Revolutionizing Banking: Innovation, Efficiency, and the Future of CDs with Neil Stanley, CEO and Founder of The CorePoint

Neil Stanley, CEO of The CorePoint, discusses transformative strategies for financial institutions, from empowering frontline bankers to reimagining CDs. Learn how innovation and AI are reshaping banking efficiency, reducing costs, and preparing for a dynamic future in financial services.

Key Words

• Banking innovation
• Financial services
• The CorePoint
• Cost of funds
• Empowering frontline bankers
• AI in banking
• Future of CDs
• Market value CDs
• Community banking
• Financial efficiency

Transcript

welcome to banking on information where

we dive deep into the dynamic world of

financial services and

Technology discover the innovative

solutions driving the industry forward

explore the latest trends and uncover

the strategies that are reshaping the

future of

Finance join us as we unravel the why

what and how of solution providers in

the financial services

industry stay tuned for insights that

will revolutionize the way you think

about money and Technology

[Music]

hello and welcome to banking on

information today with me is an Neil

Stanley the CEO and founder of the coreo

welcome to the podcast Neil glad to be

with you

reer so we talked a little bit about

this we're gonna start with a question

based on the book from by Simon synic

start with why we're g to ask why do you

do what you do and why did you

originally start the core

Point yeah so you know I believe in our

industry's capacity to help people to

help people manage their money I had the

privilege of starting or the situation

of starting in the industry many many

years ago when we didn't have much

capacity technology-wise everything was

was one to one you know you did stuff

locally you only thought about your

competitors who were local and as the

industry is evolved we've gotten to the

point we're competing against everyone

everywhere all the time and yet the

industry many ways Rec acts like

nothing's changed in the in the realm

that I work in time deposits it looked

just like it did decades ago which tends

to commoditize what we do and and I

worked at a very Progressive

organization First National Bank of

Omaha we did things differently than

than the peers and I didn't realize how

resistant to change the industry was

until I left there after 22 years and

what I've realized in being in the

community banking space is that there is

such a need for Innovation and not just

automation there are a lot of fin

techers who are trying to automate

things what we know is that there are

ways to improve the way Bankers do

things that bring value and cost the

bank nothing that's what's so

interesting Bankers think it's a zero

some game if we give somebody something

we must have given it up and the reality

is we can do both simultaneously so

that's my why sir right now that is a

great starting point um for the core

Point um wanting to do things

differently helping Bankers with

Innovation and helping them with

technology now tell me a little bit

based on that why what you solve for for

the banks that you work with what what

use case do you help them solve for yes

so when you think about funding a bank

and I have the privilege of being kind

of a a a financ minded CEO a bank CEO I

had the financial aspect of it of course

I had the human aspect of it too but

there's a lot of Bank CEOs that came up

on the lending side and it's all about

business development business

development business development but you

have to look at how the bank makes money

that's the value proposition create

value for your clients and create value

for the bank simultaneously and what we

found was when it came to funding they

just said we'll throw our rates out

there we'll throw rates out there until

until it works out and you know some

rates we'll we'll share with everybody

some rates we won't share with just

everybody so how does that work how do

you systematize that and how do you how

do you take a a group of people who are

working with retail depositors and

esteem them properly rer I've never met

a commercial lender who would start out

introducing themselves and say I'm just

a commercial lender here but I've met so

many personal Bankers who said I'm just

a personal banker they diminish their

role they they basically claim that

second or third class citizens and so

what we do is we go into a bank and I'm

thinking of a particular Bank we went in

when they had a bunch of these third

class citizens and we said folks you are

vital to the success of this bank now

we're not saying that the commercial

lenders aren't vital we know they are

but everyone's vital if you don't know

about managing money and if you're not a

vital component of helping your

depositors manage their money what are

you going to do in banking because

you're going to need to get out of this

industry because there's no room for

people who are ordert takers and product

pushers you need to be someone who helps

people manage their money so what we do

is we go in and we give them tools very

simple tools I'm thinking of a

particular situation where they had a

very high cost of funds ruer because all

they did was rate promote rate promote

well if you promote rate guess what

people want rate Y and they had one of

the highest cost of funds in the

industry we worked with started working

with them two years ago and as as we

have worked with them they went from

being the 90th percentile down to the

40th percentile on their cost of funds

huge differential we're talking we're

talking 6070 80 basis points of

differential on hundreds of millions of

dollars of portfolio that's real money

y now when you do that how does that

generate value for your customer and in

what type of ways does that generate

value for the customers that you work

with yeah so there are

when we go in it's very holistic and

that causes as you know Bankers don't

want to lose control of things but we

let them configure everything but as

it's holistic we change their approach

or process we make it look a lot more

like commercial lending instead of being

the ordert taker with a rate sheet and a

warm cup of coffee we Empower and equip

people at the front line this is scary

for seite people wait a minute we're

going to empower the front line to

negotiate we already do on the

commercial lending side why don't we on

the deposit side so we equip and Empower

them we give them a platform we give

them some new products products that

make a lot of sense and we train them

and we track results I'm a funds

transfer pricing person I know that you

have to measure results if you want to

see something improve you better know

what your Baseline is and you better

know what you're looking for and tell

the team that's involved here's what

success looks like this is what it feels

like this is what it it comes out in in

metrics and we can save 10 to 40 basis

points that one client I told you about

yeah we saved them lots of basis points

but we will claim 10 to 40 basis points

and on hundreds of millions of dollars

of portfolio at 10 basis points we're

talking real money real fast I just

looked at a bank uh that's in the market

right now that we're looking at and in

2022 their entire CDA interest expense

rightor $4 million the whole year yeah

guess what it is annualized now $53

million they went from $4 million for

the whole year of 22 to 53

million

today that is a huge huge number and

somebody needs to be managing that and

if you're managing it like it's

1982 yeah sorry it's not gonna work yeah

so you're creating value by creating

more efficiency in the process by making

people confident in the front line and

giving a better experience experience

and then to top it off you basically

reduce the cost of funds which is the

heart dollars and cents so it's it's

both better experience as well as cost

of fund savings you nailed it now here's

what most Bankers when they hear what

you said they think well he's sprinkling

magic fairy dust on this no no we're

using very basic financial management

techniques we dollarize everything we

show how we stack up against the

competition in dollars we know how to

identify the sleepers the curious and

the rape shoppers and so as you identify

those personas and you work with them

you find that there is negotiation room

but not if you just throw out CD

specials day in day out so you have to

have a a process to take that

opportunity and it used to be trivial

because oh the difference between the

highest rate and the lowest rate was

just just a few basis points you know

when when F funds were a quarter ah if

we pay 04 or3 what difference does it

make now it's the difference between

paying 4.9

or

3.6 wow 130 basis points difference huge

yeah that is impressive now let's talk a

little bit about the future I like to do

this thing called future stinking so we

both don't know what the future is going

to hold but we can think about what a

possible future could look like so Neil

paint me a picture of what you think the

banking industry looks like in 2034 so

10 years out yeah what what what does

that look like what's different what's

the same yeah so record the the future

of banking is is really going to be

focused in on how we integrate our best

and brightest people as professionals

with the tools to engage and know what

we need to know at the time of a contact

a time of of of connecting with our our

clients and that is going to

require use of AI and it's really

exciting I'm I'm just working right now

we're we're using AI for some training

things we're going to be using it for

real-time coaching and in the future we

may actually see a sales agent using our

techniques that we've developed over

over time the reason you can't use uh

the a the U computerization of our

technique hasn't worked is that there

has to be a pace consideration to these

conversations and you cannot have just a

simple decision tree because if there's

a simple decision tree then your your

depositors will game it because they'll

play out the decision and then they'll

go back and then take the sweetest deal

because in sequence you always offer

what the depositor would be inclined to

take potentially but most profitable to

your financial institution and then you

work them through a process where you

give something but you get something

give and get and in the future here's

what's going to

happen CDs are going to look very

different than they do today okay now

most people on that are going to watch

this are going to go what do you mean

CDs could look different it's just a

fixed rate for a fixed term how could it

be an Indi well there's already a model

out there record it's called us

treasuries treasuries is a fixed income

security fixed rate for a fixed

term but the but the market for us

treasuries is gigantic compared to that

for fix income securities in Banks which

are called CDs yep CDs are in banks are

a three trillion dollar market so

there's this group of people who want a

fixed income fixed term uh product from

a bank yeah but you know what they hear

when they go to buy that fixed rate

fixed term penalty for early withdrawal

we're gonna punish you for early

withdrawal yeah and you know Rucker

that's completely optional that's

completely designed by the banking

industry and perpetuated by individual

Banks it is not a requirement and who

would buy a US Treasury if you were told

hey on that 10-year treasury if you want

to redeem it early we're going to charge

you a a penalty we're going to punish

you for early Redemption we would not

see that that industry that treasury

market be as robust as it is so we have

in our industry perpetuated a tool from

the 60s and 70s because that's the way

we've always done it in the future

you're going to find that we're going to

sell fixed rate fixed term accounts just

like every other fixed income security

Bankers are going to awaken to the fact

they're not giving up anything when they

tell people will'll market value your

early Redemption it's going very y so

that so that's a possible future that

can happen we're we're going to see that

how should how should we if we go

backcast that to today how should Banks

get ready for that possible future if

that happens what what what do they need

to do today to get ready for that well

they can adopt that right now they do

not have to wait it is not we're not

talking about sophisticated mathematics

uh if you know how to present value a

cash flow you too can offer a fixed rate

fixed term market value we call them

redeemable CDs um because every consumer

today wants their options we have gone

through an Amazon Amazon ification

that's a word I'd like to be able to say

consistently

and and everyone now thinks differently

about being a consumer because we know

we can get things quickly and easily and

we can trade it out if we didn't like it

as as we thought we would and in

thinking we haven't done that yet in

some ways we are still stuck back

decades ago and we can change that

individual Banks can change that right

now they don't have to wait now at some

point a big bank is going to do it and

the Market's going to seize this and

everybody's going to be under the

pressure of doing it at one time but

until that happens individual Community

Banks individual credit unions recer can

take advantage of this opportunity right

now that is great well so the future is

already here if you're ready to take it

on that is probably a great note to end

on thank you very much Neil for this

conversation if you have any questions

for Neil and myself you can reach out to

us on

LinkedIn thank you so much Neil for

being here Recker I appreciate it and I

appreciate what you're doing for the

industry to bring insights like this uh

to to the the industry players thank you

so much thanks so much and until next

time choose to be curious