The California Bankers Association hosted their annual conference in May, and despite being contradictory to the association’s name, executives and directors from banks all over the West region attended.
RSM attended the conference and was one of its sponsors. We noted three predominant themes that were the talk of the conference.
The prominence of a digital framework
A bank’s digital transformation is perpetual in nature; once an initiative is executed and crossed off the list, the next up-and-coming technology has already arrived. That elevates the importance of a sound technology infrastructure and digital framework that would help smooth out any strategy related to our digitized economy. Three areas related to a bank’s modernization process garnered heightened attention throughout the conference:
- Artificial intelligence continues to be the headliner at banking conferences. Although the technology took the world by storm, the banking industry is taking a calm and intentional approach toward adoption. Banks are focused on integrating AI into internal processes. Once institutions have streamlined those capabilities, they will pivot their focus to customer-facing AI features.
- Stablecoin legislation is inching closer to finalization and banks are waiting ambivalently. From a risk perspective, the GENIUS Act, a U.S. Senate bill that sets rules for stablecoin issuers, still needs to incorporate integral details. The typical guardrails we would see specific to capital, liquidity, reserves, etc., are not currently addressed and could lead to financial instability within our economy. Conversely, integrating stablecoin is a pivotal change in our financial system and will keep financial institutions on the innovative path forward as they continue to incorporate more of the digital asset era into their operations.
- Fintech funding is not nearly at the level it was five years ago, according to CB Insights data, but partnerships with fintech companies continue to drive efficiencies. Amid the ongoing wealth transfer, partnering with fintechs offers a modern, effective way to bring your bank to customers in a way that aligns with their evolving needs.
M&A activity
The current administration’s approach to deregulation is accelerating and we’re on the verge of a pro-business environment that will help support an M&A resurgence as well as spur de novo bank formation. As the opportunity approaches, the deal demand that has been pent up for the last few years is poised to break, and institutions need to be agile with data-driven strategies to take advantage and capitalize on potential prospects.
Talent and succession planning
On the never-ending list of priorities that banks need to address, succession planning and developing the next generation are consistently highly ranked. Mentorship, leadership development and sponsorship are all critical factors in not only executing the bank’s vision but also helping overcome common challenges that the industry comes across such as leadership gaps and identifying and developing talent. Cross-training, clear communication and employee engagement will help aid the transitions as they are set to take place.
Elia Blankenship, an RSM director in financial institutions management and technology advisory, contributed to this blog post.
For more insights on banking, visit RSM’s financial institutions page.
