The Banking Industry From a Reporter's View

Alex Habet sits down with longtime banking industry journalist Paul Davis as they talk about how financial services have changed, as well as how journalism itself has changed, and tips for how bankers can sort fact from fiction.

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[Website] The Bank Slate

[LinkedIn] Paul Davis

[Website] Paul's Substack

Transcript

Alex Habet

Hi, and welcome to The Purposeful Banker, the leading commercial banking podcast brought to you by Q2, where we discuss the big topics on the minds of today's best bankers. I'm your host, Alex Habet. 

So today we have a very interesting conversation for you all. It sort of came out a little bit out of left field. We were recently having one of our internal brainstorming calls, and it was a particularly noisy news day in that particular instance. And when Paul Davis, his name was suggested as a guest for today, it was a very interesting timing to say the least.
Paul Davis is a veteran reporter, pretty sought-after commentator in the financial services industry, having spent almost 11 years at the American Banker before launching his own platform called The Bank Slate in 2021. He also spent three years as a director of market intelligence at SRM (Strategic Resource Management), where he was responsible for research content and engagement for U.S. and international clients and prospects.

As mentioned today, he has The Bank Slate. It's a consulting and advisory practice with a media platform. It's got a website and newsletter and podcast, and it's focused on banking and fintech articles. It's really incredible content. Highly recommend you check it out. He's also a contributor at the Forbes Financial Council and contributing editor to the American Bankers Association Banking Journal. That was kind of a mouthful.

But to say the least, to help us understand how to make sense of the world. It's a very noisy world. Why not bring in a pro for advice? We've never had a practicing financial journalist on the leading commercial banking podcast before. So I'm hoping you all will enjoy this look behind the curtain, or just kind of understand how the overall engine works. Learn a little bit about Paul, how he got started in this industry, and his observation as a direct contributor in its evolution, not only from how journalism has transformed, but also how financial services have transformed over the course of the last 20 years. So sit back, relax, and enjoy my conversation with Paul Davis.

Paul Davis     

My name's Paul Davis. I actually created and operate a consulting and media platform called Bank Slate. You can find it at www.thebankslate.com. I also have a Substack channel where I produce my own podcast, and I also do a weekly newsletter as well, subscription-based. So, obviously, feel free to take a look there. Recently I was the director of market intelligence at a company called Strategic Resource Management, where I handled a lot of content for them, both in terms of blogs, research papers, went from years of journalism to actually being a subject matter expert to do interviews, things like this. Do interviews with American Banker, Bank Director, you name it. Speak at conferences. I'm actually going to be moderating a panel at an American Banker conference coming up soon. So it's been … the last few years was a real interesting transition.

To go back to the beginning of the story, I should say, I started out in this field with a job as a banking reporter and then news editor for SNL Financial. It's now part of S&P Global Market Intelligence. But I started covering banks there, and then from there went on to work for American City Business Journals, doing a lot of commercial residential real estate in addition to banking, but really, really cut my teeth at American Banker. I was there for 16 years, initially covering large southeastern banks during the 2008 financial crisis.

And then the last 11 years there, I was in charge of our coverage of community banks. In other words, we kind of cut it off as banks with up to $20 billion of assets. So it's been an interesting journey spending a large part of my career in financial journalism. But like we were talking, spending the last three years really being more of a subject matter expert, of being more out in front and being interviewed and speaking at these types of events.

Alex Habet     

What got you even in the first place, what drew you? I always talk about how did I start in banking? I can tell you the story. It was kind of drilled in from stories of my father. He used to say, "Hey, you want a good future, go to Wall Street." That was kind of drilled into me. So I'm curious what drew you into your field?

Paul Davis     

Yeah. Honestly, the first job kind of was by happenstance. I went to the University of Virginia, so I was still living in Charlottesville, just young, just open-minded to anything new and different. So S&L Financial was based there. They had a job opportunity as a banking reporter, and to be honest with you, Alex, the hours were 12 noon to 8, and as a young, just freshly out of college, it was nice to have a job where you rolled out of bed at 11 o'clock in the morning, did your job, and then you still had your nights off. So honestly, I wasn't 100% sure about what the job would entail. They looked at me as somebody who was a quick study that could learn quickly. They brought me on.

Within a year, I had been elevated to being the news director, which meant then I oversaw five different verticals including the banking coverage at the company. And from that point on, I was off and running. I really spent two years there, really, really learning the banking industry. This is going back, admittedly late ‘90s. So I've had almost continuous exposure to the banking industry now for 25 years, which allows me to see all the ups and downs, the twists and turns, the mistakes, the corrections, rinse and repeat, so S&L really was just a very fortuitous circumstance to find myself in early my career.

Alex Habet     

So in reflecting on that period of time, as you observed the arc of change, whether it's in the industry, I'd actually like your perspective not only in the banking world or the financial world, but also in the journalism world. What big shifts did you see, or how would you describe it if you could, in a paragraph or so?

Paul Davis     

Well, let's take into account the previous crises in the industry versus what happened last year. The speed of change has increased. Messaging has to be much more ... It has to be sharper. It has to be delivered, I think, sometimes more quickly than we used to. It used to be that past crises were like a slow-moving train. One domino would fall, couple of weeks later, another one, another one. At least that's what it was felt like in the 2008 financial crisis. You had one major financial institution go under, and it took two, two and a half weeks before the next one, you had to put out another fire. If you look at last year with the liquidity panic—I call it a panic versus a crisis, I think it was serious, but not elevated to some of the past crises we've seen. The one thing you notice is how quickly the dominoes were falling in that situation.

Because you had Silver Gate, voluntary liquidate, SVB gets shut down, two days later, it's Signature, and then immediately everybody, the next within hours starts shifting their attention. Who's next? Who's next, who's next? And so it used to be you would have a day or two, a week or so to really rally the troops, get your messaging put together, get your media strategy put together. But there were community bankers. I was at ICBA at their ICBA Live when all that happened last year, and bankers were having to leave the room and call back home and be all hands on deck within hours after those failures happened. So the biggest difference is the speed of change is quicker, and the messaging has to be really sharp.

Alex Habet     

You used the word domino and the PTSD triggered for my days when I was a Merrill Lynch employee during the Lehman Brothers weekend. And I remember what that was like emotionally from the inside, looking back on it, when having not been a bank employee during the SVB events, it still took me back, and I can only imagine for those who kind of lived during that phase and having to relive it again. But you're right. There was kind of this snap to reaction to call it a crisis. The event certainly feels like it has passed us, but maybe that's just because the headlines aren't as busy. What do you think?

Paul Davis     

I think the way I view the financial services industry and banking specifically as it seems like we always have a crisis or a panic. Either the industry responds or the government responds, things calm down, and just when you think you're about to get your footing and your momentum going, something else happens to spook people. So just look, in the last five years. You have the COVID pandemic happen, and so there's that idea of all hands on deck. What are we going to do here? We have to just circle the wagons, pull back in, focus in where the government comes in and puts all the stimulus in. Things settle out, we're good. You enter last year thinking, OK, now, and then with interest rates coming up, suddenly there's more pressure, there's more pressure. You have the liquidity panic, and banks again, circle the wagons, all hands on deck.

Internal, internal, internal focus. That seems to pass. We're doing OK. We're starting to get the footing and the momentum, and next thing you know, we have this CRE situation with New York Community Bank, and suddenly, now we're back to everybody's starting to get antsy and jittery about credit quality, particularly on the CRE side. Investors start trying to pick winners and losers, who's next, who's next? And we go right back to where we are, and that is circle the wagons, messaging, focus on making sure that we have our own house in order.

I just feel like that's just a cycle that we face in this industry. But, early in my career, it seemed like those cycles were separated by years, like a thing in '98 thing in 2000, 2007. It seems like we hit these things now on a 12- to 18-month cycle where it's really hard for the industry to really get its footing and move forward because there's always a fire to put out.

Alex Habet     

Do you think that's reflective of perhaps a shorter news cycle in general, or people's shorter attention spans and perhaps a little sensational? Well, what's your perspective with a lot of people who use social media as their primary source of news? First of all, I'd be curious, does that terrify you or how do you feel about that?

Paul Davis     

I'm all for the democratization of news. Honestly, if we didn't have things like social media and even TikTok, there'd be a lot of things that just would've happened under the radar, particularly for younger folks. Most younger folks don't really go to mainstream media. So on one hand, I'm all for democratization of media because there are stories out there that need to be told that aren't told by the mainstream sources. That being said, there's always trade-offs, there's always unintended consequences, and there's always bad actors. And so yeah, you'll have situations where you can use social media, whether it's Facebook, Instagram, Twitter, or even TikTok, to further an agenda and fan the flames of a crisis rather than help put the fire out. So it's just ... I think when I advise banks about their crisis management and media strategies, in fact, I did a couple of assignments last year during the liquidity panic where a community bank brought me in and said, look, sit in on our executive meeting. We're trying to figure out what our messaging is going to be in light of these bank failures.

The first thing that I mentioned to them is, look, you're really not competing against the daily newspaper or the Wall Street Journal sometimes. Your messaging is really going to have to counter what people are saying about you relatively unchecked on social media chat. So you really have to think about a multipronged strategy in terms of what do you do with your mainstream media, but also how do you respond to something that's elevated due to something being spread on social media.

Alex Habet     

But with the, do you think the viral nature of the algorithm, as in your words, fanning the flames of the sell-off, or for the panic for the banks, right? Do you think we've solved that problem? I don't think we have, right?

Paul Davis     

I don't think you can.

Alex Habet     

I don't think you can. Yeah.

Paul Davis     

I think it's virtually impossible to put a lid on something like that. But again, I think that's a trade-off. Again, if you want to empower people to disseminate legitimate news, then the trade-off is knowing that there are going to be folks out there that use social media for other purposes. I think the key there for if you're a bank in that position, is hopefully, have a really good plan to counter and educate your customer base, your investor base, and just be proactive when it comes to your messaging.

Alex Habet     

All right. Yeah. I'm curious, just from your perspective, and again, looking back to your experience and to the present day, how does ... I was checking out, I guess, Substack is something I want to talk a little bit more about. I've kind of seen the popularity of it grow, but in particular, I noticed you cover a lot on movers in the industry and things like that.
So I'm curious, how do you maintain, or how do you grow and network as someone who covers the industry? You're probably among the most networked in the business, so for our aspiring young bankers in the audience who might not necessarily want to cover other banks from a journalistic perspective, but want to learn how to develop networks across these institutions, how have you done that in your career and how have you kind of refined that part of your craft?

Paul Davis     

Yeah. Obviously one advantage is that I have been involved in the industry now for 25 years, so I've been able to make those initial connections with people. And I'll tell you the key is sometimes it's like a hub-and-spoke thing. Some of my best connections have been a result of other connections that I had previously. So a great example is during my time at American Banker, I was introduced to an executive recruiter in the southeast, a guy by the name of Rod Taylor. And I got to know him, build trust, build confidence with him as a source for content, and then one day he said, "I'm really involved with this banking symposium at Ole Miss. Would you be interested in doing a presentation on M&A?" I said, "Yeah, absolutely. That would be great." I went down there, did the presentation, went to some dinners, did some networking, and you fast-forward, it's been, gosh, I'd say about 12 years, 13 years since then, I'm still very closely affiliated with the Banking and Finance Symposium there, and I've made dozens and dozens of really good friends and good contacts from that.

And that's not just bankers. That's investment bankers, it's banking attorneys, it's academia. So number one is, I think sometimes you just make a contact with the right person, and then they plug you into an even broader network. And then, over the course of time, you may have this Venn diagram of contacts. I know these people from the Ole Miss Symposium, here are the people that I know from the Federal Reserve Conference. I've also been involved with a conference at the Federal Reserve in St. Louis for a dozen years. Get involved, build your network, and then the people in that network help you just expand and expand and expand over time.

The other thing is you also have to make sure you maintain and nurture those relationships, and these have to be genuine relationships. I think a superficial networking relationship kind of goes by the wayside. The fact is, I've tried really hard over my career to nurture the relationships that I have. You don't want to ghost somebody, and that way that when they need something, they know they can call on you and depend on you to help them out.

Alex Habet     

Yeah. I would imagine, there's probably an anonymous tip line involved somewhere in there. Is there?

Paul Davis     

Yeah. There's certainly folks that I can call and bounce ideas off of, and they know 100% that I'm not going to name them. I'll tell you a great example was when I was at American Banker. Occasionally, I would have to write about very complicated accounting issues, really complicated stuff. And I had been introduced to a senior accountant for one of the large banks. I won't name the bank because I'm also not going to name the accountant, but we had a great relationship.

I could just pick up the phone and say, "Hey, Alex, I'm trying to work on a piece about XYZ accounting standard. Help me understand, in layman's terms, what it is and how it would impact your bank off the record. Just explain it to me so that I could then explain it to our readers." And it was a great relationship. He was always accommodating because we had that trust factor involved. I was told earlier in my career, too, it takes a long time to build up credibility. It takes one bad decision to totally undermine it.

Alex Habet     

I guess looking ahead, first I want to talk to you a little bit about the finance industry and then back to talking about The Bank Slate and the work you're doing on Substack, and a little bit more about how that whole world works. Because again, I think that's all a little bit new for some people as well, but just looking ahead over the next, I would say year or two, and again, I noticed from the stream of content on The Bank Slate that you cover a wide variety of things from strategy to regulation to you name it. So across those categories, what will be the big theme you think in 2024, 2025? Barring, of course, no surprises, right?

Paul Davis     

Right. Barring another panic or a crisis or something else that forces us to circle the wagons or have put out fires. Yeah. No, I think the two big things that I look at are the continuing evolution of technology and an accelerated pace of change. So for example, it used to be that you would see a technological advance come out, and it would take years for the industry to figure it out and figure out how to harness it, develop the use cases, and build it into the mainstream.

What we noticed with artificial intelligence, I think, was it came out what, late 2022, and it was such a novel thing. I remember sitting there just playing with ChatGPT and, oh, it can write this thing for me. Oh, it can write it in a ... It was just kind of this fun novel kind of gimmick. You fast-forward, it hasn't been a year later, and the large banks are figuring out specific ways to put it into work, whether it's combing through thousands and thousands of customer complaints to search for commonalities, whether it's ... It's really being used extensively for data aggregation and data analytics. So that turnaround happened so quickly between it being a gimmick and being something that's usable by the industry. I think we're going to still see some of that. I don't know what it is, what it's going to be, but we're going to see some kind of technological breakthrough or breakthroughs that work their way very quickly into the DNA of the financial services industry.

Alex Habet     

Yes. As a practitioner of selling at least one of those solutions in the market. What I think, just to add to your comment is this will be the year, or the next two years of, working through all the red tape to deploy these technologies. More than anything, it's all about we're now drilling into the use cases and figuring out every step along the way why we can't just go off the shelf with this stuff. And the hallucinations are just like's the broad thing. There's a million little drill down things, too. So that's my perspective, which sounds in line with-

Paul Davis     

Well, you're going to have two camps. You're going to have one camp in your organization that's geeking out and saying, we got to do this, this, this, this. And you're going to have the other camp, which is going to be your legal compliance side, that's going to be like, well, we need to make sure our regulators are on board with this. We need to make sure that somebody's not going to show up in Washington and pass legislation that's going to ... Let's make sure that we have our ducks in a row before we just dive into the pool. So I think that's going to be where some of those conversations in management teams and in boardrooms, those are conversations that have to take place, I think, before these things really catch on.

Alex Habet     

What about in the world of journalism? How does the trend, does it continue? Is there more of a decentralization trend continuing, or is there going to be a recoalescence of sorts because of waning trust broadly? What's your view there?

Paul Davis     

Yeah. I think it goes back to the social media conversation. I think you do have platforms out there like Substack that are fostering, again, for lack of a better way of looking at democratization of journalism in some ways. It used to be you had your core media conglomerates, core media groups that were responsible for news, and they had their own policies. They had their own processes. And oftentimes, they moved slowly to present news to their subscriber base. You look at Substack, and I stumbled on Substack about a year ago, just a couple of guys I knew that were on it. I started rooting around doing the research and realized, wow. Now I already had thebankslate.com, my website already. Substack, when I really evaluated it, allowed me to just take the website and take it to another level. 

So now it allowed me to produce a weekly newsletter and make it a subscriber-based newsletter, which is great because now I can give people option A, here's the free trial free offer, where you get very limited stuff. You just get to see what the topics are. And then you have the paid side of it where, OK, if you want the full article, like for example, I'm going to be putting out a piece on Monday that looks at how banks can identify credit cracks early in the process. So early signs of borrower distress. If you're the free person, you know that's what I’m writing about. The paid subscriber gets to see the five pointers that I'm sharing.

And from my perspective, when you're a paid subscriber, I have to provide value. And so that's what we do, and that's, like you said, it's a wide base. I try to share a wide variety perspective, whether it's media strategy, credit quality, assessing a big news development. Like when New York community had its issues, I've been continuously updating people, “Hey, this is why they had the material weakness in their results. Hey, this is why CRE is an issue for them.” Try to help find answers to people's questions and provide value. And so, I'm not the only one. There are other people that do that as well, and we're also able, I think, to turn content around at a faster pace than what traditional media has historically been able to do.

Alex Habet     

Are you finding yourself collaborating with other peers more directly who are going down the same path as you? It's something at least I observe in some of the other podcasts and things that I follow. You kind of see there's little networks and cliques that are formed. Is there something similar happening in your space as well?

Paul Davis     

Yeah. There's certainly a collegiality. I don't think I feel like I'm competing against other folks in the space. I follow colleagues’ Substacks. They follow mine. I've had questions before, and I'll shoot a quick text to one of my friends in the industry and just say, "Hey, I'm thinking about creating a podcast off of this. What do you think?" Those types of things. Really don't collaborate on actual covering events or things like that. But honestly, with the advent of more podcasting with this platform, there are certainly opportunities where you could point counterpoint with folks in the industry. So certainly, I think it's something that's constantly evolving, constantly growing, and yeah, I think more so in this space than in the mainstream media, there is more collegiality. We're not feeling like it's as cutthroat.

Alex Habet     

Right. Right. So you would say then Substack is a great place to receive value. You say you deliver value, I assume, for example, advertising doesn't necessarily get involved here, right? It's kind of like, I'm subscribing directly to you, so I'm the source of your revenue, and so I need that value coming back. That's kind of the whole value prop here.

Paul Davis     

That's the business model for Substack. I looked into it. Substack's overall policy is they don't provide a means for you to offer advertising to folks, but at the same time, they don't preclude or bar you from doing so. If I were to go the out route of having some advertising on-

Alex Habet     

You would have to go off platform?

Paul Davis     

My platform, I could do it, but it's not something that, there's templates and stuff for Substack to accommodate it. And so I've talked to folks about it, and it would be more like, I think you could have sponsor something here or there, but right now, I'm really happy with the traction that I've gotten just on the subscriber side of things. And the great thing about the subscriber side is I've worked at publications before that were subscriber-based. I've worked on some that were advertiser-based. At least with a subscriber situation, I think there's more granularity. There's a wider base. So if one person ends their subscription, it's no big worry. When you're advertiser-based, and you're relying primarily on people paying for ads, and a panic happens, a crisis happens, and half those guys circle the wagons and pull out, then you're really, really, really in a difficult financial perspective. So it's just like in the banking industry, I think having a granular client base really helps insulate you from certain types of shocks.

Alex Habet     

Right. It's kind of less elastic, is what you're suggesting.

Paul Davis     

One hundred percent.

Alex Habet     

Versus, yeah. Yeah. No, that's interesting perspective. Well, look, on behalf of everyone who listens to the show, I really want to thank you for coming on and just lending your expertise. How can people find you? Where's the best place? Is it Twitter or X or go straight to your Substack site? How should-

Paul Davis     

Well, yeah. There's several ways you could do it. I mean, obviously the main website is www.thebankslate.com. The Substack is easy to reach, too. You can just go to Substack and put in The Bank Slate, or it's thebankslate.substack.com. I have a Twitter feed. It's just, you can find it under The Bank Slate, The-Bank-Slate. There's ways to find me. I have a pretty strong Twitter following as well.

And then I will tell you, say if people want to get in touch with me, so whether you want to talk about banking news, whether I'm doing consulting, some spot consulting stuff with things like crisis management, executive recruiting, media relations, I've done some of that. I'm going to be doing a lot more of that. I can certainly be reached at info@thebankslate.com as well. And I guarantee you, you email me, I will email you back. It's nice being in that position where I could just have those dialogues and it's very energizing.

Alex Habet     

Excellent. Excellent. Well, thank you again, and we hope that you'll join us again soon here at The Purposeful Banker.

Paul Davis     

Oh, 100%. Thanks for having me, Alex.

Alex Habet     

And that's it for this week's episode of The Purposeful Banker. If you want to catch more episodes of the show, please subscribe to the show wherever you like to listen to your podcasts, including Apple, Spotify, Stitcher, and iHeartRadio. And if you prefer a video version, you can also find us on YouTube.

As always, let us know what you think in the comments. You can also head over to q2.com to learn more about the company behind the content.
Until next time, this is Alex Habet, and you've been listening to The Purposeful Banker.

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