April is Community Banking Month. To mark this occasion, The Artisan Advisor talked with co–founder and managing partner, Jeffrey Voss, about his career, the evolution of community banking and what he sees around the bend. After a career like his, Jeff had a lot to share.

AA: How long have you been in community banking – both as a banker and as a consultant that supports community bankers?
JV: Five years as a consultant primarily with banks, to start my career. Then 25 years as a C–suite level banker within the industry, and now 15 years as a board member of banks and a management consultant again, serving the industry.

AA: Has it been a fulfilling career?
JV: Yes … wish I had another 40 years to see the future!!

AA: How did you get started in community banking? Why did you stay?
JV: I entered the community banking industry after a decision to leave public accounting (KPMG in Chicago) and join a client of mine (The Lane Banks) that was looking for a CFO of one of its unit banks, Pioneer Bank and Trust, located in Chicago. I started in the industry in 1984, a time in the industry when change was imminent and the era of interest rate risk management was born. I stayed in community banking because there was a tremendous opportunity for hardworking young people who were not afraid of change. And with many changes occurring throughout banking organizations, it created meaningful experiences and impactful work.

AA: Tell us more about some of the most meaningful moments from your career
JV: Sure – over my 40–year career there are many. But a few really stand out. Here’s my top five. The first was being part of the management team that led Pioneer Bank out of the first FDIC regulatory safety and soundness order. We had significant credit issues, where these loans aggregated to approximately 3x of our capital and reserves. I had a particular expertise in accounting and tax ramifications of leveraged leasing transactions. As a result, I crisscrossed the country with our Senior Loan Officer, visiting our clients and securing favorable leasing terms for the bank, thereby ensuring collectability of our booked lease balances. I got to work on oil tanker deals, hotels and manufacturing equipment deals, which were not typically part of a community bank loan portfolio. It took over 6 years to get it done, but the FDIC removed our regulatory order, and we were allowed to operate like a real community bank again.

The next happened shortly after we had our order removed. I was on the Pioneer management team that led a buyout of the Lane family ownership. This allowed me to experience the benefits of being an owner, not just an employee. I was 28 years old, and this kicked off a long career of requiring ownership in each bank that I participated in. There is a real difference in the way someone thinks and acts as an owner, rather than simply as an employee. These differences revolve around serving constituents – like customers, regulators, shareholders, and employees – as well as needing to take a strategic view of the entire organization, instead of just focusing on the department you work in. It’s a completely different point of view.

Starting First DuPage delivered “meaningful experiences” three and four. I built a bank (and its culture) from scratch, watched it grow and prosper…and then watched it fail. Success was easy for so many years, but failure can define you – particularly how you deal with failure. For me, failure was not something that I had experienced in my life. Unlike many during this time of the Great Recession, I chose to openly discuss it with other bankers. I thoughtfully contemplated the reasons for the failure and decided to use that experience to help others who are facing the same outcome as my bank.

My last and most meaningful experience serving this industry emerged from the ashes of First DuPage. I established a new consulting business, initially focused on helping troubled banks deal with their regulatory problems. I teamed up with Jim Adkins, who was helping banks deal with these same issues. Jim and I had worked together in our past, but never as closely as we did on the troubled banks we took on as clients. Artisan Advisors was formed after 30+ years of experience in the industry. Today, Artisan Advisors is 15+ years old. I am proud of how we have adapted to changes in the industry, grown our client base across the country, and built our brand and reputation. We are fortunate to serve the leadership of community banks across the country, to be their trusted advisor and to help their banks be the best that they can be.

AA: How has community banking changed over the course of your career? And what changes do you see on the horizon?
JV: Deregulation in the early 80’s led to increased competition, followed by increased M&A activity and shrinking numbers of banks, then re–regulation after the Great Recession in 2009. Meanwhile, banks became hyper–focused on being compliant with regulation and increasing branch locations. At the same time, community banks’ competition (credit unions, non–bank lenders and deposit gatherers) focused on improving customer banking experiences and creating a digital banking environment where locations do not matter and doing so in a regulatory compliant manner.

The next big change will be AI and determining how it will be implemented in the industry. These changes will involve both regulatory and industry agreement on how to implement AI, while safeguarding the interests and information of all customers. Consolidation within the industry will continue, creating less competition, more homogeneous products and services, and better pricing power for surviving banks.

AA: What does the next generation of community bankers look like?
JV: I believe the next generation of bankers will be more creative than their predecessors. They’ll use technology to eliminate redundant work tasks and repurpose or eliminate staff that does not provide value to customers and shareholders. They will deliver services to clients via digital means to improve customer experience, and stress compliance with regulation, while not obsessing over regulation like our generation has done.

AA: Are they human?
JV: Yes, for the most part, at least for the next 5 to 10 years … humans still need to teach AI bankers how to do their jobs. But in the future, AI bankers will be more observant and  detail–oriented, finding opportunities to improve results where humans may not, as well as being strategic thinkers, ensuring long–term success.

AA: What challenges and opportunities will they face?
JV: Will these bankers be able to learn at the same pace as their technology counterparts? How will bankers who need personal face–to–face experience with clients deal with their AI counterparts? How will human clients react to AI bankers? Humans have the capacity to make judgments and take risks, whereas AI will follow algorithms and lack the capacity to make such judgments – at least today.