Strategies, Best Practices and Thought Leadership

Stopping the Spread of the Fastest Contagion In Banking During COVID-19 – Misinformation

In early September 1900, a hurricane was devasting the islands of the Caribbean. Thankfully, the meteorologists in Cuba, who were recognized as the hurricane experts, had indicated that the storm would head up the coast to the Galveston Texas area and not the coast of Florida. However, the Cuban insight and data did not align with the data that the overconfident US Weather Bureau had. In fact, it flew right in the face of the local Galveston Weather Chief Meteorologist, Isaac Cline, who said it was “crazy” to think that a storm would impact Galveston. Cline had information he trusted in, it just was the wrong information – and the results were catastrophic.

We, the banking industry, find ourselves today in our own storm. We have been displaced from the board room to the kitchen table. We find the economy and our clients struggling to stay afloat. And in the midst of all of this, there is a ton of misinformation that is impacting our ability to serve the small businesses and consumers that are reliant on us.

Since no one wants to be unprepared like Galveston was, let’s address business challenges in the COVID-19 environment.

Go with the team that has been through the storm before.

Just like in the 1900 hurricane, the Cuban meteorologists had a lot more experience than others, yet they were overlooked. When considering who to help you weather the storms, consider partners that have been through several recessions and market cycles, rather than those that were spun up overnight. There is a lot of interesting tech out there, but it needs to be combined with process and policy. You need solutions that can not only identify the issue but resolve it as well.

Go with the team that may not validate you completely.

The US Weather Bureau had a lot of information, but they could not grasp that the Cuban data did not perfectly align with their data set. Be cautious of data that always validates your needs. It is our responsibility to challenge the data and information. We are risk managers and as such, we should manage the risk that comes from bad data or validations. If you are not being told no occasionally, that should be a red flag.

Go and prepare now for the next storm.

In 1886, the port city of Indianola (which competed with the port in Galveston) was devastated by a hurricane – it is now just a ghost town with a historical marker. Years later the Chief Meteorologist for Galveston wrote an article in the local newspaper stating that the idea of building a sea wall to help save Galveston from a hurricane was unnecessary and outlandish. Due to this short sightedness, the damage from storms down the road was both catastrophic and preventable. Storms (and sunny days) will come back around, so now is the time to digitalize your user experience, automate your lending process, and implement solid portfolio risk management practices.

Our ability to handle risk is what makes us successful bankers and we will get through this crisis. Your insights and expertise have gotten you this far, so let us continue to focus on that and build out successful partnerships to weather out any storm. Here is to sunnier days!

Topics: Risk Management

Mike Horrocks

Written by

With more than 25 years of experience in the financial services industry, Mike Horrocks possesses a unique and extensive blend of financial expertise, technology skills, process redesign abilities and solution management experience. Horrocks’ background enables him to create go-to-market strategies for new solutions, help clients convert strategies into revenue generating initiatives and forecast market direction.

As the Vice-President of Product Management at Baker Hill, Horrocks’ responsibilities include the identification and development of new market opportunities in the business of lending, risk management, and analytics for financial institutions. Mike holds a MBA both in International Finance and Venture Technology Management from Indiana University and a B.S in International Finance from Brigham Young University.

Before joining Baker Hill, he held executive positions within several other organizations, including Experian, Profit Technologies, SAIC, Broadway and Seymour (FIS), Zions First National Bank and Zions Data Corporation.

Horrocks is a member of many associations including the Risk Management Association and Bankers Without Borders. In his free time, he enjoys traveling internationally with his wife and five children.

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