How a $1 Billion Community Bank Outperforms Industry Giants
Webster Five's Brian McEvoy discusses how the billion-dollar mutual bank achieved 50% asset growth by combining big-bank technology capabilities with community bank values while successfully completing an 11-month core system transformation.
By Justin Estes
On an episode of the Banking Transformed podcast, host Jim Marous spoke with Brian McEvoy, chief retail banking officer at Webster Five Savings Bank, about how smaller banks can compete effectively while maintaining their community focus.
Q: What motivated your transition from large national banks to Webster Five?
Brian McEvoy: I started my banking career in high school. I think I was somebody who was heavily interested in the humanities, political science, et cetera, and I had a guidance counselor who said "why don’t you take a class in the vo-tech center?" And I heard banking was easy.
I started working at the Fleet Bank branch, took a class there, ended up as a float summer banker and that ended up turning into a career over time. After I came back, summers in college, working shifts over the summer and things of that nature, it actually became something I love.
Q: What key lessons from large organizations have proven valuable at a smaller institution?
McEvoy: One of them is that conditions are temporary. And what I mean by that is you really do have to play the long game. I remember a time when I was going through a great recession, and the goal was managed through the trough. We can get through this, but there is something on the other side, and you have to be able to survive before you can thrive.
I think the second one is that strategy really does matter. You have Drucker out there who says, culture eats strategy for breakfast. I believe that culture is also really important. But you do have to have a strategy, really a guiding north star for where you’re taking your business.
Building Digital Capabilities
Q: How do you leverage branch-based experiences in a digital world?
McEvoy: Part of that is your employees; your team members have to embrace the fact that digital is part of the experience you deliver.
So, they need to understand it, and they need to be advocates for it. They’re selling it, but they’re knowledgeable about it and providing the customer with information about how to access digital and utilize it in a way that makes their lives easier.
I think even more importantly, if a customer is going through a self-service journey, and they’re in the digital arena and they get stuck, you have to be able to drop everything and know how to support them and help them through that challenge.
Q: What approach have you taken to digital transformation while maintaining community focus?
McEvoy: One of the things that honestly is looking at that competitive landscape and recognizing that, in some cases, there’s really no turning it around. People are going to use other services that are convenient for them. Payments Space is a great example; Venmo, PayPal, whatever, the ship is sailed in a lot of ways.
However, in terms of competing and becoming digital while still remaining personal, one of the ways we’ve looked at that is through effective partnerships. I don’t want to call it open banking, but our technology platform today has a pretty open API integration with digital. And so, we can partner with some unique and innovative firms that provide a service that we don’t have the scale to stand up on our own.
Core System Transformation
Q: How did you manage your recent core banking transformation?
McEvoy: From the time we signed the contract to our implementation date, it was 11 months. It was a rip of the band-aid approach. I wouldn’t recommend it to anyone, although there’s not a better way to do it. Like we get it done and have the scars to prove it.
But in all honesty, there were some bumps. Still, it wasn’t bad at all because a big part of it that helps is our customer base is loyal and understanding, and we had a, I think, effective communication plan with multiple touchpoints; email, direct mail drops, messaging, a microsite on the website, everything to try to prepare for that.
Q: What challenges did you face maintaining business as usual during the conversion?
McEvoy: In the branches, some that are north of 30 years, they’ve always done things a certain way because we have the same core for 25 years. And so, getting them to make the transition and learn how to use the new operating platforms to serve customers in a different way was a huge area of focus for us, but business can’t stop either.
Competing Through Innovation
Q: How does Webster Five attract new customers and build relationships?
McEvoy: First of all, in terms of growth, I joined the bank in June 2020, and we’ve grown our asset base by 50%. So, we’re having a lot of success there. Most of that asset growth has been on the commercial banking side. So, for us, one, it’s about differentiation.
We’ve made a name for ourselves as a commercial community bank. It comes down to where you have expertise, leveraging that, and focusing on your core competencies.
Technology Partnerships and Integration
Q: How are you leveraging partnerships to enhance capabilities?
McEvoy: We found some success by looking at that FinTech relationship as a partnership opportunity instead of a competitor opportunity. One recent example is that we’re one of the probably first 15 or 20 banks in the country to roll out Spiral, a giving platform that enables customers through their digital banking to do roundups on their debit card and select the not-for-profit of their choice.
Q: What unique advantages have you found at a mutual institution?
McEvoy: The biggest advantage is the customers really love the bank, and not that they didn’t at other financial institutions, but the scale of, for example, net promoter score is different. We used to be excited about one set of numbers; now, it’s a concern if we’re at Webster Five below that set of numbers plus 30.
And so, the level of commitment to that relationship between the customers and the bank is surprising in a positive way. The average tenure of a customer and an account relationship is much longer than I’m used to.
Q: How does the mutual structure affect decision-making?
McEvoy: Working at a community financial institution like Webster Five, we’re mutually held. That means our depositors own us, and we don’t have shareholders. The strength and the advantage of that is that we can make long-term planning decisions. They still have to make sense from a profitability perspective. But we’re not looking at making the next quarter’s number and making decisions in the short term that we then have to figure out later.
Leading Innovation at a Community Bank
Q: How do you approach product development differently at a smaller institution?
McEvoy: Well, very differently. I think first and foremost, the scale is completely different. And so, in a community bank of my size, the senior management team, basically the CEO and direct reports, forms the technology steer co, the al co, and basically all the committees.
And so, there really is a tight-knit group of leaders that are working together closely all the time. And that’s the same group that puts together the strategic plan and works through the budget every year. We’re very aligned on where the bank is going and where we want to take the bank.
The flip side of that coin is that empowerment coin, if you will because I’m empowered to innovate and deliver new products. There’s accountability as well like there’s no one left to blame if it doesn’t get done.
Engaging the Next Generation
Q: How are you adapting your services for younger customers?
McEvoy: Providing that value-added service, which we think is important in the marketplace, too, as the landscape changes, especially with regard to who is now signing up for banking accounts and looking for new banks and new financial institutions. Cause-based purchasing across industries feels strongly like the future wave, and that applies to banks, too.
A customer who’s my son’s age or whatever is looking to partner with brands really across the spectrum that have core values that are aligned with his. Providing that true kind of link to giving in a personalized way and reinforcing our commitment to community values is really important to us.
The Future of Community Banking
Q: What excites you most about the future of community banking?
McEvoy: What excites me the most about the future is that I think, as we’ve been talking about here today, there’s really been a democratization of technology. And so, a bank of my size can effectively compete, whereas 5 or 10 years ago, I was more doubtful about it.
We’ve been effective in acquiring talent. Even if you look at our employee mix it’s probably more majority millennial and Gen Z, which you wouldn’t expect from a billion-dollar community bank.
Q: What challenges keep you up at night?
McEvoy: What keeps me up at night is, it’s increasingly difficult to compete at this scale. Just from a cost perspective, your technology costs are going up, your employee costs are going up, and so are benefits. And so, the margins get slimmer and slimmer. So, scale becomes even more important.
We’ve successfully grown at a clip that we’re happy with. But there’s also a pretty significant wave in the mutual community bank space of mutual holding company tie-ups. The competition around us is getting larger and has more opportunity for leveraging that scale.
For a longer version of this conversation, listen to "The Community Bank Advantage", a podcast with Jim Marous, available here. This Q&A has been edited and condensed for clarity.
Justin Estes is an award-winning writer, strategist, and financial marketing expert with expertise in banking, investments, and fintech. His clients include the NYSE, Franklin Templeton, Credit Karma, Citi and, UBS, and his work has appeared in Forbes, Barrons and ThinkAdvisor as well as The Financial Brand.