Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols, and this is Breaking Banks.

It’s conference season, and that isn’t just for the parents out there juggling work and home commitments. Nothing makes you reassess your life choices like being the subject of an article in a major publication. Since the Time article came out, I’ve tried to significantly curtail my travel, and I’m grateful for the change it made in my behavior.

For the most part, every now and again, the FOMO sets in. In this case, what I was missing was the infamous acquire or be acquired conference put on by bank director. In case you missed the Arizona desert, or you want the insider view from two of bank director’s brightest minds, this episode is for you.

Kia Haslett, oftentimes on the show doing fintech hot takes with me, and Emily McCormick making her debut, join me this week on Breaking Banks to recap AOBA, as the conference is known, and more importantly, share their view on what this means for the industry and what they’ll be writing about next. These are their opinions and not those of their employer, which makes it all the more delightful. Although I suspect the editorial board at bank director would find their points of view are nothing short of insightful.

This week on Breaking Banks. This is probably not going to make up for it, but Emmett, who leads ecosystem development on the Alloy Labs team, was throwing down major shade about me not being at AOBA this year. What’s better than being at, no, it’s second best to being at AOBA, is having two of my favorite bank director writers, like nerds extraordinaire when it comes to banking, and I mean that as a sign, yeah, Emily’s shaking her head for the listeners.

I mean that in the biggest compliment, so since I couldn’t be at AOBA this year because I was busy dadding, I thought, hey, I want to hear from two of the people who make that thought leadership happen, their perspective, and where I want to start, so Emmett right away keyed in on, he goes, the energy is very different this year at Acquire or Be Acquired. We can joke all we want about Emmett being into vibes, but what was the vibe from your perspective about AOBA this year? Did it feel different to you as insiders? Emily, did you report a vibe shift? I mean, I would say a subtle vibe shift. I think there’s a couple of things to pick up on.

I mean, one, I will report on what I would call the cautious optimism, maybe. There was an air of optimism, but I do think we were talking about some very serious challenges, so that does temper it a little bit, but I feel like we were feeling good in the desert. Folks coming in and enjoying the environment, but also looking ahead.

We actually, during the event on the second day, we get to poll the crowd. That’s one of the things I get to do. That’s one of my super nerdy tics that I get to do is hear from our audience of bankers and throw questions at them, and they get to participate.

One of the questions, one of the first questions we had was, how do you feel about 2024 compared to your experience? So, not compared to the previous AOBA, but compared to their experience at their institution for 2023. It was 91% said they feel more optimistic about 2024, and I think there is a general sentiment that the second half of the year in particular feels really good for the industry. Maybe we get a couple of rate cuts.

That was definitely coming out in presentations like Tom Michaud of KBW, the CEO of KBW. That’s kind of the vibe, the prediction. He was setting up the conference with that.

So I do think there’s that air of optimism that, yeah, we’ve got some challenges now, but there’s a little bit of a light at the end of the tunnel toward the end of 2024. Yeah, from my perspective, so there’s, I have two hats that I wear. One is that as the banking and FinTech editor, I spent most of my time on AOBA’s technology track and on our tech stage, so sometimes wasn’t always, Emily and I were rarely in the same rooms together based on where we were assigned to go.

But I also have a big balance sheet nerd enthusiasm, big bank accounting. From my perspective, I was really happy to see the intellectual focus and shift and enthusiasm. That’s the most important thing is that there was a lot of balance sheet talk on main stage where, and again, famously you think about the investment bankers and the attorneys on stage talking about Bank M&A, and that’s fine, and I love Bank M&A right next to the next person, but this year it’s almost impossible to talk about Bank M&A without mentioning a balance sheet.

The, I felt so seen on stage to see a balance sheet with fair value accounting and to see how the interest rate mark impacts the deal value and then the accretion and then the dilution, whatever. And then to see people next to me taking photos, when the bankers in the audience take out their phones to take a photo of basically what a hypothetical balance sheet looks like in a deal, that’s where I was like, oh shoot, you too, you like this stuff too. So that’s what I got really excited about.

And I felt like there was just a lot of engagement in that content. And just really, again, when a nerd meets a fellow nerd, you get excited and you feel like you’re among your people. And so I felt like the intellectual engagement and the nerdiness of this conference was really high.

I don’t know if that’s quite the vibe shift he was sensing. Not that I could report about Aoba. And we should add, when we say it’s super nerdy, we are totally complimentary.

This is totally enthusiastic, very happy to see that. But yeah, I mean, it was a depth of discussion. I mean, folks come out to Aoba to the desert.

It’s not just about the weather, which is fantastic and great, but they come to learn. And it was, but it was like an extra layer of depth and wanting to, like balance sheet was huge this year. The balance sheet, you know, tweets and LinkedIn or exes and LinkedIn were part of what gave me the FOMO.

And Emily, you should know, I did hit one of Kia’s bucket list items. We talked for a full hour on breaking banks about core deposits last year, right? It was one of our best interviews, our highest hitting episodes. Everyone loves deposits.

Everyone loves deposits. Everybody wants deposits right now. And I think that was part of what came through in the questions that were being asked.

And I’m curious, everyone wants deposits. Everyone doesn’t want to pay up for deposits. What nuggets did you glean or were there any big insights from people on stage around deposits and the quest for the perfect balance sheet? So one that I’ll take is that unlike all of FinTech space, I did not think that banking as a service was discussed or took up as much energy in the room.

I was kind of interested to see that, you know, whether or not these bankers see that as an option that’s available for them. It just kind of wasn’t, you know, we didn’t spend a lot of time talking about it. What we did talk about was that in the quest for deposits, you know, where do I go find deposits and bank primacy came up a lot.

So, you know, just even understanding the relationship that your bank customers have with your bank and having the data and the insights to bring that in, that seems like a gimme. But also the fact that we’re talking about it, I guess, assumes that it’s not being, that’s not a practice at some banks. Deposit pricing is so interesting to me because when I’m, again, I’m so interested that the competition has continued after what I would feel is we have more deposit stability.

Last year, it felt like, you know, scrambling for deposits. Now, I guess it’s just keeping deposits. What I was, felt was missing from the conversation is, you know, we’re talking a lot about the outlook for the federal funds rate and then kind of assuming that that will mean that cost of funds decreases, deposit prices decrease.

I actually think that we need to have a better understanding of the relationship between cost of funds, the terminal point for cost of funds relative to the federal funds rate. There’s research coming out from S&P that says that cost of funds may not have peaked for banks, even if federal funds rate decreases. And I don’t know how many banks are fully prepared for or fully have that baked into their analysis and what their terminal cost of funds could be.

Did you, you saw, you heard a lot about deposits. Yeah, I did hear a lot about deposits. I’m trying to coalesce it.

I mean, you know, we were kind of talking about this yesterday, you know, and speaking about the vibe shift too, you know, we weren’t, we weren’t talking about the, at the conference about liquidity management, right? We weren’t worried about deposits flying out the door in the wake of the bank failures in the spring. It is an emphasis on how do we handle this as a profitability challenge? How do we keep the deposits that we want to keep? How do we, how do we price those? You know, I do think again, with that optimism, we’re looking at, you know, second half of the year, we’re going to have a couple of rate cuts. We don’t know if that’s going to happen.

And I think, I think that’s important to emphasize. Like we, we wouldn’t have looked at, you know, beginning of 2022 and said, hey, it’s going to go up, you know, how many 500 points, you know, we were not thinking the federal funds rate would move like it did. I think there’s room to be flexible, be thinking about different scenarios in the sense of, you know, we just don’t know what’s going to happen.

And, but you know, the latter half of the year is a long way away if we think about it. So I think that’s kind of my caution around it. I love seeing an optimistic vibe, but I’m also like, well, we don’t know what’s going to happen.

Emily, you just said something that I think is so important is that, you know, this idea that rates can go down, but they also can go up and they can also stay the same, you know, and I would tell me if this is a fair extension of what you just said is a bank better go build its business, that it has a viable and good business, no matter what rates do. In fact, you know, there’s probably a couple of things we should drill into related to how banks think about their balance sheet in an age of more volatility. Well, and the other thing too, now I feel bad because like Emily and I, when we were building our outline for this, we were, the vibe shift was really optimistic.

And I’m a pessimist, like, I’m just a straight pessimist. I know. I think as journalists, we’re supposed to be just a little skeptical.

We’re probably like a little bit more sensitive to risks versus like opportunities and upsides. And so something, again, I saw on main stage, but we don’t really spend a ton of time in, and it’s still pretty theoretical is the, the reason why deposit costs obviously are so important is that they’re really eroding profitability and net interest margin. There are, you know, 40% of banks last year had expanded net interest margin.

We saw on main stage, but that means 60% didn’t. And there are some banks that are under two. And so if you can’t make, if you can’t grow loans at a rate that expands that margin, and you have, again, the rising cost of funds or the cost of funds that doesn’t decrease, and you’ve got the unrealized losses on your balance sheet, you are in a declining earnings position, which means that you have fewer options available for you to make investments or to grow your balance sheet, right? You don’t have, you don’t have organic earnings that fund growth.

And so, you know, for me, I’m always interested in the zombie bank that is technically operating, technically profitable, but is, has increasingly fewer and fewer options available. And, you know, it’s probably the second A on Aoba and, and just kind of needs to understand the position and the financials that got them there as well as, you know, what is, what does the next 12 months look like and what needs to happen in the next 12 months? Well, let’s come back to the second A in a second, but I think there’s a number that are pre-zombie call it, they’ve been bitten, but haven’t turned yet, but they’re losing Samra brought this up yesterday and it’s one of my favorite engineering terms, but the idea of degrees of freedom, the number of directions something can move and a balance sheet that doesn’t give you flexibility and it’s limiting your degrees of freedom is definitely beginning to become a problem, especially when you compound that with pressure on fees, even if you are, you know, a sub $10 billion bank, I think we all need to assume overdraft fees will continue to come down and other fees will come down either under regulatory pressure or just because the market is going to push that. Yeah.

Do you agree with that statement? These old continue to be under pressure. Yeah. I mean, I definitely feel like the hint is particularly from the regulators that, you know, the consumer financial protection bureau specifically it definitely feels like that’s going to happen.

That did get mentioned from the stage. You know, Skip Hagebeck runs a city national bank out of West Virginia and he was up there as part of a panel there. They were actually identified in our ranking banking analysis last year as one of the top 25 banks in the country, which is why we had him on stage as part of that panel.

But they are very much a retail focused bank out of West Virginia. They’ve got branches, they’ve got small dollar checking accounts. I think he said the average was around 300 per checking account.

So not talking high volumes, not talking about uninsured deposits or anything, these are bread and butter kind of banking. But they’re making income off fees. And there’s a big concern that, you know, not only does that affect profitability, he was speaking generally, I think, for the industry.

He was not speaking specifically for his bank. I feel like I should be very careful here. But, you know, there’s a concern around profitability.

There’s also a concern of like, who can we serve, right? Can we continue to offer small dollar checking accounts that a lot of Americans need? You know, you just need a small account. So I think that’s an interesting juxtaposition. You know, there’s the impact on the banks, but also on their customers as well.

I think it’s a big question. And Jason, to your point about the degrees of change or flexibility, I also, you know, having been to several AOBAs and, you know, seeing kind of the narrative around adding technology to do X, Y and Z digitization, now thinking about how can you add technology to increase efficiencies if or, you know, and then even generate positive operating leverage and growth. For me, being the pessimist, I felt like there was kind of a looming like point of no return that it’s 2024.

And if we’re having these conversations to fully digitize X, Y and Z thing in your bank, and you don’t make that choice now or today, it’s going to, you know, in five years, you are going to be in a position where you have no options. You have no growth. You have things like that.

And so, you know, I’m hoping that, you know, people take the vibe shift, people take that enthusiasm, people take that optimism. And then also, I think the greater shared understanding that the technology is now seasoned. You won’t be the first or the 10th bank to use this technology.

There are a number of banks already using many of these things that I think are becoming increasingly standard. And so if you don’t have, you know, data analytics or data warehousing or online, fully online account opening for not just your retail consumers or on, you know, like, you know, or the stronger, more robust model risk management or data that can be used in an AI application, like data quality that’s high enough. If you don’t have that, or if you’re not working on that today, then, you know, that’s charting your path forward.

You’re making a choice that five years from now, you won’t have choices. Whereas these are the things like banks have to do now. And I’m really hoping that Aoba gives a lot of enthusiasm for what’s possible.

If you do this, not if you don’t do this, you know, it’s the point of no return. So that was also something that kind of was in the back of my mind at this conference was, God, I hope we can kind of move these conversations forward because we’re just getting to the point where we have universal consensus that this is now what banks do. This is now how banks operate.

And I would add to that. I mean, there’s a real sense that that’s why bankers come out to learn and to get ideas. And I mean, that’s what there’s all these, you know, fintechs and different solutions out there.

And I had one banker say, hey, this is actually super efficient for me. I can go around, I can have these meetings, I can kind of better understand their solutions without bringing them down. You know, a lot of these banks may be in small western towns.

You don’t want to have to have folks come out. So it’s super efficient for them as a way to understand what’s possible. And there’s a real enthusiasm, I think, to understand what’s possible and understand how they can move forward.

So hopefully we had a really proactive group. That was definitely the sense that I got that they want to be better. They want to improve.

They want to figure out. I think the challenge for community banks is the what’s next, right? We can’t invest in all of it. So what are we going to prioritize? Well, let me test this because there might be a selection bias that a lot of what I was hearing and seeing in social media was that this I like Chris Skinner’s words.

So I’m becoming all kind of Brit and European on this. It’s not digitization. It’s digitalization.

So they digitalize. It seems like the general sentiment from this stage when it was talked about during M&A was it wasn’t optional anymore. And in previous years, you heard a lot of people talk from the stage and some platitudes around, oh, yeah, digital transformation and digital and this idea of we need the same experience to be able to offer digital.

But the audience felt like it was a little bit optional and aspirational in what they did. And it felt less aspirational this year and more mandatory. And that’s part of what I think I heard you saying.

Yeah, I think that’s fair. Yeah, I would say that the set of assumptions that the optional versus mandatory versus standards is we’re just kind of coming to it felt like the mindset agrees that this is the standard going forward. And I don’t know, again, if there’s selection bias against banks in the room or if banks don’t offer that, they kind of know they need to offer it.

That’s to me where like I will be curious around like your ability to how do you how do you go from like, I know I need to do this to I actually do this to I’m doing the next thing that kind of came up a lot is how do you you know, I joke I’m a technology writer, but I write about I actually write about how to make a decision and how to execute. And I, I’m always curious by the dynamics of, of like the mess, how do I internalize the message? And then how do I execute on that? And how do I overcome, you know, to, you know, what I think a lot of community bankers have, which is like, I’m, I move slow. I’m a, you know, I’m a slow follower.

I’m not even a fast follower, or, or, you know, like, think about declining profitability, how do I prioritize projects that will, you know, help us with efficiency and make us money, right? Like, those are things we have to prioritize versus like, I don’t want to just look at what everyone else has, I need to figure out what’s going to be the best bang for my buck, and be most consistent with like, who we are as a bank and who we serve. Do you feel that banks and especially, you know, a conference that I don’t know any conference that pulls in as many directors. I mean, you live up to the name, right? Of bank director, right? Like you see a lot more directors, like you don’t get that at ABA’s conference for community bankers, the number of directors there, like tons of C-suite, but not a lot of directors.

And I’m curious, you know, Kia, what you just said, our banks, especially the directors that need to approve budgets, getting that this investment in technology is mandatory in an era where, you know, under pressure on NIM, and I want to cut costs. Yeah. Well, I actually think that that’s where that enthusiasm around the balance sheet really, really helps some of these conversations that, you know, to both kind of normalize like, this technology is available, it’s achievable, your bank, peer banks use it.

And so that messaging, so that non-threatening, almost like, and honestly, and Jason, I’d love to hear about like, people who kind of get scared of the word innovation, and they really want, like, they want it to be seen as just like very accessible technology that, of course, you would add, like, you know, how the iPhone is just a phone. And then to really tie it to also declining profitability means increasingly these are not, these are not conversations, these are not like, just maybe we’ll think about it. It’s, we’ve got, you know, we as the directors understand our balance sheet, understand our growth, and then understand kind of what’s going to take us to the next level or to the next five years.

And also, we are increasingly familiar with the technology that’s available, and we’re not scared of it anymore. And, you know, I mean, maybe that is like kind of a five-year process to really educate and get everyone comfortable with what needs to happen and why and what’s available. But that was, I think, again, that mindset where we all are speaking kind of the same language, it’s just going to be really interesting to see what individual choices people make coming out of the conference.

But I think that the conference itself is getting a little bit better at getting everyone kind of on the same page about accounting, balance sheets, M&A, just kind of understanding the, what goes into M&A, like, why did we have the lowest amount of deals on record since the Great Recession? And then also understanding, like, you know, the balance sheet and deposits going forward. So much to talk about with what you just described. So let’s pick the piece, the first piece of this.

Why was there so little M&A, you know, really beginning in, you know, 2020, and, you know, continuing through the drought of 2023? Okay, I guess. I’m sorry, I’ve been talking a lot, but I guess this is also a question for me. This is definitely, he has time to shine, so.

So are bot not, or they’re bot not sold, right? No, no, banks are sold not bought. So like, so the seller, sorry, there’s been so little M&A, I forgot the saying. So for years, we have had increased unrealized losses on the balance sheet, which for the most part, banks can ignore, except when a bank has to, is sold, and the entire value of the assets gets marked, right? Because there’s an event to mark to market.

Yeah. So that’s like one of the only times we have marked market fair value accounting in banking. And that is the time where sellers are realizing how much their assets have lost value, and how much someone else is willing to pay for them.

And in, at the same time, buyers, especially buyers that are public, have seen their stocks decrease. So they can’t really use the premium in their stock price to buy assets that are not worth as much. And so we saw less than 100 deals last year.

Increasingly, these deals are carrying what we would call interest rate marks that are almost the full sum total of their bond books. So because the asset just is paying a rate that’s below the market rate, and so they bring it on. Now, the reason why we’re seeing some thawing in deal activity is because once we can kind of understand the metrics of these deals, and that maybe you do have to take 110% of book for your deal.

Well, if you combine your bank, which was a seller for whatever reason, with the buyer, you will have earnings that are just so strong. The EPS accretion on the deal, the pro forma deal is so strong because these marked assets are technically performing, and they’ll pay off to par. So you’ll have deals that have maybe like 11% tangible book value dilution because of the size of the mark, but they earn back in two years.

And EPS accretion is 20%. And it’s all just rate driven. And I think some banks are coming to be comfortable with like, yeah, this is just kind of accounting.

It’s just like how it works. But four quarters, it took sellers a while to digest the way, way, way lower rates or prices that they were going to have to get for their banks. And it’s a real convincing process.

We’ve seen deals that are below book. We saw one at 88% of book. I mean, that five, 10 years ago, that seller is distressed and close to failure.

Nowadays, it’s just someone who loaded up on bonds. Yeah, well, I mean, my running joke, I think I said this to you the very first time we met is I always loved how Al would open the conference for like solid decade, right? Which is who’s here to make an acquisition? And all the hands go up, right? Looking for acquisitions. Who’s here looking to sell? And like only a smattering of hands go up, right? But it was interesting, Naomi, in what she published end of year, right? That for the first time ever, the number of people saying that they’re looking to sell went up, the seller sentiment went up by, I still think these numbers are wrong, but I’m still shocked that people admit it when from like 46 or 48 to 54% said that they’d be interested in selling, of course, for the right price.

I think it’s a lot less or a lot more than that, especially when it’s the right price. But I think you’ve hit it, like a key thing here is just the realization and the hard truth that many are beginning to accept, which is the never ending cycle of life is not that you get acquired at a premium because they want your branch footprint and your deposits. Yeah, I mean, that stat is from our M&A survey.

And I think you were putting air quotes around the right price and that shifts, right? I think that’s what Kia just illustrated is there has been a, I mean, I’ve been thinking about it, the drivers behind M&A, what drives people to sell, that’s not any different than it’s been before. We still have succession challenges. We still have shareholders that are seeking liquidity.

Then we have some heightened concerns maybe around investments in technology, like we were just talking about. We’ve got a heightened compliance environment that’s gonna require some additional, so you may sit there and go, I don’t wanna continue as a solo entity anymore, it’s time to sell. And maybe does that get you a little bit more rational on price as you continue to wait this out? And do we keep waiting for pricing to come back up to whatever you think that number is supposed to be? Emily, I think that is what changed is people played the waiting game on what you just described.

And they just realized, I do need to invest in technology. Cost of compliance is not gonna get cheaper. What a Kia’s earlier points, rates may go down, but that doesn’t mean your cost of funds is necessarily dropping proportionally in the short term.

They are a bit of funds, so like. Yeah. The other thing too, and it’s funny, I was talking to a banker at Aoba, it was the next day after all the craziness.

And he was saying, in his Midwestern state, that there are still banks that don’t have websites. And that one of the first things he did when he, he’s a millennial, he’s actually younger than me. He wanted to have like a millennial bankers group, which I’m gonna put in my comments for next year.

But he, that when he joined his bank from the big city, went back home, one of the first things he did was make sure the bank showed up on Google Maps. Like that people could like drive to the bank’s branches. And I know, look, I’m looking at your face.

But I want you to know that it’s been taken care of at his branch. But the fact that he had to do that when he joined indicates that, there is really a range of banks in America still. There are still 3,000 plus banks.

They don’t all come to our conference. Only 2,000 people came to our conference. So I know that there are some who aren’t attending.

But he was talking about how one of his strategies is that he wants to acquire the banks in his state that don’t have websites. And honestly, like that tracks, like it might be a little harder to find them. You gotta go drive.

Yeah, you can’t Google search for them. Yeah, you can’t, that’s a challenge right there. Don’t pull up the FFIEC and figure out what banks are even in your state if they’re not all in Google Maps.

But there is, I think to Emily’s point, there’s a lot of pent up demand. It’s not just iBankers on our stage saying that. All of the reasons why a bank would sell are actually still present.

They’ve actually probably amplified. And then the one weird thing is that pricing had changed so much that it really, really put a damper. And then going back to the nerdiest AOBA ever, that balance sheet, bankers understanding how interest rate risk or how interest rates change their balance sheet and what that means strategically for them, both from an earnings perspective, but also if they were, what is the right price to sell at? And how much is that initial number versus how much is the pro forma earnings of the combined banks? I love that it was the nerdiest AOBA ever.

Can you promise next year will be even nerdier? I don’t know how we’re gonna increase it. I think we’re committed. I mean, I feel like we’re committed to it.

It was so nerdy. We could use AOC. I might not be as big of a deal next year.

And I think that focus on interest rate risk and how important that is into earnings and profitability, like if we move away from that, we might just get kind of back into like regular banking, super nerdy stuff. So we’ll see. I’m curious, both of you coming fresh with ideas out of AOBA, what do you both wanna, Emily, let’s start with you.

What do you wanna write about that maybe either was sparked by AOBA or didn’t get enough airtime? Maybe it’s too nerdy for the broad audience, but for the extreme nerds, it’s out there. I don’t know if it’s too nerdy. I’m trying to think about this.

Talent is actually a piece that we talked about a little bit. I don’t wanna insinuate that we weren’t talking about it at all. We actually had a really excellent panel with a couple of bankers that talked about talent, but it’s a real challenge for the industry.

It continues to be a real challenge. It’s something that we were hearing, particularly through our survey research kind of in the years leading up to the bank failures in the spring. And then we got super nerdy about balance sheets for a while.

That’s been underlying all this, talking about M&A and going forward, succession is a huge piece of that. It has been a traditional deal driver, but we also have a lot of baby boomers that are retiring out of the industry. That’s not just the C-suite, that’s commercial lenders too.

So that’s been something we’ve been covering. I think we’re gonna need to kind of return to more coverage on that. We have a compensation survey coming up that we tend to cover talent challenges.

So that’s definitely gonna be top of mind for us coming soon. And we’re gonna have fresh data on that. But I do think the talent challenge is, banking as a technology enabled business, right? But it’s still a very people powered business.

You do have a lot of individuals that are working to help borrowers and help customers. So I think the talent crunch, making sure you have leadership at the top, the board is of course central to what we do. Board refreshment is a big part of that as well.

So that was maybe something that we didn’t talk about quite as much at Acquire or Be Acquired that I’m intrigued to maybe explore some more this year. I mean, it’s funny you bring up on the talent because talent is always there, but it’s taking a different lilt now than it maybe has in the past. In our upcoming LA Labs member meeting, we have a session on succession planning, but it’s not the session that you expected.

It’s this around, how do I actually do the board refresh that you said? And especially how do I do the refresh of my middle management and senior management, right? Like I have these dependencies on, this person has been one of our commercial lenders for 35 years. Probably not the commercial lender of the future. It’s that the person that’s like, hey, we’re not on Google Maps, right? Like how do I find, keep and promote the person that recognizes showing up on Google Maps is actually really important.

Yeah. I mean, and I think it’s important to juxtapose this with the big buzzword out of Aoba, the big technology that we’re talking about. I can’t believe we haven’t talked about it yet.

I tried to make a game of how long I can go without saying it. How long can we go without that? But artificial intelligence was a big thing that was coming up on the stage. We had a whole breakout session that was really well attended that folks just want to hear about what AI can do.

And I think there’s a real practical interest in it. It’s not kind of the pie in the sky, robots are going to take over and that sort of thing. But we’re talking about talent challenges.

We’re talking about making banks more efficient and AI solves for some of those issues. So I think there was a real appetite to kind of understand how that could apply. So that’s another thing we do have coming out.

I do want to mention in a couple of weeks, we have an AI report that Kia worked very hard on. You know it will be about how to make decisions and less about the technology. Very practical in its approach.

Yeah, I also actually agree with, I don’t maybe focus on succession planning as much, but I have been thinking a lot about the skill sets and the knowledge bases that directors and executives need to have. When I talk about everyone in the room getting really excited about balance sheet accounting, I feel like it’s because there’s a greater appreciation for this. When we talk about finally moving away from the nice to have or optional technology to the, well, I would just assume that you have this or you’re potentially going to be acquired mindset.

That’s really useful, but also it kind of reflects that the mindset of leadership is shifting towards an orientation that is more open to certain types of things. Our colleague, Laura Alex, just wrote about direct qualifications. The American Banker just wrote about an AI chief executive.

These are types of talents and skills that maybe you don’t hire for directly, and maybe that’s not just their one job, but you do kind of want to see that they have the understanding that the leadership, the board has this understanding that allows them to even push forward. I would like for the skepticism and lack of knowledge to stop being the roadblock to banks. The work of Aoba and to see over time, the mindset shift, hopefully that will be very empowering to banks because we’re not having an argument about whether or not this is important for our bank.

We all kind of have that same shared mindset now. Again, now it’s just about how to make the decision and how to execute on that decision. Oh, man, you hit one of my favorites.

Oh, this is really important, but not for my bank when it comes to tough choices. Well, thank you both. Like you’ve done nothing but re-instill my FOMO for not having been there this year.

And I promise I’ll be there next year, if you can promise it’s going to be even nerdier. But the topics and what you brought to life for us today, I really appreciate you taking the time and your thought leadership for the industry because it is all about the balance sheet, baby. Well, thanks for having us.

This was really fun. That’s it for another week of the world’s number one fintech podcast and radio show, Breaking Banks. This episode was produced by our US-based production team, including producer, Elizabeth Severance, audio engineer, Kevin Hirsham, with social media support from Carlo Navarro and Sylvie Johnson.

If you liked this episode, don’t forget to tweet it out or post it on your favorite social media. Or leave us a five-star review on iTunes, Google Podcasts, Facebook, or wherever it is that you listen to our show. Those actions help other people find our podcast.

And in return, that helps us build an audience that can be supported by sponsorship so we can continue to provide you with our award-winning content every week. Thanks again for joining us. We’ll see you on Breaking Banks next week.