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Banking Today

About this time last year, I was wrapping up a cover story for U.S. Banker magazine on Dick Kovacevich, the charismatic and outspoken CEO of Wells Fargo Corp., one of the nation’s largest banking companies. With his proven track record and colorful personality, Kovacevich had always intrigued me. His bold assertions such as “Banking is necessary, but banks are not” had captured my attention, and I was thrilled to get my face-to-face interview after months of wrangling with various PR handlers.

What I found especially interesting, though, was the consistent focus of his remarks. No matter what we discussed — and we discussed a lot during the lengthy interview — Kovacevich kept hitting on the same theme: execution.

“You have to have a good product, good people, good processes, good locations, all of these things are important,” Kovacevich stressed. “But a good strategy doesn’t mean a damn if you don’t sell the product.”

In the time that has passed, I’ve appreciated his comments even more, as I’ve seen a variety of bank CEO’s tout “the vision thing” while failing abysmally at execution.

In Mississippi, I would dare say that First American had “the vision” when it merged with Jackson-based Deposit Guaranty, but it missed the mark in bringing the dynamics together to serve customers better. Undoubtedly, other Mississippi banks have vision too when they merge with other in-state or out-of-state institutions. But do their returns accurately reflect whether they are delivering on that vision? It’s certainly a timely and relevant question to consider given current events in the banking industry.

I hate to keep picking on Bank One Corp. — the nation’s fourth largest bank was the subject of my column last month for its First USA credit card foibles — but Bank One’s recent problems clearly reflect the trouble with vision without execution.

After the company announced in the fall that it would cut profit projections for the second time, Bank One’s longtime CEO John McCoy stepped down in December. McCoy, a high-profile banker who often speaks at conferences and writes books, was touted as a visionary who turned what was a family bank in Columbus, Ohio, into an industry leader in cutting-edge technology and marketing.

While McCoy had a penchant for new and unique initiatives like Wingspanbank.com, the company’s Internet bank, many of these efforts didn’t live up to the hype they generated in the press. Moreover, when McCoy tried to reign in costs from traditional bank acquisitions by streamlining products into more centralized offerings, he failed to adequately provide the internal support resources that were necessary to keep various managers informed and efforts coordinated, according to analysts. After paying dearly to acquire First USA a few years ago, McCoy subsequently failed to understand why First USA customers did business with the firm when a change in policy subsequently drove customers off.

In a recent Wall Street Journal opinion piece, Martin Mayer, author of “The Bankers: The Next Generation,” succinctly outlines the problem with vision without execution. In a piece cleverly titled “You Can’t Take Vision to the Bank,” Mayer states, “It’s not enough to see where industry in going; you also have to have strong managerial skills to get your company there.” He contends that banking, for all of its changes, remains a business of “blocking and tackling” every day, where raising your eyes from the playing field is “still dangerous.”

As banks struggle to regain lost market share from nonbank providers, they will undoubtedly continue to explore the marketing of new products as well as the viability of expanded distribution capabilities. Many banks will also continue to seek efficiencies from mergers with traditional bank partners or alliances with one-time competitors.

Throughout all of this, vision and strategy will be a necessary ingredient for survival. But in order for banks to thrive in the long term, vision must be accompanied by execution. As many bankers in recent years have learned the hard way, proclaiming a goal isn’t the same as achieving a goal.

As author Mayer concludes, “wishing” something doesn’t make it so, even when the wishes “make great press releases.”

Tupelo-based journalist Karen Kahler Holliday writes a monthly banking column for the Mississippi Business Journal. She is senior contributing editor for U.S. Banker magazine.


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