How Will San Angelo's Smaller Banks Survive in a High Tech World?

SAN ANGELO, TX — Can small community banks survive in a Google-Amazon-Facebook-Apple world? That was the question posed to San Angelo area bankers who attended the Independent Bankers Association of Texas 2018 Regional Meeting Tour de Texas yesterday at Bentwood Country Club.

About 200 bankers from all over the region, from as far away as Abilene, came to see what the trends for success for small banks in Texas were. Two subjects came up repeatedly. One was federal government regulation and the other was fending off the big national banks—the ones “too big to fail,” and a possible future threat if one of the aforementioned four horsemen of tech ever decided to barge into their industry.

Let’s talk competition first. Uber and Lyft disrupted taxis, what’s to stop a tech startup or giant from disrupting banking, and with it, the most vulnerable, small local and regional banks.

“Your kids already think anything that is ‘tech’ is cool. What are you going to do if Amazon opens a bank?” panelist and CEO of IBAT Christopher Williston posed.

IBAT Chairman Joe Kim King, also Chairman of Texas Country Bancshares in Brady, the holding company for many banks in the area, including Bank of San Angelo, said small banks must stay focused on “helping make our customers’ dreams come true.”

Your banker should know you and be there for you for life, he said. King understands that customers averaging 76 years old own majorities of Certificates of Deposits in small local and regional banks. He said his outreach to the next generation starts when kids are in high school. He urges parents to get their high school-aged children checking accounts with debit cards. His banks offer scholarships for college, too. It’s also about technological convenience. Online and mobile banking, mobile apps with the ability to make deposits from anywhere their phones are connected, and logistical convenience when away from home comprise the bedrock foundation of keeping customers through generations.

Yet, the most important way small banks survive is talent, he said. “You’ve got the hire the right person for the role,” he said, because no matter what the sexy tech feature there may be, banking is still all about relationships.

An array of vendors was present to make relationships with the local and regional bankers. Michael DeWitt was present representing Top Flight Financial. As the VP of Wholesale Lending there, he said his job is to augment small banks with a portfolio of mortgage and lending products. For example, a bank can offer VA home loans through his wholesale service. Leveraging services like this allows small banks to compete with the national banks like Bank of America and Citi.

IBAT President Christopher Williston brought the group up-to-date on the organization’s lobbying efforts in Washington. With a Republican-controlled federal government, Williston said, the atmosphere in the nation’s capitol has flipped from eight years of “all bankers are bad” under President Obama to an atmosphere of asking bankers what legislation will best help small banks serve their customers well.

IBAT believes passing the “Economic Growth, Regulatory Relief and Consumer Protection Act”, or U.S. Senate Bill S.2155, is paramount (a 3-page primer of it is published at Forbes.com). The bill, if signed into law, would loosen mortgage-lending requirements and provide other regulatory relief, allowing smaller banks to better serve their customers, Williston said.

Opponents of the legislation point out that community banks are thriving today, even under Dodd-Frank. S.2155 will not prevent another banking system collapse because it eliminates needed protections, opponents say.

Williston believes the bill will be signed into law by Memorial Day.

The Trump appointments to various regulatory agencies also thrill IBAT, particularly the appointment of Mick Mulvaney to head the Consumer Financial Protection Bureau. As the Washington Post noted earlier this month, Mulvaney is winning the war in dismantling the regulatory agency. “That agency has a staff comprised one-third of lawyers,” Williston said. Mulvaney is changing the direction of the newly formed agency (under Obama) to protect loan consumers at, what the IBAT believes, an unsustainable burden on lenders like small banks.

The road show has visited El Paso, Midland, Lubbock and Amarillo. Tomorrow, the IBAT officers will meet with community bankers in Waco. There are two road shows every year. The second trip later this year will start in Houston and wind its way down into south Texas.