The banking industry has seen significant challenges recently, particularly with the failure of some prominent institutions. As customers worry about their financial safety, understanding what leads to these failures—and how we can prevent them—has never been more important. In this episode, Jay Williamson, President and CEO of American Southwest Credit Union, joins John Riley and George Usi to shed light on the current state of the banking industry. From the importance of liquidity management to the evolving landscape of cybersecurity and regulatory pressures, Jay provides expert insights into what keeps him up at night as a CEO and what measures he’s taking to safeguard the future of his institution.
The Core Problem: Why Banks Fail
The recent wave of bank failures has led many to ask, Why did this happen? According to Jay, the main reason behind these failures lies in the mismanagement of liquidity risks and poor asset-liability matching. He explains, “You have to understand where your risks are and match up your cash flow with what your balance sheet looks like.” Unlike the large banks that took on more risk by investing in long-term assets, American Southwest Credit Union employs a more conservative strategy by ensuring that its assets are more liquid and aligned with short-term financial needs.
This strategy has been crucial in preventing situations like those faced by Silicon Valley Bank, where poor liquidity management led to a crisis. Jay says, “Almost all of ours are set so that we know exactly when our cashflow is going to come in and how it’s going to come in so that we don’t take on that risk.”
Cybersecurity: An Increasingly Vital Concern
While liquidity risk is a top concern, cybersecurity also keeps Jay up at night. As a CEO without extensive cybersecurity expertise, he trusts experts in the field to manage the complexities of digital threats. Jay reflects, “What I don’t know can take me down.” Banks must constantly fight off cyberattacks, which means that understanding and implementing strong cybersecurity measures is paramount. Jay emphasizes the importance of partnering with cybersecurity experts who can help safeguard the organization from threats that lie beyond his control. He believes that while the financial risks are manageable, cyber threats require a specialized focus.
Regulatory Pressures: The Changing Landscape
The regulatory landscape is another major challenge for the banking industry. As new laws and regulations emerge, particularly those concerning data privacy and cyber protection, banks must stay agile. Jay explains that understanding and complying with these regulations is not optional. “If those are the regulations, then that’s what we have to do.”
He points out that some of the recent regulatory changes, particularly in states like California, are designed to hold banks accountable for securing customer data and ensuring that they take proactive steps to protect it. For Jay, keeping the organization compliant and secure is a constant priority.
The Role of Risk Transference and Cyber Insurance
Jay acknowledges that cyber insurance plays an important role in risk transference but emphasizes that it’s not a foolproof solution. “Cyber insurance is difficult. Can we even transfer this risk?” While insurance helps mitigate financial losses in the case of a cyber breach, it’s not a replacement for proactive security measures.
Banks like American Southwest Credit Union focus on reducing risk at the source, ensuring that they don’t rely solely on insurance or external risk transference to manage the threat landscape. Jay explains that cybersecurity and liquidity management go hand in hand to ensure that the organization is resilient to both digital and financial threats.
Embracing Innovation: The Future of Banking
Despite the challenges, Jay remains optimistic about the future of the banking industry. He highlights the importance of finding new opportunities even in the face of adversity. “We launched a new product where we can ensure any member or business up to $250 million with guaranteed coverage insurance instead of $250,000.”
Jay’s excitement about the future lies in the ability to leverage technology to provide better services and solutions for his customers. He notes, “We’re 100% different than the banks that failed. That’s our biggest selling point. We offer things that those huge banks can’t offer, and they can’t do, but we can.” This forward-thinking mindset positions American Southwest Credit Union as a leader in providing both security and innovative solutions to its customers.
Key Leadership Insights: A Philosophy for Success
Jay Williamson’s leadership approach is rooted in the belief that doing the small things well every day is what ultimately leads to success. He shares his mantra: “You have to do the right things for the right reasons every day. We want to do the small things well.”
His leadership style is deeply focused on creating a supportive environment where employees can thrive. Jay believes that when leaders grow, their teams grow with them, and this principle has been the cornerstone of his success. He also credits his background in banking for helping him navigate challenges, saying, “When leaders get better, everybody gets better.” His focus on leadership development, combined with his deep commitment to his community, positions Jay as an exceptional example of how leadership drives organizational success.
Jay’s passion for his community is clear when he talks about his work at American Southwest Credit Union. He believes that success is not just about profits—it’s about making a positive impact on the people they serve. “If our community succeeds, we will succeed. I put everything I do into making sure that our community succeeds because I know the end result is that we will follow as well.”
This vision for success is rooted in community, trust, and the belief that, “If you take care of your pennies, your dollars will take care of themselves.” By focusing on the small things and the day-to-day successes, Jay and his team are laying the foundation for a thriving, sustainable future for the credit union and the people it serves.
Important Links
- American Southwest Credit Union
- Never Split the Difference
- LinkedIn – Jay Williamson
About Jay Williamson
A servant leader who understands how to cultivate an award-winning corporate culture that drives long-term growth in assets.
- President/CEO of American Southwest Credit Union
- Recently launched a new online banking platform
- Loves to hunt, fish, and ride motorcycles
- Owns two motorcycles, soon to be 3
- Diet Coke-a-holic
- Has one beautiful granddaughter
