Competing With Giants: How Community Banks Win

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Jim Marous (00:11):

This is a lot of fun. We started this three years ago, and it's our ability to do a podcast in front of a live audience, on a big stage and actually draw just amazing guests. I am so fortunate this year, all four of our guests are really at the forefront of the industry.

Jim Marous (00:30):

You hear about them, you see them, you read their insights, you see them on other podcasts, on other platforms, but this is really a great opportunity. This person specifically, we go back a long way, sometimes just passing the halls at Bank of America, TD Bank, at CBA Live.

Jim Marous (00:50):

Ryan Bailey is the CEO of Cambridge Savings Bank. If you looked at all at his history, this is an interesting history. It's a reverse transformation because he started his career at very large organizations, and then transformed himself through the process, was president of the CBA, the Consumer Bankers Association, and for the last two years, has headed up Cambridge Savings Bank, which is more like the organizations that we have in the room today.

Jim Marous (01:20):

So, we're going to have a really interesting discussion about how do you make it so that small institutions can outpunch their weight just like the big guys do. So, without further ado, Mr. Ryan Bailey.

Jim Marous (01:33):

So, Ryan, as I said, I don't know if it's a compliment, but I find it to be a compliment that your transformation is a little bit of a reverse cycle from what some people think is a normal career path situation.

Jim Marous (01:46):

And it's interesting because you bring so much to the table of your history to where you are now. And that's what we're going to discuss today, is what can organizations the size of yours learn from your time at the larger organizations, or what weaknesses may be there, the Achilles heel, the Trojan horse issue.

Jim Marous (02:08):

So, let me start off, I gave it a very short introduction, a little bit about your career path and what roles you play in these different organizations. As I said, we had crossed paths many times.

Ryan Bailey (02:19):

So, as you said, I've been at large organizations, some of the largest in the country, and I really got a great base of what banking is like especially from a data standpoint. As I progressed in my career, I started more on the financial side and I got advice that, well, if you want to be a great CFO someday, that I should be in a business line. And then I ended up getting in a business line and I never left. I always wanted to run a business.

Jim Marous (02:48):

So, your experience through the years and even the most recent experience at CBA gave you a vast realm of insight and probably at CBA, a really good insight of how the medium and smaller institutions, how they're different from the larger institutions. So, 20 years inside the biggest institutions in the country, what are they doing really well that smaller institutions kind of stumble with sometimes?

Ryan Bailey (03:21):

I mean, they have the vast resources to really look up data and everything about you. I could tell you at some of the institutions as that how big your dog is by how much pet food you bought at PetSmart or Chewy. So, I think bringing that to a community bank will help make my community bank much better having that experience.

Jim Marous (03:42):

So, when you look at that and you look at the advantage you have of financial wherewithal, which nobody in this room can snap a figure and say, “Hey, now I'm going to spend that much,” the good news is the industry has transformed itself as we see at The Financial Brand Forum to a point where we can find amazing providers that can help the small institution outpunch their weight, as I said earlier, because a lot of the things that even as recent as seven years ago were completely out of the realm.

Jim Marous (04:11):

We now have specialty companies that can really move forward at a speed of technology to do that. When you first joined Cambridge Savings Bank, number one, why did you join Cambridge Savings Bank? We'll start from there.

Ryan Bailey (04:24):

So, I'm probably one of the weird individuals that always wanted to be a banker growing up and I always wanted to be a community banker. I really like being close to the customer and when you have 25 million people, you don't get to know them.

Ryan Bailey (04:37):

At Cambridge Savings Bank, I go to sports with these people. I'm on the field with them, I'm in the community. I really understand who you are as a person and that makes me really get excited about being a banker.

Jim Marous (04:50):

So, when you looked at Cambridge Savings Bank and you thought about, “Okay, I'm going to make this jump,” obviously, the interview process is not a short process and nobody just clicks their fingers, “Okay, come on in.” You got to understand a little bit about the organization before you joined.

Jim Marous (05:06):

What number one did you see as this is a, I want to say a flaw, but a disadvantage this financial institution has that I can very quickly make better? What were those things? A couple of them, maybe.

Ryan Bailey (05:21):

Yeah, a couple of them is I think by being at the larger institution, I got to understand by learning from hundreds of thousands of people, some of the smartest minds in the country. And I didn't grow up through community banks, so I get to really learn what the best was like from each individual, and I got to bring that to Cambridge Savings Bank.

Ryan Bailey (05:43):

So, on the technology front is really where I helped transform Cambridge Savings Bank to where we're at today.

Jim Marous (05:48):

What do you mean by technology? Give me an example of what you had, what you saw as we got to fix this. This is one of the things I want to bring to you from my history, but something that is a non-negotiable from the standpoint of as an institution, not as far as your role at Cambridge Savings Bank, but you just said, “Guys, you got to do this.” And they may have come to you and said, “We know we need to do this and this is why we're talking to you.”

Ryan Bailey (06:09):

So, I'd say what we had is that we were really customer-obsessed. That is in our DNA. I think community banks are really good at that. What we didn't have is what does that mean? So, people want to bank sitting on their couch in their shorts, they don't necessarily want to go into the branch anymore.

Ryan Bailey (06:28):

So, I needed to make sure that I have high touch by high technology. So, I brought a lot of that technology, especially from a digital front, and we've transformed back office and front office but I've really prioritized — and when I say front office is what the customer sees.

Ryan Bailey (06:42):

So, when you go online, we're competing against not just banks, but we're competing against Amazon. And people want to do things in just a couple of clicks. So, that's what we've really transformed.

Ryan Bailey (06:52):

So, you can open account, we also have a national digital bank called Ivy Bank. And if you don't have an account there, you should. It's one of the best banks in the country. High interest rate, easy to use-

Jim Marous (07:02):

How old is Ivy Bank? Did you bring that in or was that there before?

Ryan Bailey (07:06):

It was started just a couple of years before I got there, but I really helped accelerate it with some of the people I brought in and done a really good job with Ivy Bank. It's about $1.3 billion at this point.

Jim Marous (07:15):

So, you're about to talk about some of the technology and how it impacts the consumer. What were some of the things you changed almost immediately at Cambridge Savings Bank or certainly said this is a priority one for me, this is what's going to make us a better community bank in our communities.

Ryan Bailey (07:31):

So, one of the first things I did is did an assessment of kind of where our weaknesses was and it was really our digital platform. You had to answer a lot of questions to open an account, you had to answer a lot of questions to fund your account, now, it's just a matter of clicks. So, I really brought the digital experience forward with some partnerships that I have out there.

Jim Marous (07:51):

So, how fast can I open a bank on a mobile or open a checking account on a mobile phone for Cambridge Savings Bank?

Ryan Bailey (07:56):

So, Ivy Banks are quickest. You can open a savings account in less than five minutes, Cambridge Savings Bank, you can open a checking account very quickly as well.

Jim Marous (08:06):

So, what are some of the things you moved from the experience you've had at Ivy Bank and said, “I need this to be part of the equation in my more human centered bank?”

Ryan Bailey (08:18):

Well, the reason why we launched Ivy Bank, first of all, is even though we're a community bank, we lend mostly local, greater Boston area, but we run all over New England, down in New York and across the country for the customers. But we launched Ivy Bank to have a national digital bank so we could gather deposits nationally but lend locally, and that was the genesis behind Ivy Bank.

Jim Marous (08:38):

And when you look at when you came to Cambridge Savings Bank, what did you in your mindset say, yeah, I know the Chase, I know the TDs, I know all the big banks in the marketplace that many of them, you compete with directly because they're also relatively regional. With that in mind, what did you think to yourself and said, “This is where Cambridge Bank can outperform even the local versions of these bigger finance institutions?”

Ryan Bailey (09:08):

So, I don't look at my marketplace as just the local banks anymore. You know, you can bank nationally, you can be with the Bank of California and do most of your transactions nationally. So, what I do is try to take the best of the best across the country and not even actually just looking at banks, I look at fintechs and the Amazons of the world and figure out how I can make my experience, if you're dealing with us in a digital aspect, more like them versus just an old stodgy bank.

Jim Marous (09:38):

So, JPMorgan Chase not only built an online bank with Wingspan, they built a digital bank and both of them, they kind of, I'm not going to say closed because that would they would slap me on the wrist for saying that — they rolled in within the traditional bank.

Jim Marous (09:56):

What goes wrong when an organization tries to build another entity like Ivy Bank, and in some way, shape or form, what makes it so they don't live with that?

Ryan Bailey (10:10):

I think a couple of things. One, we have a different brand name for ours, it's Ivy Bank versus Cambridge Savings Bank. So, we already have a wall built up. So, our customers don't walk in thinking they can transact in a branch on Ivy Bank. So, we created the difference in brand. But we use Ivy Bank also to do things faster and learn because it was a smaller part of our organization.

Ryan Bailey (10:31):

So, if we did something on the fintech side, we could do it on Ivy Bank and learn from that, and then push it on the Cambridge Savings Bank as well. I think the reasons why the larger institutions didn't need it as much is because they are nationally and we're not. So, it helps me get further reach than JP Morgan, who's got branches all over the country.

Jim Marous (10:50):

So, from a financial perspective, the ability to gather deposits nationally, to be able to build a brand nationally allows you to fund what you want to do locally, as you mentioned earlier. And in a way that … you also don't have 35 stories in a big financial institution that are all really dedicated to the brand structure of this financial institute.

Jim Marous (11:14):

I always say that there's 35 floors that Chase had to answer to if they … because my wife was in regular retail, store-based retail, and then moved to digital retail. She became from going from an ally to an enemy overnight because the store base said, “Wait, these people are going to take our customers.”

Jim Marous (11:33):

As I'm sure to some degree, the people within Cambridge Savings Bank said, “Geez, Ivy Bank is going to steal all of our business.” How do you make it so it doesn't? What will differentiate a customer that comes to Ivy Bank but more importantly, what's different about a customer that comes to Cambridge Savings Bank knowing that Ivy Bank exists?

Ryan Bailey (11:53):

A couple of things. So, we don't really have the conflict between the branches and our national digital bank because we've talked about it. They understand our strategy that it's not a competitor, it's an augmentation. It helps you so you can do loans locally. So, they're really behind it. So, it's a matter of how we talk about it. So, they don’t look at it as a threat.

Jim Marous (12:15):

So, who comes into the branch when you have such an efficient, easy way to open an account but they can't really access the Cambridge Savings Bank branch?

Ryan Bailey (12:24):

So, our customer base is very different. We're much more Gen Z, Gen X, or younger on the Ivy side, where we have a lot of legacy relationships on Cambridge Savings Bank so it's a different segmentation of customer set, and we target them differently. The look in the field is different. The great thing about Cambridge Savings Bank is we're almost 200-years-old. So, I have generations of people-

Jim Marous (12:50):

The brand's in place.

Ryan Bailey (12:51):

The brand's in place. And most people still get advice from their parents. And if they have an account there, they're like, “Oh, Cambridge Savings Bank, I love that bank. Go open an account there.”

Jim Marous (13:01):

So, part of you obviously wants to invest in the Ivy Bank side of the organization, what motivates you to continue to invest in the Cambridge Savings Bank part of the organization besides the deployment of loans and besides the more altruistic viewpoint of wanting to serve the community?

Jim Marous (13:18):

Those are the easy answers. The tough one is, how do you determine the prioritization of the investments and how much are you putting emphasis into the digitalization capabilities of Cambridge Savings Bank?

Ryan Bailey (13:32):

I don't look at it as where do I invest or where I don't. If I invest in Ivy, I believe that's an investment in Cambridge because I do get those learnings from Ivy, so I don't look at them separate. Obviously, we get together as a leadership team to figure out what's our next big project or priorities, but I don't look at them as one or the other, I look at it as a learning experience for Cambridge.

Jim Marous (13:51):

So, what do you invest in Cambridge? What are your top priorities right now at Cambridge to improve the customer experience for the customers that use the branch system?

Ryan Bailey (14:01):

So, I look at investment as it’s a marathon, not a sprint. So, technology changes every day. My priorities is if you ask me what AI is going to do for me versus the large bank — large banks are like, “I want to use it for efficiency. I think I could take out cost.” You hear that all the time.

Ryan Bailey (14:21):

I look at AI as how do I make my customer experience better? And that's what we use it for. So, I'm putting a lot of investment in AI now. We put it in our call center. So, if you call Jim and you want to get an answer, the agent's flipping through 80 screens instead, they have an answer AI assist that says, “Oh, this is the screen to go to, pops it up, and they can help the customer much faster.”

Jim Marous (14:43):

Do you deploy it for customer directly? Are you using AI in your call center for delivery of answers to the customer who has a simple question?

Ryan Bailey (14:52):

We use both more. We help them play answer the question. So, we're different, too. If you look at-

Jim Marous (15:00):

You're doubling down on the human aspect of digital at Cambridge not just looking for the replacement and obviously at Ivy, you're saying the efficiency play is something we have to continue to look at.

Ryan Bailey (15:10):

Yeah, of course, we're going to look at efficiency, but we're also different as a community bank. I also for even Ivy, I answer the phone. I have live agents. I don't want to send you through that circle of death, I want you to be able to get an answer with the help of an agent.

Ryan Bailey (15:23):

So, we'll answer our phones unlike trying to make you go through a chat system or the circle of death and hitting number five, number six, because I want that customer to feel where human meets that digital component.

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Jim Marous (15:43):

So, at Cambridge Savings Bank, when you look at the digitalization journey and trying to keep up with or go ahead of the organizations that are community-based, were you surprised by either the speed or lack of speed of the decision process at Cambridge to move forward compared to where you were before?

Ryan Bailey (16:04):

Oh, it's night and day difference.

Jim Marous (16:07):

I'm asking the question, we both knew the answer but in what way? So, this is obviously an advantage that the local community banks and credit unions have over the large banks, even though they have the money to burn.

Jim Marous (16:22):

When you take the next level of financial institutions at that second, third, fourth, fifth tier from number 10 or number 12 down to number 4,500, those organizations have legacy leadership that can hold them back. How do you within your organization keep that streamline? Because it must have been in place in some degree before.

Ryan Bailey (16:44):

It was, but I would say the collaboration that I have, we're in one building, I have 500 people. I'm meeting with my leadership team every week and we walk upstairs and we're there talking. Everybody knows what everybody else is doing and although large banks have the funding and the money and maybe greater resources or expertise, what they don't have that I can bring is that collaboration every day with my leadership team and the people.

Ryan Bailey (17:13):

I'm talking to the people, I have my call center. It's three floors down below me, I sit there, listen to calls. I understand what's going on from a customer standpoint. I can read almost every complaint that we get myself. The large bank CEOs obviously can't do that.

Jim Marous (17:29):

What's the size of Cambridge Savings Bank as an asset?

Ryan Bailey (17:31):

$7 billion.

Jim Marous (17:32):

So, it's very similar to, I'd say almost everybody in this audience that … so what you got in place, you knew what you had. You had a very good community organization that had great community outreach and had a great brand, a historic brand.

Jim Marous (17:51):

What are some of the things that you're working on now that are challenging from, I'm going to say the human side of Cambridge Savings Bank’s part of the business. What are you working on that is important and that you're trying to deploy so you can keep up with what's going on in the marketplace?

Ryan Bailey (18:08):

And my biggest struggle now, Jim, is really because I only have a limited amount of resources and my pipe is this big, so I can't set up 18 agile teams to go work on number of priorities. So, that's actually my biggest struggle is what we're really good at is making the decision and going because we only have the people in the room that need to make that decision and it's fast.

Ryan Bailey (18:30):

So, we can make a decision within 24, 48 hours, vet it out and go. My biggest thing is having enough resources to get done what I need to get done.

Jim Marous (18:38):

Which means probably more than you ever had to it at some of the other organizations you were working with have to partner with the solution providers such as the ones on the exhibit floor, such as the ones that you got to know really well, the CBA. How important is that collaboration with those that are the best at their specific deliverable?

Jim Marous (18:59):

And that's something, as you know, something we probably … I'm going to point at about 2019, 2018, where not only did the solution providers start saying, “I can't have that elevator speech that sounds like everyone else in the elevator. I got to specialize in certain things to certainly outperform the core competitors they have.”

Jim Marous (19:19):

You used to work with of course, you used to be able to drive the bus yourself because you drove enough resources that said, “I can make the decision on who I partner with. They're begging for me.” But now it's kind of reversed. What do you look for in your partnerships to make it so you can modernize while not changing Cambridge Savings Bank?

Ryan Bailey (19:39):

So, if you asked me five years ago, first off, could I compete against a large bank? The answer would have been no. Because of the tech revolution, those people on the exhibit floor are my best friends. I don't look at them as enemies because they really have the expertise that I don't have in-house to have those partnerships, and I need to rely on them to get things done and actually do it for me.

Ryan Bailey (20:01):

Before, I had my own digital design teams in-house that I did everything, the look and feel myself. Now, I've got to rely on those partners-

Jim Marous (20:09):

You can go down a couple floors and meet those guys.

Ryan Bailey (20:12):

And get those guys to do it. Now, I've got to call somebody. But what's great about having the marketplace out there, I can take my non-tech guy standpoint and just plug my HDMI cables in to the best of the best now, which is absolutely amazing.

Jim Marous (20:27):

Is that one of your advantages of having come from where you did and going to Cambridge Savings Bank? You bring a wealth of knowledge on how things can work, and you can also make decisions on the partners because you've been in that place to say, “Okay, how do we build this and who's closest to being able to build this this way or for the future?”

Jim Marous (20:47):

Is that something you look towards as you look into partners? I mean, a partner that wants to work with you, what do they have to bring to the table?

Ryan Bailey (20:56):

They have to bring the same customer session that we do. And by that, I mean, every deployment's got to go flawless because if I lose 10 customers, it's a big deal now. When you got 12 million customers, it's very different than when you got less than 100,000. So, they got to have that same customer obsession, they got to understand everything they do is super important that we have really good, clean releases.

Jim Marous (21:20):

So, the CBA, your role in CBA, you got to see how organizations differ based on asset size, based on leadership — what differentiated those that in your mind, because you're in front of an audience, you're going, “You're all going to win,” because that was your role. You're in charge of a trade group. So, you're trying to make everybody win. But you could sort out the winners from the maybe not as often going to be winners.

Jim Marous (21:48):

What did you see in the marketplace that you said, “I'm getting a really good feel for what differentiated institution today, because it's probably different eight years ago.” But today, what's differentiating the organizations that are going to have a winning track record?

Ryan Bailey (22:03):

Yes, I think it's mindset. And I'll be the first to say, I think, especially some of the smaller banks in the country won't be here 10 years from now. I think you'll see half of them, and I really think-

Jim Marous (22:18):

So, wait, wait, wait. So, you're going to assess me for this. I brought up the fact that AI could really speed up what we've not really seen as much as we've talked about the sky is falling. You're actually saying there's a potential for the sky to fall either because of consolidation — not like they disappear, but it's going to be a very fast consolidation, you're believing.

Ryan Bailey (22:39):

Absolutely. Part of my job is out talking to other CEOs in the industry, and a lot of them they just want to try to get by. And that's shocking to me, because if you're just trying to get by, by having a branch in the community and hope everybody is just going to come in and still transact with you the same way they did 5 to 10 years ago, that's not going to happen.

Ryan Bailey (22:58):

So, I do believe that consolidation will happen fast. I think AI is going to change, revolutionize that. I think you're either going to adapt or fail, and I think a lot of people are going to fail because of that.

Jim Marous (23:13):

So, you're a doctor, doctor of banks, and you're analyzing all the organizations in the marketplace. What are some of the indications that a financial institution is not healthy? I'm taking off the table financials because I think that's going to be less of an issue than a lot of others, but maybe not — you're the doctor, I'm not.

Jim Marous (23:38):

So, what is going to really be the item that you can look out and say, “I can almost tell like this, that this organization is not going to be a winner in the long run?”

Ryan Bailey (23:49):

I think it's those people that aren't using technology to either augment their customer experience or protect their customers. I think protection is huge. Do I think we have another credit cycle? Someday, yes.

Jim Marous (24:05):

I'm more worried about the cyber.

Ryan Bailey (24:06):

I'm more worried about cyber fraud than I am credit. Our credit book is extremely strong, our cyber is extremely strong, but the criminals are getting smarter fast. And I think that's the biggest threat, is AI is going to help the criminals just as much as it's going to help the banks. So, you've got to be a step ahead, and if you're not willing to invest in that, you are going to be a loser on the other end.

Jim Marous (24:29):

So, leadership, you're obviously coming in with a lot of experience to Cambridge Savings Bank, a person that doesn't come on the market very, very often and you have a role there. We see in the research that we're doing, we have a major execution gap between what we know we need to do and what we actually do, or even what we prioritize and invest in.

Jim Marous (24:53):

So, we'll talk about the fact that we all say that the customer experience, customer engagement is like number one. It's been that way for the last five years from our research we do on the trends and priorities report every year.

Jim Marous (25:04):

What's interesting, though, is data analytics prioritization goes down number four or five, and you go that that's a disconnect to me. In addition, but we have challenges because, again, it gets to be an investment deal, but it's never been easier.

Jim Marous (25:20):

I'm going to take the opposite and say it's never been easier to connect that between data analytics and deployment. What gets in the way of deployment, even at your organization sometimes that makes it hard to deploy the speed that you'd personally like to see happen?

Ryan Bailey (25:35):

Well, it's different than when I first got there, Jim. When I first got there, I quite frankly didn't have the leadership team to move projects fast enough because I just didn't have the knowhow. So, what I've really tried to build up over the last couple of years is trying to augment my leadership team with big bank talent as well as making sure I have enough community bankers and have that good combination of know how to get things done.

Ryan Bailey (25:56):

And I didn't have that before, now we really have a really strong leadership team that can actually deliver on what we need to do.

Jim Marous (26:08):

Which gets down to culture. You need to make sure that everybody's pulling in the same direction. From the standpoint of Cambridge Bank's North Star and Ivy Bank — if they're differentiated, talk about both of them. What do you say is Cambridge Savings Bank's North Star that you're working towards as you're starting to do bigger digitalization efforts within the organization, and on Ivy Bank as well? They may be the same.

Ryan Bailey (26:34):

Well, my priority is also my board's priority, Jim. So, what we talk about is we want to be seen as, wow, where did that bank come from? And by that, I mean, how do you take a 200-year-old bank with a lot of legacy and feel fresh? And that's really my North Star, that people see us as a very tech forward, 200-year-old community bank that they can trust.

Jim Marous (26:59):

So, tech forward can be a very uncomfortable situation for employees, for leaders. When you have a person that runs credits, been there for 35 years, some of it especially in payments area where so much change has happened, how do you get that person on board as opposed to simply switching that person, which may be an option?

Jim Marous (27:22):

But how do you get that person on board for not only the changes happening in payments and other areas of the financial institution, but also the speed of which this has to happen? Because it's not just, okay, I agree with you where it's got to go, but we find ourselves and we're doing digital transformation efforts that we have certain around the room that intentionally but make it look like it's actually dragging their feet. How do you get not only the speed, but the mentality for what you believe is needed to make your organization relevant and successful going forward?

Ryan Bailey (27:53):

Yeah, you hit it on the head. It comes down to culture. I try to get people to get excited about what we're doing. And my leadership style is not to say, we're going to go do this, but why we're going to do it, and get them to behind it. And once they see that that technology enhances and that inhibits them, they get excited about it, too.

Ryan Bailey (28:12):

I'll give you an example. We used to underwrite a small business loan like we would a hundred-million-dollar commercial loan and have the people look at it with their eyeballs on there, and it takes a long period of time. And once they see that I'm using that technology to help their job go faster, it gets them excited because they can work smarter and not harder by using that, and credit's a great example of that.

Jim Marous (28:37):

And it's going to continue to be a great example because you look at stablecoin, what's going to happen at some point in the future, we don't know exactly when — you need people that are on board to what's going on and looking at instant payments. We still have been dragging our feet on instant payments. Either the payment part or the reception part, it's just not the way it has to be.

Jim Marous (28:56):

So, even the larger financial institutions don't necessarily buy all the partnerships that are available out there, and they make it difficult for the consumer, myself included. I have a business bank where I still cannot transfer between two top seven banks directly. I can't transfer between my business bank, my consumer bank.

Jim Marous (29:19):

My consumer bank can accept it, my business bank, it's not a business bank, it's a consumer bank, but they do not employ the plaids and stripes of the world and they don't believe in these partnerships.

Jim Marous (29:30):

And as a result, I'm writing checks where I’m taking a picture of it twice a month and it drives me nuts because I keep on thinking someone's going to pay attention to this and go, “What are you doing?” “Well, you haven't served me.” How do you avoid those customer experience faux pas that we've just come to be used to? How do you listen?

Ryan Bailey (29:51):

So, did I just hear you writing checks at the grocery store and holding up the line, Jim?

Jim Marous (29:55):

No, I don't write checks to the grocery store, I write checks for myself. In fact, I believe last year, except for two checks and we figured out how to get rid of the IRS once, they’re all to me which I pay myself. I’m kitting is what I’m doing. So, how do you listen to the market place?

Ryan Bailey (30:15):

So, a couple things. I have, of course, some legacy technology I got to deal with, but because I don't customize code everything, I can move quicker. And once I hear customer feedback, whether it's easier to deposit a check than online than it is in a branch, then I'll take that technology and figure out how to move it backwards, if you will, to make my branch experience better.

Ryan Bailey (30:41):

Because that's true. It's actually, sometimes I walk in and I used to deposit checks in my wife's … I thought my wife was actually my account (she wasn't), to come to find out because we used to remote deposit checks and they never said, “Oh, you can't deposit this check.” And I go into a branch and they're like, “Your wife's not on the account. It's in her name.” So, trying to make that omni-channel experience connect is where we really need to prove it as an organization.

Jim Marous (31:06):

So, again, you had the budget, you had the technology, you had the human resources available at many of the large organizations you worked at — what has gotten you a little bit frustrated because of the size organization you have, besides money, is it the speed? Is it the talent? Is it just the confines in which you have? What kind of gets you frustrated going, “Boy, I didn't realize how good the bigger financial institutions had it.”

Ryan Bailey (31:37):

I would say the difference is if I was at one of those larger, larger institutions I worked at, if I called a vendor up, I got a lot of attention because you are a big part of their organization.

Jim Marous (31:48):

I'm laughing because I was one of the companies you called often and said, “We need to talk to us at Bank of America or at TD Bank.” I'm going like, “We're there. What time do you want me there?”

Ryan Bailey (31:57):

Exactly. So, if I'm giving them $50,000 instead of $500 million, I don't get quite the attention that I would like. The difference is I do find some organizations that they do want to work with us because they can co-develop with us.

Ryan Bailey (32:12):

The large organization might not take some of the … they might not invest back into these other tech companies because they feel like they can do it themselves where I can, I can be a much better partner for them and co-develop things with them.

Jim Marous (32:26):

So, you're actually investing in some of your partners and you're-

Ryan Bailey (32:29):

Well, we don't invest in them, but we'll co-develop with them or go to market with them on certain things is really what I mean by that.

Jim Marous (32:34):

So, your vision is used as their asset, and it obviously benefits you because you're keeping their speed of evolution and innovation quick which is key to moving the organization forward. Cause I mentioned it, two days ago, that you're only as fast as your slowest partner.

Ryan Bailey (32:51):

Absolutely.

Jim Marous (32:53):

And in the big bang days, you can keep on pushing that slowest partner going, “I got two choices here. You can speed up or there's the door.” You don't quite have that option now. So, it's interesting because talent is a major differentiator. What are you doing from the talent side to stay on top of what's going on as an organization? What's the key to getting them on board and find them outside, but also training them and getting them ready internally.

Ryan Bailey (33:26)

And Jim, I might come to The Financial Brand conference so I can learn about what the best of the best is doing.

Jim Marous (33:30):

There we go.

Ryan Bailey (33:30):

So, no, I mean, I've been fortunate enough to be able to bring big talent from other organizations, even large size organizations because they're seeing the vision we have and they want to be part of something, and we do want to grow pretty quick and it's exciting, it's fun, and we can move quick. So, they get excited about it. So, I happen to bring that talent in because they see who we are.

Jim Marous (33:51):

So, I'm going to pick your brain a little bit on your history here because every lead organization, we always keep an eye on the ones that we work with. What is something the Bank of America is doing that you go, “They're doing that pretty good. I'd love to be able to have a version of that at Cambridge Savings Bank or Ivy bank.”

Ryan Bailey (34:10):

So, I mean, Bank of America, if you ask a lot of these people in this room, they probably actually have accounts there because they do bring … well, first of all, they're everywhere so, you can hit an ATM-

Jim Marous (34:20):

That certainly helps, but so does Ivy Bank.

Ryan Bailey (34:22):

They are everywhere. But I still think people want to know in an emergency, they can go into a branch if they need to and we've had this conversation for years, “Is the branch dead?” The branch is absolutely not dead and it's apparent by these large organizations that have the analytics behind it, they're building branches everywhere. So, they're seeing the fruits that they want to be in the market.

Jim Marous (34:46):

Well, and part of that building branch everywhere is because they have the investment services, Merrill Lynch advantage, or they have the Chase Bank credit card advantage that they're going to where their customers are, but they didn't have branches.

Jim Marous (35:01):

You don't have the Cambridge Savings Bank person talking to me in the middle of Ohio, most likely and so you don't have that, but okay, let's take Chase. And I won't say envy because that's a big word, but what do you look at Chase Bank doing that you'd really like to improve it at Cambridge in that model or whatever from that standpoint?

Ryan Bailey (35:24):

I think what they do really, really well and it comes down to again, and keep going back to the analytics piece of it — is they can dynamically price you. So, if you go to an ATM with Chase, your limit and my limit are very different based on my behaviors, and they are really good at that .

Ryan Bailey (35:41):

They know you from a different way where I may know your kids and what school they go to, they know you well from an analytic standpoint, and they know what risks they can take on Jim or not, and they're really good at, and I do have some envy for that.

Jim Marous (35:57):

What are you doing to Cambridge Savings Bank to try to make that possible, which is now more possible than it was even two years ago, when you joined the financial institution. What are you doing internally to make that more of an asset you have at your organization as well?

Ryan Bailey (36:13):

So, again, I got to rely on that partnership to augment data that I may not have because I don't have a big wealth group. So, I don't see the whole wallet transaction. You could tell a lot about somebody, if you have several million credit cards in your portfolio, you know where they're at, you know if they travel, you know a lot about that person. I don't have that analytics so I got to go buy that from these-

Jim Marous (36:39):

That’s a major initiative at Cambridge to say, we have got up our analytics game and more importantly, our deployment against those analytics, which as you said, that's something that Chase does very well, is that it doesn't matter which channel you go to, they know you probably better than you know you.

Ryan Bailey (36:55):

Absolutely. So, I win on human heroics, and they win on making digital human.

Jim Marous (37:03):

So, USAA, a completely different move for you in a way, but a very unique organization. What is USAA? You gave them five stars as opposed to three that you say, “You know what, I'd like to take that from where I came from there and I'd love to be replicated or make it better.”

Ryan Bailey (37:20):

So, USAA, mostly a digital bank. They have just a couple branches. What they're really good at, well, first of all, they have an amazing mission and purpose — to be able to support the people that support our country is incredible. And what they do really good at is if you're a Sergeant in the military, they'll say, “Hi Sergeant, how are you doing?” Or a Captain and they know how long you've been there. So, they're using that to create that loyalty, and they have extreme loyal customers because of that.

Jim Marous (37:50)

Well, it's interesting because gosh, it's got to be, was more than 10 years ago, interviewed a gentleman from USAA, and that was when remote deposit capture just started. And I said, “This is not a big product, this is not something you're making any money on. In fact, you don't charge for it. Why?”

Jim Marous (38:08):

He goes, “You got to remember our customer base. We have people that can't write checks, who can't go to the branch. We have people that have lost limbs,” and all of a sudden, I said, “God, I wish I hadn't asked that question” because I looked like, geez, I wasn't sensitive to that issue. But it's interesting how certain innovations like that took off because yes, while they serve a very specific marketplace, there's part of that in everybody in certain ways.

Jim Marous (38:34):

So, okay CBA, obviously, a very interesting absorption of knowledge. What did you learn at CBA that you're saying that's something I — maybe it was from an institutional standpoint or from an organizational standpoint, the CBA itself: what did you learn there you'd like to be able to replicate or do differently at Cambridge?

Ryan Bailey (38:57):

First of all, what a great organization CBA. What I really learned from there too is, I looked at my competitors as competitors. What I didn't realize joining that organization in particular is my competitors became also great friends. If I had an issue, they were generally seeing the same issue. So, I could call them, the network was incredible.

Ryan Bailey (39:17):

And the other thing I really learned from the organization is your politicians do want to hear from you to understand what you're seeing in your organization so you can help them figure out what regulation makes sense. I'm not a believer in zero regulation, I'm a believer in the right regulation.

Jim Marous (39:38):

So, as we wrap this up, what's the biggest risk you see in the industry, and specifically, your community bank or our credit union?

Ryan Bailey (39:47):

That people will lose touch for their customer. I'll give you a great example. There's a large institution, a gentleman was in the hospital, he didn't have long to live. He needed a notary service and they called and said, “I need a notary to come show up. I don't have long.” And that organization didn’t show up.

Ryan Bailey (40:08):

I got a call, heard the situation, I sent my banker up the day before 4th of July to make sure that that customer was taken care of through their journey. Data can't help you with that, you need to really understand where someone's at in their life from a personal standpoint. So, I think you don't want to walk away from that personal touch.

Jim Marous (40:28):

It's interesting because that's an internal message as well as an external message. So, it's an example that you show your employees that say, “This is our North Star,” as we talked about very early in the conversation.

Jim Marous (40:39):

So, all these organizations are going to be coming and going back to their financial institutions, Thursday, Friday, maybe Monday. So, they get back to work on Monday and you want one thing to be taken away from your knowledge of the marketplace on a very broad level. What's the one thing you say, “Please, for your own benefit and for your institution benefit, do this Monday or at least start the process Monday.”

Ryan Bailey (41:04):

That's easy for me. Go back, find out the top five things that are impacting your customers' lives and go fix them because they're all generally fixable if you know what's going on.

Jim Marous (41:15):

And at a speed that we haven't seen before. I think we've run out of excuses. We can use money, we can use regulation, we can use human resources, but really, it gets down to what are you willing to take on.

[Music Playing]

Jim Marous (41:30):

And it's interesting because you come from different organizations where at Cambridge, if somebody is in a room and says, “We tried that before, it doesn't work.” The bus stops with you, you're going to go, “No, no, no. I'm sorry, I've seen it work.”

Jim Marous (41:46):

And there's very few of those. I would think there'd be very few of those situations that would come up that you haven't seen whatever challenge they have work. So, somebody says, “I got to use the driver's license to start a digital account opening.” You're going, “No, I saw that work someplace. I was involved in that, it works.”

Jim Marous (42:05):

Or some of these things that we use. Heck, I'm sure you used them as excuses, the big organization, but now you have the experience to say, “Let's not let these things get in the way and make it so that we aren't one of the ones that survive as opposed to those are being absorbed.”

Jim Marous (42:24):

So, Ryan, thank you so much for your time. I really appreciate your time and your insight from a probably as broad a perspective I've ever had on the podcast. So, I appreciate that.

Ryan Bailey (42:32):

Well, thank you, Jim.

Jim Marous (42:32):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoy what we're doing, we would really enjoy a positive review. Also check out my recent articles in The Financial Brand, the research we're doing for the Digital Banking Report.

Jim Marous (42:53):

This has been a production of Evergreen Podcasts, a special thank you to our senior producer, Leah Haslage; audio engineer, Chris Fafalios, and video producer, Will Pritts.