As emcee of the Community Bankers Association of Georgia annual conference, I interviewed Ray Davis, former CEO of Umpqua Bank. Ray is iconic for taking Umpqua, a small $140 million institution located in rural Oregon, and transforming it into a $20 billion juggernaut. As I frequently talk about the success of Umpqua when I speak and teach at graduate banking schools, it was a real treat for me to have a conversation with Ray. Who cares that there were 150 community bankers listening in?
Ray’s attitude that led to Umpqua’s success was that they would never have been able to outgun, underprice or, in any other traditional way, overpower their much larger competition. Sensing the small size of Umpqua seemed to be it biggest weakness, Ray challenged the whole bank, from top to bottom, to turn it instead into its biggest strength. It would be nimbler than and out-maneuver the large institutions.
One of the first calls Ray received on his first day as president was from a branch manager asking how she should handle an upset customer demanding a refund of a service charge. Ray simply asked how the manager felt it should be handled. The manager felt a refund was clearly warranted, so he empowered her to do exactly that. Very quickly, he made sure all of the Umpqua staff were empowered to make these kinds of decisions, and he backed his employees every time they made a decision. If it was determined that a decision could have been handled differently, they had a one-on-one conversation about it afterward to provide guidance on future problem-solving. How empowered do you think all of the Umpqua associates felt when they realized they could make these decisions based on their own assessment and management would back them up? This was the first of many elements Ray instilled to change the culture of the institution.
At an early stage, Ray decided all of their branches needed to become stores. Not branches— stores. People don’t make branches a destination, but they do shop at stores. Ray’s vision included no desks. Not one. With this open concept and more retail design, it was clear right away that people were more drawn to come inside. In fact, once the first Umpqua “store” was built and the staff of the six existing branches had a chance to experience it, all of the branch managers were clamoring to be first in line for their branches to also become stores.
And yet, even amongst all of the innovation Umpqua has introduced in their stores, it is still the culture of the people that makes Umpqua different. I’m convinced the associates would be successful even in a traditional branch setting, and I’m equally convinced that if you took the employees and culture of a traditional community bank and placed them in an Umpqua store, they would be no more successful in creating engagement than the traditional institution is today.
Ray further explained that when first hired, everyone is an “employee,” and after they complete 90 days of training and pass a series of tests, they graduate to an “associate.” They look for potential associates that have “it,” or “a twinkle in their eye,” as Ray put it. The ability to communicate and engage with another human is the key element they look for. All other skills an associate needs can be taught. And every associate is taught every skill, thereby eliminating the need for a customer to “wait until Joe gets back from lunch” to complete a transaction or provide needed information. Any associate could perform every task, leading to the creation and coinage of the position “Universal Associate.” Many institutions are still trying to get right what Umpqua perfected over 20 years ago.
Bankers from the entire world come to Oregon to study what Umpqua has achieved. In order to continue its commitment to innovation, Umpqua created a FinTech startup in Silicon Valley called Pivotus Ventures. This group is working on the next generation of technology that will further Umpqua’s ability to serve its customers and attract prospects in the coming years. And rather than keep all of its innovations to itself, Pivotus will be offering other institutions the ability to license its technologies. It will certainly be interesting to keep a close eye on what Pivotus creates. It is sure to be cutting-edge, and with Umpqua’s track record of success, I would say they will have their “finger on the pulse” of where banking services are headed.
Perhaps the most intriguing thing Ray said as we neared the end of our conversation was the fact that Umpqua was in the process of reimagining the in-store experience. I had to really think about that. Here I am trying to get FIs across the country to think about what the banking experience will be like for future generations, using Umpqua as a model for branch engagement, and Umpqua is saying, “It’s not good enough, we have to do better.” Amazing!
If you are a banker, you need to take some time to really think about what an in-branch (think “in-store”) experience could mean. You need to break out of your traditional thinking and stop worrying about what older customers will think of your transformation. If you are not a banker, how will you take the wisdom and boldness of Ray Davis and apply it to your business or industry?
Think about it.