Improving profitability in banking by changing mindset.

1. Mindset Matters:
Mindset Matters - Improving Profitability by
Changing Mindset

2. Leverage Point
for Success

3. Individual
Thinking
(Mindset)
Leverage
Point
THIS
DRIVES THIS
Behavior Strategy Growth
CULTURE:
The Story We Tell
Ourselves

4. Individual
Thinking
(Mindset)
Behavior Strategy Growth
CULTURE:
Change the story
change performance
I like the way things are: why shift to “universal bankers?”
No time to sell and serve existing customers
It’s not my job to ask for referrals – I am not in sales
These production goals are
unrealistic, we can’t compete
with these rates.
We can’t be profitable in this
local, economic climate

5. Global consultancy specializing in
the mindset of performance
45 + Years
60 Countries
23 Languages
>10,000 Leadership
Teams

6. “I can tell you there is no organization as effective in transferring
knowledge from psychology to organizational settings, educational settings,
public sector or private sector than The Pacific Institute.”
~ Dr. Gary Latham ~
Past-President, Canadian Psychological Association
Dr. David Matsumoto
Associate Professor,
Department of Psychology,
Director of Intercultural &
Emotional Research Lab, San
Francisco State University
Dr. Albert Bandura
David Starr Jordan
Professor of Social Sciences
in Psychology, Stanford
University
Dr. Amy Young
Faculty of Business
Communications,
Ross School of Business
University of Michigan
Dr. Martin E.P. Seligman
Kogod Term Chair, Professor
of Psychology & Director of
Clinical Testing, University of
Pennsylvania
Academic Advisors
Dr. Gary Latham
Secretary of State Chair,
Faculty of Management,
University of Toronto

7. • Mindset Matters
• Transformational Learning and Self-Reflection
• Culture Matters
• Best Practices
• Neuro Science and Change Management
.
What we will cover…IN 50 MINUTES!

8. FINISHED FILES ARE THE
RESULT OF YEARS OF
SCIENTIFIC STUDY COMBINED
WITH THE EXPERIENCE OF
MANY YEARS OF EXPERTS.
.

9. SCOTOMA

10. Individual
Thinking
(Mindset)
Behavior Strategy Growth
CULTURE:
Change the story
change performance
I like the way things are: why shift to “universal bankers?”
No time to sell and serve existing customers
It’s not my job to ask for referrals – I am not in sales
These production goals are
unrealistic, we can’t compete
with these rates.
We can’t be profitable in this
local, economic climate

11. • Create Scotomas
• Suppress or release
drive
• Can cause “Lock-on’s”
• Impact Alignment
Beliefs:

12. •Agreement around a common picture
• I x V = R
•Belief in the cause
•Belief in the ability to execute (leaders and staff)
Alignment and Vision:

13. • Control aspirations
• Determine the LOCUS of
CONTROL
• Are manifested and
reinforced in our self-talk
Beliefs:
“We won’t let ourselves want that which
we believe we cannot cause.”
~Dr. Albert Bandura

14. •What limiting statements (beliefs) do you currently
hear at your bank (from Leaders or Staff) and what is
the impact?
Reflective Questions:

15. What limiting statements (beliefs) do you hear?

16. Limiting StBelief):
There is not enough time to both sell and serve
existing customers!
• What is that belief currently costing your bank?
• No aspirations achieve goal
• Low energy/motivation
• Blinded to solutions (Scotomas)
• Will not reach out for Solutions
• Customer Service / Outreach is compromised
• Growth is stagnated
• Bank loses business to competitors

17. Liberating Belief:
We can reach both our sales and
customer services goals, we just need to
do things differently
Result?

18. Liberating Belief
We can reach both our sales and customer services
goals, we just need to do things differently
What is pay off ?
•Increased aspirations and motivation
•Innovation, creativity, Seeing Solutions
•Employees believe in and “own” goals
•Letting go of outdated systems and the
development of new approaches
•Increased cross selling
•Increased loan and deposit growth
•Attract and retain high level employees

19. Non-Adaptive
Culture
Adaptive
Culture
682%166%Revenue
901%74%Stock Prices
756%1%Net Income
The Case for Building
Collective Intelligence
Kotter & Heskett: Study of 207 firms over an eleven year period as reported in their book Corporate
Culture and Performance
dstevenson@immanuel.com

20. Reticular Activating
System (RAS)
Network of cells located in
the brainstem.
Primary alert to awareness.
Alerts to information of
value and threat.

21. Over a two year period…
• Revenue grew by 36%
• Income grew by 240%
• Quarterly Bonus grew by 3061%
• Long Term Debt fell by 36%
Manufacturing
374 814118%
Source: The Pacific Institute® client performance growth research

22. Performance Case Studies
By the end of the first 18 months productivity had
improved by 24%, costs reduced by 19%, customer claims
reduced by 22%. The savings for these improvements
were approximately $7m annually, for a one-time cost of
less than 5% of that.
–Ernest Skipper, Manager, Caterpillar Logistics

23. Individual
Thinking
(Mindset)
Behavior Strategy Growth
CULTURE:
The story we tell
ourselves
• Aggressive Growth through Acquisition
• Grow to 1 Billion assets (from 380M)
• Aggressive Organic Loan growth
• We have 125 years
experience
• We are “just a small town
bank”
• We like the status Quo
• We are in a recession
Midwest Bank
?
“We are Best Bankers
creating dynamic
relationships through
innovative solutions.”
Optimize
Thinking & Ed.

24. •Agreement around a common picture
• I x V = R
•Belief in the cause
•Belief in the ability to execute (leaders and staff)
•Lead with Vision to acquired bank/employees
Alignment and Vision:

25. Individual
Thinking
(Mindset)
Behavior Strategy Growth
CULTURE:
Change the Story
Change Performance
• Aggressive Growth through Acquisition
• Grow to 1 Billion assets (from 380M)
• Aggressive Organic Loan growth
• We have 125 years
experience
• We are “just a small town
bank”
• We like the status Quo
• We are in a recession
Midwest Bank
• Innovation/Creativity
• Ownership behaviors
• Efficiencies
• Customer service/Outreach
“We are Best Bankers
creating dynamic
relationships through
innovative solutions.”
Optimize
Thinking &
Banking Ed

26. Culture and Performance – Midwest Bank
• 44% Growth in Culture and 45% increase in profit in year 1
53244%368
Source: The Pacific Institute® client performance growth research
We’re just a small town bank.
We are Best Bankers, creating
dynamic relationship through
innovative solutions.

27. Strategic Growth History – Midwest Bank
($ in Billions)

28. $918
$1,365
$1,222 $1,268
$1,382
$2,151
$2,368 $2,404
$3,333
$624
$1,047
$958 $979
$1,206
$1,798
$1,996
$2,320
$3,184
2009 2010 2011 2012 2013 2014 2015 2016 2Q 2017
Deposits ($mm) Loans ($mm)
Delivering Organic Loan Growth – Midlwest Bank
Total Loans and Deposits
28
11.1% average annual
core loan growth (1)
Note:
(1) Average annual core loan growth represents average percentage change in the Company’s core loans from December 31, 2008 to June 30, 2017; core
loans represent non-PCI loans, less non-PCI loans acquired, plus non-PCI loans sold as of the date the loans were acquired or sold, and exclude certain
short-term loans that the Company does not consider to be core loans; acquired non-PCI loans become core loans subsequent to the acquisition date
and will negatively affect core loan growth in future periods as these loans are repaid or prepaid

29. • Good Culture
• Silos
• Lacked efficiencies
• Duplication of efforts
• Locked onto Old ways of
doing New business
development
Implementation Story
South East Bank

30. • Good Culture
• Silos
• Lacked efficiencies
• Duplication of efforts
• Locked onto Old ways of
doing New business
development
Implementation Story
• Assessed Culture
• Learned about Mindset
• Identified and addressed
Legacy thinking (P.P.O.)
• Goal Set based on
PONTENTIAL not on PAST
• Engaged Workforce(P.P.O.)
South East Bank

31. • Currently one year ahead of strategic plan
• Loan growth numbers increased $205 million (12.52%) and
Outcomes -
• Reduced Efficiency Ratio from 72.9% to 68.2% (4.7% improvement)
• Most profitable quarter in history of bank
14.83%
Commercial lending
18.30%
Private Client
25.27%
Commercial Real Estate

32. MINDSETTING
Awareness
AcceptanceAction
Achievement
Our Transformational Process
MINDSET
All Content Copyright © The Pacific Institute®

33. Extra Slides

34. Engaging employees around growth objectives:
Using Neuroscience to optimize performance
Constructive vs. Restrictive
Motivation
Motivate on a
“Want-to, Choose-to”
Basis
Help them to discover
WHY
THEY Choose to

35. Using Neuroscience to predict success of
performance outcomes and Change Initiatives
• Don’t Activate your employees
amygdalae!
• Amygdale:
• Responsible for emotions,
survival instincts, and memory
• Sudden change triggers a
threat response
http://study.com/academy/lesson/the-amygdala-definition-role-function.html

36. “…impairs analytic thinking, creative
insight, and problem solving; in other
words, just when people most need
their sophisticated mental
capabilities, the brain’s internal
resources are taken away from
them.”**
**https://www.strategy-business.com/article/09306?gko=5df7f
Our response to sudden
Change

37. SCARF: The 5 Domains of Experience: Triggers to threat and reward
activity in the brain
• Status:
• Cognition
• Certainty:
• Ability to accept and embrace change
• Autonomy:
• Ownership and Accountability, Innovation
• Relatedness:
• Collaboration, Team work
• Fairness:
• Safety, Security and Trust Content based on SCARF® 2012 Updating the social neuroscience of
collaborating with others. Dr. David Rock and Dr. Christine Cox, 2012
NeuroLeadership Journal issue 4

38. Using SCARF to Mitigate Change: Be proactive and build
“Collective Intelligence”
Status:
• Communicate changes ahead of time
• Explain the Why
• Celebrate employees value
Certainty:
• Detailed information about the future
• Company goals and performance
measurements
• Clarity about authority structures
• Team and trust
S
C
A
R
F

39. S
C
A
R
F
Using SCARF to Mitigate Change: Be proactive and build
“Collective Intelligence”
Autonomy:
• Involve people in decision making
• Co-contributors vs. victims
• “Their efforts make a difference”

40. Using SCARF to Mitigate Change: Be proactive and build
“Collective Intelligence”
S
C
A
R
F
Relatedness:
• Be Authentic and open
• Team Build
• Focus on shared goals
Fairness:
• Consistency, Transparency and
Over Communicate

41. Employee
Performance
Employee
Mindset
Culture
Leadership
Parents
Teachers
Community
Education
Reflection
Goal Alignment
Ownership &
Execution
Mindsetting
Experience
Factors Driving Employee Performance
Talent
Skills
Knowledge
Competency
Leadership
Philosophy
Leadership
Mindset
All Content Copyright © The Pacific Institute®

42. Individual
Thinking
(Mindset)
THIS DRIVES THIS
Behavior Strategy Growth
Optimize your culture and
Build
Collective Intelligence

43. RESOURCES AND ONGOING APPLICATION
Chris Scaffidi- Director of Market Development -Phone: 978-500-0016
• Complimentary Sr. Leadership Webinar- Cscaffidi@thepacificinstitute.com
Recorded Webinars
• Midland States Bank- Leveraging culture for organic growth and growth through acquisitions.
Link to Recorded Webinar: Midland States Bank (http://ezwp.tv/V8Vcvb5O)
• BankPlus- Building Ownership and Co-Accountability Around Your Banks Strategic Growth
Objectives
Link to Recorded Webinar BankPlus (http://ezwp.tv/V5Ymy6vF)
Articles
• Managing with the Brain in Mind…By David Rock
https://www.strategybusiness.com/article/09306?gko=5df7f
• Fintech’s Culture Challenge…by Scott Bales
https://odemanagement.com/news/fintech-s-culture-challenge
Book Recomendation
The Excellence Dividend: Meeting the Tech Tide with Work That Wows and Jobs That Last" by Tom Peters.
http://a.co/7VkMxyx

44. Extra Slides

45. The Performance Index Continuum™ has been designed to easily communicate the transformation of an organization, group, leader or individual. Utilizing an
index score out of 1000 to summarize the actual data collected creates a single number for comparison purposes. In this case study the culture has improved
171% over a four-year period, from below average (319 Index) to above average (864 Index).
Culture and Performance – Mission Bank

46. Outcomes – Mission Bank