It's all about sustainability: an interview with Michael A. Butler, president, Key Consumer Finance, KeyCorp

RMA Journal, The, Sept, 2005 by Beverly Foster

With $90.2 billion in total assets, KeyCorp is one of the nation's largest bank-based financial services companies. The Consumer Bank at KeyCorp is divided into Retail Banking (branch-based services of all types), Small Business (services to businesses with less than $10 million in annual sales), and Consumer Finance (indirect lending and home equity [prime and non-prime], federal and private education loans and payment plans, marine lending, and commercial floor plan auto financing). Consumer Finance, headed by Michael A. Butler, accounts for about 12% of KeyCorp's net profits. Consumer lending has served as a revenue source for the industry through the last cycle, but in an environment of rising interest rates and greater regulatory scrutiny of consumer portfolios, continued strong earnings will be under pressure. In June, The RMA Journal talked with Butler--a keynote speaker at RMA's 2005 Retail Risk Conference--about Consumer Finance at KeyCorp. He says, "One of the first statements we make to each consumer finance business is that we're all after the same thing: long-term, sustainable profits."

RMAJ: You're a relative newcomer to consumer finance. Tell us about the transition.

MAB: KeyCorp is proactive about moving talent around the company: It's part of our culture and it's part of what makes this a great place to work. Henry (Henry L. Meyer III, chairman and CEO) provided me with a great opportunity to move from the staff side to the line-of-business side as head of Business Banking, and then to lead Consumer Finance.

I've seen two benefits in particular from this approach:

1. Coming from a staff area gave me a much better understanding of how areas like credit, portfolio management, and technology can be used efficiently to drive client acquisition. I understood our areas' roles and was able to bring them closer together to create the partnership needed to deliver our products and services to the client. I could develop those relationships further to get people engaged in the businesses. It was all about bringing them as close as possible to the point of sale.

2. Having run our Business Banking group prior to this, I also understood the value of our franchise relationships and the opportunities to deepen the Consumer Finance client's relationship with other bank products.

RMAJ: That sounds idyllic, but what were some of the challenges in making that happen?

MAB: We made it happen through disciplined leadership and making sure we had the right people in the right job. This was a pretty dramatic cultural shift, but discipline and clarity of objectives must prevail. It's really all about human capital and making sure that people are willing to and have the ability to make the necessary change.

RMAJ: Is it really that simple?

MAB: It's simple if you define "simple" as having a very clearly focused mindset. There are human capital elements in moving people into these critical roles. Leading such an initiative involves spending time with individuals and helping them understand their roles and responsibilities.

You find that not everyone is cut out to make the cultural change to becoming client-centric. Some people aren't as adaptive. Some people don't understand. Some people aren't willing to move outside their comfort zones or aren't capable of doing so.

I had as many challenges with team members who were engaged in the business--to be inclusive of our staff partners, to recognize the value that they bring, and to work in harmony with them--as I did with getting staff people to work in harmony with the lines of business. It's a two-way street. There has to be a great deal of mutual respect and a deep understanding of what you can do together to deliver on time and in a better way to the client--and as I said, not everyone has been willing to adopt this philosophy. This is a non-negotiable cultural approach to the business. If you're not willing to ride on the bus, then we have to make sure you get off.

A good example of our success is in the consumer finance arena. The liquidity of our products represents a great opportunity for the corporation. Because these individual businesses had operated somewhat as silos, they had their own definition of an approach toward gaining liquidity. So we took a step back and pointed out that KeyCorp is a $90+ billion company with great secondary-market capabilities because of its strong ties with our partners in investment banking. We now partner with people who can take a multidimensional look at financing options that are much broader than an individual business would ever think about or have access to. We've been able to execute several transactions of greater benefit to KeyCorp than we otherwise would have had if those businesses operated in a silo.

RMAJ: So to sum it up, you're taking an enterprise approach?

MAB: Absolutely. We need to leverage our similarities and emphasize our distinctiveness to our clients. Each business we have is distinctive in some way. You cannot allow that distinctiveness to be rolled into a corporate bureaucracy and watered down, because that's what slows revenue growth.