An Outsider’s Perspective on Banking

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In 2021, $26.5 billion Arvest Bank Group hired Laura Merling from Google to lead a multi-year transformation effort at the Bentonville, Arkansas-based bank. 

Merling, Arvest’s chief transformation and operations officer, had never worked in a bank. But she thrives off the challenge to drive change at an incumbent organization with years of history — a familiar effort after starting her career at Ford Motor Co. with an internship in the 1980s. “That’s probably where transformation means the most; it has the broadest impact,” she says. She’s worked at startups, too, but there “you might be transforming an industry or an individual product.” And that’s it. 

But transforming an established bank like Arvest requires rolling up your sleeves to address “people, process and technology,” Merling says. All three components are critical elements as she guides the organization through a five-year map that sets clear but flexible goals for staff. 

A successful transformation effort requires everyone’s involvement; it’s not just a task delegated to IT. At Arvest, Merling blends skills from other outsiders as well as legacy staff with deep experience in banking. But as much as Merling’s role requires execution, it also requires one action that seems so simple: Listening to employees. “Listening gives you a good idea of where to start … And when they see the impacts — ‘you’ve heard me, and then you did something about it’ — [that] makes a big difference.” 

She’s also working with technology partners such as Google Cloud and Thought Machine to modernize the bank’s technology infrastructure. “What it lets us do is create custom products in a more interesting way, and it lets us have that flexibility to define them,” she says. “That will be important as we look forward in the future, both to how we serve customers, but also as new regulations come through.”

In this edition of The Slant podcast, Merling shares her background and how she’s leveraging her outsiders’ perspective at Arvest — and what she’s learned in her 18 months as a newbie banker. She also explains how small achievements help drive progress toward the bank’s ultimate vision to build “the leading community-focused bank serving small and medium business customers.” 

This episode, and all past episodes of The Slant Podcast, are available on BankDirector.com, Spotify and Apple Music.

Profits Over Growth

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The last few weeks have been a whirlwind for banking. As bank stock indices plummet and investors make bets about which bank will fail, I’m headed to one of Bank Director’s most important conferences. 

But the agenda isn’t packed with discussion about investor and depositor panic. Experience FinXTech on May 9-10 in Tampa, Florida, is for bankers and technology company leaders who want to make connections and learn from each other. Still, the news headlines will be on people’s minds. I’m thinking about how the new environment is going to impact banks and technology companies. Two years ago, a consultant to tech companies said to me, “The last five years have found that you don’t have to be profitable to be a company.” 

Tech founders focused on growth, not profitability; and once they had market share, they went public or sold to a bigger company, taking their billions in equity to retire at 30 on an island in the Caribbean.

The times are changing.

Some banks may pull back on planned tech implementations. I think some fintechs will be forced to sell.  Venture capital deals fell 60% in value in the fourth quarter of 2022 compared to a year prior, according to the news site PitchBook. Banks are choosing a vendor or partner while also considering the company’s financial stability. Banks don’t want their partners and vendors to disappear or be gobbled up by larger companies that disinvest in the platform.

But the current environment is not all bad for partnerships, either. In a contrast from two years ago, fintech founders tell me they’re concentrating on profitability these days and not just growth. The good news is that fintechs in general have gotten leaner, more focused and driven to create successful partnerships. 

Bankers still need to act like private detectives and investigate those fintechs. Bank Director Managing Editor Kiah Lau Haslett explores due diligence in Bank Director’s recently released FinXTech report, “Finding Fintechs.” But I’m convinced a group of fintechs focused on bank success — rather than growth for its own sake — can only be good for banks.

What Money Movement Means for Deposits

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With deposit strategy a top priority in 2023, bank leaders should take a careful look at their deposit base to better understand potential vulnerabilities, says Lee Wetherington, senior director of corporate strategy at Jack Henry. They should also consider targeted and proactive strategies that help their institution hold onto significant depositors. The most successful banks, he explains, will be those that can translate their relationship-based business model within a digital context.

  • New Concentration Risks
  • Solving for Real-time Fraud
  • Sensitivity to Deposit Outflows