How AI Can Help Commercial Bankers Be More Effective with Ron Buck

INTRO: Helping community bankers grow themselves, their team and their profits. This is the Community Bank Podcast.

CALEB: Well, hey, everybody and welcome back to the Community Bank Podcast. Thanks for joining the conversation today. I’m Caleb Stevens with SouthState Bank’s Capital Markets and Correspondent Banking division. Today we are talking with Mr. Ron Buck. Ron runs a company called the Performance Insights Team. And today’s conversation is all about how can AI specifically help your commercial lenders at your bank be more successful? AI is obviously an important topic for all aspects of banking and just all aspects of business—frankly, in today’s world. But we want to dial it in specifically to the commercial lending side of things. As a community bank, your bread and butter is building relationships, and so we want to talk about how can technology and, specifically artificial intelligence, help your lenders not distract from relationships, but actually deepen them and build greater trust with your clients so that you can add more value and grow your bank. So, without further ado, here is my conversation with Ron Buck.

CALEB, continued: Well, Ron, welcome to the Community Bank Podcast. It’s great to have you on for the first time. How’s the weather out in Phoenix?

RON: Phoenix weather is still very warm. I think it will be about 110 degrees today. I think we’ve had a summer where there’s been a 130 days above 100 degrees so, pretty warm.

CALEB: Long, long summer, for sure. Well, for our listeners who are not familiar with you, the back story to having you on is you and I have a mutual friend named Jack Hubbard. And our listeners are probably familiar with him. Jack’s a staple in the banking industry and has trained I don’t know how many thousands of lenders in his career. And I reached out to Jack a few weeks ago and I said, “Jack, I’m looking to have a show on sales, but I specifically want to talk about how AI and emerging technologies impacting the way that bankers ought to be thinking about their sales process.” And Jack was kind and he wrote back and he said, “I’d love to talk about this, Caleb, but if you really want an expert and you really want a deeper dive on this discussion, you need to talk to my friend, Ron Buck.” And so here we are, Ron. We’re going to talk about sales today, and we want to hear about your career. So, tell us real quick about your company and what you’ve been doing over the past, I don’t know how many decades, to serve bankers.

RON: Yes, thank you, Caleb. Jack has been a good friend and a partner for over 20 years. In 1996, I started a company called Performance Insights. That was an interesting period of time because that was when there were still 11,000 plus banks, mostly community banks, and it was the beginning of a new era of the Internet and the decline of community banks. The Internet was very new at that time. And it’s kind of like AI is kind of new today. And there was a lot of anxiety, apprehension, and fear about online banking. In other words, do we have the resources? Is it really worth the time and energy? Is this going to be a real thing? And that kind of thing. So, we began in 1996 helping community banks really work through that. Not only acquire the technology, but understand how the Internet was going to lower their cost, make them more competitive, and there were just some basics there that they would have to do, like online banking that would help them get through the rules.

RON, continued: There are two things that we always kept in mind during that period of time. Not all of this technology is right for every community bank. And the other thing that we always kept in mind is whatever technology you adopt, your strategy shouldn’t be about technology. It’s going to include technology, but it shouldn’t be about technology. So, when we started Performance Insights, we said we want to have a sales-enabled business. And kind of what we were thinking at the time was, we’re developing a strategic approach that equips banks, their sales teams, their loan origination teams—that kind of thing—with data quality, the kind of technology, the kind of aligned processes they really need to improve their bank. So, our engagements with community banks always include some kind of sales process or process improvement, but most importantly, the alignment of those processes, so that sales, loan origination, credit, operations are all aligned. And then obviously the technology, but a huge part of our engagements is always about data quality and sometimes incentive compensation. That’s who we are today.

CALEB: Fantastic. Well, in today’s banking landscape, it’s not enough just to compete on rate and on price. If that’s all you have in your tool belt, if that that’s the only arrow in your quiver, it’s going to be hard to keep up, you know, in today’s environment. So, I’d love to put the question to you, and this could include technology or not, but what, in your opinion, are the best community bankers doing today to add value simply beyond rate? Because we all have the same similar rates, we’ve all got similar products. So, what are the best bankers doing out there to really add value?

RON: Yeah, I mean that that’s really the question of the day. I mean, we’ve always all heard the old saying that people don’t buy from businesses, they buy from people. People they trust and people who can add value to either their personal life or to their business. I think many of our listeners will say, well, there’s no doubt location, products, and services play a role in that. But face to face with competition, that you have both selling the same money, wanting the same deposits, having the same products or nearly the same products. It’s easy for a bank to do well if there’s no competition. But in the face of competition, the differentiator is who came in that I trust the most, and who added the most value to my business or to my life? So, the real test of a banker today is, do you really understand your customer’s business? Before you even have a discussion. And I’m talking about, who their competitors are, what business they’re actually in, what industry they’re in, right down to their P&L and balance sheet. We did a research study about 10 years ago. We interviewed 300 personal bankers who worked at community banks, and we found that about 60% of them could not read a balance sheet.

RON, continued: So, it’s important for the bankers, the people who are interfacing with their customer—that’s probably the better term to use—as do they understand their customers business? That helps with both value and trust. Can you provide financial insights and provide expertise that they really need? Through shared stories, through actual demonstrations for really helping them with a problem. Can you help them become more competitive? Can you improve their cash flows? Can you help them with other problems and issues they have? The trust issue is really a critical thing. Jack Hubbard and I have studied this problem. St. Meyer & Hubbard has implemented this into their training, but I highly recommend three books. Charles Green is one of the best authors in the industry. I think he’s now retired. But he wrote The Trusted Advisor. That will be life changing to anybody who reads it. And he did a follow up book called Trust-Based Selling, and then another book called Trusted Advisor Workbook.

RON, continued: Those are must-reads for every community bank. And I’m assuming that many of the community banks out there, certainly ones who have done business with St. Meyer & Hubbard, understand though. So, it’s important enough that I’d like to mention again. Go to Amazon. Charles Green’s books. The Trusted Advisor, Trust-Based Selling, and the Trusted Advisor Workbook. Everything begins by taking the time and building the plans and preparing for these calls, it’s critically important, and it’s critically important to do that. Now, Caleb, you asked me a question that I want to answer. Today, according to Gartner, 60% of banks globally and 75% of larger banks—larger than, say, 50 billion—and 46%, almost half of community banks, have their foot in the water using AI on fraud detection, customer service sales, marketing, operational efficiencies. And I know this sounds like it’s slightly off subject, but I’m going to answer your question, Caleb. What’s happening is you cannot avoid the competitive thing and helping the people who are out there trying to build trust and add value. In the next three to five years, unless you have a community bank where there’s no other community banks or very little competition, but many community banks today are saying, “It’s not enough, so it’s not that important. It’s not that important, so it’s not that important. Don’t have the resources to understand AI. We don’t know how to start.”

RON, continued: You don’t need to be smart to get started, but you need to start to be smart. It’s an old time saying that I’ve used for many years. The biggest threat to community banks is not to get started. Community banks today need to find a way to get smart with AI while minimizing their risk and their investments and build a simple entry point. Wherever you want to build that simple entry point—whether that’s in sales, marketing, operations, loan origination, or you want to do it in risk management. You need to find that simple, risk-free, or very little risk point, that also fits with your pocketbook. And that’s what we’re doing with community banks. But I’ll wait for later, Caleb, but the reason I brought that up was, that we believe that helping banks build trust and build value using AI is a critically important way to adopt AI by community banks.

CALEB: Well, that’s a great segue into the whole AI discussion. So, from where I sit, it seems like there’s a ditch on either side of the road here. And you’ve alluded to it. The first ditch is to just rush into AI with reckless abandon and start adopting a bunch of things, but without a clear plan of how to use it, not taking into consideration the risks. On the other side is to just say, “That’s not what we’re about. We’re a relationship bank”—whatever that means—“and we don’t need these tools because we’re just about relationships. And if we have great relationships with our clients, we don’t need to adopt any of these AI tools.” And it’s scary, you know, it’s scary to think about what the implications are for your bank. So, I’d love to open it up to you and say, you know, on either side here, what are the opportunities and what are the risks that banks ought to be considering? And where do you see banks starting? That’s a great phrase there, of you don’t need to be smart to get started, but you need to start. Where do you see banks starting with AI?

RON: Well, we’re already seeing, as I showed you, the Gartner statistics say that 46% of community banks have already started someplace. And I don’t know if that statistic is right. It seems kind of right. And I don’t know the exact answer of where they’re starting today, but in a second here, I’m going to give you an example of a place to start. Banks, community banks, large banks, and small banks. Large banks out there today have 10 or 15 projects going with AI, and they’re to enhance efficiencies to improve security and regulatory compliance, sales, and improve the customer experience. And there’s lots of initiatives going on with sales. Marketing is a very popular place where they’re using AI to craft content and messaging to customers. Not only their existing customers, but if they have the information to craft it to prospects. A lot of the community banks are not doing this, but larger banks are going after loan origination and credit. And it seems like that’s an odd place to get started, but there’s a lot of analytics that can be done to help approve a loan or qualify a loan and loan origination, at least in the qualification stage. And a lot in loan reviews on a semiannual or annual basis. And I put operations in there because that’s all your non-loan origination. So, there’s a lot of activity going on in each one of those. But let me give you a simple, Caleb, let me give you a simple example of what we’re doing with community banks.

RON, continued: And it follows our philosophy of first, you need to address a problem or an issue before you ever go look for technology. So, you could look at improving your content marketing, your emails, your drip campaigns, all that kind of stuff. You can look at a lot of different ways and there’s probably a never-ending army of people coming in to promote a certain AI application. But let’s take on a problem. I think it’s a big problem. It’s a problem we’ve been working on with our clients for a long time. 10 to 20% of initial prospecting calls result in a second meeting. Think about that. 10 to 20% of all the prospect calls that you have a meeting with will ever get a second meeting. And without that second meeting, you’re not going to go too far. So, you can look at that, and you can say you’re 30% or you’re something else, but it’s a small number. CSO Insights and Gartner agree, that’s 10 to 20% in the banking industry. So, there could be no need. Well, there could be a future need, and we need to take care of that, but maybe there was no trust or no value added to that conversation. So, maybe they’re talking to another bank. Maybe they’re not thinking about moving ahead because they don’t feel somebody can help them. But there was no trust and no value added. Therefore only 10 or 20% of those initial prospecting calls result in a second meeting. And that’s the same number that St. Meyer & Hubbard used. Now, here’s what’s really critical. Of those, 10 or 20%, about half of those into no decision and the other half result in sale.

RON, continued: Okay. That says 5 to 10% of all the work in your networking your prospecting and that kind of thing end up in a sale. So how do you make that process more efficient? We believe it’s in the preparation of the salesperson before they ever make the call, so that they know more about the business, they know more about what conversations to have, and particularly what questions they ask. So let me give you another piece of data. You’re seeing that I’m an analytical.

CALEB: Yeah.

RON: You take 6% more prospects—if you can grow your prospects by 6%. So, for a typical relationship manager, that’s a couple per year. Okay? And if I can convert 6% of them with a higher conversion rate, 1 or 2%, and I can do it in 6% less time, one or two days, I’ve just grown my sales velocity by 20% with the same resources. Track with me now. If I did it with the same resources, my efficiency ratio just went up by 20%. If it’s at 16 a day, it went down to 48. And if I increased or decreased my sales efficiency ratio by 20%, do the math yourself. I just increased my bottom line by 25%. So, it’s certainly worth looking at that. Sales and engagement and building relationship with your customers is a business of small, incremental, interdependencies of numbers. So, let’s suppose on the day that your salespeople are going to get ready. Right in the moment of need, I need to know more about that customer. I need to know who they’re banking with. I need to know their financials. I need to know what industry they’re in. I need to know all these kind of things. And I can simply type in a name of a customer, and if you’ve got more information, an address, a person you’re dealing with, and that kind of thing.

RON, continued: In the push of a button—one-thousand-one, one-thousand-two—AI will come back with a discovery call plan. In the moment of need. With a push of a button. Your personal assistant. It’ll first come back with all the research because it’s looking at DMB, Hoovers, Vertical IQ, LinkedIn. Everything else on the Internet. And it’s sorting through that and giving you the truth about this company, at the push of a button. The next thing that it does is it tailors a plan to a specific business or a contact to build trust and value. We’re using a model that was developed by St. Meyer & Hubbard. We’re in partnership with St. Meyer & Hubbard, Jack Hubbard. We found that the most important thing that people want to know is, “Teach me about the industry that they’re in. Teach me about the customer. Let me know all that”—so, we’ve given you all that—“Now help me with how I should have a conversation with them. What are the questions I should ask? And now what if that all came with the push of a button? That’s available today. And the propensity models are what are their likelihood to buy?

RON, continued: If they’re an existing customer, it will subtract out what they already own. If they’re an existing customer, it’s going to tell you a list of 20 or 30 products of financial need, and it’s going to tell you the likelihood to buy theirs, so that you can focus on certain needs and craft your questions around there before you get that started. So, Caleb, you asked me, and I’m trying to tie this together with trust and value. And the work that we’re doing with St. Mayer and Hubbard with community banks is to address this particular issue of trust and value, and to solve the problems that so few prospects get converted. Whether that comes in as a referral, from the from my fellow bankers, a referral from my COI, or it comes in from a referral from my existing customers. Those are probably a higher rate, but you still don’t get any more second meetings if you don’t build trust and value. So, having all that information ahead of time, and having it laid out just like you want it, and we’ve laid it out according to how St. Meyer & Hubbard trains their clients. So, I say you don’t have to attend the training class, you just need that piece of information you need in the moment of your need, and it’s at the push of a button with AI today. And it installs quickly, you can use it quickly. It’s not very expensive, and it’s powerful. That is the kind of application—I’m not selling our application—I’m just saying that’s the kind of problem you want to try to solve. Whether it’s in marketing, it’s in loan origination. Loan origination problems is, one of the biggest costs to originating a loan today is how much time it takes.

RON, continued: So, cutting down the time, once again, you’ve got the same kind of formula. And in credit, it’s a never-ending battle of having the salesperson get in touch with the customer, getting all the information from the customer, and there’s some really wonderful applications that completely automate that. So, that’s another thing. You’re probably well aware of all the marketing applications. And operations, remember one thing, a lot of CRMs and a lot of people think loans. But today we’re thinking about deposits. So, the reason I have operations in here, is what’s happening to your credit cards, what’s happening to your deposits, what’s happening to all the non-loan products like cash management? You’re managing multi-product opportunities. AI can help you track that full opportunity all the way through the pipe to the core processor. And those are really wonderful applications. So, I’m actually very excited about them. The other thing that AI is working on that I’m really excited about is improving the quality of your data. One of the problems that banks have is the data in your CRM system is not the data in your loan origination system, which is not data in your core processor. But what if AI sat there and worked in the background and reconciled and auto-corrected all that data for you? So, there was a single source of truth. That sales, marketing, loan, origination credit and operations always went to. So, I’m kind of rambling on about a number of different applications, but I’m truly excited about some of these applications.

CALEB: Well, you’ve painted a very helpful picture. A very concrete picture of a number of different scenarios where AI could, to your point, enhance trust. Enhance being that trusted advisor and enhance their relationship. I’m curious on the AI call planning sort of application or tool. Would that require a bank to have a CRM in place? And the reason I’m asking is, I think that’s an opportunity for many banks. As it stands, a lot of banks and commercial lenders particularly—they bemoan CRMs, and I think some of their gripes are fair. You know, if I’m going to be productive, I need to be out in the field calling on customers, playing golf, being in the community, building relationships. I’m not sure I have time to do all this busy work inside of a CRM in addition to all the other things that I have to do. However, if they could see more value in it—whether it’s an AI call planning tool or what have you—there’s opportunities there. So, walk me through an application like that. Would it require CRM? And if it does, how would you help a bank get more comfortable with adopting one?

RON: It doesn’t require CRM, but it’s much more powerful if you have CRM. If your CRM has poor data quality and nobody is using it, then you can kind of forget about it. And one of the reasons that we talked about AI helping with your data quality was an auto correct. Let me give you an example on how AI helps. Today, we have an AI system that’s working at a number of banks and community banks that basically is looking at the loan origination system and auto correcting the CRM system. So, the data there is correct. So, here’s an interesting proposition. I give you the rules, and I give you some other things, but here is our rule. It’s called the “Rule of Three.” The first people stopped using the CRM are the sales managers and executives who paid money for it, that kind of thing. When they quit using it, and what I mean by that, is they no longer refer to it in their pipeline meetings, they no longer refer to it in their weekly check-ins, they’re no longer using it for coaching. Then it’s irrelevant to everybody. You’re always going to have about 20%, particularly your prima donnas who don’t use it no matter what. But you’re really working on the 60% who want to get better. They came to your bank because they want to become a better salesperson, a better relationship manager. So, you’re thinking about how I can help them.

RON, continued: So, once there’s nobody using it, but the data quality goes to pieces and then the managers start using spreadsheets and they collect data from the core processor. They collect another spreadsheet from the OS. And that’s what they’re using in their pipeline meetings and their coaching and their weekly check-ins. If they do them. Subsequently, there’s this little triangle that goes on. Remember what I talked about with data quality? It’s really important to have quality data. That’s a good starting point, okay? Aligning those processes. So, do you have a sales process that fits across the whole sales process? Networking, prospecting, qualification, origination, onboarding, and future customer relationship management. That involves five groups within your bank, and they should all be aligned. There should be a common sales process. That’s the starting point. The second starting point is from that, and we get quality data, and can I help the salesperson so, there’s very, very little data entry? Now, I’m going to go back to your question. If they don’t have a CRM system, you can use other data, but it’s extraordinarily helpful for your prospecting, with or without a CRM system, on this AI model. That you simply need to give the system a company name. If you can tell me what town they’re in, if you can tell me your contact, you can give me any other piece of information, it’s going to be better.

RON, continued: But you know what’s going to happen? As soon as you push the button, AI is going to come back and say, “I found three companies with this name.” Or, “I found six companies with a name similar to this. Which one is your customer that you’re calling them?” That’s the first thing that AI is going to do. It’s going to get conversational with you. The second thing is you’re going to input and say, give them an answer. And by the way, with AI, the sooner you start treating it like a real human being, and the sooner you start talking to it like a real human being, the better it gets. It’s really fascinating, if you’ve used a lot of AI. So, what happens then is that AI is going to come back with all this information, and then what’s really important is, “I don’t know what questions to ask when I go in? I never call on a customer like this. Where do I start?” So, using the format of St. Meyer & Hubbard, we built basically a structure how we’re going to build trust. What’s a question that helps build trust and demonstrates the value that I can? So, AI has been taught by us and by St. Meyer & Hubbard to do that. So, whether you have a CRM or not, you can do that for all your prospecting. Now, if you want to use it for key account plans, for growth and retention, it’s going to be kind of good there, but not as good as if you did have a CRM system. Somewhere where you’re collecting customer information. Now we’ve got a couple of community banks who say, “You can draw upon data that we’ve got in our core processor.” And we’re doing that. But undoubtedly this is how CRM really fits into the life of a relationship manager. So, did I answer your question, Caleb?

CALEB: No, that’s very helpful. I think it’s encouraging to know that there’s application here without a CRM. We have clients that we work with at other banks that love their CRM and make the most of it. And we have folks that have never used one at all, but they’re still interested in exploring ways to get better through all kinds of different technology and tools. So, that’s very helpful. Before we wrap up, any other AI trends that you’re excited about as it pertains to banks? I mean, I think you’ve already mentioned and covered many different ways that this can help banks get better, but anything that we haven’t talked about AI-wise that you think bankers ought to be paying attention to?

RON: No, I think the important thing that I wanted to mention was find a way to get started. It’s like in 1996. “I don’t really know if this Internet thing is going to take off. I don’t even know what the business model is. They tell me it’s got to be free. How’s that work? Okay? They tell me it’s going to be marketed? How do I do that? Who’s using the Internet today?” Well, it’s the same set of discussions. That’s why I started in 1996. Same thing with AI. I’m a little bit fearful for it. Jeez, everybody says it’s going to take over the world. I don’t want it to take over the world. It’s going to outthink everybody. It’s going to do this, it’s going to do that. The applications I’m giving you is, how do we become more efficient? I believe the banks are going to find that their efficiency rates are going to go on average, from the 60s to the 40s, who really do this very, very well.

RON, continued: And I’m seeing an application today that I really like and has to do with credit, annual loan reviews, and that type of thing. And using, we have a partnership with Role Pro. And Role Pro is a company that combines and aggregates the data from DMB, Hoovers, Vertical IQ, LinkedIn, and a bunch of other sources for public and private and nonprofits, and that type of thing. We use all that data, and because of that, we can tell who you’re banking with. We can tell you a lot about your banking relationships. We can tell you a lot about your financials, and we can serve alerts and notifications to the credit people even before they do their quarterly reviews. Okay? It’s extraordinarily powerful. Okay? That’s just a simple application, so you can see why I get excited about this. You don’t have to reinvent your bank. You have to look at a pain point, a bottleneck, a problem, define it, and say this is how I can use help.

CALEB: Yeah, that’s great. Well, one of the questions that we love to end with on a lot of podcasts that we record is this question right here. What do community banks need to be focusing on to remain independent and relevant over the next 10 years? You know, it’s harder and harder to survive as a small community bank, and that’s why you see M&A activity ticking up, and succession planning is a challenge, and technology is a challenge. There’s a lot of challenges facing community banks. So, for the folks that are committed to their communities and to the future, what in your opinion do they need to be focused on?

RON: I’ll give you a positive to start that discussion out. I think I told you that in 1996, there were over 11,000 banks. There were well over 10,500 community banks. The bank that I was a teller at when I was in high school—still there. It happens to be 10 times bigger than that. And I do business with another bank in Iowa who’s the largest bank in Iowa, okay? And they’re a community bank. Okay? They’re community bank. And I’ve never seen anybody focus more on what we’ve talked about today—is trust and value. Okay? And really not make it just a cliche or something we say, “Of course, you know, our people really get along with people.” Well, getting along with people and building trust and value are two different things. So, I believe in the future.

RON, continued: The community banks have an advantage, and that is, they have the “street corner advantage.” They are closer to that street corner right where the people and the businesses live. But when the big banks come in and are competitive, it’s not about how small you are, your community bank is, be loyal to the community, or whatever. It’s who added the value to that, and that’s a person, and who build trust with me. Because everybody’s got the same money. It’s all green. Same deposits, same cash management system, same merchant services, same credit cards. You know, no matter how much the big banks try to market different credit cards. It’s that that’s a differentiator. You have to take that serious.

CALEB: That’s a great place to end it. Ron, if folks want to get in touch with you and learn more about what you do at the Performance Insights Team, how can they find you?

RON: You can find me at our website. It’s performanceinsightsteam—all one word— performanceinsightsteam.com. Or you can get in touch with me at ron.buck@performanceinsightsteam.com.

CALEB: Fantastic. Well, Ron, thanks for coming on. Any final words of encouragement for the community bankers listening?

RON: No, I think the service that you’re offering, Caleb, and helping bankers get introduced to the concepts and ideas and really, really great, and thank you for having me.

CALEB: Well, it’s our pleasure. Thanks for coming on.