The Novantas Review is pleased to introduce a new feature in which we interview an expert about the banking industry. For our debut, we chatted with John Kanas, a 45-year banking veteran who is Chairman of the Board of BankUnited in Florida. Kanas spent 30 years as the CEO of New York’s North Fork Bank before selling it to Capital One in 2006. He then teamed up with a group of investors in 2009 to buy BankUnited after it collapsed during the financial crisis. He served as CEO of BankUnited until the end of 2016 and currently holds the role of Chairman.
Q: The theme of this issue is the disappearing customer. Obviously, this can be interpreted two ways — whether it is less face time with existing customers or customer migration to other types of providers. What does this theme mean to you?
A: There are far fewer personal and physical interactions. We don’t see them as much because we don’t have as many branches and they don’t visit the ones we do have. There is far less of a bond or relationship between bankers and customers, mostly because customers have found a way to displace the need for conversation with individual bankers.
Q: What are the biggest challenges in interacting with customers that you don’t see as much as you used to?
A: If you don’t see them physically, how do you establish relationships? For commercial customers who have larger and more complex relationships, despite all the technology and despite the fact we can be more efficient in the way we handle customer business, there still remains a need to interact with a banker from time to time — largely about strategy planning of the business and credit needs that go along with the strategic plan. With retail, the velocity of change in the relationship between banks and customers is enormous. With banks and non-banks in the retail services industry, there is less and less need for outreach. It is inefficient and unprofitable, in most cases, for banks to physically reach out to consumer customers.
Q: Are branches still important?
A: Branches are still important — and they are more important in some markets than others and with some customers than others. Large customers, particularly on the commercial side, want to feel they are dealing with a substantial company that can be seen by them in some way and is physically there for them and their customers. Customers do get a certain amount of comfort from driving by a big expensive branch that has a sign out front and gives them the sense that they are dealing with a substantial institution that is solid. Consumers rely less and less on branches, though in some parts of the country where habits change at a slower pace, branches continue to be important.
Q: How do banks achieve customer satisfaction when a growing number of customers engage with the bank online?
A: It’s tougher to do. You have to be faster, cheaper, more accurate and safer — that’s what everybody is looking for. You have to safeguard information.
Q: Has the industry introduced any digital product that received a better reception than you thought it would What were they and what do you think is appealing about them to customers?
A: If you look at the mortgage business and the success of Quicken and other Quicken-like providers, it is remarkable to look at the velocity of change in the procedure of getting a mortgage. You used to sit down with a banker for hours and fill out reams and reams of information and pay a lot of money to complete it. Today, you can turn on the TV and see a commercial about getting approved for a mortgage in minutes. It is quite something and it is something I never expected to be so successful. Kudos to those who saw that inefficiency and jumped on it.
Q: Some banks are seeing more than half of their total transactions being completed digitally. Where do you think that number will be in five years?
A: It’s a complicated answer. If you have a bank that is predominantly retail, it is reasonable to assume that number in five or 10 years from now will continue to expand. In some cases, it’s not hard to imagine a mostly-retail institution serving consumers to have 80 or 90 percent of their transactions handled digitally within five years.
Q: Are non-bank financial providers helping the traditional industry or hurting it?
A: In some ways, the relationship between banks and non-banks is converging. A lot of the non-bank providers are beginning to understand they would be well-served to work with banks to provide a service or product instead of reinventing the wheel. Those that will be most successful in the non-bank digital space are going to partner with traditional institutions. I think it’s better for the consumer because it makes everyone sharper and it expands the horizon of banks that never thought about different ways to deliver the same service.
Q: Why do you think some consumers aren’t embracing the digital shift in banking compared with other industries?
A: Consumers are handing over their most prized and valuable asset to someone in banking — their money. Some people are hesitant and just aren’t willing to jump too quickly without being convinced of the value. There is all kinds of publicity about what the risks are in dealing digitally with money. It causes people to be quite conservative about it. I think it’s quite natural for some people to be a little bit slower to adapt on the banking side compared with other industries like retail.
Director, New York