When approaching the $1 billion asset size mark, banks have more to think about than just popping champagne. Attention from regulators becomes more pronounced, risk across the enterprise is increased, and existing infrastructure can become strained. For banks, technology poses the best opportunity for managing and mitigating these challenges.

Jayson Callies has been on both sides of the $1 billion mark: before becoming executive vice president, chief information and innovation officer at $762 million Seattle Bank, he was senior vice president, chief technology officer at $14.5 billion Columbus, Ohio-based Northwest Bank, one of the largest regional banks in the Great Lakes region.

Callies shared best practices to keep bank-level growth seamless and profitable:

Enable nimbleness through technology

Technology was a benefit to Seattle Bank long before the COVID-19 pandemic made it a necessity. But the self-styled “white-glove, boutique bank,” which maintains a single branch, had to act quickly to pivot its business to digital, Callies told Bank Automation News.

“I would say that COVID accelerated the transformation and played a larger part in the need to rapidly evolve our customer experience,” Callies said. “The client expectations during that time really pushed digital transformation and UX/CX forward by leaps and bounds. COVID challenged us to serve our clients and meet their expectations while maintaining a fully remote workforce.”

The challenge was met; assets grew by nearly $60 million in 2021 alone, and the bank has embarked on a slew of fintech partnerships and service developments in the meantime. Callies credited the bank’s ability to enable technology for nimbleness in tough situations, from pandemics to economic downturns.

“We have enhanced the scale at which we can address clients’ ever-increasing demands by adopting cloud technologies and establishing key vendor relationships that have an API-first and open banking approach,” he said.

Prep for increased scrutiny from regulators

Perhaps the most significant challenge for banks when reaching $1 billion is regulatory. Many banks face issues when confronting heightened scrutiny, so planning and preparation is a key best practice, Callies said.

“It is critical to know those far in advance and plan accordingly. In my experience, examiners are keenly aware of asset trends and will advise FIs [financial institutions] to have a solid plan in place prior to crossing those key thresholds,” he told BAN. He noted Community Reinvestment Act (CRA) requirements, due diligence and vendor management, enhanced reporting and financial controls and driving maturity levels for the Federal Financial Institutions Examination Council Cybersecurity Assessment Tool (FFIEC CAT) as areas of focus for institutions crossing $1 billion.

Partner with technology leaders, not followers

External partnerships with fintechs and technology companies are critical for scaling, but banks should focus on partnerships with firms that are automated and cloud-based, Callies said.

“I recommend partnering with vendors that are cloud-based when possible and have an ‘API-first’ mindset. BaaS [Banking-as-a-service] opportunities are each so unique and require a certain level of customization, and there is no cookie-cutter approach,” he said.

Seattle Bank takes a three-pronged approach to ensure its fintech partnerships are worth it, Callies added:

• Is it doable from the technology perspective?;
• Is it compliant from the regulatory perspective?; and
• Is it profitable from the financial perspective?

Callies will join Bank Automation Summit Fall 2022 for the panel discussion “Embedded Finance: Frontiers in Open Banking” on Monday, Sept. 19 at 1:45 p.m. PT. Bank Automation Summit Fall 2022 will be held Sept. 19-20 at the Hyatt Olive 8 in Seattle.

Bank Automation Summit 2022, taking place Sept. 19-20 in Seattle, is a crucial event on automation and automation technology in banking. Learn more and register for Bank Automation Summit Fall 2022.