As Q2 prepares for the in-person BankOnPurpose conference in November, Alex Habet looks back at some of our favorite, most impactful sessions from past years.
[Website] BankOnPurpose Conference 2022
Hi, and welcome to The Purposeful Banker, the podcast brought to you by Q2 PrecisionLender, where we discuss the big topics on the minds of today's best bankers. I'm your host, Alex Habet, and today I have a very special episode for you. Here at The Purposeful Banker, we typically are going to feature a guest that'll come on and talk about the flavor of the day or what's going on in the market. But today we're actually going to throw out that playbook. I'll be running the show solo, right? It's a little bit different from the typical show you'll find here. But it's not because we had a late cancellation or a no-show. We wanted to dedicate the show to something really special in the history of this company.
For several years, PrecisionLender has hosted what I believe is one of the most interesting and thought-provoking conferences I've ever encountered. As a former client attendee myself, I used to look forward to this thing every year, and that's because it was an incredible gathering of the minds. It was filled with spectacular and engaging keynotes that sparked ideas all over the place. But the best part is that you could take many of those ideas and put them into action the very next day. Now, after hastily switching to a virtual format in 2020 for what is now an infamous reason, we have a little bit of an announcement. That's right. BankOnPurpose is officially coming back in person in Austin this fall.
After a 2 1/2-year hiatus, it's back on. Mark your calendars, this is not one you're going to want to miss. November 15 through the 17 in Austin, Texas. Which brings us back to why this is a one-person show today. As you'll find with any good sitcom or long-running show, when there's a moment to stop, celebrate, and reflect, what they typically do is run a clip show. Now, with BankOnPurpose returning, there's no doubt that it's electrifying the energy here within our walls. And given that so many of you out there have never actually attended before, we figure we'd give you a little bit of a glimpse of what it's like. And for those of you who have attended in the past, well, this might feel like a little bit of a stroll down memory lane.
We've selected just a handful of clips delivered by some of the best minds at previous conferences. The topics covered are financial services, as you would imagine, but also go beyond (which is) one of the best parts of BankOnPurpose, in my opinion. This selection is going to cover a range of things. Most of all, it's going to probably focus more clearly on purpose, which is obvious based on the title of the conference itself, but also understanding how things like having good perspective matters, or how do you take advantage of technology to enable what matters—those kinds of things. Bringing it all together is what this conference is all about.
Best of all, not only do you get to take action on it the next day for a lot of it, as I mentioned a moment ago, but it's also a fantastic opportunity to just get to know each other within the industry. I mean, you're having a gravity of the industry bringing in people that focus on the same problems day-to-day or try to find the same type of solutions for their client. Well, this is a very collaborative atmosphere and you get to learn a lot from each other's peers. But let's go back to the whole point of this show here today, right? Giving you a little bit of a glimpse of what BankOnPurpose is like.
Let's take the first example that I'm going to share with you today. This one comes from Roy Spence. Roy, he talks about strength coming from combining the vision of dreamers and the ability of doers together, right? That's when you really get a powerful combination. He speaks about what banking on purpose truly means under that context and how bankers can be a critical ingredient for enabling that magic combination. Here's that first clip from Roy Spence, BankOnPurpose 2016.
You remember cursive? Thank you. I love you. Eighth grade. Remember when you had to take your test in the actual room? You couldn't take it home and cheat. Anyway, I'm studying Emerson. I turned in a paper, three pages, four pages, writing about Emerson. It comes back and I had eight misspelled words, eight misspelled words, and there was a huge C minus at the top of the paper. Cs were not celebrated, at least at my home. My mom was a teacher. She didn't say anything.
Next year, I'm in the ninth grade. I was telling my staff this the other day, and I was studying English again. This time by a woman named Mrs. Levecy. I remembered her name. Studying Emerson again. I had to turn the paper in. I said, "Mom, I can't do it. I'll make another C." She said, "Just do the best can." I turned it in. I had 11 misspelled words. I still have them. 11. The whole thing was red. There was a tiny A minus at the top.
I went home and I put the two papers in front of my mom. I said, "I don't get it." And she said, "You can't spell," true story. But she said, "You can write, and Mrs. Levecy saw that."
At 14 years old, the grand bargain was struck with me and my mother. She said, "I don't want you to spend another second of your life trying to be average at what you're bad at. I want you to spend the rest of your life trying to be great at what you're good at." At 14 years old.
I did a speech for the Clinton Global Initiative a couple of weeks ago. I put initiative into spell check. It said, "No suggestion." When you're building your company, and Haley knows this, we built our company on the marriage of the doers and dreamers because of what my mom taught me. The dreamers, we can see the mountain top. We just don't know how to climb it. The doers will climb all the wrong mountains perfect. Put them together. Marry the doers and dreamers. Strong on strong.
If that's the case, collectively in this room, how do we play to our strength? I think we do it by banking on purpose. I think that's why you all are here today. Every time the people in this room or your people can minimize your risk and maximize your return and lend money to the doers and dreamers—the young, the young at heart—so they can go build a business or a future or a home, every time you do that, a candle is lit in your community. I promise you. You might not see it. A candle is lit because it's the miracle of this country. You're not in the banking business. You're in the American Dream business, I think, when we're at our best. That's why every time we can not spend time on the back stuff, and every time we can know that our risk is minimized and our returns are going to be there, every time we do that, we reinforce the miracle of this country.
Well, I love that one and that's a fantastic one to start this series of clips to share with you here today. This next one I specifically remember because I was in the audience. It had a very interesting title to the talk, especially given who the audience was. But ultimately, the title points out what it's all about. In the clip, you'll see an interesting take on what innovation is and an interesting take on listening to customer needs, which can make all the difference in the world when it comes to building products that add value to them. Here's Bob Moesta and Chris Spiek with "No One Wants a Loan," BankOnPurpose 2017.
What we want to talk about here is this is not a new or novel idea. We've developed it over the years. We've made it applicable and consumable for product developers. But this basically dates back to ... In 1975, Ted Levitt at Harvard Business School said, "People don't want a drill with a quarter inch drill bit. They want a quarter inch hole." It was profound because ultimately what he was telling us is we can't get caught up in just thinking about our features and our competitors' features and how we're going to improve these things. We need to change this lens and think about the consumers and what they're trying to accomplish.
The way this plays out is if you go into Home Depot or Lowe's or any of these department stores and you go into the drill aisle, you will see drills in every color of the rainbow with all kinds of different torques and battery life and different accessories and things like that. What we call this is hand-to-hand combat. You've got the guys at Milwaukee looking at the guys at DeWalt saying, "They just increased their battery life by 3%. We need to get the engineers on them. We need to beat it." What we end up with are these side-by-side products. What we say is, "How do we break out of this mold and say, 'If they're not really even shopping for the drill, how do I understand the progress that they're trying to make?'"
If we think about the hole in the wall as if they want to hang a picture, now I can go to 3M and I can say, "I could put something that I stick on the wall that's removable, that doesn't even create the hole that hangs the picture." That's innovation. Right now I've really understood the consumer's need and I can break out of this cycle of just more amperage, more torque, more battery life, more, more, more, more, more, and sort of switch my thinking, right?
You end up adding a bunch of features that don't add any value. In Japan, the way they described it to me was this is, "I need a drill. Why do you need a drill? I need a hole. Why do you need a hole? I need a plug. Why do we need a plug? I need a lamp. Why do I need a lamp? Because I want to read better." Invent the freaking Kindle, right? The thing is, what happens? We get so myopic on the little things that we don't realize the bigger purpose of what people are trying to do. And by taking a step back, you start to realize, like, you can make the trade-offs. But if you don't see it, you literally end up in hand-to-hand combat and you will be nuked.
That was "No One Wants a Loan" by Bob Moesta on Chris Spiek. Again, that title draws you in if you're a banker, let me tell you. This next one we'll hear about the deeper relationship between quantitative and qualitative decisioning, in particular, how we have a collective tendency to forget how numbers that are measured tend to be a lagging indicator. This reminds us that in terms of leading indicators, we might have to go beyond quantitative to find what we're really looking for. Qualitative things are harder to measure, right? It's more about the narrative, but ultimately more useful as a leading indicator. It's important to lean on that. Here's Lisa McLeod, BankOnPurpose 2016.
This card talks about the company's purpose. It's all printed out here. The purpose is to inspire and empower others to spend life wisely. The question that people often have is, once we get a clear purpose, and there's lots of ways and lots of people you can hire to help you get it, but once we get it, what do we do with it? Here's what I would do. Has everybody seen their card? I was really impressed with it. You might already be doing this, but if this was the company purpose, to inspire and empower others to live life wisely, then what I would say to that person who is about to interact with a customer, "What does spend life wisely mean to this customer, and how are you going to find that out? What would it take to empower this customer, and how can you do that?"
Do you see how that's a different conversation? What I would say to the person who's in charge of measurements, I would put someone in charge and I would say, "We need to figure out how do we measure whether people are spending their lives wisely? How are we going to measure that?" Chances are, it's not going to be a quantitative metric. I'm going to say something here that's going to really be difficult for the financial, the bankers, the spreadsheet people, the Excel spreadsheet people in the room. OK? Get ready. Get your stomach ready. OK?
Numbers are always a lagging indicator. Numbers are the lagging indicator.
Quantitative metrics, if we live our lives, if we run our businesses based on quantitative metrics alone, they are always lagging indicators because they're a snapshot of what's already happened. The leading indicators are more qualitative and they're harder to measure. They're me telling you, "Hey, let's find a way to measure what spending life wisely looks for our customers." Maybe we come up with seven or eight prototype customers and we say ... Our archetype customers. We say, "This is what spending life wisely looks like to these people." It's going to be more narrative.
If we say, "Hey, we're going to measure how your interactions are with customers," we can look at how fast they are. That's pretty easy to measure, isn't it? But if we want to look at the deeper quality, it is going to be more qualitative metrics. Those are actually the leading indicators. Because when I showed you that graphic about purpose, the way the leader was talking about the business and the impact of the business, that was the leading indicator. The lagging indicator later was when it showed up in the behavior of the people, and then it showed up in the money.
Now, purpose, as you would imagine, is something you're going to hear a lot at BankOnPurpose. For obvious reasons, it's included in the name. OK? But in the next clip, we dig into what purpose means a little bit more, right? It's a striking fact that purpose has become more important over time as more and more begin to realize that it's the one thing really nobody can give you, but nobody can take away from you. Purpose is a key ingredient in leadership, especially in banking with the level of uncertainty today. Here's Nick Craig, BankOnPurpose 2019.
If you think about the business you work and the world you're operating in today compared to five years ago, do you think today ... How many of you think today the world is more certain? Raise your hand. How many of you think the world is more uncertain today? Raise your hand. Next question. Usually we think of the future more positively than the current times, right? Five years from now, do you believe the world that you operate in the business will be more certain or less certain? How many think more certainty five years from now? How many? Couple of you. How many think more uncertainty five years from now? Well, that's the world in which you have to do predictable forecasting and you have to lead your organization.
You actually have to look like you actually know what you're doing, right? In some sense, the big reason why purpose has become so much more important is it is one of the few things that someone doesn't give you or take away from you. Your job, your role, your expertise someone installed and someone can de-install or make no longer relevant. But purpose is the one thing that will never change for you. It is the most certain thing you'll ever have. If you're going to lead, it's one of the key ingredients that you need to lead, especially in the banking world or any world where the level of uncertainty is what it is.
The next clip is actually one of the most referenced ones I hear from people who have attended BankOnPurpose. There's a good reason for that. It's an interesting choice of speaker, especially for a banking conference. Annie Duke is known for her career as a former professional poker player and author in cognitive behavioral decision science and education. She provides a great perspective on how beliefs may be driving too much indecision, especially when there's an insane amount of uncertainty out there. Some will then ask, well, how does poker, for example, relate to lending, right? To answer that, I'm actually going to quote an old show from this podcast when Jim and Dallas did a little bit of a recap shortly after she gave that talk at BankOnPurpose.
The question was, how is poker like lending, right? "It's not just whether we will win or not, or will this pay off or not. But there's a lot about how there is a lot of uncertainty out there. It's a big part of poker is that you can see your own hand, but you can't see everyone else's hand. You're making decisions with imperfect information and gaps about what other people know, what they understand, what's important to them. You have to come to grips with that uncertainty and make the best decision you can in the moment, which you know is pretty much a classical definition of what relationship banking is." There's your similarity. Here's Annie Duke, BankOnPurpose 2019.
We can sort of summarize that by saying that this is a really good explanation of how we can start to get to really good decision making, which at its base is making sure that our beliefs are good, and it's to marry what's called the inside view and the outside view. The inside view is all those things that are driven internally by you, your beliefs about the world, your personal interactions with the world, the things that you think are true. The outside view is the stuff that is outside of you, the way that somebody else might view your situation, the statistics, things like base rates, for example, super helpful here, what other people might know as they look from the outside, why might you be wrong.
When you marry these two, accuracy lives in between the two. I'll give you an example. I don't suggest that you actually run this experiment, but just to give you a good example of what the inside view versus the outside view is. Let's say that I were not so nice and I walked up to a couple that had just walked off the altar, having been married. I said, "Hey, couple that just got married this second, how often do you think you're going to get divorced?" They'd be like, "I hate you. Don't ask me that question." They'd say zero. They'd say 0% of the time. That's the inside view. They're living their own life. They just got married. They're going to say zero.
But if I said to them, "Hey, couple that just got married. A couple that you literally have never met before over in the next room, they just got married. How often do you think they're going to get divorced?" Everybody answers 50%. Now, it may be true that that particular couple that just came off the altar because of certain things about their relationships is not going to get divorced 50% of the time, but I know it's not zero. If we can wed those two things together... That was a pun. Ha! I didn't even intend to do that. If we can marry those two things, what we'll get is accuracy, which is I understand what the base rates are, right? 50% of couples get divorced.
I know certain things about my relationship and now I can move away from 50% a little bit, but I shouldn't move too far because I need the disciplining action of the outside view of thinking about what's outside of my own beliefs because I know my beliefs drive too much. I know they're in the driver's seat too much. I want to get information in the driver's seat more. If everybody did this, more people would have prenuptial agreements and I think divorce would go much more smoothly since it is going to happen.
Alright, and last but not least, we have a clip from a legend, one of the most influential people I've ever met. Getting to work with him on tackling some major transformation at a big old bank was a privilege of a lifetime. Carl Ryden, as many in this audience would know, is the co-founder and CEO of PrecisionLender. Not only could you sense his passion for the product, but you witnessed it with every conversation. He provides here an excellent perspective on data intelligence and the insights that are unlocked if applied in the right moment. Here's Carl Ryden, BankOnPurpose 2019.
Data is the facts, the who, what, when, and where. It's the set of facts around what happened. If you give those facts context and a little bit of a narrative and you get enough of them, you can get information. Information is like a time series of trend. More of this is happening over time. Less of this is happening over time. This is going up. This is going down. This is becoming a greater percentage of things. That's information. Intelligence gives it even more context. It puts that information together with a critical question, right?
Intelligence has potential value and it has potential value in what I think is two ways. One is it can increase the probability or the magnitude of a good outcome, right? The second is it can decrease the probability or the magnitude of a bad outcome, but it only has that potential. Here's where it takes a turn. Intelligence can go in one of two places. Insights, if it's applied at exactly the right moment at exactly the right time, you unlock the potential value of that intelligence. At the wrong moment, at the wrong time, it's trivia.
Think about... This is one of my favorite slides. I showed this to some folks, young folks on my team, and they had no idea who the person on the left was, and I think their life is worse for that. But go back to the previous example, right? Knowledge that pain in the lower right side and the low grade fever and swelling in the abdominal, maps to appendicitis. If you take that, it's potentially valuable because it can really decrease the likelihood and the magnitude of a bad outcome, your appendix rupturing and you dying. In the ER, in the hands of the guy on the right, it's almost priceless. It's an insight. In a bar over a beer with the guy on the left, it's trivia, right? The value of intelligence is really contextual. It really matters when it's applied.
And that wraps up our little clip show here on The Purposeful Banker. These clips are just a really small cross section of all the great stuff that was shared at BankOnPurpose across the years. We're continuing on that legacy now into 2022. Now, we know not everyone can make it to Austin this fall, but it's OK. You can still visit BankOnPurpose.com. In there, you can actually view all the great content from the past years' sessions, including the full versions of the presentations we clipped here on the show. There's a lot of tremendous value just by visiting the page. All you have to do is go there, select your year, select your speaker. No information needed to be entered and enjoy the content.
Now with that, I want to thank all of you for taking this little trip down memory lane with me. I hope to see you all in Austin in November. Visit BankOnPurpose.com for more information and you can save $100 off your registration if you use the code "podcast."
If you want to listen to more shows, you can go to the podcast page at explore.precisionlender.com, or you can head over to q2.com to learn more about the company behind the content. If you like what you've been hearing, please make sure to subscribe to the feed in Apple Podcasts, Spotify, Stitcher, or iHeartRadio. We'd love to hear what you think of the show on any of those platforms. Until next time, this is Alex and you've been listening to The Purposeful Banker.