Banks at the Purpose Crossroads

October 30, 2017 Maria Abbe

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PrecisionLender CEO, Carl Ryden, and Lisa McLeod, author of Selling With Noble Purpose, discuss the difficult choices banks have to face when it comes to growing their businesses and building their culture. Their conclusion? It's not an either/or situation. 

In this podcast, you'll learn how these choices can affect your bank and you'll come away with a better understanding of how to build your bank's purpose and lead in a way that fosters that purpose.


Helpful Information

Lisa McLeod LinkedIn

Carl Ryden LinkedIn

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Selling With Noble Purpose


Podcast Transcript

Jim Young: Hi, and welcome to The Purposeful Banker, the podcast brought to you by Precision Lender, where we discuss the big topics on the minds of today's best bankers. I'm your host, Jim Young, Director of Communications at Precision Lender. I'm excited to have not one, but two guests today. The first will be a familiar voice. It belongs to Precision Lender CEO, Carl Ryden. The second is a voice you'll recognize if you attended either one of the first two Bank On Purpose conferences.
It belongs to the only person who has been a keynote speaker for both years, Lisa McLeod. Lisa is a leadership and sales expert and the creator of the popular business concept, noble purpose. She's the author of several books, including Selling With Noble Purpose: How to Drive Revenue and Do Work That Makes You Proud, so it should come as no surprise to you that today's discussion is going to center on surprise, purpose, specifically the purpose of banks and the culture they build around that purpose.
It grew out of a conversation that Lisa and Carl were having about the current state of banking, one that as soon as Carl got off the phone he contacted me and said, "We really need to do a podcast about this with Lisa," so that's how we got to where we are right now. Lisa, when Carl was pitching this podcast to me, he talked about how banking is at a crossroads. We've spent a lot of time on this podcast talking about the technological crossroad for banks. Can you shed some light on the idea of a purpose and culture crossroads for banks?
Lisa McLeod: Absolutely. You know, banks and really anyone is under greater pressure to deliver financial results and deliver it quickly than ever before, so you have a kind of confluence of events. You've got huge revenue pressures. You also have a situation where we are now in a whistle blower culture for a variety of reasons, where anyone that sees anything going wrong is now emboldened to report it more ways than they used to be able to, and we have a media that will latch onto that. None of these three things are a bad thing. We want people to drive financial results.
We want employees to be able to report wrongdoing, and as a consumer we want to know about those things, but the challenge is in so many financial organizations, the culture has become default, and if you don't define your culture intentionally it will default to a numbers driven organization. As a CEO you think, "Well, why wouldn't I want a numbers driven organization?" Well, ask Wells Fargo what happens when ... You know, they're a perfect example of ...
You know, 99% of the people that work there are good and honorable bankers, but if a bank doesn't make a decision that they are going to stand for the consumers, their clients, small business, whatever the decision is, if they don't make a decision that they're going to stand for something bigger than just revenue or a balance sheet, then if it doesn't happen by design, it will happen by default. That's what I mean by a crossroads. Banking leadership has to really make a decision about who they want to be and who they want to stand for.
Jim Young: All of that makes sense. I guess why now? Why is it particularly high ... I mean, could you have had this same conversation in 1993, just for example?
Carl Ryden: I think you could have. I think things move ... Things in the world have been speeding up, the rate of change, the rate of adoption of technologies, of things like machine learning, AI, automated decisioning, even, I think, some of the things that led to ... Not to beat on Wells Fargo or anything, but some of the things that led there was managing by the numbers and amplifying it with the technology that put the numbers in your face all day every day, and the computer systems that shortened those feedback loops. A lot of the things you do with technology now amplifies who you are, so you have to make that conscious choice of who you are.
Going back to something Lisa said, one of my favorite quotes is Peter Drucker, "The purpose of any business is to create value for its customers. Profit, therefore, is not the goal. It is the measure of how well you're doing that," right? I think that's how ... Sometimes it becomes about the numbers and about the stuff and you lose sense of creating value for your customers. I'll also add as a prerequisite to that is ... It's particularly true today in a social media dominated world and where not only does technology amplify those feedback loops, but technology provides the megaphone for when you do screw up, it becomes huge, and the stakes are much higher.
Lisa McLeod: Can I jump in?
Carl Ryden: Yeah, go ahead, Lisa.
Lisa McLeod: Okay. You know, what Carl says is so important about amplifying, and I think it's a really interesting insight, because I think about my dad, who was a banker, and he was the manager of The People's Bank in Macon, Georgia. I can tell you, when we were sitting around the dinner table, he didn't have a cellphone getting pinged with the day's numbers, and the bank was called People's Bank. As a manager in a bank, as any kind of leader, you've got those numbers right in front of your face all the time.
What we know about brain science, what you're seeing in front of you creates neural pathways, and so you've got the numbers in front of you, and then you start checking them all the time, and it's like this endless loop, and then that starts to define you, because you're spending more time staring at a screen than you are with your people and with customers. It starts to create this feedback loop where you think, "That's what I do all day," and it dehumanizes the employees and the customers.
Carl Ryden: That is a huge, huge point, and in following the numbers sometimes, you lose sight of the purpose, and back to the goal is, "A purpose of a business is to create value for its customers," if you do things ... If the numbers lead you to a place that erodes trust, if people don't trust you, you never get the chance to create value for them. If you never get the chance to create value for them, then you never have a chance to generate the profits that actually measure your ability to do so.
When you follow the numbers and it causes a misstep, and it gets amplified in the ... Technology amplifies that message, and it can destroy your brand and your reputation, again, when you lose trust, you lose even the opportunity to be in the decision set. I think that's something where ... The CEOs of banks, or of any institution now, particularly banks, who are, their fortunes are so wed to the ability to build and maintain and earn trust every day, have to be deeply concerned about that.
Jim Young: One thing I wanted to just take a slight turn-off, because Wells is the example that we use, and Wells has become quite frankly the whipping boy on a lot of this sort of stuff, but fair to say that there are a lot of banks out there that are sort of saying, "There but for the grace of God," you know what I mean? "That could have been us." Is that fair to say?
Carl Ryden: Absolutely, and Equifax now is a different one. Not only do they have failings, but then how they handled the failings meant the world, right? What you do after the problem actually says more than anything else, and particularly if you have an institution that doesn't have a good compass that points you in the right direction, what you do when you get punched in the face is not having set the tone and set the culture of how you're going to do these things and how you think about your customers, people do even worse things and it's not the first thing, but it's the second and third things you do that really define how people perceive you.
Lisa McLeod: They do. Well, you think about these situations and I completely agree, there's so many other businesses saying, "There but for the grace go I." There's so many fine Wells Fargo employees who are very embarrassed now, and they shouldn't have to suffer through that, but you think about something like this happens. Imagine if everyone in your company, if you have a clear purpose that you've named and claimed, "Our purpose is to improve ..." One of the clients we work with, their purpose is to improve the customer's financial fitness. If that's your clear purpose and things go wrong, you've got something to reset to.
"Okay, guys, here's our North Star. Here's how we're going to reset." But if your purpose has been money, and that's been your sole aim and something goes wrong, then it is a scramble where everybody tries to cover up, "Oh my God. We're not making money. Oh my God. Oh my God." You know, everyone tries to cover up and then everybody feels like a complete failure, and then the whole thing starts to spiral down, and the thing is, you can't do that after the bad things already happened. That's where CEOs, we're seeing this obviously in banking, but we're seeing it in other places.
We're seeing it in Silicon Valley, where senior leaders have to be proactive about setting the culture, because what happens is they think, "Well, yeah, we're all about customers. Everybody knows that," but I'll tell you something we've done with our clients that is stunning to them. We say, "Well, everybody knows you're all about customers." We'll take a transcript from one of their big meetings or one of their all hands, and we'll create a word [clap 00:09:53] from it, and they are often stunned to realize that they only spent 5% of the time talking about customers. The rest was all about their own internal financial metrics. You think, "So what does your team take from this?"
Carl Ryden: I think this is one of the things ... Long ago I worked at Bain, and one of the things that Bill Bain would say was, "Look at whatever you do and whatever you say, whatever you put in the PowerPoint, and assume it's going to be on the front page of the Wall Street Journal tomorrow. Would you still say it?" Because I think what happens is if you record that meeting and you say, "Would it be okay if I showed this meeting to your customers?"
Lisa McLeod: Yes.
Carl Ryden: If that's not ... That should be a standard, and the reason why I say that is when we talk about ... Where you started, Lisa, with whistle blowers and social media, and the amplification of technology and all these things, well, at the end of the day the world has become extremely good at figuring out who you are as a company, so good in fact, that if you think you're hiding something, that is a ticking time bomb. You need to decide who you're going to be, forcefully make the company that, because the world will discover it.
Jim Young: How often do you guys think that this is something that ... Because we've got all the very valid reasons for things that are taking up banks' time, regulation concerns, FinTech disruptors, technological needs, et cetera, et cetera. How often or how common is it, do you think, that there are banks out there that are really taking the time to say, "Okay, let's pause for a second amidst all of this stuff that's going on and make sure that we have a defined purpose and that we're following it?" Can you put a percentage on that?
Carl Ryden: I'll let Lisa take that one. I would start with a not enough.
Jim Young: Lisa, what about you? How often when you run into a bank do you get the sense that they have been ... Before you start talking to them, that they've been thinking about this?
Lisa McLeod: Yeah, so this is a really good point because usually by the time they call me, they're saying, "Okay, we're ready to do this. Can you come work with our leadership team and help us to find our culture?" The ones I work with are already doing that, but I'll also tell you that it has usually been a discussion internally for a year or more before they finally decide to do it because of all the other priorities you just mentioned. I will also tell you, having worked in two situations, two types of situations, I would much rather get that call before something's happened than afterwards when we have to go in and oh my gosh, it is so much harder and you've already lost trust.
But if we get that call in a preemptive way, then we can make such a difference. The thing that's interesting here is for a lot of people that I've worked with, when we go in and we name and claim a noble purpose, we define their culture, we identify selling behaviors that are in the customers' best interests, and also financially profitable, because your customers want you to be profitable.
Otherwise they wouldn't have a bank, but in the best institutions it's not a 180. It's simply taking what is implicit and making it very explicit, and that's the job of leadership, because if you leave it implicit, it's open to interpretation, and as Carl said, on a bad time when things go wrong, but if you make it very explicit, then it's not open to interpretation by every manager at every branch. Then it's clear who we are and what we do here, and that's the thing. I mean, most of the people in banking are good people. They didn't go into bank robbing, you know? They went into banking. They want to help people.
Carl Ryden: Yeah, and that's a good point is that when I said not enough are leading, putting the ... Culture is the set of things that you'll tolerate. That's kind of one way of stating it in a practical sense. But within every bank we talk to, and we talk to quite a few, there are amazingly great people who are really driven and motivated by a real sense of purpose and desperately want this. They're typically the best performers within your bank, the ones that if they left your bank you would hate it.
It would be painful to see them walk away, and typically the reason those best performers do walk away is you had somebody in there who was taking shortcuts and you tolerated it. You had somebody who was just going to the number and eroding the trust that they worked so hard to build and the relationships they worked so hard to build, and you tolerated it as a leader. You really have to find ways to not just name it and claim it of who you are, but then demonstrate it through your actions of what you tolerate and what you don't tolerate, and that really sets a ... It magnetizes the compass to the True North of the organization, and then everybody knows that.
Jim Young: As usual, once again, this always happens with these podcasts where you guys start answering my questions before I get a chance to ask them. I'm curious also, though, what about ... Do you need any sort of incentive, incentivizing for this? How do you sort of ... You talk about being explicit and those sort of things, but how do you sort of turn it into a habit or make sure that this is something that is done every day in every interaction, besides just ... Because a lot of places you can talk about it, you can put a poster up on the wall and that sort of thing, but how do you really make sure that it sticks, I guess?
Carl Ryden: I have thoughts on this, as you might imagine. I think we sometimes cross the streams. I'm an engineer to my core, right? I mean, I've been an engineer my whole life and folks, when I die I would be fine if they put engineer on my grave stone, but engineering problems need engineering solutions. Financial problems need financial solutions. Social, human problems need social, human solutions, and you don't want to cross the streams, I think, and I think a lot of times folks try to engineer a social outcome or try to provide financial incentives to create a social outcome. A lot of the social outcome is built by communication.
It's built by leadership. It's built by praise. It's also built by, in some ways, delivered the right way, shame. Being able to make sure that you match a social problem to a social solution and not trying to engineer it with a system ... You don't need one more database to get your people to behave right. You don't need cash bonuses to get them to behave right, and in fact, a lot of times the engineering systems and the financial systems are the things that are eroding away and causing the social problems that you're causing, that you're trying to fix, so social problems require social solutions and it requires communication and leadership, and human interaction.
Lisa McLeod: I'll give you a quick example. One of the things that we do when we work with clients is we have a list, so the naming and claiming your big noble purpose, that's fun and sexy, but we've got a list of 108 other things you can do, places you can infuse it, and it's as simple as when you give out sales awards, which by the way, I'm still a believer in sales awards. The top producers should still make the most money, but how do you give out those awards? Do you say, "Hey, Carl closed 200,000 or two million, or whatever the number is. Carl's the closer. Carl gets that money?" Or do you say, "Carl helped 20 new business clients. 20 new businesses in our community now have loans and are operating thanks to Carl."
The words of the leader matter. When you lift up examples of what people are doing right and what people are doing wrong, do you describe the impact it has on clients? When you go into your CRM, do you have any information on the client about their financial goals and who they are, and their ethos, or is everything just a balance sheet? There's 100 different ways that as a leader you communicate what's important. To Carl's point, a lot of times the systems that you have in place, even the most well-intended people, if the system, if what people are seeing every day on the reports they're tracking, that is what's going to prompt the conversations.
You have to tweak that a little bit, so one of the things that we always do when we go in is we find 10 places we can infuse this customer focused purpose, and we can do it right away. What it starts to do is it starts to change the organizational conversation, and Carl's right. It's the people and it's a social problem, and it's revealed in what you talk about. You can go into any family, and if you sat there for three family dinners in a row, and you observed what they talked about or lack thereof, you would be able to get a bead on the culture of that family. The same thing is true in an organization.
Jim Young: I'd also make a ... I'm going to make a quick shill here for Bank on Purpose, too, in the sense that I'm a marketing and content person and every once ... About once a year it's good to sort of get out of the day to day thing and go to some place and really talk about the things that make marketing and content what it is. I would make an argument that Bank on Purpose serves that purpose for lack of a better word, for people that want to think about the culture of their bank and what it means, to go there for a couple of days and talk to people that are thinking about it and are dealing with the same issues that you're thinking about, to step outside the day to day sort of thing.
Carl Ryden: I would say it's more than that. It was built as sort of a support group for folks who are trying to do it the right way, because it can be a lonely path you're on and feel like you want to give up, but we don't just cover purpose. We do cover purpose, but we cover sales. We cover marketing. We cover technology and AI, and how you're going to do that. But we tell you how to do those things effectively, really effectively, and still remain true to your purpose. They're not ... I think one of the most dangerous things ... Someone said this. I'm probably quoting somebody. I can't remember who said it, but I use it all the time. One of the most dangerous things in business or in life is the artificial either/or, where you believe that it's either this or that, and it's not. This is where actually putting both together takes you to a far greater place, and that's something I think we try to emphasize at Bank on Purpose.
Lisa McLeod: Absolutely. I mean, you heard in the intro that I was there for both years, and one of the things that I was really impressed with, and that people came up and said to me, leaders in banking, was exactly ... You know, your comment, Jim, is, "Wow, it's so great just to give myself a breather, to step and think about my culture and how I'm integrating all these things." To your point, Carl, about the false dichotomy, the either/or, "Well, I can either be a really nice bank, have low profits, or I could make a lot of money." The data actually tells us the complete opposite is true.
Our research with sales teams revealed that the sales people who were the most focused on the clients, whose purpose was to improve the client condition, actually outperformed the sales people focused on targets. Your point earlier, Carl, they were the top performers and what we see, this same thing play out in terms of a brand and what brands that really stand for something in the global sense or in the micro sense in a small community. People know what you stand for. That's how you achieve competitive differentiation and emotional engagement, and those are the two secrets of a really profitable business, that you're different from your competition in some meaningful way and all of your people care passionately. That is actually how you make more money, ironically.
Carl Ryden: Yep, and the reason we created Bank on Purpose is we went through and looked at our ... We make pricing software for banks, right? You see a bank who, they complain that it's all about rate and this is the cheapest rate. Well, ultimately it's because they chose that, is they had the artificial either/or and they chose that. They said, "Well, they're only going to do business with me if I give them the cheapest rate." Well, you've commoditized your entire existence, right? I say if that's your choice, if that's your path, fire all your RMs, rent a billboard that we've got the cheapest rates, and wait for people to show up, because they're not ...
But that's not the path to profitability. It's not the path to ... I can prove that with data, actually, and we see banks who actually find ways of helping their customers, and they use our solution as ways to navigate that path and find the exact solution that best meets that customer's needs and win better deals, build better relationships, and build a better brand for themselves and the bank. When you do that, everything falls into place. If it's all about the numbers ... We felt like us, as a company that makes pricing software for banks, to say it's not about the numbers, it's about those conversations, and getting better on those conversations, we see it every day.
Lisa McLeod: One of the things I always say is if you treat your customer like a number they'll return the favor, and whenever I have ... You know, one of the common reasons that people call my company is because they feel like they're being commoditized and their customers are treating them like a number. Inevitably when I go into those organizations, and I look at how customers are discussed, customers are discussed as numbers, and so you've got to change the internal conversation, to your point, Carl, so you can change the external conversation, and if you can get your team to start to look more holistically at customers and think about the impacts they have on customers, that's how you differentiate yourself.
Jim Young: Well, I could listen to you two talk about this topic all day long, and I suspect you two could talk about this topic all day long, but we will ...
Lisa McLeod: We do talk about it all day long.
Jim Young: But we will have to wrap it up for this particular podcast. Lisa, thank you so much for coming on the podcast, so if I'm a banker and this has lit a fire under me, how would I go about finding out more about you and what you do.
Lisa McLeod: Google noble purpose, and you will find me, and I think probably the book that I would recommend a banker read is Selling With Noble Purpose, and if you want help getting your team to do that, call me. I'm easy to find.
Jim Young: All right. Well, thanks for listening. If you'd like to learn more, visit our resource page at If you like what you've been hearing, make sure to subscribe to the feed in iTunes, SoundCloud, Google Play or Stitcher. We love to get ratings or feedback on any of those platforms. Until next time this has been Jim Young with Carl Ryden and Lisa McLeod, and you've been listening to Purposeful Banker.

About the Author

Maria Abbe

As a Content Manager here at PrecisionLender, Maria develops the messaging, stories and content pieces for prospects and current clients – showing them the value in PrecisionLender. Her passion for serving others is evident as she leads the volunteer program here at PrecisionLender. Maria’s ability to be organized and constructive, along with her ability to be practical makes her an exceptional addition to our team.

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