What happened with the recent bank closures in 2023 is all about managing all risks and tackling every aspect of risk—at the same time! As you can see from the various events that led to the closure of several banks, one type of risk led to another in a chain reaction until the regulators closed their doors.

One of the most important things to know about Enterprise Risk Management is that all the risk categories are interrelated. This means that when your institution experiences one type of risk, immediately, or simultaneously, you will experience another type of risk.

Chain of Events

When the Pandemic happened in early 2020, (see blog about how the Pandemic affected all other risk categories), the government’s reaction was to provide the biggest cash stimulus in the history of the country. With the extraordinary influx of cash to individuals and businesses, the financial institutions encountered a tidal wave of cash which represented an “excess” of liquidity (risk). This cash was sitting idle not making any profits for the institutions which led to earnings risk. Then most institutions decided to invest the excess cash, and many chose government securities. The decision of how much to invest, for how long, and in which investments was a crucial management strategic decision and thus strategic risk.

The Decision’s Consequences

Unfortunately, many institutions of all sizes made the wrong decisions. They invested too much of their excess cash for too long of a term, not in a laddered maturity structure, and at extremely low interest rates. But that was better than making zero money on the extra cash, right? However, as a result of the government stimulus, inflation happened. Now, to combat inflation, the Fed started raising interest rates (interest rate risk) at such fast pace that institutions quickly found themselves upside down on the value of their bonds. The Other Than Temporary Impairment (OTTI) happened, and institutions’ balance sheets now showed millions, and for some billions, of dollars in unrealized losses.

This situation became now a liquidity (risk) crisis for certain institutions, and they experienced capital risk when they had to realize the unrealized losses from the sale of their securities. Lastly, when word got out that certain institutions were in need of raising additional capital, the bank experienced a run on their deposits. This is a perfect example of reputation risk. In the end, reputation risk is what sealed the fate of these institutions.

Your Reputation Risk

Your reputation is your most priceless possession, and you must protect it at all costs. You protect your reputation when you establish strong policies, procedures, and safeguards in all areas of risk. You then ensure none of the risk categories start a chain reaction that could end your existence. This blog is a simplistic way to explain what happened to certain regional banks that experienced several risk categories one after another and almost simultaneously for some risk categories.

This catastrophic event serves as a perfect example on how it’s all about managing all risks—at the same time. This is the “M” in the CAMELS ratings that regulators focus on to ensure your Board of Directors and senior leadership—management—can in fact manage all the potential risks your institution faces now and in the future. As an emergency reaction, the government stepped in and created a new program called “Bank Term Fund Program” (BTFP). But institutions must be cautious on using this new liquidity funding source because it may imply a liquidity weakness which creates immediate reputation risk.

The Tone at the Top

Can the Board of Directors and senior leaders tell your institution’s story from the risk perspective? Do you know your unique risks such as portfolio concentration, depositors/relationship concentrations? Do you allocate the appropriate resources to ensure your institution is truly safe and sound from every risk category? Is ERM an afterthought at your institution or is it a monthly Board meeting agenda conversation? The “tone at the top” is crucial to identify, assess, mitigate, monitor, and report all your risks. I encourage you to complete and formalize your ERM Program.

Looking to generate more business leads for your Treasury Management services? Many of our clients are looking for ways to add more businesses to their sales pipelines and one of the easiest ways is to use LinkedIn. LinkedIn is a business-focused, professional social networking app and many of your prospects are using it. Today, we’ll visit some tips on using LinkedIn posts for the Banker.

Say Something Relevant

First, what do you want to say? Posting something relevant to your prospective business customers is important and coming up with something interesting can be challenging. However, when the idea strikes, we recommend putting the idea through a content filter. A “content filter” guides your posts to be relevant to the people you want to talk to.

For instance, at Malzahn Strategic, our content filter is: Deliver Value, Educate, Inform, Entertain, and Give the Reader a Reason to Take Action.

If you don’t have a content filter set up for your organization, we recommend you speak with your marketing team to develop these guidelines and then share them among those who post to social media.

Once you have your topic and have run it through your content filter, write the post in Word so you can verify spelling and check for grammatical issues. If you are stuck with a sentence and can’t quite make it sound right, using an AI based re-writer might be useful. ChatGPT and Copy.AI are two re-writers we have regularly used when we get “stuck”.

Once written, make sure your post is less than 3,000 characters. This is LinkedIn’s limit on posts.

Some organizations may require employees run their posts through a review process before posting. If you need to do that, get your post approved.

Post Your Post

Once you are ready to post your information, consider adding a photo or infographic to emphasize or confirm your content. You can easily create an infographic in PowerPoint or have your marketing person help you out in formatting a photo for LinkedIn. There are specific sizes for LinkedIn photos/infographics: 1200 x 627 72dpi or 1080 x 1080 72dpi are the two we recommend. Anything else and LinkedIn tends to crop with undesirable results.

If you wish to add a video to your post, we recommend a resolution of 1920 x 1920 (square). You should also have a preview image created to match your video 1920 x 1920 72dpi. If you don’t use a preview image, LinkedIn will pick the most awkward part of your video to use for a preview. We also recommend no fade-ins or fade-outs for your video. Get to the point and don’t waste valuable seconds on a fade.

Now, post your post.

Posting Tips

Here are some things we’ve learned over the years to improve your posts:

• Post should have, but don’t need, an accompanying video, photo, or infographic.
• The first 3 lines are visible on the LinkedIn feed, so make those three lines your point. Get to the point at the top, then elaborate on it later.
• Write concise posts using your organizations’ content filter.
• No Selling in posts – it just annoys prospects. You can do that when you talk to a prospect.
• Work with your marketing or graphic design staff to make your photos, videos, or infographics informative and compelling. Professionalism is important on LinkedIn.
• If your post is important and you want more folks to see it, consider boosting the post for a fee. We’ve seen where $500 spent on a boost can give the post good visibility.
• Looking for free stock photos? Unsplash is a place to start. Your marketing folks might also have a corporate stock photo subscription (Adobe Stock, Shutterstock, etc.) you can take advantage of.
• Pick three hashtags for each post and place them at the bottom of your post. One hashtag is your business primary hashtag and goes on every post, the second one refers to the main topic of your post and the third for the secondary topic of your post (if you have one).
• Posting to relevant LinkedIn groups can be a way to get more views if your post is relevant to the group.

Some Daily and Monthly Maintenance

Here are some tips on maintaining your LinkedIn presence.

• Daily comment on comments. If you get comments on your posts, reply to the comment to keep the conversation going.
• Daily ask others to follow your organization’s LinkedIn page. If your organization doesn’t have a LinkedIn page, push to get one created.
• Daily comment on other posts. Again, use your “content filter” to make sure you are making the right comment.
• Monthly review stats on your posts to see what is working. After a few months, you’ll start to see a pattern of content that works, and content that doesn’t work.

More Resources on Lead Generation

Book: Revenue Growth Engine by Darrell Amy. He has a free audio version available for listening any time.

Book: Outbounding by William “Skip” Miller.

If you made it this far, please follow Malzahn Strategic on Linkedin! We aren’t spammy and post relevant information for the banking industry. Remember our content filter above? We stick to it.

LinkedIn is a powerful tool for getting prospects into your Treasury Management pipeline. If your institution is struggling with getting your Treasury Management department up and running or need help with selling Treasury Management services to business customers, we’re here to help.

Looking for ideas to expand your Treasury Management reach to new business customers? Look into the TMClarity Framework, our comprehensive and transformative training and Treasury Management business management system that leads to greater sales success, higher margins, and increased customer retention in a competitive marketplace.