By Jim Ropella, Consultant & Retired CFO
A common theme among bank leaders has always been to improve efficiency thereby improving profitability. The pandemic has quickly made us all discover new, innovative ways to efficiently conduct business and accomplish our responsibilities. Some of our actions and decisions are accelerating the evolution of financial services and some are direct reactions to combat the effects of COVID-19. As leaders of your financial institutions, your responsibilities have grown due to this unforeseen environment, so some of these situations may sound familiar to you or members of your leadership team:
- With new important safety responsibilities or other concerns, one or more of your other areas of responsibility isn’t getting the attention it needs.
- These new responsibilities are add-on tasks or outside the core position requirements.
- You rely on third parties for advice and they provide it for “free.”
- A single incumbent position possesses all or most of your organization’s specialized knowledge.
- Your organization is growing or evolving to the point where you need more specialized resources.A key person in your organization who has gained a variety of specialized responsibilities over the years is nearing retirement.
Are you experiencing one or more of the situations above? Outsourcing may help solve your need.
Earlier in my career, I was fortunate to test this out myself when I accepted a position as Chief Financial Officer (CFO) for a community bank. I knew their ideal candidate included some very specialized responsibilities, including tax compliance and preparation, merger/acquisition analysis, Asset Liability Management, and Investment Management. Even though I believed I was a fit for the traditional role of a community bank CFO, and I had experience in Asset Liability Management as well as mergers/acquisitions, I was far from proficient in tax preparation and compliance or investment management. I moved from a larger bank with resources to hire people to accomplish those tasks.
My new employer ended up having a real bias for efficiency, which meant I shouldn’t expect to hire people to make up for the experience gap, so we outsourced the work to experts in the respective fields. I retained the responsibility and was provided resources to make sure the requirements of the job were completed.
Successful financial institutions diligently serve their communities, clients, employees, and shareholders. There is no respite from this mission in a pandemic. Your immediate actions responding to the environment include facilitating work from home, on-site safety measures for employees and clients, and serving client needs in a controlled on-site manner and virtually where possible. These actions were well thought out and designed to protect your clients’ and employees’ safety while preserving access to vital financial services. Some of these changes may be revolutionary and forever transform the time-tested methods of serving client and employee needs in the future. You also may eventually scale some back.
Whatever the new normal ends up looking like, these measures will help ensure the ongoing success of your financial institution so you can remain in a position to serve your community and clients the way they desire. Other organizations may accelerate the process of closing small community and neighborhood locations, unilaterally deciding that mobile banking or online banking is the only way to provide client services rather than offering in-person visits, as well. Positioning your financial institution favorably with your community, clients, and employees will satisfy the long-term requirements of your stakeholders and shareholders.
As you strive to fulfill your staffing needs going forward, outsourcing can help as you strive to hire people who embody your organization’s values and meet many, but not all, of your requirements. Outsourcing may even be an integral part of your succession plan for that key employee nearing retirement who has a long list of knowledge and abilities you may find difficult to replace.
Outsourcing has many benefits including:
- Access to specialized skills and expertise.
- Eliminate the risk of replacing someone in a single incumbent position.
- Increase efficiency by only paying for the resource you need.
- Increase in purchasing power because of their business contacts.
- Focus internal staff on their core responsibilities.
- Ongoing exposure to best practices of the industry.
- Speed of learning and adopting new practices or requirements.
With more than 30 years of experience each, the Bank & Credit Union Consulting experts at First Business Bank have in-depth, specialized knowledge that you can use to achieve your financial institution’s Investment Management and Asset Liability Management goals. The pandemic is an ongoing, changing challenge for our essential industry, so addressing your unmet goals now is important as you continue to pivot to the shifting needs of your clients.
Let’s talk about how our financial experts use their specific knowledge to help your team accomplish its Asset Liability Management and Investment Management goals.Let's Talk