Digital transformation insights, three ways to increase customer loyalty and gaining a competitive advantage are discussed in this week’s newsletter.
January 8, 2022 / VOLUME NO. 191
McWilliams’ Mark
Jelena McWilliams’ tenure as chairman of the Federal Deposit Insurance Corp. will end in February.
McWilliams leaves the agency less than four years into her six-year term following a political dispute between her and other members of the FDIC’s board. Still, her leadership at the agency charged with overseeing most of the nation’s community banks leaves an indelible mark on the regulatory landscape.
“One of the biggest changes that she brought to the FDIC was in attitude,” says John Geiringer, a partner at law firm Barack Ferrazzano. “Her unique upbringing, her amazing experiences both in the private and public sector, coupled with an outgoing and dynamic personality — all taken together made her very formidable.”
McWilliams combined a legal and banking background, which included time spent in the U.S. Senate, on the Federal Reserve Board and as chief legal officer at Fifth Third Bancorp, with her experience immigrating to the United States from the former Yugoslavia with $500 in her pocket. Her personal and professional history informed her approach to transparency and responsiveness, says Geiringer, which showed in a number of initiatives the agency undertook.
The FDIC reexamined regulatory frameworks and guidelines under her leadership. These included paring back capital and liquidity requirements, narrowing the scope of the Volcker rule that prohibits proprietary trading by banks and — my personal favorite — updating the brokered deposit framework and calculation. She also launched the “Trust through Transparency” initiative to share more agency guidance and expectations with banks, along with data and metrics around applications and examinations.
She also pushed regulators to explore how to encourage prudent innovation. In an October 2021 speech, she revealed that she reflected daily on the government’s role in enabling innovation. “How do we ensure that the United States remains the place where ideas become concepts,” she asked herself, “and those concepts become the products and services that improve people’s lives?”
Under her leadership, the FDIC hired an innovation officer, launched an innovation vertical and collaborated with other regulators on a paper about fintech due diligence. Those efforts should make it easier for banks to navigate partnerships with fintechs, stay relevant and competitive, and retain their safety and soundness.
“She really cared about community banks,” Geiringer says. “And it showed.”
• Kiah Lau Haslett, managing editor of Bank Director
Digital transformation won’t succeed unless there’s total commitment from the board of directors down to the project level.
“Have you embraced the kinds of changes that are taking place inside the industry? And do you have a very strong cultural commitment to be a part of that change?”
— Mike Butler, Grasshopper Bancorp
• Jack Milligan, editor-at-large for Bank Director
The share of real-time payment transactions in the U.S. has only continued to grow, giving financial institutions an opportunity to launch services that meet customer demand and enhance their experience.
