Innovation Amidst Uncertainty: 3 Lessons from a Bank CEO

As part of the Money Experience Summit, Brent Beardall, President and CEO of WaFd, talks about what 2020 has brought to his workplace. Beardall says, “It keeps me up at night, but it also excites me. It's what wakes me up in the morning.”

1. Start Where You Are

Beardall puts the changes at WaFd in context. “I came to the bank in 2001,” he says, “and I am not exaggerating when I tell you that the general ledger for the holding company was done on a Big Chief Tablet. And our holding company had a market cap of, I think, $700 million, literally done by hand. We had no email at the bank. I was the controller at the time, and I was doing the trades for our investment book on my personal Yahoo email account. And so I had to speak to the compliance department at Goldman Sachs and Citibank and JP Morgan, and explained that, yes, this was legitimate, coming from a Yahoo email account.” 

“We didn't even offer checking accounts at the time,” he continues. “One of our previous chairs thought you don't want to give people access to their money. They believed the more access customers have to the money, the more likely they are to withdraw it. When I got to the bank, we were 90% funded with CDs. Today, we're down to 29% funded with CDs, and we've more than quadrupled the size of our deposits. So that's where we came from.”

[Learn how you can help your customers make smarter financial decisions. Read the Ultimate Guide to Financial Advocacy.]

2. Develop a Dynamic Understanding of Customer Needs

Since the pandemic, the need for digital solutions at WaFd has become clearer than ever. “The realization I've had in the last six months is that the data we have now is just a small fraction of what we need,” Beardall says. “We need to understand if we can have a real-time understanding of our clients’ financial health.”

“We have a reputation of being capitalist pigs because we take advantage of people when they're down,” he says. “Let's educate people about what they need to do to pay us back. If we truly believe that people are inherently good and want to pay us back, let's not set them up to fail, to have a high default. Let's charge a reasonable rate of interest so they can come and get their loans within the banking system and not pawn them off to the payday lenders where they will pay the highest rates of interest and really have the most opportunity to fail.”

3. Use Regulation to Your Advantage

Regulation doesn’t have to be an innovation killer. “I actually give the OCC a lot of credit,” Beardall says, “They have spun up their office of innovation. They realized that unless we innovate, we will fail. When we look at a business for a C&I loan, for example, we ask, ‘What is the moat around that business? What is going to keep that business going forward?’”

“In reality,” he continues, ‘Amazon, Facebook, Google, or Microsoft would be eating our lunch because of the technology budgets they have and what they could leverage off of, but they specifically stay out of depository or insured deposits because of regulation. ... So we have to be creative in thinking about how we innovate within banking. And it's such a huge opportunity because we have these behemoth banks that are so slow in innovating. They're trying to innovate around the edges, but we have to take the opportunity to reinvent ourselves. And we can take market share. We can be out there offering the new services. … We want to provide customers access to their funds in a safe manner. Make banking easy, make it transparent, so they make smart financial decisions.”

Learn how you can help your customers make smarter financial decisions. Read the Ultimate Guide to Financial Advocacy.