What have been some initiatives that Citizens Bank has undertaken to spur its growth?
I’d say on the business side, our commercial bank always was good. But it was not fully at scale, so it needed to be bigger. And we didn’t have all the product capabilities. So really, the first order of business was to go out and figure out where we could expand, where we could bring in coverage bankers.
We had a bias towards the middle market, which are slightly smaller companies, and we thought we had a good opportunity to move up market into the mid-corporate space, but still not going head-to-head every day with the mega banks. But there was a $500 million to $3 billion in revenues, that’s the mid-corporate space, and if we were going to attack that, we needed to bring in bankers with industry expertise. So, we had to build out some industry verticals.
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.
Talk about working with boards both as a director and as the CEO of Citizens Bank?
Speaking first about Citizens…when I was at RBS, they had a regulatory obligation to have a board here. But it was really an advisory board, because all the decisions were taken from London. And so when the plan was for me to come over here and take the company public within a year, I had to assess, what did we have on that advisory board? Was that the foundation for a public company board? And then what holes did we have, and what did I need to add into that?
And the good news is that the CVs, the talent level on that advisory board was actually quite good. So I had a base. I brought two directors back from RBS, who are Americans who left the RBS board and came on to the Citizens board, Art Ryan was the most significant, he’s become our lead independent director.
And then I went out and recruited four new directors over a two-year period. So, when we went public, we had a very strong board with the right experience in financial services, both in banking and insurance, and folks who understood risk and a nice cross-section of backgrounds.
And I think, you know, the key to having a good board is to just have a shared vision of what they’re trying to do with the bank, and a very collegial operating style, but then also be sharp and be able to have engaging constructive challenge of all of management’s plans.
