Citizens Bank of Edmond's can-do CEO

Worried about banking’s relevance in the digital age? Don’t be. Ten minutes speaking with (or reading about) Jill Castilla, president, CEO, and vice-chairman of Citizens Bank of Edmond, Okla., will banish any doubts.

She’s a one-woman recruiting team for millennials or any other cohort who may view a bank as kind of a stuffy, sleepy, old-school place to work—or bank.

One cohort in particular she hopes to encourage is women in banking, noting that less than 2% of bank CEO positions are held by women, even though they comprise 70% of banking’s workforce. Castilla thinks that represents a huge talent pool that could help solve banks’ succession challenges.

“I hope I can have some impact on those numbers,” she says.

Castilla has built an impressive resume: a stint in the Army; finance and economics degrees; CFO of a Michigan community bank; played a key role in Citizens Bank’s two-year workout from a regulatory enforcement order; named CEO of the bank in 2014; named “Community Banker of the Year” by American Banker; elected to the board of the American Bankers Association; turned herself into a social media “wunderbanker.”

As Steve Cocheo wrote in a piece on BankingExchange.com in 2015, “If you travel in banking circles on Twitter, it is hard to miss Castilla (@JillCastilla). She has close to 6,500 followers of her own.”

That figure is now 13,000.

The resume is impressive, but even more so is Castilla’s enthusiasm for her profession.

“I love this job,” she says. “This is my New York Yankees job.”

Whenever she travels—even on vacation—she’ll stop in to visit with other bankers. She gets inspiration, ideas, contacts—many of which she implements.

For example, the idea for Vault 405, the bank’s downtown co-working location for local entrepreneurs—set up in space resulting from branch consolidation—came from visiting other offices.

In the following edited dialog, Castilla shares her views on community banking’s future, learning from adversity, her approach to regulation, and more. As a reference point, the $259 million-assets state bank she heads is situated in Edmond, Okla., a suburb of Oklahoma City. The bank was founded in 1901 by her stepfather’s grandfather.

Q1. In a digital world, how does a community bank keep a personal touch with customers and the community?

A. I think the digital world enhances the community banker’s ability to stay in touch with communities and even personal relationships. We’re known for being in the grocery store aisle and for being at Little League games.

The digital component allows us to be accessible in even more ways than we’ve ever been before. Being on social media and having customers able to contact you directly where you can respond in real time, I think, is the greatest advent since their being able to email the bank.

Accessibility is what differentiates the community bank president from the market president of a larger bank because it allows that greater intimacy to the decision maker. The digital world has just amplified that.

Q2. Because of the shift to digital, branch numbers and visits are down for many institutions. Are you seeing that?

A. We had six branch locations when I came here in 2009—all within two and one-half miles of each other. It’s hard to make that profitable.

We consolidated to one in 2013. And we haven’t seen branch traffic diminish. Those additional branches had not been open that long and never had the traffic of the original bank location. And most of the branch transactions were occurring through drive-through lanes.

Now, we have a very lively and energetic single-branch lobby and have one drive-through that’s also very busy. We have digital channels that complement these two, but we haven’t seen in-bank transactions decrease. Actually, they’ve increased, and I think it’s because it’s a busy branch lobby and attracts people to come back into the bank after they open an account. Customers use digital, but they still want the in-bank experience.

We also put video drive-up ATMs near the branches that we closed. They basically replaced the drive-through experience that the customers lost when we sold the physical locations. [More on this in Q6.] Overall, we had net customer growth after the consolidation.

Q3. You seem very comfortable with technology. Does increased competition from Amazon, Google, Facebook, Apple, and others concern you?

A. It does. Competitors are emerging all the time, and consumer preferences are changing at a pace that we’ve never seen.

It should concern any banker, especially when looking at our funding mechanisms. We need access to the customers’ deposits in order to be able to deploy loans and investments effectively to keep our business model going as it has for hundreds of years.

To stay relevant in this changing landscape, we have to be ready to partner with fintech companies and to really understand consumer preferences and needs even before consumers know them, so that we can try to get ahead of them.

I spend probably 50% of my time meeting with customers in person and engaging digitally. This helps me stay in touch with our customers and their preferences. I also spend a good amount of my time engaging with the fintech communities. Social media allows you to manage both of those communities very well.

If you join Twitter, all you do is search for #fintech and you can follow all of the conversations that are happening in the financial technology sector in real time. As you’re reading articles that fintech leaders post or opinions that they tweet out, you can engage with them and add your perspective.

I also use LinkedIn to connect with individuals after I’ve read an article they’ve posted. It’s a great way to get introductions and to ask that community for advice if you’re looking for some specific technology. It’s like having a “fintech chamber of commerce” meeting. You can transform some of those relationships from just being interactions on Twitter or posts on LinkedIn to becoming actual friendships or partnerships.

Q4. There’s an ongoing discussion in banking about the size and scale needed to succeed. As head of a $259 million-assets bank, what’s your view?

A. I don’t think there’s a magic number. It all depends on how skillful your management team is in running the institution at whatever size it may be. I see some highly successful $100 million-asset banks in what you would think of as low-growth areas.

The M&A activity in our industry is more the result of succession planning issues—being able to attract that next generation of talent and being willing to hand the bank over to that next generation. There’s also regulatory fatigue among many management groups
and boards.

Scale can assist you in some ways by dispersing fixed costs over a larger base. But if you’re smart in the management of the bank, nimble in taking advantage of opportunities, and willing to cut your losses in those dogs that weigh you down—such as a bank branch that’s not performing—you can make the bank more efficient for the consumer as well as internally. Then there’s no reason why a small bank can’t be as successful as a larger institution. And maybe even better.

Q5. You mention regulatory fatigue. How do you keep that fatigue from setting in at Citizens Bank of Edmond?

A. A lot of it is attitude at the top. The leadership team for your bank has to be positive when it comes to good regulation that’s trying to look out for the consumer.

Our leadership is committed to being able to understand regulations and comply with them, and also to understand the spirit of the regulation and comply with that spirit.

We feel it is our responsibility as the community bank in town to make that effort to understand the regulations, to comply with them as was intended, and still provide customer access to mortgages, small business loans, and unsecured loans—in a way that is ethical and complies with the regulatory environment we’re in.

We invest a lot in our compliance staff, and they’re at the table in almost every decision we make. We view them as assets to the organization rather than burdens.

When the Dodd-Frank mortgage regulations came out, we saw other banks pulling out of mortgages. We thought it was an opportunity for us to enhance our expertise and our offerings, so we started increasing our mortgage activity rather than decreasing it.

But whenever the regulatory burden impacts the consumer negatively, then it’s important for banks to band together and speak up to make some changes. I believe that’s a very empowered way to approach regulation and not be defeated by it.

Q6. What lessons did you take from helping your bank work its way out from under a regulatory order?

A. It was painful at the time [2010-2012], but looking back, you’re able to get ten years of banking experience for every year you’re going through the turnaround. The benefits for my team of having gone through the turnaround is the confidence we now have that we can find solutions; that as long as we consistently do things the right way, it will generally turn out for the best; and having courage to make decisions that could change the course of a company.

Going through the turnaround gave us the confidence to think about banking a little differently, yet still stay safe and sound—we will not concede on that. But there’s a lot of flexibility to be a little different and to implement new technology or new approaches to doing business.

For example, if we had not gone through the turnaround, I don’t believe we would have been as open to using social media. We’re not marketing geniuses. We got into it because we didn’t have any money for advertising.

It was the same way with the interactive video at the ATMs. Not having access to the technology that the big banks have, we had to kind of become “MacGyvers” and develop our own solution.

[The bank collaborated with two Oklahoma City companies—Monscierge and OrderMatic—to develop a “savvy interactive experience” for the drive-up ATMs in a very short time.]

In the process, we realized technology can be inexpensive and very accessible. If you stay away from customer account information and payment processing and things like that, there is technology you can implement that doesn’t have the same level of security concerns or the regulatory hurdles.

The turnaround opened our eyes to how we could change the way we were interacting with the customer without taking on a lot of risk.

As bankers, we’re expert risk managers—especially on the credit side. But sometimes we forget that we can apply that skill to all areas of the bank. Going through the turnaround helped us see that.

It’s really difficult to disrupt yourself when times are good and the business model is working great. The external force of the turnaround made us shake things up and allowed us to have the opportunity to change the culture at the bank and do things differently.

Q7. Your bank is a member of the Independent Community Bankers of America and the American Bankers Association, and you’re on the ABA Board. Why both?

A. The associations are slightly different from one another. The ICBA consistently has banks like me in the forefront of their advocacy—very specific to the needs and challenges of my type of institution. To be able to engage with them and hear their perspective on how proposed regulations or laws specifically affect community banks is very valuable to me.

Whereas ABA is an advocate for the entire industry, so their advocacy may or may not be specific to me, but they’re looking at banking as a whole and, at times, they’re able to use that muscle to push forward a community banking agenda.

At ABA Board meetings, I enjoy that very diverse perspective, and I’ve learned a lot from my peers that are 100-times, 1,000-times larger. Hearing their perspective has helped me become a better banker and be more empathetic to the challenges they have and understand better the role they have in our economy.

Also, I think there’s more strength in having diverse voices and having an ICBA that can step up maybe where an ABA can’t because of the composition of their membership. They can’t go out on a limb for specifically sized legislation that could potentially harm their other members, where the ICBA can. I like having that flexibility.