From his perch as chairman of NJBankers, Thomas Kemly has a birds-eye view of the issues and opportunities surrounding the state’s banking sector. NJBIZ caught up with Kemly, who’s also the chief executive officer of Columbia Bank, and asked him what’s ahead for bankers in 2020.
NJBIZ: State legislators recently decided to put marijuana legalization on the ballot in 2020. If it passes, which seems likely, what will that mean for banks?
Kemly: It’s a huge issue, because even if it’s legal at the state level [medical marijuana is legal in New Jersey], it’s still not legal at the federal level. And therefore, banks technically are prohibited from financing a legal marijuana-related business. The majority of New Jersey banks are waiting for federal legislation that will provide clarification, although one or two institutions in New Jersey are already providing some banking services. The assumption is that it will be a big market, and once the federal issues are cleared up banks will probably quickly enter it.
NJBIZ: Here’s another issue. Gov. Phil Murphy has been pushing for a state-run bank, and in November signed Executive Order No. 91, creating a Public Bank Implementation Board that’s tasked with developing a plan for the bank within a year. Is this good news or bad news?
KEMLY: We didn’t think this would ever actually happen, but now the governor has established a commission. Bankers in New Jersey are uniform in questioning the need for a state-run bank since, as a community of bankers, we already support the industry and consumers. We’ve heard some reasons from proponents, but in our view there are still many unanswered questions about how a state-run bank would actually work, and how it would be insured. Would taxpayers support it?
Running a bank requires a lot of expertise, so there’s some concern about the state taking on this responsibility, especially when there’s no need for it. Banks already do a lot to support local communities, and small and large businesses. We’re not worried so much about competition as we’re concerned about what could go wrong with a state bank.
NJBIZ: What about cybercurrencies, like bitcoin, and the broader concept of fintechs, or financial technology companies? Could these kinds of digital developments threaten banks?
KEMLY: Our members, of course, are aware of cybercurrency, but so far it doesn’t seem to be an issue. Fintechs, however, and the related issue of the “digital wallet” is on every banker’s mind. Banks are working on how to develop and deploy the technology in order to remain competitive.
Some banks are partnering with fintechs, while others are developing their own technology. At Columbia Bank we’re speaking with potential partners to see how fintechs can fit in our space so we can get innovations to market faster.
NJBIZ: What other issues are bankers thinking about? How about grooming the next generation of banking leaders?
KEMLY: That’s a big deal. As an industry, we’re focused on succession planning, and we’re meeting with local residents and bringing more young people in to see the opportunities that a banking career offers. NJBankers [since September 2018] has sponsored an Emerging Financial Leaders Group [to provide educational programming and networking opportunities for emerging leaders in finance, and to provide support to local communities through philanthropic activities and outreach]; and an Emerging Leaders program [designed to enhance the organizational, performance, and leadership skills of highly motivated managers who have the potential to become future leaders in the banking industry].
At Columbia Bank, we’ve established relationships with educational institutions — including through job fairs and hiring college interns — and we have a robust two-year leadership development program designed to develop leadership talent across the bank.
Bankers are also dealing with the changing nature of branches. As more people do their banking electronically, we’re seeing a smaller branch footprint; although there’s still a place for physical branches. Today, people often visit a branch for advice, or to discuss their personal or business strategy. We’re seeing fewer teller transactions — and Columbia Bank, like others, has embraced the “universal banker” model, where branch employees are cross-trained so they can handle a variety of activities — and an increase in discussions at branches.
NJBIZ: What about diversity, getting more women and minorities into higher positions?
KEMLY: That’s a front-of-mind issue at most institutions, and NJBankers is taking significant steps to assist, with events like the Women in Banking conference, and Women in Banking leadership and other programs. NJBankers also supports a variety of diversity and inclusion training activities.
NJBIZ: NJBankers representatives typically sound an optimistic, or at least “cautiously optimistic” note when they talk about banking’s future in New Jersey. But right now, despite a healthy economy, the industry is facing some stiff headwinds when it comes to the yield curve, basically the difference between what banks pay to access money and what they earn when they lend it out. What are your thoughts?
KEMLY: The flat yield curve is difficult for any kind of margin-based business. Many banks are looking to develop other fee-based sources, instead of relying so much on yield-based ones during this cycle. Examples include wealth advisory, and loan servicing services. At Columbia Bank, for example, we have a title insurance company. Bankers in New Jersey, though, are proud to continue to service communities, individuals, and business customers.