfer portal and our bankers in the field can assign customers into this transfer portal. Even though we don't have people sitting in some of these markets, we just look through our whole portfolio. And probably about, depending on the market, 80 to 95% of a person's book is going to be within that region. So it might be within Indianapolis city limits. So when they bring the customers into the transfer portal, again, freeing up capacity, that's a goal for the field. It's free up capacity. They come in and then they're going to go to the group of folks that work most often in that region. And then once they do that, it will go to the person who has capacity. We have newer people that are coming in, they might get more of those customers, but that's how we do it.

Nick Miller (13:26):

And you have a reevaluation every year?

David Burch (13:28):

We do, yeah, every year. We're doing it right now. So maybe a couple hundred customers that we have in our dedicated team maybe should go back up to the field, go out, back out with the regional bankers and get a little bit too complex. Occasionally during the year if it's too complex, we will transition. Credit submission comes. That's very, very complex. Credit submission, new owners, sellers, things like that in the mix. We can transfer at that time too. But that same process is done each year.

Nick Miller (13:54):

So Jason, what's been your experience in terms of staffing the role to focus at the smaller end?

Jason Tarr (13:59):

Sure. So the last two firms I've been at, we took an approach of let's take our best market. So who is doing the most business loans, deposits, and then let's take our worst market in terms of loans and deposits. Those are the two that we launch in. And that gives us a great gauge to understand what we feel we will need when we roll across the entire footprint. So rather than go out and say, I think we need 15, hire them all at once and it wasn't enough or it was too many and now you got to do something with those extra folks. Take your best and take your worst. The number's going to be somewhere in the middle probably from a client standpoint, same thing. Always start small, my opinion, because if you overload and you already promised them a certain delivery, now you got to go back and change commitments, move those clients back to the branch or move them out to a business banker.

(14:52):

But when you pick your clients, you can look through the data and you can try to choose those that appear to be dispositioned to work in a virtual model. So look for clients that have the app that they're using it, that have online, maybe they've called the 800 number several times as opposed to those heavy transactors in the branch, they're probably not going to want a deal this way. Those are the ones that when you call, they say, you know what, no thanks. I like Mary. I'm going to go keep seeing Mary in the branch. So we try to find clients upfront that would want to work with us, but then we also give our bankers the ability to deselect those from the book as they call, because they know best. So if I call Nick and he says, Jason, thanks sounds like a great program, but I'm never going to call you. I want to go see Joe. I want to go see Mary. Then there's no reason to keep those in the book. So we can immediately move those so that we can bring a new one in instead of waiting for those quarterly bi-annually or annual transitions.

David Burch (15:50):

And just to touch on that as well, when we do the transfer portal, it's not like we just throw up a hundred customers and take all your customers. So we do a very similar thing where we'll say, Hey, here's a hundred customers that you have 70 of them, they really look like they should be over here. What do you think? So it's actually the banker that selects where that customer is going to go or not. Now, occasionally you're going to need a little nudge in from the leader to say, Hey, zero loans, 7,000 in deposits. I don't know what you think's going to happen here, but it doesn't look anything's going to happen from my standpoint. But we do give the banker the ability to hold on. And that's one of the things that helped this program work for us is doing it alongside of our bankers. We didn't force it. We made it an option. And I think that's one of the key things that helped. Very similar to how you did that.

Nick Miller (16:40):

And Jason, when you put, I'm just thinking of the Santander example and specific, when you put that team together, they were given a choice as well. Yes.

Jason Tarr (16:50):

The clients, no,

Nick Miller (16:52):

The bankers. The folks that you put on the team. What

Jason Tarr (16:54):

Was the choice?

Nick Miller (16:56):

Maybe I misremembered that.

David Burch (16:58):

Did they want to be on the team or on the team?

Jason Tarr (17:01):

Did they want to be on the virtual team? Yes. Yeah, I think, oh, absolutely. Absolutely. Yeah. We don't force anybody to do anything. It was a role that they posted for, they applied for. That's a big, I was saving that for my end. One of the most important, you know what? Who has a virtual? We should ask that first. Who has a virtual channel? Who's thinking of a virtual channel? Asia, okay. One of the most important things is making sure that you get the right person in that role. Go way above and beyond to make sure, just because somebody's a great business banker, probably doesn't mean they're going to be a good virtual one. Because folks that are business bankers, financial advisors, commercial rms, they're in that role for a reason. They love the freedom. When you're in a virtual center, there is no freedom because of the telephony system.

(17:51):

Every single phone call is recorded. So we know everything in and out with the computer systems these days. We know what you're doing every minute of the day. Those typical rms, they're not going to go for that. So make sure in that hiring process that you go above and beyond to make sure this is what you want to do. You're going to be in a seat five days a week, six days a week, whatever your bank is, from eight to five, nine to six. That's probably the biggest lesson that I learned is trying to pick those right folks upfront.

Nick Miller (18:21):

Talk about your test for determining whether somebody is likely to be the right person.

David Burch (18:26):

Low handicaps usually don't,

Nick Miller (18:28):

Usually

David Burch (18:29):

Don't fit.

Jason Tarr (18:31):

I developed, so Nick and I laugh at this because he's actually seen pictures. So every interview we do is virtual, so none of them are done in person because you're never going to see somebody in person. The very first one is a quick little 10 minute meet and greet with no instructions other than here's the link. And a lot of times folks from the branches really struggle with that. So I've had people with their head chopped off. I've had people that aren't even in the picture. I'm not even sure where they are. They can't log in. I don't know how to use this team slack stuff that's probably not the right person for the role. So that's the first one is just can you basically join a virtual session, which is going to be your job five days a week. From there, we start going through a series of mock interviews, discovery calls. It's a big difference between, Hey, show me your factory floor versus you're never going to see me in person. I can't shake your hands. I don't know if you're wearing pants. It's a different story. So we have series of three to four different interviews that the folks go through before we'll consider them for the role.

Nick Miller (19:39):

So let's shift to performance. David, come back to you on this. How do you measure team and individual performance for your guys?

David Burch (19:48):

Well, we shifted for our organization maybe five years. Four or five years ago when I first joined the team, we had composite score. You have six goals and you add them all up and whatever your percentage is, as long as you're better than a hundred, you win. And you can have someone who does really, really great in merchant services and nothing else and somehow still win and being congratulated for that. We shifted the business to goals first. Goals attained first, then composite score. So you're first to get them to be a top performer, you have to hit all six goals. Then the top performer has all six goals hit, and then the top composite score. So we shifted our bank towards that, which has been incredibly helpful for us organizationally over the last four or five years. And our dedicated team has the same scorecard.

(20:38):

The only difference are, one of the things we shifted the outside team to was a key goal, which is new to bank customers. So bringing brand new to bank customers in, they'd have a certain number of those each year. DBR, our dedicated team doesn't have that. If they're bringing people in or people are following, they should be handed it off to the field outside. So we have very similar goals, loans, treasury management deposits at Huntington, everyone has very similar things of referrals to other business partners. We call it optimal client relationship. You see that in our financials. So that's on the scorecard, referrals to the internal team, referrals to the cross team and then portfolio. And so we're scored against those goals and we have done the same transition over the last maybe three years for that team to be goals first, then composite score.

(21:34):

And so from a leadership perspective, what we do, and we've shifted more to this, we should have shifted a lot earlier and we didn't, is to participation rate for leaders. So you manage 10 bankers, they have five goals in the first half, five goals in the second half. That's a hundred goals. You need to have 85% goal attainment. So we've transitioned that team to participation rate because your winners are always going to win, right? You got 10 people, your top three, you're going to hit home runs every single time. Your leader's job is to get the bottom three. Either coach them to be better or coach them to find something else in the bank that's maybe a better fit for them. So transitioning our business to that goals first. Then composite and then participation rate for the leader have been two really big financial wins for us. And frankly, from my perspective, it's a customer win. When our people are supposed to go to different things and talk about different things, our customers get a better impact. They're just getting a better experience because more things are getting talked about.

Nick Miller (22:41):

Jason, how did you measure how you measure performance in your group?

Jason Tarr (22:44):

So at KeyBank, we had more of a traditional balanced scorecard at Santander, because we did the team approach, we had team goals because we were fostering that environment. We also had individual performance goals, all the typical metrics lending. But what we also did, because we were in the small space, so I'll say basically one to seven, but you guys know that typically means one to three, one to four, just because that's where the bulk of small businesses are. A problem you have in that lower space is complete applications. Applications that are thoroughly done because you're not talking to CFOs or treasurers. So we added that piece into their comp to make sure. So we had a percentage of apps that become complete and a percentage of complete that go on to be funded and booked. And we found that was a way to get clean applications right up front so you don't clog up your shop with junk.

Nick Miller (23:39):

Yep. Love to talk about the end result performance. Jason, maybe start with you on this in terms of what could you share about how your team in that space produced results for the bank or any of the banks that you worked with?

Jason Tarr (23:54):

Yeah, so I'll stick with Santander first, which has a very unique story. They got rid of business banking several years ago before me. So production basically went to zero. So overnight they got rid of all the business bankers on the street. They thought the branches could pick up the slack. I'm sure everybody in this room knows that's not something that usually happens. So we brought our group back, which dramatically turned the faucet back on. What probably led the most to that was having a lifeline for the branches that they could call, and if they wanted to input an application themselves, they could to a point, but we dramatically increased volume there at KeyBank. Our virtual center actually outperformed the field, but that was mostly because of a volume game. So the average application was smaller, but because again, I wasn't driving from east to west, and now I got to go back to pick up tax returns and corporate papers, everything's done electronically. So you can see and push a lot more volume through a virtual channel.

Nick Miller (25:04):

And David, for your team, how would you describe the performance?

David Burch (25:07):

Just really fantastic. So one of the benefits when you start something is you can set your own goals. So that makes it a little bit easier. So I think we undershot the goals pretty well in the first year, and then over the coming years, we've kept moving them up. And even as we move the goals up, our teams have achieved the goals that we've set out for our attrition rate is incredibly low. Our customer experience and the bankers that are in this group has gone up probably 10 percentage points, and we just have a deeper relationship. So the scorecard looks fantastic. It's looked fantastic every year. My predecessor Ron Pedo, and I've taken the team over, he created an incredible leadership team, incredible followership, and it's always, always performed and continues to do that. I'd say I think right now we're 130% the goals, 400% the goal for 1 25 for loans, one 70 for treasury management, 300 for deposits.

(26:09):

And then the other stuff is just, it's very, very strong. And the teams, when you have somebody that likes doing that and they can make a good living doing it, you can't make as much money as being a field banker. But when they really like it, they're going to stay there a long time. As long as you don't flip them on their head in their comp plan all the time and change things up, make the world too complicated going to, they might stay there for, we have 60 some bankers, I bet you 30 of them have been there for four years now, and it's only because we're growing over the last few years. They'll stay there for a really long time. They can take care of customers, can make a great living, and it's secure. So that's how we've gotten there is just with great leadership and a great team. But performance has been fantastic.

Nick Miller (26:54):

We have a couple of minutes left for questions. It's less than I'd hope for, but if somebody has a question, Megan has a microphone, we'd be happy to field the question and David and Jason can talk later. Yep. Could you wait for the microphone? It's coming right in the front row please.

Jason Tarr (27:08):

I don't know if we can hear that far. I know.

David Burch (27:11):

Oh yeah, you lost. Sorry. Sorry.

Nick Miller (27:16):

It's for the recording.

Audience Member 1 (27:17):

Ladies first. I don't know if this may not be as relevant, but you were talking about how once a year you guys classify accounts or assign them to other bankers. How do you come up with, if you say you're going to classify 70 accounts, is it by tax id, by how do you classify them and

David Burch (27:42):

Assign them? So we know if it's a business customer number one first. So we're going to pull all business customers by and who they're currently assigned to. So they're assigned to the branch, either they're assigned to a dedicated person or they're assigned to the field. We pull those lists. And then one thing I want to make sure that you know is, and it's important, is that we just don't go in and assign them to other people. We let the bankers make those decisions. Unless it's going to the branch, it just will collectively go to the branch. So we start with just a loan cut and revenue cut, I'm sorry, loan cut and deposit cut, not revenue. Because revenue is so hard to come by because DB is typically not on target.

Audience Member 1 (28:20):

So if it's by loan, how do you classify, what about if they're relationships? What if they're tied to multiple?

David Burch (28:27):

We parent child them. Yeah. So it's the parent child relationship.

Audience Member 1 (28:30):

So are they already assigned a number from origination? Is that how?

David Burch (28:35):

Yeah, I don't parent child at any time and I yell at everybody. They don't do it.

Audience Member 1 (28:39):

It did sounds so easy.

David Burch (28:40):

I don't know how to do it, but we could talk through that a hundred percent. Yeah. I don't know your system, but we do. We have a way in our system to parent child it.

Jason Tarr (28:49):

Salesforce helps. If you have salesforce.com, that's, that's an easier way to do it. But no, it is tough. And I know we have our guy, Matt, in the back, who knows the struggle just because sometimes there's multiple owners, different tax IDs. So yeah, you will miss some to quote Ben, it's going to be a little messy. I thought it was easy.

David Burch (29:11):

It Sounded, it did sound easy.

Nick Miller (29:12):

Thank you all.

Audience Member 2 (29:14):

Yeah. Have one question, one more question if you have time. Thanks. Chance. It was really informative. You talked a little bit about it, but try to be more direct. When you think about the virtual team, what percentage of their time is servicing versus deepening versus acquisition or something else I'm not seeing, how do you think about those ratios of where the virtual team spends their time?

Jason Tarr (29:33):

Yeah, so servicing, that was a big lesson. When I went to Santander. I actually partnered very closely with our business servicing group. And because we're all in the same telephony system with one push of a button, we can pipe them in because I didn't want them to spend their time doing multiple statements or refunding a fee. So if you call with that immediately, I'm going to get somebody on the line and I'm going to warm transfer them. So we spent the bulk of our time on new business, whether that was a new loan application or cross-selling treasury or something like that.

David Burch (30:09):

I would add that it depends a little bit on your strategy. So if your strategy is to put a lower cost vehicle or a lower cost colleague there to then manage the relationship, but you don't really expect them to get much more, you just don't want the customer to go anywhere, that's going to change. So if it's, say somebody who's making 60 to 70, $80,000, somebody who's making 70, 80, a hundred thousand dollars that you're expecting production out of that time is going to shift pretty dramatically. So it'll depend a little bit on your approach and each individual bank of what you should get there. I've been at my former institution, they had a program just like this and it ran out of gas because they didn't have as much new business. And when you run out of production, you run out of being able to tell the story. So I would be leaning more towards people that can produce than people that are just going to service their relationship. But

Nick Miller (31:06):

Okay, thank you. We're done. We're off stage.