Speaker 1:
Welcome to the JMARK business innovation technology experience.
Todd:
Welcome everybody online that might be joining us, and then later if you’re listening to this or watching this, we’ve been doing a series of interviews with clients over the last month or so, and looking to understand how everybody is working through the current situation with COVID-19. There’s a lot changing in the world. We’ve talked a little bit in the past about how digital transformation has accelerated about 5 years in a short timeframe, because people have been thrust into this model of needing to work from home or work in a different way, and react to changes in customer behavior.
Todd:
Excited to have Matthew Lowman from Farmers and Merchants Bank in St. Clair, Missouri, who has had a little bit of a different story than a lot of other companies. Matthew, could you walk us through a little bit about how this whole situation has affected the bank and how you and your employees have transitioned to the changes that you’re dealing with now?
Matthew Lowman:
Sure. We had spoken in the past a little bit Todd about our situation and our town is a fairly small town.
Matthew Lowman:
Some people are aware in the banking industry, and some people probably are not, but what had happened in our particular instance and across the state bank wide was we had gone ahead and shut down our in branch services, and actually just limited that to an appointment only type of situation. If somebody needed a lobby access, we could certainly transact business through our drive ups and through a curbside type of service for document signing and what have you. Then certainly if people needed to have interior access for safe deposit box or other types of services, then they could go ahead and do that.
Matthew Lowman:
We had done that for about a 45 day period. We found it to be fairly beneficial. The initial thought process or fear was that you’d see a run on some of the deposits or that the business [inaudible 00:02:24] drop. It’s actually been quite the converse has happened. We are actually right now at the largest point we have ever been from a deposit standpoint. Our loans are up massively this year. Some of that is attributed to the PPP loan program, but actually aside from the PPP loan program, we’re up a pretty considerable year to date as well.
Matthew Lowman:
It’s been interesting because after the initial few days, I think people started to settle into understanding that there are other ways to do their banking services, and that they don’t have to come in. We tend to have two of our… several branches are very heavily trafficked from a in-person perspective.
Matthew Lowman:
That’s because they’re smaller towns, because people like to come in the bank. We may know their name for whatever reason that might be, but we do tend to have quite a bit of in-person traffic and to start to see the behaviors change a little bit whereby, that in-person might have shifted slightly to the drive up or may have shifted to learning that I can deposit my checks remotely, or set up direct deposit, or start to use some of these other features and functions that quite frankly I’ve had for several years, but maybe the adoption rate wasn’t as high. For example, the remote deposit capture has started to really jump in the last couple of months because now people are realizing, “Hey, I don’t have to go to the bank.””Hey, I can snap a photo of this check and know next day, there it is. Voila.”
Matthew Lowman:
That can allay some of their fears relative to if they don’t want to get out in the community or they don’t want to interact with folks or whatever the case may be. That also helps us on our end from a safety perspective as well.
Matthew Lowman:
We had talked a little bit about how our business model had changed. It didn’t change a lot from a personnel standpoint. I’ve talked to some of my colleagues in the industry and there’s some banks that have up to 60 to 70% of their workforce as working from home.
Matthew Lowman:
We’re still a little resistant to that, from a safety and security standpoint. But, we had a few things going on at the time that the COVID had hit namely a Corp[inaudible 00:04:40] change, which was a very large undertaking for any bank, then COVID, then an examination, and then the PPP loans. It all was a perfect storm all one time.
Matthew Lowman:
We didn’t really have the option to furlough or allow a lot of our work staff to work from home. Now, we are very office oriented within our bank branches. There’s very few of our personnel that are all clustered together. So, from a distancing standpoint, we’re able to and have been able to, thankfully knock on wood, avoid any exposures into the bank so far. I don’t want to jinx it. We haven’t had any positive COVID or any introductions into our little ecosystem, which has been nice.
Matthew Lowman:
We have been reopened for full transactional business interior to the lobby since the 2nd week of June. We’ve seen an ebb and flow. Some days are more heavily trafficked than others. I think you’re starting to see the public get a little more acclimated to starting to relive their lives a little bit.
Matthew Lowman:
We’ve certainly got all the PPP equipment here for our staff. They’re all able to wear masks, not wear masks. We don’t force people to wear masks when they walk in the bank. Although if they are, of course, we want them to take it down so we can identify them briefly before I hopefully don’t get robbed. Masks in a bank don’t go hand in hand real well regardless of what’s going on out in the world.
Matthew Lowman:
I think in general, the demeanor of most folks, I can’t say everybody, but most everybody they understand what’s going on and for their safety and our safety. It’s been interesting. We haven’t seen an absolute shift away from the in-person. We are still seeing the numbers start to reincrease now where our lobby traffic is… I think yesterday we had almost a hundred people in the bank. That’s probably a little higher than our average daily in the bank. That does ebb and flow. You get between 20 to a 100 people in a day, but you start to see those trends a little bit. So, it does lend credence to the fact that many people are starting to get out and about a little bit more, and just trying to be cautious about their spacing and their hygiene habits.
Matthew Lowman:
We’ve definitely seen that shift a little bit in some of the technology. The telephone banking that those numbers are up. The merchant capture is up. The remote deposit capture is up. We are starting to see the shift. It’ll be interesting to start to be able to quantify that in the next several months to see, from a demographic standpoint, if that’s starting to permeate into some of the older generations that sometimes are a little more either resistant or just don’t understand it, or don’t want to deal with it, and if that’s starting to really flow over into that segment of our population as well.
Todd:
So, as some of this population is changing some of their behaviors and taking advantage of digital features that you had for a while, how is your staff helping them to migrate to that new model? Is it… Do you hold any online classes or anything else you’ve been doing to try to get people to-
Matthew Lowman:
No, we’re pretty good about putting stuff out on our website as a starting point. We worked with a couple… one company in particular that does a lot of our electronic and digital marketing programs, especially specific to Google and then Facebook. We try to put a lot of stuff out on Facebook as well that’s pertinent to those folks.
Matthew Lowman:
Unfortunately, with the COVID, we haven’t really done anything that’s in-person. We’ve kicked around the idea of actually trying to do something that was online. If we could figure out a way to grab a good segment of the audience. Again, I think sometimes that if you’re trying to reach the older demographics, the online might be a little bit of a barrier to entry to get those folks to do that versus something that you could hold in person. But, obviously with what’s going on in the world right now, it’s difficult to get people into an auditorium or even close quarters type of setting.
Matthew Lowman:
We have talked about that at some point in the future, about away from some of the things we’ve done in the past, which would be more akin to security training, because that has been a big hot button for several years, and making sure you’re trying to educate your consumer base about the different frauds that can be perpetrated, whether it’s with banking or online in general, and bring some experts in the field out on that to have discussions and shift that over to “Hey, here’s ways that you can continue to bank safer 24/7”, and so on and so forth. But a lot of that right now is being directed towards our website and our Facebook marketing presence.
Todd:
Great. In regards to your employees, you had mentioned that you’re practicing safe distancing and other strategies. I imagine this has created some anxiety on the part of employees in terms of, could they be carrying something and not know it, or bring something from home or take something home. How have you worked or dealt with that in the culture of the organization to make sure people weren’t too stressed out?
Matthew Lowman:
Well, it’s a fine line. I think we’re all trying to migrate our way through this as it seems to change every other day almost now, in what they seem to know and not know. But, up front when I put the edict out that we were going to close the lobbies to traffic outside of appointment only, and we’re seeing maybe three to five persons a day, and highly disinfecting everything, and then you realize, “Well, maybe it’s not on the surfaces as long as they thought or at all.” Now, they think it’s just the 6′ for X amount of time and so on and so forth. We’ve made available the optionality for our staff, because we never really want to force anything upon anybody now. We happen to be located in three different counties around the St. Louis area that have three completely different sets of guidelines if you will.
Matthew Lowman:
One being in St. Louis County, which is the most restrictive. Franklin County where our headquarters is, which is the least restrictive and has the least amount of cases.
Matthew Lowman:
We’ve made masks a complete optionality for our staff. If they feel comfortable wearing them, they can. But, in St. Louis County, they have to have them on the ready because that was for a while an ordinance. Then that went away and now that’s coming back again.
Matthew Lowman:
Again, with the… shifting to the clients for just one second, I am never going to force that upon anybody, but certainly we’re not going to berate them if they want to walk in with a mask. Again, for our safety and theirs, they have to be able to lower their mask long enough to identify themselves on camera, because I can’t have the Jesse James gang walking in the bank and walking out with a sack full of cash. Not that that really happens a whole lot anymore, but you still don’t want to put anybody’s life in danger or upset anybody that does work in this industry.
Matthew Lowman:
Then we’ve got the, as I lovingly call them, the sneeze guards available at all the high traffic areas that was also made optional for all the lenders. If they felt more comfortable to have some type of a physical barrier between them and a client or someone else. Some chose that. Some didn’t. Everybody’s got their personal preference. But, the interesting dynamic with our bank is that we’ve had such long tenure with most of our staff and so much familiarity that it really is a work family here. There’s a high comfort level with each other. I think everybody respects everybody’s space. Sometimes we like to do our food days here at the bank and certain other things where we’re probably starting to congregate a little more than maybe we should, but I really do believe that because of how our culture is here, we haven’t had, at least it hasn’t manifested itself anyway, really anybody who has exhibited any real fear or anxiety or desire to say, “Look, I’m not going to come into work” or “I’ve got to work remotely”, or what have you.
Matthew Lowman:
We’ve been fortunate. We’ve only had two, if you want to call them instances, where we may have had somebody in touch with somebody with COVID. We actually had one employee who had a spouse that tested positive. That employee was negative tested, but you still have to quarantine for X amount of time. We had another staff member who had some cough and cold symptoms and, again we make them self-monitor if they exhibit anything there… we send them home. In order to come back, they got a test. That person also tested negative.
Matthew Lowman:
So, we’ve been fortunate because I believe at some point everybody’s probably going to come into very close proximity with this some way shape or form. It’s just inevitable. It’s a virus. I mean, what are we going to do? We can try to take every precaution we can, but it’s going to permeate into our lives one way or the other. So, we just try to take the best precautions we can. We’ve got a lot of Lysol wipes and a lot of spray. This place smells like Lysol a lot all the time. You’re making sure you’re being diligent. Our cleaning crews are in more frequently than they typically are. From a precautionary standpoint, when somebody does come in the bank and they’re signing papers, as soon as they leave, I feel like I’ve got a team of gals that swarm the room with Lysol and wipes. I don’t think anybody’s going to contract anything from sitting in that chair five minutes after that person’s left the bank.
Matthew Lowman:
We do take it very seriously, but the culture here has bred a… it’s not a situation where we’re being laxed by any mean, but I think there’s a comfort level with everybody where there’s not that apprehension to want to come in the office every day. I think they feel like it’s a safe space for them.
Christina:
That’s good. Did you think or did you notice that the culture was the same during the beginning of this, when like you said, it was all hands on deck and you were dealing with not only Corona [inaudible 00:15:10]
Matthew Lowman:
Yeah. The stress level was through the roof because absent COVID and absent some of the byproducts of COVID, we did, as I alluded to before had been preparing for and gone through a core process for changeover, which is a very highly stressful event. It’s a very large undertaking, regardless of what’s going on outside of the world or inside the bank anyway. Then compound that a 100 fold with the virus and everything else going on.
Matthew Lowman:
The level here was pretty high stress due to that and an exam going on at the same time as well, just for good measure. But, I’ve seen that as we’ve gotten through the conversion, the levels come down, because now we’re starting to get that comfort level with the new system. It’s just something that takes time unfortunately. The data is the same, but you’re figuring out where to extract it. How to use it. What new features do we have. What new features do the customers have. Making sure we can walk them through those things. I really do see every day that it’s morphed back more into the regular routine and comfort level for everybody.
Matthew Lowman:
So, it was a little more stressful at the beginning, but I think COVID probably elevated a stress level that was already there anyway as a byproduct of what we had going on.
Todd:
I wanted to ask you about the exam. You had mentioned earlier that you are one of the first or second banks in the state to go through a remote exam. Could you talk a little bit about that and how technology played a role to make that happen?
Matthew Lowman:
Yeah, yeah. It’s actually in the state and at FDIC. They do their every 18 month cycles on exams. Over the years they’ve had their FDIC Connect, which is their online system for us to do communications in terms of a safe and secure document distribution back and forth. That’s been gaining more and more traction every year and every exam cycle. It helps because they don’t have to come onsite for as long a period of time. They don’t have to pull as many physical files. It lends credence to speeding up the process quite a bit.
Matthew Lowman:
In this case, it was interesting because we were able to transmit everything to them electronically upfront. As the present CEO, I still like to see people in front of me. So, that was a little bit disconcerting from that standpoint, because you really have a hard time sizing up what’s going through somebody’s head. We’re a very clean bank anyway. It’s not like there was a lot to have concern over. But, you do like to sometimes have that face to face interaction.
Matthew Lowman:
I will say from a time standpoint, it seemed like we probably shaved a couple of days off the entire process because they were able to gain everything so quickly. Get through that, utilize the phone and email to go back and forth on different things, and knock things out that might have otherwise taken either several more hours or several more days to go through.
Matthew Lowman:
I don’t know if, and only the examiners could probably speak to this, if what was going on with the pandemic maybe played a role in them having a little more limited scope on what they were looking at. A lot of times, again, not to toot our own horn, but we’re a very clean bank. It makes for a little bit easier of an exam process to navigate through.
Matthew Lowman:
I think all those things in general were interesting. They were different, but they certainly weren’t difficult. Again, I think technology really, in this case, helped. Their system is, and once you’ve got a good grasp of it, it’s pretty easy to do all the uploads and in the back and forth on.
Christina:
So, cyber security is always obviously an issue, especially in your industry, but it’s become even more of a concern during COVID. How are you all handling that?
Matthew Lowman:
Well, so far so good. We’ve looked into trying to acquire a few more laptops in case we have to put people on a remote work basis, which so far, we’ve only had one of those that I have alluded to whose spouse had it.
Matthew Lowman:
We’re still, and we work with JMARK very closely on all our IT stuff and our security, but we’re still a little old school in the fact that I don’t like things leaving the bank. So, we try to limit it. I know the capability’s there to do it, but any windows or doors that we can keep shut, we’d prefer to. We don’t look at letting everybody work from home as something that we’re probably going to be doing in the next several years, if we can at all avoid it, because we’re still a pretty high touch bank.
Matthew Lowman:
The industry is changing a little bit, but when you’re talking about your loan customers, there’s still a lot of touch points there. I think that having a physical presence in some way, shape or form has some importance still. But, we have been looking into acquisition of more laptops, more as a part of our business planning than anything else, rather than as a strategy going forward to start letting half of my workforce work from home. Because, I do feel like the markets we’re in and where we’re located, it’s important for those folks to have a hub every day to touch base. It keeps that culture that we’ve built here over many, many years to stay in tact.
Matthew Lowman:
I’m a little fearful if I’ve got 60 or 80% of my staff working all over the place that you start to tear down that culture a little bit. That’s part of what makes us a FMB bank. That’s something I don’t necessarily think it’s a bad thing technology-wise. Just something that we’re not really looking to try to do here anytime soon.
Todd:
Also wanted to ask you, how… Looking at everything that’s happened over the last couple of months and where your technology is, and you’ve mentioned investing in laptops versus workstations in the future. But, with some of the changes in customer behavior, which may not have affected you as much, where do you see the bank investing in technology over the next 9 to 12 months coming out of COVID with all the changes? Or do you see it?
Matthew Lowman:
I know in working with JMARK, we’re getting ready to consolidate two of our locations and our operations center, which is a leased space here in St. Claire. Going into next year, I know there’s some different areas within IT we’re going to be spending some pretty serious dollars, server wise and some other hardware and software.
Matthew Lowman:
Without getting too specific, I know that that’s going to be a pretty good undertaking in the next probably 6 months, that we’re going to be throwing into the budget alone. We’re also investing into a couple more cash recycler machines. So, when you get to the teller area, we’ve already had one for a couple of years and it’s worked out real well. We put another in one of our other branches. So, we’ll have multiples of those in our different branches that really helps on the teller side. Then for the new bank, we’re actually going to have the capability for one of our drive up spaces to have an ITM machine. That’s not going to become functional day one, because they don’t know if our market’s necessarily ready for that yet. But, I [crosstalk 00:23:17]
Todd:
What is an ITM machine?
Matthew Lowman:
It’s an ITM. So, it’s basically an ATM, but it’s a super smart ATM. You can do all your banking on the ITM machine then if you need help, you’ll hit a button and up will pop one of our customer service representatives on the screen that will actually be able to walk you through any of your transaction needs. Whether that’s a teller need or even up to including possibly personal banking functions as well.
Matthew Lowman:
They’re becoming a lot more popular in the South. You’re starting to see a few banks here in Missouri have actually implemented them. They’re fairly cost-
Todd:
[crosstalk 00:23:52] teller machines also, right? Or something like that.Matthew Lowman:
Yeah. Yeah, pretty much.
Todd:
I’ve heard that [inaudible 00:23:56].
Matthew Lowman:
Yeah. They call them, they call them ITMs.
Todd:
Yeah. [inaudible 00:23:59]
Matthew Lowman:
I don’t know if it’s intuitive or what the I stands for, but in any case, they’re a lot more robust than your regular ATM machine. So, if you’re actually doing a deposit it’ll scan or deposit versus the old school drop in the mail slot, it’ll stay sinking in there, then somebody is going to grab that that night or that next day to manually do your deposit. It’s going to be something else that we’re going to be implementing as well at the bank.
Matthew Lowman:
Between that, between the cash recyclers and between whatever you guys at JMARK tell us we need to keep on the forefront in terms of the servers. I know we’ve done some different things relative to Windows and some different software upgrades. Definitely some hardware upgrades. We’ve done some work with you guys on the VPN. We’ve got some of the capabilities if we need to get remote as a matter of need versus choice. Because again, I don’t personally see that as a business decision for us, unless it’s made for us as a byproduct of this pandemic or something else. But, that’ll be another area with the VPN. Then where we’ve got going in at the new bank facility in terms of lines and all that stuff. That [inaudible 00:25:19] be the areas where we’re going to be [inaudible 00:25:21] dollar here, at least in the next 12 months, for sure.
Todd:
That’s great. How has the communication and collaboration with JMARK been during this time? Since we’ve all been under the same restrictions.
Matthew Lowman:
It’s good. It’s good. We’ve had a very good relationship since day one. I know David over in our operations center or they deal more directly with JMARK on a day in day out basis and monthly meetings and the followup and all that stuff. But no, it’s been fine. Usually, no news is good news from that side of the road. So I don’t… I’m not getting any negative reporting. That’s a good thing.
Matthew Lowman:
But, JMARK has been working very closely with us too, especially as it relates to the needs and all the implementations we’re going to need to have, with going into the new building. In my mindset… my simple mind goes, “Well, we’re just going to pack up and move in one weekend.” Then I was told, “No, that won’t really work that way.” That it’ll have to be a phase to move in, but we have to make sure that everything’s going to be firing on all cylinders before we opened the doors up that day. Especially as it relates to the technology side. We’ve got to make sure that in conjunction with wherever our backups are and what we’ve got here, and when we move all that and how that’s all going to jive and work correctly, so when we do quote unquote, flip the switch, we’re functioning over there, and our clients can rely on the fact that we’ll be open for business the first day we want to announce we’re going to turn the lights on.
Matthew Lowman:
You guys worked very closely with us. Collaborated with us. Worked with the different third parties, the cable companies and the APTA companies, the charters, the AT&Ts and all that coordination stuff in conjunction with the company we’ve got that’s doing the construction development of the building. Because, they’re also going to be working with us from the security aspect as well. There’s a lot of integration there between all parties and it’s been good so far.
Christina:
Awesome. I remember from talking to you all last time, that helping out your community is very important to your culture and to all of you. What are some things that you all have done since COVID has hit?
Matthew Lowman:
Yeah. Again, when it first hit, we had talked a little bit about… we were looking at the community from a whole and who could we, or how could we do our little part. And so, in talking with our board, we had made the conscious decision to say, “Look, since I’ve got everybody cooped up here, everybody’s going to have to work.” Because of all the things we had going on simultaneous at the time, when they forced these limited work arrangements and shut down, was we’d go ahead and feed the staff. Feed them every day. Feed them breakfast. Feed them lunch. Let’s make sure we’re going to go ahead. We’re going to take care of the mom and pop shops and the customers of the bank and the folks that are here local. We can do our little part to keep all these businesses afloat.
Matthew Lowman:
Every day whether it was breakfast and lunch or just lunch, whether it was our main bank facility or our branches, we had authorized that across the board. We’d spend a little bit on bucking up for everybody’s food for almost 2 months period of time. But I mean, again, I’m sure we played a small part. I’m happy to say I haven’t seen any of those customers. I know many of the customers, but mostly those mom and pop shops, no one’s closed their doors so far. I think they were very appreciative of it, if nothing else. Not that we don’t patronize those businesses individually in the communities day in, day out. But, I think that probably helped quite a bit to get some bulk orders, at least once a week from this restaurant or once a week from this restaurant. We’re a small community. We don’t have a ton of restaurants. So, we were able to keep it relegated to a handful of those. Our way to pitch in our small little part during the pandemic.
Todd:
Well, thank you very much for your time today. I applaud everything that you’ve done for the community and your employees.
Todd:
It’s very interesting to talk to somebody who, while you guys have been affected by it as everybody one as, your operations haven’t changed a whole lot. I think that’s pretty awesome. It’s a great move for what you’re doing in your location. Obviously, every location is different, like you said. It’s also interesting to hear how some of the population that you serve is changing their behaviors and mindset, and learning new strategies to deposit checks and use technology more to make it easier for them with everything going on.
Todd:
We appreciate you as a client of JMARK. I always hear great things about your organization.
Todd:
For every body who’s listening, thank you very much. Please visit Farmers and Merchants Bank in St. Claire, if you’re out there. Take care.
Matthew Lowman:
Thanks Todd. Thanks Christina. Appreciate it.
Speaker 1:
Thank you for attending this podcast. We hope it has been informative and helped convey that at JMARK, we are people 1st and technology 2nd.
Speaker 1:
To learn more and discover additional content relevant to your business, please visit us online at JMARK.com or at LinkedIn, Twitter, Facebook and Instagram. You may also call us at 844-44 JMARK.
Speaker 1:
Thank you for your time, and we look forward to seeing you again.
