Citizens Bank CEO On The Rise Of A Super-Regional Bank

So over time, we’ve added, you know, 50 or 60 senior coverage bankers who come from other banks with long careers, a lot of wisdom, good relationships, and they ultimately brought those clients with them, over time to the bank.

What was interesting on the commercial side…it’s the chicken and the egg situation. The coverage people would only come if you had strong product capabilities and the product people would only come if they knew you were hiring the coverage bankers to give them more swings at the bat. And so we had to move that up in lockstep.

Now we can go beyond just simple loan syndications. We do bond underwriting, we do M&A, we do sophisticated interest rate and foreign exchange risk management. We have a brand-new cash management platform we’re putting in place. Today, we can win business against the mega banks where we’re competing head-to-head with them, and we can lead a transaction, or we can win an interest rate, hedging transaction against JPMorgan, against B of A, which was a hard thing to do five years ago when I started.

What about the consumer side?

On the consumer side, there was a significant amount of change. In terms of customer expectations, the branch was becoming less important, although still important. We had too much space and our branch was dedicated to transactions. You had to start migrating the transactions to smart ATMs and to mobile channels so you can do remote deposit, capture and take a picture of a check. There was a lot of technology change.

And then making sure those channels, those new channels, were working seamlessly with the old channels. Can you follow a customer through their mobile interaction, through their call to the contact center, through their visit to the branch and make that a holistic, good experience?

There’s been a lot of challenges with that, as to how do you get that customer interaction model right? How do you use data to personalize offerings to your customers, so you don’t waste their time?  We’ve also innovated on our consumer-lending areas. We had a fairly narrow and super safe consumer loan book focused around home equity line of credit and auto. And we wanted to scale up our mortgage business. We thought the student lending business was very attractive, because the government had pushed into it and crowded out some of the big players. There was still opportunities, and in particular, opportunities to refinance student debt, which was there for the taking.

I think we and SoFi, a company called SoFi, were the two who pioneered that market, which, you know, when you think about the burden of student debt and folks mostly paying a high rate that reflects where they were 10 years ago, they’re 10 years out of school, they have a good job, they have a good credit rating, they should consolidate all their debt and pay a lower interest rate on that. On average, we’re refinancing about $50,000 in debt and saving a 32-year-old something like $175 a month, which is real money.

And then merchant finance, we struck up a partnership with Apple around their iPhone upgrade program and that’s been very successful. Apple has very high expectations around the customer experience, and we designed a process that works really well for them.

I think we’re doing some really interesting things where we’re leading the pack. We were the first super regional to launch a national digital bank called Citizens Access, where we have five and a half billion in deposits after a year of having it up and running. This was principally targeted at savers, but now that we’re gaining traction around the country, what else can we do with our digital capabilities? So that’s really exciting.

As a super-regional, how does Citizens Bank compete against the larger banks like Chase and Bank of America, while providing the kind of personal and community service people would expect from local banks?

It’s called the “middle of the river” phenomena. You usually don’t want to be in the middle of the river. Steve, one of my guys, said to me in the beginning, “You know, here’s the deal, Bruce. We’re big enough to matter and small enough to care.” So what you try to do is outcompete the smaller guys by being local and really having deep roots in the community. One thing I’m very proud of is that the bank, when I got here, we had a commitment to the communities, and we volunteered about 50,000 hours. I benchmarked it and I said, “People feel good about that, that’s really not enough.” Today, we’re hitting 150,000, so we’ve tripled that. Our executives are on 700 boards. We’re supportive of communities, promoting opportunity, taking care of the less fortunate, that’s really part of our core DNA. And that’s a good way to compete against the local players. We could do that with a little more mass and a little more scale behind us.

And then at the bigger end, I think we’ve been quite nimble on technology. The mega banks may pay more, but they’ve got a sprawling enterprise to manage, and we can, I think, be more targeted. And I think at this point, there’s a little more regulatory forbearance. Initially, when the reforms came, they were painting everybody with the same brush. And I think over time, the heavy regulation is still oriented towards the biggest banks, who have the too-big-to-fail problem. And it’s lightened up a little bit on us, so I think we have a little more flexibility than some of the bigger banks.