Jim Aramanda, TCH: Bill, thank you for joining me. Give me your top-line thoughts about the banking industry today.
Bill Rogers, SunTrust: Thanks, Jim. Banks have never been better positioned to support business growth and make a positive impact on communities. Coming out from under two natural disasters this season, Hurricane Florence and Hurricane Michael, we’ve spent a great deal of time discussing with teammates how SunTrust can contribute to recovery efforts and actions that instill financial confidence even in the midst of trying situations.
It’s important to recognize the role that all banks play, not only in helping the economic recovery but also in the face of natural disasters and unexpected events. Our collective work matters. That’s an important message for our industry at large.
It can be as simple as actions banks always take, like providing access to credit and cash, strong financial advice, and good old-fashioned banking. For example, we had a SunTrust branch in Wilmington open quickly after Hurricane Florence to provide water and give clients access to their cash. The branch manager, who rallied teammates from different divisions to pitch in, told me, “This is our job, and this is what we have to do.” That speaks to the fiber of our culture and our people, and the role we play in helping communities.
As an industry, we are making a difference. We need to continue making investments in things like affordable housing and workforce development. And we need a focus beyond financial literacy to an emphasis on financial well-being – encouraging actual behavioral change.
Aramanda: You’re right – it is something that is taken for granted. Now, as you focus on reaching and helping more people, let me ask about how SunTrust is expanding into new markets with private wealth management, commercial banking, online lending, etc. Could you comment on where you see the greatest opportunities for growth at SunTrust?
Rogers: We view organic growth as the best opportunity for SunTrust. We like what we’re doing, and we’re confident in our teams and capabilities. I believe a company is only as strong as its culture. Ours is one that believes in the power of purpose, acts as one team, and puts our clients first. We only hire those that have the potential to help us build and expand upon these values.
When we look at expanding into markets, we ask ourselves, “Would a market benefit from the differentiated expertise that we can offer?”
Further, for us, the best way to stay competitive is to be extremely agile with our teams working together in the best interests of our clients. We do this by bringing our commercial, corporate banking, investment banking, and private wealth teams together. It’s an effective approach.
If you watch what we’re doing and where we’re going, we typically plant a flag somewhere with one particular business line and then very quickly add SunTrust’s other specialties to build the whole approach to that market. Pick your city – Houston, Dallas, New York, Cincinnati, Cleveland – we’ve been consistent. We’re seeing lots of success, and we are encouraged that people want to be a part our platform. The key is to get great talent and allow that talent to leverage all the solutions SunTrust brings to the table.
Aramanda: You’ve got a great reputation and great name recognition, so I’m not surprised. Do you think you have the economies of scale you need everywhere? Do you see any acquisitions in the future?
Rogers: We do feel like we’ve got the scale and the capacity we need to serve our clients well, to invest in the requisite technologies, and to provide the platforms our clients need. We feel really good about where we are.
Scale is important, but you also need agility. Many things are scale busters, whether they’re cloud-based technology, partnerships, or APIs. We have, of course, leveraged many of these. We always think about economies of scale as a broader ecosystem, not just size. Do we have size and agility and ability to leverage resources to maximize the benefit for clients, teammates, and shareholders?
Aramanda: You’re absolutely right. I think technology has been a great enabler of scale as well. It used to be equated to just size, but certainly not anymore.
Let’s switch to the economy. We’ve had a lot of growth over the last couple of years, and small businesses in particular seem to be doing well. What’s your take on economic growth, and are there sectors for which you have some concern, either because they’re overheated or they’re lagging?
Rogers: I think the overall economy is in good shape. Consumer confidence is high, which you certainly see in consumer spending. Business confidence also is high, evidenced by the continued increase in business investments. Despite the choppy stock market, consumers and businesses are in good health, and they’re generally optimistic about the future. That’s the macro overlay.
But there also are micro challenges. Individual companies within a segment or geographic region might have inflationary pressures, tariff-related impacts, or workforce availability challenges.
Nonetheless, while there are some micro issues, I think the overall macro environment continues to be very positive.
Aramanda: You don’t have any concerns at this point about the economy, or certain areas of it being overheated?
Rogers: We’re bankers, so we’re always trying to look around the corner. Just as much as we can think about all the positives, we also think about the challenges. We stress-test our portfolios for everything: inflation, commodity prices, tariffs, and concentration.
Certainly, at SunTrust, we’re a much more diversified business today than we were pre-crisis, and we’re diversified in every sense: our balance sheet, our business, and our market risk. We just talked about our expansions in new markets, which is also a differentiation strategy. Diversity has a risk mitigation component to it but also a new business opportunity.
So again, while we may have some concerns with micro challenges, there is a macro environment that still has more opportunity. Our job is to be a good steward, recognize the micro environments, and adjust accordingly.
Aramanda: During the past 10 years, I think everyone would agree that banking has undergone more sweeping changes in the regulatory framework than probably all the years prior to that combined. Most recently, Congress recalibrated some of the changes. Do you think we’re at that Goldilocks era of regulatory approach, or is there more out there that you’d like to see addressed?
Rogers: Your comment about recalibration is a good one, and that reflects what’s going on right now. We’ve been very clear that regulation should not be a one-size-fits-all approach, and it shouldn’t be that banks must meet certain criteria because of things that are as simple as asset size. It really should be related to the risk profile and strategy of each organization.
Regulatory reform has taken a really positive step, moving toward a continuum recognizing that regulation should be risk-based. The best way to ensure stability is to allow banks to have the maximum capability to serve their clients, support their communities, and compete effectively, while always retaining appropriate levels of safety and soundness.
The current rhetoric is much more oriented toward a tailored regulatory environment, which I think is very appropriate.
Aramanda: I think tailoring is a lot safer environment than a one-size-fits-all model, which ends up obscuring the basis of the next crisis.
Rogers: The one-size-fits-all approach can have unintended consequences. Holding too much capital has as much risk as holding too little capital, so the key is to have the right amount. Banks are substantially better capitalized now than pre-crisis, and I think that’s appropriate. I don’t think anyone would argue with the fact that more capital and more liquidity in the system has been positive overall.
In this environment, it is good to constantly reevaluate where we are and make sure that we make adjustments to continue to improve regulation.
Aramanda: Let’s touch on SunTrust’s financial wellness program. I know you mentioned that 40% of SunTrust teammates surveyed in the past lacked confidence in their finances. But, today, you’ve made great inroads in that. Why did SunTrust begin focusing on financial wellness a few years ago, and how do you see that helping your customers?
Rogers: SunTrust is a purpose-driven organization, and we define that purpose as “Lighting the Way to Financial Well-Being.” This guides all of our actions, from the advice and solutions we provide to clients, to how and where we invest, to the people that we hire. It’s a cornerstone of how we think about running our company. It seemed so appropriate to start at home with our SunTrust teammates to ensure that they were in the best shape they could be from a financial confidence standpoint.
We did some surveys, as you mentioned, and discovered that our teammates weren’t as confident as we had hoped. It was an imperative as a purpose-driven company to do something about it.
We worked with a company called 8 Pillars that we thought had the best employer-driven financial wellness program in the country. We decided to put some money behind this. We told all of our teammates we would contribute up to $1,000 if they participated in the program and if they started an emergency savings account. To date, that’s been a $13 million-plus investment.
Our participation rate in this program has been off the charts. Typical programs have a 3% to 4% participation rate, but ours is in the 70% to 80% range. Now, our teammates are a lot more confident. Well over 75% of our teammates say they now feel like they’re on a better path toward financial confidence.
Aramanda: I think that’s terrific.
Rogers: Banks play a significant role in advancing financial well-being. While we strategically invest in programs and partnerships that support our purpose, we truly believe employer-driven financial well-being has the highest correlation to success. That certainly has been our experience.
So, we bought the assets of 8 Pillars and we hired its team to come work for SunTrust. Then we decided to offer this program to other employers. To date, about 150 companies are participating, and we’ve reached more than 50,000 employees. We have large companies like Home Depot and Delta on board but also have companies of every size. We have a program with some of the YMCAs, as an example – so both for-profit and not-for-profit organizations are involved.
What we found – and we want to build a community around this – is that their employees who went through the program increased from 43% to 87% in categories such as “living on a budget.” Those with emergency savings improved from 68% to 98%. On average, these employees increased their contributions for retirement by 35%. The results are compelling – it’s a program that works.
I think it is very natural to have financial well-being as a cornerstone of your benefit offerings, just like physical well-being. Just like employees have physical stress, they’re also having financial stress. Isn’t it smart to try to make sure that companies are addressing both?
Aramanda: Yes. The stresses can be related, too. I think that makes perfect sense.
Rogers: I should also say we run this program, called Momentum onUp, as a not-for-profit. There’s no SunTrust product or branding associated with the program. We felt compelled to offer this to the community at large because we think we’re on to something and we can all learn and build upon each employee’s experience.
Aramanda: I wanted to switch the topic to the RTP system at The Clearing House. SunTrust is an early adopter – actually, one of the earliest banks online. How do you see RTP playing a role in the financial wellness area?
Rogers: For us, RTP is actually pretty simple. It’s an important part of delivering on our SunTrust purpose. If we’re lighting the way to financial well-being for our personal and business clients, we have to do that with the greatest speed possible, the greatest transparency, and the most access to individual client’s funds. All of those things help business and individuals build financial confidence.
We wanted to be a leader, and we wanted to be an early adopter, because this isn’t a big-bank thing – this is an all-bank thing. We wanted to put a strong stake in the ground to make the point clear that this is really good for the financial system. I think that having RTP under the banking umbrella is a really important confidence builder for all people who participate in the system. This is something we should all participate in as it’s a key part of how we help our clients.
Aramanda: I’ve been spending some time with some of the smaller banks. I don’t want to say community banks, but some of the banks have assets of $2 billion to $4 billion, and some of them have gotten very excited about it because they look at this as you described it.
Rogers: Yes. I think what we’re doing through TCH with RTP to really increase the transparency, stability, and requisite confidence in real-time payments is important. Our client feedback is that they want faster, safer payment options. I think the banking system should be the leading provider.
Aramanda: That’s what our studies have shown. The biggest asset that banks have is that customers trust us, and we ought to be at the forefront of safety and soundness. So, thank you for that.
Let’s jump ahead to innovation in banking. You have quite a track record there, working with potential technology disruptors – including GreenSky, SummitView, and LightStream. What advantages do you think the FinTechs bring to banks, and what challenges have you had integrating FinTech products with SunTrust?
Rogers: I’m a big believer in the “coopetition” model. What’s most important is to recognize and build capabilities from the client backward versus from your infrastructure forward. I think that’s certainly the right approach.
Innovation is part of our culture; we spend a lot of time thinking about what clients want and then how we deliver.
We’re also not afraid to disrupt ourselves. I think that has to be one of the starting points; you have to be willing to accept that you may be disrupting your business, but what you’re really doing is understanding and responding to client needs.
LightStream is a good example. We were an early adopter of being a digital bank, and we just did it on the asset management side through LightStream. LightStream now is part of our offerings. In addition to being an important part of our unique digital offering, it’s a key component through our branches, suntrust.com, and all of the SunTrust channels. It’s a really good example of integration.
You mentioned we have things like SummitView on the private wealth side. We also recently launched an online SmartGuide application in mortgage, a really good use of APIs. And back to your other question, it’s a really good way to leverage scale and build something that’s very responsive to clients. Today, well over 50% of our clients are now engaging with us on the mortgage side in a digital capacity.
Aramanda: Has it been a challenge to acquire these smaller startup technology firms and assimilate them into the bank culture? Are you having any cultural issues?
Rogers: If everyone starts with the same mission, which is serving clients in a fast, safe, efficient way, then all other problems are small. If we’re aligned on big issues when it comes to culture, then smaller issues are just things that we have to challenge ourselves to do better.
In many cases, we’re adopting strategies from our partners into our company versus insisting that they adopt strategies from SunTrust. Again, with that underpinning of “we’re client-first focused and we’re going to do it in a safe and sustainable environment.”
Aramanda: My last question regards SummitView. It has a data aggregation tool for wealth management. We talk about data aggregation at our board meetings, and it’s a topic around the industry. What have you learned from SummitView and the benefits that it provides?
Rogers: If we start from the client backward, at the end of the day, this is the client’s data. It’s not our data. Our obligation is to make sure that the data is safe and secure. Our view is that clients are the owners of their own data, and what we want to do is provide tools that they can use to consolidate and manage.
We don’t think of SummitView as a data aggregation tool because it does much more than aggregate data. SummitView is a goals-based financial planning tool that includes data aggregation as one of the elements. We view it as an opportunity to talk to clients and help them think about the more comprehensive picture of their financial needs.
We provide a vault, as an example, for housekeeping key documents – another safe and secure place for clients to put some of their important digital documents that they can have access to. SummitView allows the adviser and the client to sit down and have a more comprehensive view of their portfolio and their needs without forgetting anything. If they have an account somewhere else and they may have an insurance product they want to bring into play, or real estate, whatever it may be, we want to make sure that we’re looking at all those elements so that we’re not giving advice in a vacuum. We’re giving advice that’s broad-based and with the client’s full interest in mind.
Aramanda: Thank you, as always, for your time
Rogers: Thanks, Jim, for all the work you do for the industry.
