What Makes a Banking Leader

By: Alan J. Kaplan

May 23rd, 2014

The banking industry today is operating in an environment that few could have anticipated, yet requires an increasingly complex mix of banking skills, leadership capabilities and interpersonal qualities in its leaders. Having spent time recently speaking with hundreds of bank CEOs, board members and senior executives, the requirements for success as a bank leader today have crystalized. Each letter below represents a vital element that bank CEOs and potential CEOs must understand or possess:

B is for balance sheet: Today’s bank leaders must understand the risks inherent in the current interest rate environment, whether due to potential funding mismatches or the risks from declining securities values in a rising rate environment.

A stands for asset quality: Bank leaders must remain vigilant regarding credit quality. There’s still no quicker way for a bank to falter than to suffer from a spate of bad loans. Regulators continue to focus on credit culture, policies and procedures as well.

N is for non-interest income: Everyone wants more, but how do we actually grow revenues? Increasing fees on customers always carries some potential fallout. And building lines of business such as wealth management, insurance or other products involves a significant up-front investment and a long-term return. There are few easy answers here.

K represents capital: As everyone knows, this is the most critical ingredient that banks need today to survive and drive growth, whether organic or transactional. A lack of ample capital not only constrains strategic plans, but too often invites a call from your regulator.

The L stands for leadership: While great leadership remains an obvious prerequisite for success, the demands on bank leaders today are more strenuous and complex than at any time since the Great Depression. Many bank boards struggle with the challenges of succession and developing that vital next generation. In addition, the mantle of leadership should extend much further into the organization than just the CEO’s office or C-Suite executives for an organization to truly succeed. While the CEO sets the tone, everyone should lead by example in their daily interactions with customers and colleagues.

E stands for emotional intelligence: This is the critical aspect of leadership in which you see your bank’s leaders communicating effectively, leading from the front rather than the rear, and following a “servant leader” mindset. The emotionally intelligent leader knows that the bank’s success is not about them, but rather the people on their team. When the team is successful, the leader succeeds as well.