This week, we sit down with our COO Renee Brooks to discuss the latest topics and trends in digital banking.

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

Caleb Stevens: Well, Hey everybody. And welcome to episode 31 at the Community Bank Podcast. I’m your host for today, Caleb Stevens. I serve banks in Georgia, as well as Kentucky here at the South State Correspondent Division. And I am joined by Eric Bagwell. Eric, how’s it going?

Eric Bagwell: I’m good, Caleb. It’s good to be here and you’re running point on this thing. So, I’m just kind of sitting back and watching you do your thing.

Caleb Stevens: Usually you’re the guy taking us in. So, thanks for letting me bring us in today.

Eric Bagwell: Yes, and it’s…we’re actually recording this on a Friday and its sun shining outside. And I think the highs this week or weekend are going to be the high fifties. So, I’m going to play golf. So, I’m doing really good. Everybody’s good. On a Friday.

Caleb Stevens: Yes. But you said your ninth grader, he beats you the other day, right?

Eric Bagwell: Yes, those days are going have…that’s going to happen a lot more.

Caleb Stevens: I was like; he’s creeping up on you.

Eric Bagwell: Yes, It’s. I’m getting older. He’s young. So there you go.

Caleb Stevens: Well, today we are excited to bring you our conversation with our own COO, Renee Brooks here at South State Bank. This was a great discussion about digital banking, the future of branches, how COVID has impacted online account openings. And so, really good stuff I thought from Renee and really helpful. And I liked how she gave some helpful advice to smaller bank CEOs thinking through how do you find the right partner for your digital strategy?

Eric Bagwell: Yes, and she…I never heard this before and I’m going to attribute it to her cause she said it, but she’s got a great way to look at vendors. And so be on the lookout for that. It’s probably halfway through the interview.

Caleb Stevens: And the great Tom Fitzgerald will be returning next week. We are sorry, he’s out today for this show. So, no economic update, unfortunately, but he’ll be back. He’ll be back in full force next week with a really good discussion on the bond portfolio in the economy. So, be on the lookout for that as well. But with that, here is our conversation with Renee Brooks.
Renee, welcome to the podcast. It’s good to have you on. How are you doing this morning?

Renee Brooks: I am doing great.

Caleb Stevens: This is I think my first time talking to an executive on the South State side, which is crazy because I guess we announced our merger over a year ago now, but with COVID, it’s been hard for people to get together. So it’s finally good to be talking to somebody on the South State side. We’re so thrilled to have come together with our new partnerships. So, thanks again for being on and looking forward to diving into this discussion about digital banking. Tell us a little bit about your role at South State as the Chief Operating Officer and how’d you get into the banking industry?

Renee Brooks: Well, actually, I was an accounting major, went to Clemson, got a degree in accounting and when I came out of school in ninety-two, jobs were pretty hard to come by. I always thought I was going to go into accounting. I actually ended up getting a job on a management training program for the Old Wachovia Blue. So, that’s how I kind of got in banking. I’ve been in banking now for thirty years. About half of that time, I was on the line. I was a banker, branch manager, commercial lender, managed a commercial team, ran the retail bank. And about the other path, I have worked in the support areas, IT operations, HR, marketing, all those things. Today, I’m responsible for all of bank operations, including our call center, technology, HR, marketing, and really the overall digital strategy for our bank.

Caleb Stevens: That’s great Renee. And Renee is very busy because I think you send us an email at like three-forty-five in the morning. So we again, thank you for taking the time out to be with us today, but tell us what you’ve seen in the last ten years. What are some of the major trends in digital banking that you’ve seen and have experienced?

Renee Brooks: It’s interesting. I just sort of thinking back. So, ten years ago, the mobile app was just coming on the scene if you think about it. So, when I think about how and I know our conversation is around digital, but let me just kind of say to start with, when I think about digital banking, I’m really thinking more strategically about the consumer. Like how do we deliver service to the consumer? And so when I think about that consumer, that banking customer ten years ago. And so, when you think about digital banking back then, it was kind of, it was just online banking on their desktop, right? And they got in and they looked at their balances. They may have transferred money just between accounts at their bank. You know, in the fastest money movement we had was bill pay within your online banking platform. But then over the last ten years, just the pace of that mobile app adoption and really the pace of money movement. If you think about how fast you can move money today and not just small amounts, very large amounts instantaneously, and it’s not through the traditional wire system. So I think, you know, number one, just the rapid pace of what’s happened with the mobile app and having all kinds of abilities within that mobile app on your mobile device, money movement. And then when I think about our consumers, I think one big difference is today they expect twenty-four/seven. Twenty-four/seven, not only uptime on your systems, but also the ability to move money and actually get banking done at any hour, any day of the week. So, really that overall consumer expectation has really changed dramatically over the last ten years.

Eric Bagwell: Its funny, you say that about the pace of the money moving and the expectations. My mom is seventy-six years old and four months ago was mailing checks to folks for bills. And I came in and said, Hey, let me show you how this works online and mobile. It got her a mobile, got her an Apple phone. She is now…She loves it. She cannot believe she feels like she has gone to a different world with just being able to not just even see an account, but to see the bills get paid so fast and move money and all that. So, there is a stereotype though that digital banking hat has just been for younger generations, but that’s not the case. I’ve seen it with my mom. Talk about that. Because I think there’s some stats out there and probably COVID cause this, but a lot of the older generation is actually getting into it, so.

Renee Brooks: Yes. And I think the point you brought up about your mom, but what I’ve noticed with COVID, number one, I think it kind of goes back to the consumer. When I think about folks that are in the sixties, seventies, eighties, I really think if they’re going to adopt digital banking, it kind of comes back to how did they do other things in life, right? I mean, how did they order, goods and services? Are they on social media? I mean, how many grandmothers and grandfathers, they get pictures of their grandchildren through Facebook and texts and, you know, Eric, just like you did with your mother. I think that’s what you’re finding folks were kind of helping them when they were through it. And then once you educate them, they love it. It’s absolutely love it that, you know, kind of interestingly, here’s a stat we are offer checking accounts through an online channel and if you kind of look at the demographics, so twelve percent of our online checking accounts are folks that are fifty-five or older. So, that’s through our online channel. Then if you kind of look at the branches, it’s about double that, right. So, maybe more like twenty-four, twenty-five percent. So, maybe, you know…and this was data from last year. So, but I think my message is the stats tell me they’re still opening online. And then to your point, I think, especially with COVID especially, I mean, our older generations, they were the ones that were most success susceptible to something serious with COVID and it really forced them to make that change. And so we have seen an even greater adoption as it relates to mobile deposits and just not coming into our offices anymore from that older generation.

Eric Bagwell: Let’s spend a little more time on that. We know when COVID first burst on the scene, people didn’t really know what to do, how to handle it. Eventually we said, we probably need to close our branches. That’s the right thing to do. That’s the safe thing to do. Was there an immediate spike in online account openings kind of right after those branch closures were announced? Or did it take a little bit of time for you to see new online account originations kind of tick up. Talk a little bit about just the past twelve months and how you’ve seen it impact? Not just the branches but online account openings and just how folks are interacting with the bank.

Renee Brooks: Well, as far as online account openings, it wasn’t immediate, but I think some of that, honestly, just overall account openings were slightly down at first, right? I mean, folks were getting their bearings on just dealing with the pandemic. But in two-thousand and nineteen, in the year prior to COVID, we opened ten percent of our checking accounts came through our digital channel. Ten percent of our consumer loans were originated through our digital channel. When we ended last year at the end of the pandemic year, both of those had doubled we’re now up to twenty percent and the trends in January, we don’t see that levelling back off. It’s still saying that momentum seems to be in a good spot and we think it’ll continue just as behaviors have changed. Now that’s like our online acquisition channels, some of the other stats, obviously we’ve been tracking like all the other banks what’s happening to the teller transactions, and deposits, right? That’s an easy one you can easily deposit a check through your mobile device. And its kind of interesting. So, what we’ve seen is like our overall teller deposit direct transactions are down about twenty percent. Conversely, mobile deposits are up about thirty. So, you’re just seeing that shift pretty dramatically. Another digital channel which I thought was kind of interesting that I noticed with COVID is remote deposit capture, or RTC volume. That actually was down six to seven percent. I think some of that, honestly, people quit mail in checks, right? I mean, it was all about, let’s be safe. Let’s don’t handle anything, paper, money, coin, let’s be safe. Again, conversely, we saw our ACH deposits tick up about the same amount. So, it was kind of…there has definitely been a shift. So if you just kind of go back to those stats anywhere from ten to thirty percent shift from the traditional teller transactions, checks, cash over to this digital world.

Eric Bagwell: I was talking to a customer the other day and they are a small bank and he said, one thing they’re trying to do to try to educate their customers. They’ve kind of taken that Apple approach. You know, you can buy a phone and you can take a class. And obviously you do that online. Now I used to be able to go sit and do it. But they are throwing around the idea of offering like a class, a digital zoom call just to show folks, Hey, if you’re scared of digital banking, we’re going to make you not scared and we’re going to show it to you over a zoom call. So, probably having to get them to do a zoom call is a big step. But for small banks and that’s a lot of folks listening and obviously most of the banks in the country are smaller. What do they need to be thinking about, Renee and can they stay competitive when it comes to this type of stuff we’re talking about? Because obviously there’s some expense to some stuff, but talk about that. Talk about what for a small bank, what does the future look like for those guys?

Renee Brooks: Well, let me say this, I mentioned that I’ve been in banking almost thirty years, twenty-five of those years have been here at South State. So, when I got here, we were much smaller. I think we were less than five-hundred million. We might’ve had twelve offices. So, let me just, first of all, say any of the listeners out there that are at smaller banks, I have been there, love our smaller community banks, what a great service we offer to our customers and our communities. But you know, kind of what I saw when you’re smaller, you probably do feel a little limited, right? You sort of feel like, can I invest the technology spin, I’m going to need to invest, really to compete against the big banks. And, this is just my perspective.
I would say if we were having this conversation ten years ago I would feel differently because the technology vendors were behind the big banks. I’m talking about the ones we all know, Jack Henry, FIS, Fast Serve, some of the online channels, Q2. The typical vendors that banks go to, what I’ve seen over the last ten years, they’ve caught up. And they’ve caught up just in their basic offerings. And, my advice, if I was working at a smaller bank today, number one, I would make sure I picked a really good vendor whether it’s the Fast Serves, FIS, Jack Henry, and what I would probably invest in, I would invest in someone who owns that vendor relationship, and I would make sure whatever “out of the box” solution I pick. And I would, I’d pick a “out of box” solution today. I think we’re solar, back sometime miss the mark, is they don’t realize how many bells and whistles are on that “out of box” solution. And if you have a dedicated leader, that can really own that solution really work directly with your vendor, hold them accountable and just make sure you leverage all the bells and whistles. I think you really can be competitive today. They’ve had the catch up, otherwise they were going to lose business really from the banks. But, just my perspective, if I was at a smaller bank, that’s absolutely what I would do.

Caleb Stevens: And any thoughts on, what do you look for in a great vendor and any advice on the vetting process? Any advice on thinking through? Okay, what do we want to accomplish here? What does it look like to find the right person? Because, I’ll tell you, yes, these bankers, and I’m sure you know, this as well. They get called on twenty times a week, sometimes twenty times a day, with emails and things from, people that sell products and services to community banks. And, so any thoughts on how to sift through probably all the different folks that are calling on them each week and when it comes to their digital strategy?

Renee Brooks: Well, I think I’m sure the folks that are listening to this podcast are just like me. We probably get five to six vendor calls a day, and it is. It’s really hard to sift through that. It’s hard. I think sometimes not don’t want to chase the shiny object, right? I think that can become a bit of a challenge sometimes, but let me start off by saying so. This is my quote on vendors, “always treat your vendors like they’re an underperforming employee and you can never get rid of them”. So, you know, how you made it…. You know, how you do that, right? You have to hold them accountable, you have to give them very clear direction and you don’t let them move in and try. I mean, that’s just…. I mean, I don’t know what else to say, but that’s what I always tell my folks, I’m like, “you treat your vendors like they’re underperforming employee and you can’t get rid of them”, to start with. And what I mean by that, I kind of go back to if I was a smaller bank, I would have somebody dedicated to my vendor. Because you really did. You got to stay on top of them and it’s not. They really do want to provide good service to banks, but they’re big. And especially if you’re a community bank, you have to remember, you are dealing with somebody in a very large organization. It can be very complex. If you think about digital banking, because you’re talking about having to communicate with someone in CheckFree, with your core, with your online solution. And they have big teams, different people, so it can get kind of complex.
So, I just want to encourage the smaller banks, if you really want to do this, do this right and leverage your systems, make sure you got strong leadership and a dedicated underlayer. As far as picking the best vendor, that’s tough. But it’s kind of…It’s not really rocket science, you know? I mean, it’s just like any other decision you make, just make sure you get all the data. I would, over the years, I’ve done negotiations with vendors by myself. I find I get the best end product. If I can leverage a third party who really knows how and what to look for in these vendor relationships. Because it can get very complex in banking, whether it’s the number of checks, number of deposits, clearing, how they pay for things. So anyway, that would just be my recommendation.

Eric Bagwell: Renee, let’s talk as we’re closing, this’ll be our last question for you, but in ten years, and I read the other day and I think you can probably see this every week where branches are getting, not scaled back in a large scale, but people are scaling back on branches. And honestly, I didn’t ask the guy that I was talking with the other day, but he’s got four branches. And I would think that somewhere down the line in four or five years, he’s probably looking at man, I may have to close one or two of these. So, that’s why we got to get everybody to digital and get our folks used to digital and selling it. Where do you see the traditional bank branch in the future? What role do you see it, you know, say in five, ten years? Where do you think we’ll be at?

Renee Brooks: I think the trajectory tells the story, right? We’re going to have a lot less branches. There’s just no doubt. And I think you see that, just in any kind of retail space today, right? Whether it’s clothing, I mean, you name it. I mean, things are closing up. I do think the basic transactions, I mean, you’re going to continue to see those teller transactions shrink. It’ll be interesting. I wonder if we’ll even have coins, right, in ten years and just what’s happened to cash if you just think about no one carries cash anymore. So, what kind of needs will we actually have in those branches? I think in ten years is kind of my fault, but I do think it’s going to become…They’re going to become more of a financial center. I mean, it’s really you would be going in there to have some of those more, higher level conversations. I think as bankers, we’ll continue to play a role in helping our customers with their financial planning and kind of where they’re headed there. But, I can absolutely see all that transactions. I mean, I almost wonder in ten years, will you still have tellers or will all of that be automated just within your branch? Because you really…you’re probably not going to need all that. So, less branches. I don’t think you’re going to see all the transactions running through the branches, less number, right. You’re just not going to have as many. So, that’s just my initial thoughts who knows where this thing goes.

Caleb Stevens: That’s great. And I’ve read an article about this the other day and the author kind of likened it to, there’s still even with telehealth and telemedicine and online prescriptions and things, there’s still value in going in to see a doctor and looking him or her in the eye and saying, “this is my issue, can you please help me?” Kind of what you’re hitting on, maybe deeper level, more complex issues that we may go in to about versus just today the day of cash and checks and money, that kind of thing.

Renee Brooks: Yes. I think so. I mean, you’ve seen some of the larger kind of Metro banks. They’ve turned their branches into more of a cafe. I mean, it’s, it’s become more of a place that folks could go and work on their laptop or hang out and have coffee. I mean, will they all become that way? I don’t know, but I do think it’s going to be more of a more deeper interactions that is today. Not just basic transactions.

Caleb Stevens: Well, this has been a great discussion, Renee, thank you for your time. We appreciate it. We know you have a lot going on here at South State, but great to hear from you and your thoughts on where digital banking is going. And I really appreciate the advice you had to our listeners to really think about that vendor management process. And I love the advice to dedicate somebody to that specifically. I think that’ll be very helpful to our folks listening. So, thank you again. We appreciate your time.

Renee Brooks: Thank you. I enjoyed our time together. Thanks.

 

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