Zions Bancorporation, National Association (ZION) Earnings Call Transcript & Summary

Good morning. It is my pleasure to welcome you to the Zions 2020 Investor Day Investor Conference. We're excited to have all of you here. We -- my name is James Abbott, and I am the Director of Investor Relations for Zions. I've been here for about 10 years. And it's been a good run. When I started here, I think the stock price was about 11 or so,and it's up 5x since then, and just -- it's a fabulous -- it's been a very, very good experience over the last little while. The conference theme for today is building a premier business bank with highly skilled bankers, great technology and a solid risk management foundation. And I think you'll find that, that theme is consistently woven throughout. Every speaker will probably touch on every one of those parts as they go through that. And you'll just see how integrated this really is. Let me go over a couple of housekeeping items before we get started. The presentation materials are found on our website, which is zionsbancorporation.com, and also can be found on the Securities and Exchange Commission's website, sec.gov. We are broadcasting the audio of this conference. For those of you who are not in the room today, that can be accessed by clicking the link on our website. And there are -- there may be some folks, and I know that there's -- I believe there's a real-time transcription going on of this as well. And so if you are unable to hear the audio, and you are reading this through a transcription, you may want to check your settings on your firewall or you -- maybe change your browser or use your iPhone or something to get the audio. Sometimes that is a potential problem. The broadcast is being recorded and will be available on our website tomorrow. Next, I want to enter into the record our forward-looking statement, which is on Slide 2, do we have -- we don't have our slides up. Okay. We'll get our slides going here in just a second. So let me just kind of highlight a couple of things about the forward-looking statement that pertain to -- these are the same forward-looking statements, terms such as believes, anticipates, continue, could, will, expects, those types of terms, anything related to that would be a forward-looking statement, and the actual results may differ materially from what we anticipate things to be at this time due to either -- potentially due to unforeseen circumstances. We also make reference to non-GAAP financial statements here. We try to make GAAP financials the most prominent. And that is the directive of the Securities and Exchange Commission. But in a couple of cases, like in the example being the efficiency ratio, that's something that the industry uses is actually not a GAAP term, but we do -- but everybody uses that, and so we do reference that. And so we would encourage you to look at the GAAP, non-GAAP reconciliation tables that are at the end of the presentation. So with that exciting news behind us, I wanted to introduce the main event today. Our -- we -- the opening comments this morning will be given by Chairman and CEO, Harris Simmons. And following Harris' remarks, we will move to a presentation by our Chief Banking Officer, Keith Maio. After Keith's presentation, there will be a brief question-and-answer session. We will have several questions-and-answer sessions strung throughout the day today, 5, 10, 20 minutes of those. And at the very end of the day, there will be a wrap-up question-and-answer session, where we'll try to take any questions that you can come up with as at least as much as we have time. If you are listening to this at home or at your office outside of this location, if you want to send a question to me, if the people in the room are not asking your question and you'd like to, please feel free to send me an e-mail. It's james.abbott@zionsbancorporation.com (sic) [ james.abbott@zionsbancorp.com ], and we'll try to get it in, if we have time. After Keith Maio's question-and-answer session, we will then move to a discussion about technology. Scott McLean will make the opening comments for our technology session. And at that point, we'll move into the meat of the technology session, and we're excited to -- we'll take it to that point. We're excited to have you today. Thank you again for coming. With that, Harris, I'll turn the time over to you.

Sure. Yes, great. Well, good morning. It's great to have all of you here. Welcome to Salt Lake City on a very snowy February morning. This is the greatest snow on earth, we boast. We used to get sued by Ringling Bros. for that, but I think they're no longer around. They thought that was too close to the greatest show on earth. We hope to give you one of the greatest shows on earth during the day today to accompany the greatest snow on earth. But we're really delighted to have all of you here, and we appreciate the -- several of you have followed this company for a very long time, and we appreciate the depth and the quality of the understanding of this company that so many of you bring to investors. And for some of you who are here as investors, we greatly appreciate your investment in the company. I want to talk -- most of you here in this room know a lot about the company. There may be a few online who know a little less about it. Zions Bancorporation is a -- we fashion ourselves a collection of great community banks. We try to operate as community banks in the markets we serve. We try to have very strong connections to the business community, to the political leadership in the community, to non-profits, which -- we develop very deep roots in the communities that we're in. And we think that, that is really the hallmark of a great community bank. It's hallmark of a bank that is creating solutions in their communities, and we really pride ourselves on doing that. We have great local management teams. We try to keep the CEOs of what we call affiliate banks, we're all part of one charter, but we operate in this local fashion with local management teams for most all of our customer-facing colleagues. And we think we've got some fabulous local leaders. The focus today is less on them and more on technology and some of the initiatives that we're engaged in. So we didn't invite them to join us today, which saves us a little bit of money. But I don't want to start without acknowledging the really important roles that they all play. We are fundamentally a business bank. About 2/3 of our revenues come from serving commercial customers. That's both with commercial lending, commercial real estate and all of the depository and fee line of business activities that we conduct with them, but this is fundamentally, primarily a business bank. We have some strong consumer franchises in some of our markets, less so in others. But the common thread that weaves through this organization is a real focus on small to middle market businesses in particular. We operate in a very strong part of the country. If you look at -- if you want to advance that slide, James -- our footprint is nearly unparalleled in terms of its exposure to growth. You can see here that real GDP growth over the past 5 years has been -- this is weighted by deposits in each of the markets that we and the peers that we show in these slides operate in. And we've had a 5-year compounded GDP growth of about 3.7% in the markets that we serve. We've got some of the strongest job growth in the nation. Here in the state of Utah, our -- it's just been really, really strong to the point that -- and I think this is -- you're hearing this from others, certainly, but the major problem that a lot of our customers are facing is just finding qualified talented labor. That's certainly true here in the Utah market, where our unemployment rate is 2.3%, which is, I think, tied for the lowest in the nation. Idaho, I think, is about the same. And you see on the right-hand slide, here, you see the current unemployment rates for, again, weighted by deposits in the footprints of some of our competitors, ourselves. I mean, obviously the nation is in pretty good shape as are we. We are a -- as I said, we're fundamentally a commercial bank. We're really a leader in small business lending. Many of you have seen these slides before, but it's really important kind of there's a snapshot of what we do. This is pulled from a call report data. And these are commercial loans from $100,000 to $1 million in size. And it's not meant to represent all of the small business lending we do. It's really kind of a slice or a sliver. But it's an important slice because we know it's reported in call reports and attested to by everybody who's signing them. And what you see there on the left-hand side is just aggregate loans of that size. And first of all, for some of the largest banks in the nation, then for Zions and some of our peers. We stack up really well against some banks that are multiples of our size. And if you look at commercial loans in that size bracket, $100,000 to $1 million as a percentage of total commercial loans, also very, very strong. This is typical, really, of a lot of regional banks and certainly of community banks. But it tends to be even more true here. We have a -- not only a very granular deposit base, which is very valuable to us and gives us one of the lowest deposit costs in the industry, but we also have a pretty granular commercial loan portfolio. And if you were to take -- I say this is kind of a slice, if you were to look at -- if we had a view into kind of the rest of the iceberg, I mean, what you would see is we do a lot of lending kind of in the $1 million to $5 million kind of range. It's a really important part of our business. We do this, as I said, with local brands and management teams. And we think that gives us a very distinctive kind of posture in the markets that we serve. We are consistently recognized in various ways, in almost every -- in most local markets, you'll have -- whether it's a local business journal or some local organization who compiles lists of the best of this and that, we consistently show up in some very large markets, including Southern California, in the Phoenix market throughout Arizona and elsewhere as being the best bank in the market or the best business bank in the market. Greenwich Associates, which has done research for many, many years in the investment banking industry started doing commercial bank customer research about 10 years ago. And we have consistently shown really well in the Greenwich surveys. We're 1 of only 6 banks to have received -- to have averaged 15 Greenwich excellence awards since its inception. If you look at -- drilling -- if you drill down into some of this Greenwich information, and this is showing both on the top middle market companies' revenues from $10 million to $500 million and then small business customers, revenues of less than $10 million, what you -- I think really stands out is that, especially when you look at overall satisfaction, the very far left bar there in the chart for both middle market and small business customers, we're really very, very strong relative to some of the national players that they include in their surveys. You also note that same kind of strength when it comes to a bank you can trust, when they look at cash management or treasury management capabilities, these are some -- this is something we really focus on probably in a much greater way than most banks -- most regional banks and certainly most larger banks with some of the smaller middle market and even small business customers and giving them some tools that we think are really state of the art. And then this total customer satisfaction in terms of our willingness to extend credit, our willingness to work with customers in a way that is, I think, more personal. And when you look at our credit results, I think they -- we're not cutting corners in terms of credit to get there. We're going to talk a lot today about some of the themes that James mentioned. I want to -- I'm going to just set the stage by saying that, first, over the last few years, really, since 2014, we have been doing a lot of work to change this organization in some really fundamental ways, to simplify it, to reduce its profile, to improve its technology. And we've made a lot of progress. We've achieved pretty healthy profitability. We're not where we'd like to be, but we're getting there, and we will get there. And we find ourselves, right now, in a very challenging environment. I found myself looking recently at -- going back and looking over the last 30 years at how many times we've seen a flat or an inverted yield curve over the last 3 decades. And it's happened a handful of times. This is -- actually, I guess, if you kind of micro measure it, it's about the sixth time we've seen this, I believe. But every other time that we've had a flat yield curve or even a slightly inverted yield curve, we've had the Fed funds rate that was between 5.25% and 8.25%. This is the first time in a very, very, very long time that we've had such a flat yield curve with such low interest rates. And I think that's what's particularly challenging for banks that produce earnings primarily with their balance sheet. Certainly working hard on fee income initiatives, but the bulk of our revenues are certainly coming from the intermediation of credit. And it's a tough environment to be doing that in. We are focusing on a lot of initiatives to improve our revenue. We've -- to improve the customer experience, to improve the [ pull-through ] rate on deals when customers apply, better digital delivery of small business loans, streamlined account opening. There's more than one bank in this country that can open a checking account in 5 minutes, and we've been doing that for some time now. We are working on initiatives in capital markets, in mortgage. You'll hear today about some of the things that we've been doing in the mortgage area that have really streamlined how customers are receiving mortgage credit in wealth management and other areas. And we expect that all of this is going to pay a lot of dividends and especially in an environment where the yield curve normalizes. I would certainly hope that history will be a guide and that a flat yield curve is not going to be the new norm. It may be briefly, but history shows us that, that's not how a yield curve is generally going to be constructed. We're going to talk a lot today about technology and about some of the things that we're doing, some of which, including the core transformation project that we're going through. We're about 7 years into it. These are really long, hard, expensive projects, but they're fundamentally important for the long-term health of any organization. And so you'll hear a lot about that. And we think that we're really at the vanguard of the industry in terms of tackling some of the toughest problems in technology, which are the rails that everything else rides on. You'll hear about how we're working to provide a better experience with our people in our branches. Because we're so small-business oriented, a lot -- we still have a lot of connections with lots of our customers through branch managers, business bankers, people out in the field. And we're really intent on making sure that we're investing in their training and their skills and creating an environment in which they want to make a career in a branch, which isn't something you hear a lot of banks talking about today. But that's actually where customers are and especially in a bank like this, and we want to be sure that we have employees that are empowered, that are educated, that understand our products and understand how to talk to a customer about their financial situation, to read a financial statement that we can deliver data to them so they can talk about here's how you might compare to others similarly situated. We think there are a lot of opportunities there. And then finally, you're going to hear about risk management. We have done a whole lot over the last few years to strengthen our risk management. More about that in just a moment. If you look at some of the profitability metrics over the last 5 years since we embarked on this series of initiatives, we come out of the great recession and with exposures in places like Arizona and Nevada, Southern California, where there was a lot of damage done to those economies. We're also dealing with the effects of the Dodd-Frank Act as at the time, the smallest SIFI in the industry. And I'll tell you, for a period of about 4 years, it just took all the energy of this organization to deal with all of that. And we found -- and as we're coming out of that in about 2014, we said, okay, we've just got to pivot and focus on customers and on streamlining this place and making sure that we're really strong for the long haul, including the technology. And the result is that you can see the efficiency ratio, which was up around 74% back in early 2014, came down to just under 60% and ticked up in the fourth quarter. And this is reflecting some of this margin compression from the yield curve. But we're really intent on making sure -- we continue to be intent on making sure that we're focused on getting down into the mid-50s and not taking forever to do that, but it's going to take some help from the yield curve, I think, before we really achieve that goal. You can see the return on assets, which was decidedly subpar back in 2014, is now kind of middle of the pack. Part of the reason that we've been able to accomplish that is we've had much lower credit losses and thus [ better ] provisions. We've had exceptional credit quality over the last couple of years. And we expect that, that's going to continue, and it will be a positive outlier in this -- whatever the next credit cycle brings us. We've had this real drive to simplify, as I say, this organization. A couple of notable things we did. We consolidated the charters -- the 8 different bank charters we had into a single charter, a national charter. And then just over a year ago, we consolidated the holding company into that bank charter. And that's really been a very good thing. I was looking the other day at the last year that we were under the oversight of the Federal Reserve as a holding company. We had 43 different communications from the federal reserve that we were having to respond to deal with examinations that we were having to deal with the effects of those. Those are now gone. But we continue to have a lot of oversight from the OCC. We had, in 2019, 45 supervisory letters from the OCC. So there's still a lot of examination going on. But we're not getting the doubling up that was taking a lot of time, and it was just not particularly productive. And so that's been, I think, a very good thing. And I can tell you honestly, none of us feel like there have been any corners cut in terms of supervision and regulation in this company. We have a very strong team from the OCC. And we think a very good relationship with that agency. And it's a very respectful one, but they've got quality people, and they do a good job. We've gone through a lot of reorganization of -- I mean, this is a process that had started 20 years ago, but it's continued to evolve, of consolidating back-office functions around the organization. And most recently, a reorganization of finance, of human resources and several business lines, to make them more congruent with the new structure that we have. And of course, the FutureCore project as a replacement of our core loan and deposit systems has been a huge catalyst for simplification. Because you don't embark on something this complex without first stopping and saying, "Okay, let's first see if we can make sure that we've got the process right, that we're converting this over to." And so there's been a lot of work on simplifying our product set, particularly with deposit products. There's been a lot of work on cleaning up the way we -- up off the charter accounts and our general ledger and the way we use those accounts and creating data definitions and data governance and a lot of structure around that. And really, the reengineering of data flows, that in some respects, will culminate with the implementation of a customer data hub, which will be really a critical piece of allowing us to support a variety of digital initiatives that we think are really going to be first class. We've had an ongoing list. And Scott McLean has really helmed this effort and done a magnificent job of it of, of what we call kind of a top 40 list. We have a continual list of 40 projects with an executive officer in the company as a sponsor and we track it. Typically, we will have a project manager associated with it. And we're tracking these all the time. And when we complete one, we have a backlog, and we'll pull another one out of the list and we go at it. We have got the bandwidth to be focused on about 40 of these. I think Casey Kasem may have had something to do with this. But we've really knocked out some fabulous projects in automation, in simplifying credit processes and streamlining how we underwrite smaller loans that produce both a better experience internally and externally. And that's a process that will continue. I'm not going to go through all of these, but this will give you kind of a sample. We've absolutely been focused on making sure that this place is much safer going into whatever the future brings us. Some of this, certainly, was brought on by the Dodd-Frank Act and the Enhanced Prudential Standards, Section 165. And though with the elimination of holding company, and for that matter, with the reg reform bill that was passed about 1.5 years, a couple of years ago now, a bank of our size is no longer subject -- would no longer have been subject to Section 165 of the Dodd-Frank Act. The OCC created, really, a companion set of standards with what they call their heightened standards, which mimic a lot of what was in Section 165, and it's resulted in, we think, really a major upgrade in terms of the risk management structure that we have in the company, and it's become part of the culture. There is -- there's been, with the elimination of the enhanced prudential standards, compliance with CCAR stress testing, et cetera., we've eliminated much of the tedium associated with those standards. But we have retained the tools, and we continue to do stress testing and liquidity measurement and stress testing and a lot of the things that came out of Dodd-Frank. But we're doing them in a less tedious way. And it's just, again, part of the streamlining that's gone on. But we think that it's left us much stronger. We've also been very focused on concentration limits and repositioning the portfolio. So we've gone through kind of a decade-long process of improving our risk profile. James, if you would go to that next slide. Here, you'll see a number of things listed here. The things I'd focus on, maybe first and foremost, are concentrations. We came through the -- through the Great Recession. And I think what we -- one of the thing -- great lessons we learned is, as we look back, we said, "Look, we didn't do, fundamentally, a bad job at underwriting. Where we needed to really improve was on concentrations management." We had too much exposure to the wrong kinds of product in the wrong markets. And so we have dramatically reduced -- I mean, we've nearly eliminated land development financing as an activity around here. We have, in recent years, dramatically changed the profile of our energy portfolio. And we have a lot of limitations on commercial real estate generally and kept the growth of that portfolio from overwhelming the growth of other portfolios here in the company. I think we've had a lot of discipline around CRE and that's important when you are 10 years plus into a cycle. We've been growing some lower risk categories, jumbo mortgages to very strong clients, municipal finance, where we've had a long history of almost no losses in that portfolio through multiple cycles, focusing on some smaller deals, typical deal size is about $3 million. So we've seen growth in some of these categories. They tend to compress margins a little bit compared to some of the things we were doing a decade ago. They also tend to consume less capital. And so we think, in the balance, these are actually quite good lines of business. We've dramatically strengthened our capital. Now in the last year, we've brought that down. We think that we overshot that. And that was, again, part of the aftermath of Dodd-Frank. But we have a common equity Tier 1 ratio today of about 10.2%. And after buying back $1.1 billion in shares last year, you saw in our first quarter -- in our fourth quarter earnings announcement, and well, I guess, it was really -- that's been -- we paid a couple of weeks ago after our board meeting. We announced a $75 million buyback in the first quarter. And so we're pulling back in the buybacks. We're getting to a point where we think we're closer to where we're going to want to be. We absolutely want to go into the next down cycle with really strong capital and with a clean balance sheet, and we think that's going to put us in a great position. We have very strong liquidity. We have very low market risk. We have a liquidity that we have on balance sheet. Our mortgage-backed securities portfolio was high-quality and reasonably short duration. And so we've been doing a lot to change the profile of the company. And then I guess, maybe almost finally, we've reduced the asset sensitivity quite significantly so that we're a little better balanced in terms of our exposure to changes in interest rates. The last thing I'll talk about in terms of just risk management is what we've done with our Board of Directors. We brought on some phenomenal directors over the last 5 years. Ed Murphy, who's the CFO of the New York Fed and had been Chief Auditor at JPMorgan and then CFO of the Retail Division. Suren Gupta that had been the former EVP and Group Chief Information Officer at Wells Fargo in their consumer lending business is now the EVP at Allstate Insurance and oversees all technology and a lot of shared services there. Vivian Lee, she's running a health platform business for Alphabet, Verily and a very bright, really savvy Board member who is managing in her own world in health care through a lot of the kinds of changes that we're seeing in financial services. In fact, they come together with kind of just a lot of interesting parallels. Gary Crittenden, Gary is a former CFO at Citigroup during the crisis, had been a CFO at American Express and other assignments and a phenomenal board member. Barbara Yastine, former CEO at Ally Bank and CFO at Credit Suisse First Boston. Aaron Skonnard, who just joined our Board very recently. He's an entrepreneur who founded a business portal site, which is the -- quickly become, I believe, the largest provider of online technology education to technologists in Fortune 500 companies and others around the world. And he brings a lot of insight about technology, about small business and scaling up businesses and about working in a digital world. So we're developing a really interesting skillset on our Board. I want to finally, I want to just make one comment, this last slide before I turn things over to Keith. I want to talk a little bit about technology and innovation. We hear a lot about -- a lot of handwringing and concern about the ability of smaller banks, regional banks and others to compete with technology. And I'll tell you my own bias is I think it misses the mark. I think maybe the other things where it's going to be a challenge, including branding, including competing with big platform companies. I mean, I think that that's where the real risk is. Technology as anybody is, if you look around at the whole financial technology world, there's a paradox that this notion that you have to be huge to do it, but all the innovations coming out of these upstart fintech businesses. They don't have the capitalization. They don't have, fundamentally, a lot of the understanding of the financial ecosystem that I sit around in meetings with our people -- and I can look around the table at any meeting I'm in, and they've got a lot more depth than, I'm sure, most of the people starting these businesses have. So I think it's not a matter of size. It's a matter of just taking initiative. We've actually had a really interesting history in this company of doing some innovative things. We were one of the early banks in the industry to provide what we -- back in 1995 called PC banking. We have experimented with a variety of things. Some of them that are technical in nature, technology-related and others not, including things like underwriting municipal revenue bonds, and creating a secondary market in SBA 504 for mortgages. And I mean, there -- this doesn't always involve bits and bytes. But in the technology realm, we've done some interesting things in our history. I was digging through a file the other day. This thing I'm holding up here, is this a what is known under the Check 21 Act as an image replacement document, an IRD. It's actually just -- it's a photocopy of a check. It's a check I wrote myself back on August 5 of 2002, and that was a little over a year before the Check 21 Act was passed and made law by Congress. We were really instrumental in going to the Federal Reserve. Some of you've heard this story, but it's kind of -- it's really a fascinating story. We went to meet Danne Buchanan, our CIO at the time, conceptualized the idea of why don't we figure out how to clear checks without moving all this paper. And I said, "A way to do that, it might sound kind of clunky, except it kind of works, is that if you just take a photocopy of it, send the image to the paying endpoint and present the duplicate." And we started playing with that idea and saw some use cases for it, ended up taking it -- working with the Fed, with a woman by the name of Louise Roseman down in the Atlanta Fed, which is kind of their center of excellence for payments. Took that to Roger Ferguson, who was Vice Chairman of the Fed back in July of 2001 and did a demo. We built some software. We had a scanner. And we knew -- we figured out, ultimately, to make this really useful, you needed a change in federal law. And Roger Ferguson was very gracious but not -- it wasn't going to be at the top of his list of priorities to pursue this until a couple of months later and you had 9/11, and all of the Fed's fleet of planes that were ferrying checks all over the country to get cleared were grounded. And the Fed quickly realized that we actually have a weakness in the payment system. And that -- called us up and said, we want to talk further about this, and it led to the Check 21 Act, which is the basis for every check that you take a picture of on a phone today and deposit originated with that insight that you don't need to clear a physical item these days. And so we became an early leader, particularly in small businesses in rolling out scanners and letting them deposit checks from their places of business. I call it the greenest thing we ever did, because I think it's saving -- this technology is saving millions of trips to the bank and it's actually led to the ability to reduce the branch footprint in this industry because you don't have to present physical items anymore. We had another early venture. You see up here on the top right here, it's digital signatures. As the Internet was taking hold, we said that we thought if you're going to do commerce over the Internet, you're going to have to figure out how to authenticate transactions and identify that the person at the other end is who they hold themselves out to be. And the answer to that is really found in public key infrastructure and encryption. And so we started an initiative. We commercialized it. We ended up selling the business, it was called Digital Signature Trust company, to a competing venture that was started by some very large banks globally. When they saw what we were doing and we saw the writing on the wall, and said, "Probably, Barclays and Citigroup and others are going to beat us at this game in scale." So we sold our business. But we -- back in the year 2000, Bill Clinton signed the electronic commerce -- the Electronic Signatures in Global and National Commerce Act with the card we provided him, it's got his signature we embossed on it, and the presidential seal and a chip was actually encrypted in his signature. He actually signed it behind a curtain with a wet signature, and then came out and did it ceremoniously with this because it was a little bit of a chicken-or-the-egg problem. You couldn't sign the bill electronically until he'd signed it with a pen. But I mean, just a couple of examples of what companies our size, and at the time much smaller, can do. We are doing something very different now with this core replacement project. We're in the last lap, and it's a tough lap because it's deposits. We now have all the loans that are in scope done. But it's -- I hope that it will, again, to be an initiative where we are creating something that is ahead of the industry, at least in this corner of technology and something that will serve us well for many years to come. This can be done by smaller banks, but you have to focus on it and unleash people's creative powers. It's tougher these days. There's a lot more oversight. Used to be you could launch a new product in a couple of weeks. Today, there's a lot of process -- and appropriately so. But there's a need for banks our size to be innovating, and we hope to do that. Okay. I'm going to turn the time over to Keith Maio. And he's going to expand on some of these themes. Keith is our Chief Banking Officer, and he is responsible for several lines of business, including all of our retail banking -- as Keith, and Olga Hoff, who works with him at mortgage and wealth management. And so Keith, we'll turn the time over to you.

Good morning. Thanks. So before I everybody gets a little too wound up about the title of my presentation today, last I looked, we're about 400 miles from Las Vegas. There are no table games this morning, okay? So -- but the presentation ought to be exhilarating. I want to welcome all of you as well. And interesting to just kick this off with several references Harris made to small business, the leadership we have in our markets of small business, it's clearly something we're known for. And so as we have been thinking about key strategies for the company to grow our revenue, we talked about the fact that we're good at small business, we can be better, and it's extremely valuable. So let's double down on what we're doing. And I'll talk a little bit about what that means and how we go about thinking about double down. But essentially we start by really better understanding our customers, doing some segmentation work and actually listening to our customers. Many banks, including us several years ago, treated commercial customers as a one size fits all. And the reality is, not unlike consumers, businesses of different scale have different needs. So we really wanted to go through a segmentation process with our customer base and then listen. And then from there, we then decided, okay, what is that we should invest in, what have we learned from these customers and then what do we want to invest in strategically to move the needle. And then as well, think about some of our complementary businesses and making sure they align with our core strategy. And Harris mentioned a couple of those that I'm going to touch on, that's wealth management and mortgage banking. So all of this with a goal of a meaningful revenue outcome. So as we look at the segmentation that we've done first -- James, will you hit the next one, please? We go through an analysis, and it's different for every bank, but how are we going to think about our customers? And for us, we decided that this small business segment is going to be a combination of micro businesses, which there are large numbers of, but those have under $1 million of revenue, business banking, which becomes a real core customer for us is up to $10 million of revenue and then commercial beyond that. And it's measured by gross annual revenue of the company. And so you might look at that and say, "Okay, that's pretty simple to figure out." Well, the reality is, when you get down in the business banking and micro business segments, most of those companies don't borrow money from us. And that's really the only opportunity we have to gather gross annual revenue information. So we spent a lot of time with our data science team, tuning up various algorithms to look at deposit activity, et cetera, other attributes to determine where our customers fell in these segments. And then we backtested that by taking actual customer names and going to our affiliate banks in their markets, and just checking that against what they knew about those companies. So actually, a lot of work went into this. But what I mentioned was one of the learnings that we had. So we tend as bankers to think about customer needs, and we start with the loan first. And the reality is, as we think downmarket about the small business customers, that's business banking and micro, most of them don't borrow money. So as they're looking at us to provide banking services, what's important is things other than loans. I mean, clearly, when somebody needs a loan, they want to have somebody who's responsive. But the reality is, if we only focused on the loan, we're missing the mark. So something we learned there. And so at our core, I'd sum that up, and Harris mentioned this, but 2/3 of our revenue comes from these business customers. So if we look at and break this down just a little bit more, business customers, we have 207,000 of them out of about 1,060,000 total customers. It's not quite the 80-20 rule. But this is about 20% of our customers in total when you add them with commercial real estate, representing, again, 2/3 of our revenue. So at our core, we are a business bank first in every way, shape and form. Interestingly, of that 207,000, again, back to these smaller customers, the micro segment and business banking segment, 90% of that 207,000 is that $10 million and less gross annual revenue. And so at first blush, you might think that's not really a relevant part of our customer base. But I'm going to talk about and show you why it's extremely relevant. Again, learning that most of those customers don't borrow is important. And then lastly, let me touch o there's a big elephant at the bottom of that slide, that's 800,000-plus consumer customers. That's the biggest number out there, don't we care about them? Yes, we care about and love our consumer customers. And we're really good at consumer banking in a couple of our markets. We're focused here and we're focused in Nevada. The rest of our banks have plenty of consumer customers. I would term it as a more opportunistic approach in those markets. But as we started to -- we are starting to drill down in that consumer segment. And where we're doing that is with another strategic initiative that has launched recently and it's an affluent initiative. It's really how do we understand our affluent customer base? And some initial learnings that we have there. And we haven't clearly defined what that affluent box looks like, what are the attributes, but we are refining it. But what we're finding is that about 25,000-ish of the 840,000-plus customer base, so 3% of that customer base represents about 40% of consumer revenue. And guess what? Many, if not most of those affluent customers are tied to the businesses that we bank. So there's going to be a clear tie there. We'll be doing some work in the future to really drill down there. But clearly, affluent customers represent another significant revenue component for our company. And we'll be doing more to define how we can build better products and channels for those customers. Okay. So we've got -- we're a business bank, first and foremost, and so how do we do in the business banking segment. Let's touch on a couple of things here. So first is that this will show you that we're better than most at acquisition. This is over the last couple of years. We net acquire about 2,000 business customers a month -- I'm sorry, each quarter. So we outpace our attrition, and we also outpace business formation in the markets that we serve, okay? So we're doing a pretty good job of acquiring customers. If you look at the attrition statistics, at first, they might seem kind of high because that is a reasonably high attrition rate. Again, not for business. But when you think about these smaller business markets and smaller business customers and looking at attrition, the #1 reason customers attrit is they go out of business. Again, think about that micro segment, that large number of customers we got, they go out of business. There's a second reason, though, a second learning we had here, and I'll touch on what we're going to do about it later, and that is that these small customers tend to get lost once in a while in our organization or any organization. Officers change. We have branches, many of them are -- the branch managers have assigned to them business customers. We have branch managers that have as many as 800-plus business customers assigned to them, along with running the branch and consumer customers. They just can't touch them all the time. So what we found, what we learned from this and have applied some change is that there's a reasonable number of our smallest business customers that don't know a banker. And so when they have a need, all of a sudden, and they don't know who their banker is, they don't really know who to call, they talk to some other business person they know and said, "Oh, you can get this product over at Wells Fargo," they leave. They attrit. And so it's not that we've really done anything wrong. We just haven't been there in front of them and communicating clearly. So that's another learning we have about acquisitions. So we're going to talk about one thing we're doing to deal with what we call affectionately the orphans, those that we're just not in front of. So let's talk about why small business because I mentioned that at a distance, you might look at these smallest customers, these micro customers, business banking customers. And why would we really care about them? And this is going to point to the biggest single reason why. Harris touched on this, mentioned what we did from a lending perspective, how we were very engaged in the lending market to small businesses, but deposits is really, ultimately where the action is. And it's really why you see other banks in the last several years deciding they want to chase small business. So a couple of things you learn from this slide. One is that 70% of the deposits that we had, the $12.5 billion, is DDA. And if you remember, the entire company, we're in the low 40s, so -- which is tremendous, but this segment is 70% DDA. It's very DDA rich. It also is a net funder, meaning the amount of the deposits for that segment minus the amount they borrow is that $5.6 billion. So it's $5.6 billion to help fund other activities in the company that maybe aren't as deposit rich, like commercial real estate. These companies and their size, if you think about it, they tend not to have the corporate treasurer, so there's not disintermediation going on as rates rise. They're not chasing the next highest interest rate. They're busy running their businesses. And so if we're taking care of them in other ways, these deposits tend to be quite static. The other thing was we talk about how granular they are in that micro business segment, again, that under $1 million segment, average deposit balance for our customer is about $20,000, but there are 173,000 of them in this company. So the numbers are big. And if you think about that business banking segment, the next segment up, the average deposit balance, 70% of which is DDA, is $275,000, and it's made up of 64,000 customers. So large numbers of customers with deposits that, in aggregate, really provide a lot of value to the company, but individually don't pose a lot of customer risk. The only other thing I'd mention about deposits just to give you a frame of reference as to their value is that for these micro and small business customers, in 2019, our average interest rate paid across that was 13 basis points. And that compares to 45 basis points across all of our customer segments. So again, these are really cheap deposits. They are net depositors for us. As I mentioned earlier, that's a learning we had as a takeaway here as to how to focus on being even better with this segment is to really understand where the value is. You saw this slide earlier from Harris, but I threw it in here anyway, just because I think that when we think about our reputation in our markets and both from a commercial banking standpoint and a small business point, the fact that we rank #1 across most of these, and those that we aren't #1, we're #2 on, as compared to our large bank competitors, is really important. And the importance is in trust. Something else I think the market thinks we're better at than we have is just our digital capabilities. And importantly, we're going to touch on this in a little bit, but the perception of our bankers is superior. And so when you think about that, so what does it mean as we talk about this initiative? What it really means is that -- and these results are consistent, but that consistent solid reputation that we have really provides what I would think about as a launching pad to double down or go deeper into the business of banking businesses. It provides, for our bankers, a confidence and conviction. It provides a tailwind. They have a positive reputation. They don't hit the water swimming upstream because their reputation is so positive. Okay. So let's switch now and let's say, okay, so we've learned something about our customers. We've segmented them. We've listened to them. We understand where relative value is for the company in all of this. So now where do we invest to be even better than we've been? So it starts with, really, what I would call a strategy waterfall. So we think about this from a product perspective. And when we think about the products, we're going to think about the products that are specifically fit or sized for small business. Again, it's not the one-size-fits-all. So a really good example is we've got a very robust treasury management offering for our commercial and middle market customers, but it's not a fit for small business customers. It's too complex. So we're going to talk just a little bit about how we think about products and solutions that are more fit-for-purpose or fit-for-size. From a technology perspective, there's a lot we're doing from a technology or -- particularly a digital technology perspective. And what customers tell us there is they really want us to provide solutions that are efficient, so again, if you think about it, these are people running their own business. Time is so important. In fact, saving time is probably the single most important thing to them when they think about using bank product. And they want it to be easy. Don't overwhelm them with complexity, kind of back to that treasury example. Keep it simple. And then lastly, when we think about people, we're going to talk about this quite a bit. And Harris mentioned it a couple of times. But really, fundamentally, we want to just make sure we arm our bankers with the right tools as they're out in front of these customers. And really importantly, and I think a big takeaway today is going to be just that we want to develop the best frontline bankers for small business, and that will be a key differentiator. That really is different than what most of our competitors are doing. And we're going to talk about specifically the things we're doing with our people to differentiate them. And then we're also, from a people perspective, thinking about a, again, fit-for-purpose, fit-for-scale segment service center. So differentiating a service center for these small business customers, different than our consumer care center, because their needs are different and unique. So just to drill down on these individually just a little bit. If we think about products and solutions, I'm not going to go through all of these. But again, I mentioned earlier, just focusing a set of treasury management products for down market, again for customers kind of in this under $10 million segment. We've got specially prepared ACH products, positive pay, business banking, a business online banking, smaller, less sophisticated treasury management set. So we've designed some treasury products that are down market. Business Access is a loan product that we kicked off about 2 years ago. Business Access is really our fintech competitive loan product. It's up to $50,000 unsecured, $175,000 secured. It's a 4-hour turnaround. It's a -- when you sign your application, either manually or digitally, that is your loan document. So it's a really quick-turn, score-based product. We've had great results with that product. Express CRE is something we are actually launching this week here. This is not an attempt to double down, if you will, our commercial real estate portfolio. But we found that there's a much simpler way to provide small commercial real estate product to professionals we bank or sometimes our business owners want to own a building or 2. So this is a solution really to help those kinds of customers in a much easier way navigate financing for that kind of purchase. And then last one I'll touch on is this Business Complete, and it's really -- it's a complementary set of products from non-bank partners that will be on our web. It's launching in Q2 because one of the things we heard is that these smallest customers don't necessarily know where to go for services other than banking. So in listening to them, we're launching the most important products to them first. So that's a payroll provider, accounting services and business and marketing supply. So in listening to them, that's where their priorities were. I'm sure we'll go further with this over time, but that's the initial launch Q2. So those are some examples of how we're thinking about different products and solutions, again, with a focus on this business banking customer and what we learned. Okay. When we think about technology, I'm going to stay really light here. It's actually much deeper than this. But Jennifer and her team are going to go through a presentation right after this, where they'll be making a much deeper dive. But I think just a couple of things that really stand out from a technology perspective as it relates to Business Banking. First is we have this digital road map for that Business Access product that I referenced earlier. That's been in use for a little over a year. And right about, maybe just a little bit more than 2/3 of our applications for that product are now coming in digitally. And so when those things come in digitally -- and by the way, this is a very conversational kind of application. It's very easy for customers to fill out. It's very easy for bankers that want to help their customers fill it out. But it's a great solution to simplify things for customers, obviously it eliminates paper and frankly, it makes us much more efficient on the back end. So everybody wins. We're going to expand that digital application in the business banking space to what we think about as the next level of credit or underwriting, a little bit more than that $50,000 and $175,000. We'll be doing that in 2020. We also have a bankcard digital application that's been used. Importantly, we're revamping and enhancing our small business online and mobile banking application, and that launches first half of 2021. So that will be coming soon and a replacement for that business online banking product that I mentioned. So -- and I think one other thing I would mention in technology that is going to be a theme of what we're going to talk about today, and that is that the digital assets we talk about, so let's use the one that was -- the application for our Business Lending product. We don't do that in a -- we don't provide that in a way to necessarily or, in any way, really replace our banker. It's really meant to augment what our bankers are doing with their customers. So many times, as an example, when we're taking that application, it's being taken alongside with the banker. So these are not applications we're trying to take where there's absolutely no relationship with the bank. It's really meant as a tool to augment what our bankers are doing with our customers. And I think, from a technology standpoint, that's a theme. Okay. And then let's talk about people. And so I'm going to start with a quote from our Chairman in last year's annual report because I think this sets the tone for what our goal is. And Harris said, and I quote, "We want to ensure that our branches are staffed with real bankers, with much longer than average tenure, who can solve problems and build and maintain the kinds of relationships customers value." That's really our goal. And that, again, I'm going to tell you is a differentiator. So how are we going to do that? First of all, we've got a series of banker capability and authority building programs we put together. And I'm going to go through those in a little more detail later because they're really important. But primarily, that's where that starts. I think secondly, we've built what we call centralized relationship manager teams. And we've got them in -- we just rolled them to our third market. So we've got some in Utah, Nevada and now in Arizona. And so why is that important? The reason it's important is that, go back to attrition and the fact that one of the reasons we attrit customers is because they don't know who their banker is. They don't have a connection to the bank. And then I mentioned that we have just so many of these business customers that we can't effectively -- down market when you think about those smallest customers, we can't effectively assign bankers, like you would think about traditional business bankers or commercial lenders, to go call on these customers twice a year, spend time in their businesses. It's just not cost effective. But if those customers have a touch point, they know somebody, they've got -- built some element of relationship with the bank, that's a value. So we set up these centralized groups. These RMs then take lists of customers. They tend to be smaller. They work with the individual markets to decide, say, in a branch, what customers a branch manager is going to keep. Maybe we think about branch managers can handle 250 business customers. Anything over that gets moved to the centralized RM group. Those centralized RMs reach out to those customers, introduce themselves. How often would you like for me to work with you? Anything you need today? But just creating that touch point, so when that customer needs something, they have a contact. They know in the bank who they can talk to. And we're already seeing that it's making a difference. We talked to some of these customers, and it's interesting. Some of the anecdotal feedback is, "Gee, I was about ready to leave the bank because I don't know anybody." Again, I don't think the expectation they have is somebody is out visiting their business 2 or 3 times a year, but just that somebody cared enough to touch base. So it's in a maturing pilot stage, I would say, but it's been very successful for us. So that centralized RM team is really what we put together to address what I mentioned earlier, those orphans that are out there. And then lastly, I would mention Business Banking Service Center. And this is a centralized group that we set up really to focus only on these Business Banking customers and really to help them from a service perspective. So the bankers that are in there are only focused on small business and also to help either the customers or our branch managers, business bankers, on-board products for those customers. Okay. So those are some of the things we're doing. Let's talk about branches for a minute. Harris mentioned branches, and this is that annual Barlow survey. And you can see that the last 4 years are stacked up, and the most recent year, 2019, is what is in blue. But it points out that business customers continue, and this is not a dramatic change, but they continue to value the branch and the relationship banker. They're just -- they're 2 of the key features that businesses are looking for when they're looking for a bank. So we think about technology, again, with these smallest customers, and it's not that the technology is irrelevant, obviously, from the finding. But I think the takeaway we all need to have is that branches and relationship bankers are as important as technology when these businesses select a bank. So again, just another takeaway from us, another learning about small businesses and what are we going to do with it. So I think the takeaway for us is that investing in our people is important. When we think about branches, something we've been doing for a while, and this validates, while we're not rapidly reducing the number of branches we have, there is transition in our branch network. And so when we think about transition or relocation, we really now, in the last few years, are thinking about locations where business is primarily. So there may be some new subdivision being built out north of town. That isn't necessarily where we're going to race to be in the future, okay? What works best for us is let's go where business is because, again, that's our core customer, and it's how we might reorient how we look at branches. And then lastly is, again, a validation of what we just talked about a minute ago, and that is that we need additional RM capacity. We can't do it by putting people out, again calling on these smallest customers, but we can create that touch point, that centralized bankers so that every customer has a banker. Every customer knows a banker in this company. That's important. Okay. Now -- so we've been talking about branch and digital. So if we switch now to what's going on with branches and digital, if you look at the right side of this slide, it's -- it essentially says that as we think about customers that work with the branch only or branch and digital or digital only, the customer satisfaction, and this is for our bank, the satisfaction customers have with us is pretty much the same. And it's actually very, very good. But if you look at the left side of this, what it tells us is that those customers that have a branch and a digital, and branch being personal as well, but a branch person, human connection, along with digital connection, attrit at a much lower rate than digital only. And that probably isn't completely shocking to all of us, but it just further validates that we need to make sure that, that human, that branch connection, is part of what we do with customers every day. It also confirms for us something that I think we all know intuitively, and that is that those customers that engage with us or others digital only, the ability to switch is very easy. And it happens a lot more often. So our goal is to, for obvious reasons, have that multiple connection point with our customers. It's that digital connection along with that personal connection. So again, that's where we're going to go. Okay. So we talked about bankers. I said come back to what we're doing from a frontline development perspective with our bankers. And I'm going to reiterate this probably for the fourth or fifth time, but this is really a key differentiator for us. It's something we're doing that's very different. It's a contrary approach to what goes on in the frontline with bankers, but we think it's critically important. And I think we've demonstrated why, for our customers, they think it's important. But -- so when we think about banker development, here's some things we're doing. We've created a multi-level and a proprietary program that both has a credit component, so learning about lending, learning about business, learning about financial statements, and a relationship management learning component. It's got 3 levels. And so for people in our branches, Level 1, the base level, is going to be a requirement. Everybody will have gone through that or have tested out of it. There's just -- there's a base element of learning that just, we think, is so valuable as our bankers are engaging with businesses that we're making that mandatory. There are two other levels that can be achieved. And I think what is valuable about those is it really gives 2 different paths to people in the retail business today. The first is those that aspire to be commercial bankers, they now have a career path to go through additional credit learnings and some relationship management learnings, but it's a lot more in-depth credit as they move along the next 2 levels. Or, and I think Harris mentioned this, it really creates the opportunity for certain branch managers, those in the retail business that want to remain at a branch. They want to remain engaged with those customers, but want to advance their career and be able to deal with more sophisticated customers. It gives them an opportunity to do that yet remain in that branch position. So -- anyway, so that's where we're really heavily investing in those customers. The outcome is that those bankers, as they go through these different levels, will be granted authority, and that authority is a credit authority and also various operational authorities. And so why is that important? I don't know that our bankers are going to be using their credit authority left and right, but they really will develop a level of confidence if they really do need to take care of a customer that they know well. We run into this sometimes that one of the policies we have in our card area. A business wants a card, we have a requirement that they're -- they've been in business 2 years. It might be that this customer has banked at this branch for 20 years, had 3 different businesses. This is the fourth business. Guess what, the fourth business hasn't been in business for 2 years. We know the customer well, we banked them before, we ought to be able to override that, make it happen. It's those kinds of things that these bankers will be able to do practically speaking. But it helps them develop a confidence when they're dealing with their customers, that they don't feel neutered. They don't feel like somebody who is just checking some boxes on a list as they grab application materials and send it off to who knows where to be approved or declined. That's just absolutely we don't want. We want them invested in the process. We want them to own that relationship. And so to do that, they've got to have this kind of understanding, and granting them that authority they've earned, I think, really helps them own that customer and own the responsibility. And at the end of the day, this will give them the tools and the confidence to better assist our clients, and it will clearly differentiate them from bankers that the customer may work with at other banks, particularly other large banks. So that's a really important program. We've invested a lot of time in it. It kicked off late last year. And as I mentioned, this first wave, we've got basically a year to get all of our frontline bankers trained in the first level of this program. Okay. So lastly, then, the other piece of this is, how do we think about some of our complementary businesses. And this is not the time to focus on all of them, but a couple of the key ones are mortgage and wealth. So I thought I'd talk about those real quickly. And how do we think about those in the context of this core customer that we have? So you've got the mortgage offering. James, will you go to the next one? The mortgage offering really has 2 key components, and both of these, again, fit with who this core customer as we've defined. The first is to be the bank of choice for self-employed, and that's the non-W-2 borrower. Sounds simple, okay, you want to focus on business owners. That is generally the self-employed, right? It's not easy. As you all probably have some sense, mortgage rules changed years ago, calculating debt-to-income is critically important. Take some complex tax return and try and figure out what their income is to calculate DTI, it's tough. But we're focused on it. So we've got specific teams that focus on it. It comprises 40% of our volume, so we're doing it and doing it well. We have the QM and non-QM product sets fit for those customers. And I think one of the things, specifically, that we did here is we've got a proprietary mortgage portfolio product that ties specifically to a proprietary cash flow model we use when we're dealing with customers on the commercial side of the bank, commercial real estate side of the bank, private banking, et cetera. We use those cash flow analytics that drive this proprietary product that we've got. So there's an ease of a customer transition in what can be a very difficult space. Secondly, in the mortgage area, the other thing we do and do really well is we got a one-time close product. That construction perm product, again, it's somewhat unique, everybody isn't doing it. That ends up being about 25% of our volume. And again, very targeted to professionals and business owners. Okay. And then in terms of mortgage experience and bringing in technology, and this just goes with the theme that you have been and will be hearing all day, it's -- it goes with a theme of pairing our great bankers with technology. So we introduced Zip, which is our digital mortgage application in 2018. Our adoption rate of customers that are using this Zip is about 75%. Things unique about it, or digital applications, that you digitally obtain verification of deposit, verification of employment. We've got -- the technology will also go grab their tax -- income tax transcript from the IRS, makes things very simple. And again, if you go back to what was important to these small business customers, keeping it simple, keeping it efficient, respect my time, does all that. So you're not uploading documents like some of the older digital applications are all about uploading documents. There's no uploading. You can just go pull everything automatically. It also creates a very transparent process for the customer. So again, just in terms of efficiency and ease for that business owner, the process is very transparent. You can look at any point in time and see what's going on. And so there's a really -- there's a great customer experience involved here. But the other thing it's done is because all that information comes in digitally, it's actually, since the launch of this just over a year ago, it's allowed us to reduce our cost per loan, our CPL, by 10%. It's actually made us a good bit more efficient as an outcome. So -- and then the other thing I would just say to tie this to everything else we're doing is that our bankers, when we think about our mortgage loan officers, are much more knowledgeable than what you generally see in the industry. And so you say, well, why is that? And the "Why is that?" is because if you think about the volume I just described, they routinely deal with construction lending clients. Every one of them does. So they understand the construction component of lending. And secondly, we talked about the business owner, the non-W-2, 40% of our volume. So again, our bankers are routinely dealing with what is the more difficult set of customers to understand and deliver to. So they're just more savvy. And so we have a differentiated experience with our bankers and the technology. And again, as noted, most customers want to deal -- they want the technology, but they also want a banker riding shotgun with them to help them out. That's what we find in the mortgage space. That's, again, consistent with what we find everywhere else. So I think we're delivering well on the mortgage side. And if you see the outcomes of that, we've had portfolio growth of 9% per year over the last several years. The quality in this portfolio is nothing less than exceptional. Our loss rate over the last 8 years has been 0.1%. It's virtually nil. Market delinquency rates, when you look at the mortgage market, and delinquency is measured as 60 days past due, the delinquency rates run in the high 2s or low 3s. Our delinquency rates have routinely run about 35 basis points. So our delinquency is less, our loss is far less. So we're doing this with a very high-quality portfolio. And then last thing I would touch on in the mortgage space that -- going back to Zip Mortgage and what we're doing there, we have found that we can be so much more efficient with that digital application and it's so much easier for people to understand. We are actually rolling that to our branch managers in 2020 as an initiative to give them one more tool to work with their customers. Our branches are now -- they either are or will be -- have iPads in every one of them. And why that's important is then a branch manager can sit down with a customer and start the application process with them and turn it over to them later or complete it there. So we're going to engage our branches as we try to find more that they can do with customers directly in originating mortgages. Okay. Then we'll touch on the wealth space last. And obviously, on its surface, Wealth Management is a real natural fit with Banking Business. And where we position this is to lead with planning first. So if we think about succession planning for companies, it's critically important. We have a leg up. We've got customers that trust us. They've had a good relationship with us, so introducing the advisory component is relatively easy. When we think about business transition, it really occurs in 3 ways. These micro businesses tend to shut down. Remember, we talked about how businesses attrit and those smallest customers, a lot of them shut down. And so we think about that on the Wealth side with -- helping those customers plan for retirement outside of their business activities. When we think about Business Banking customers, that next step up or commercial customers, they're either going to transition to family, generally, or they're going to sell. So again, there's a planning component that we bring there and things introduced on that side tend to be insurance kinds of products. We offer family business services. That's something, again, that's proprietary to us that we offer to these companies. If they're thinking about transitioning to family, there's a completely different set of dynamics and issues that come up. So we've got experience there, and we provide that to them. But if you look around the wheel, you see that we have a full suite of products that we offer. And I think a couple of things are important. One is that our offering is free of any conflict. We don't accept compensation from any fund companies. It's all advisory. And then we've done this with some strategic partnerships, something we've done a little bit differently. So our advised brokerage and mass-affluent advisory product is offered by the largest independent broker in the world. We have the largest independent research firm that offers advice for our mass affluent and high net worth offering. And then finally, we've had, for a number of years, Zions Direct, which is our self-directed broker-dealer. And we have, in the last couple of years, paired that with one of the largest broker-dealers to run the back end of that. So we can do it more efficiently, but still have that breadth of offering for our clients. When we think about our Wealth model and how that has changed, before 2016, we offered Wealth but we offered it through a variety of affiliates and disparate offerings that were disjointed. We had 3 broker-dealers, 3 trust companies. We used 7 clearing firms and we had 3 RIAs in this company. So we simplified the structure dramatically. It was very confusing to our bankers. And I would say not in its entirety, but many parts of this, were not really, again, targeted at who is your core customer. We talked a lot about who's our core customer. We needed to target it there. So we revamped what we were doing in the Wealth business, targeted the offering for who that core customer is, but yet have an entire breadth of an offering up to the ultra-high net worth. So the outcome over these last few years is that we've been growing revenue at a nice low-teens clip, importantly reducing costs all the way along and complexity from the things I described. But along with that, what's happened is we've used technology and automation on the back end to make things more efficient and redeployed some of those assets into more highly skilled customer-facing people. So more advisers we have out there, but also more planners than we ever had. Talked about how important planning is when you want to serve this market, portfolio managers and trust professionals. So we've reduced cost, reduced complexity, but oh, by the way, also reallocated resources to the front end. And lastly, again, just along the theme of everything we've been talking about and will talk about today, we have a next-generation offering that's launching this year. It's called Wealth Select. And it's essentially an adviser-assisted digital offering. So it's not digital, it's not robo on its own, but it's adviser-assisted digital offering that, again, pairs people with technology. You're going to hear that all day, but it's about pairing people with technology. So then just in terms of looking at the advisory growth we've had, we all know that the landscape is changing. There's a regulatory push. There's going to always -- there is constant pressure these days about moving things more away from brokerage more to fiduciary. We have an incredibly high level of recurring income. So we built our offering and our growth on advice, not commissions, which I think will serve us well in the long run and also positions us, I think, best to take care of our clients' best interests. We've grown AUM substantially. And really, we think about brokerage in a way that we provide it, but it's for customers that need or want brokerage as opposed to a primary product offering. So I think we've got this well positioned today and going forward. And this recurring revenue piece that you see in the right-hand of that slide, I think, really tells the story. So let me wrap this up and try and bring this together. So clearly, what we learned is business customers, and particularly these small business customers, are the core of who we are. We continue to acquire those customers, and we have a positive reputation in that market. So we've got some momentum there. We have provided and continue to think about providing technology and products that are scaled for them. That, I think, is one takeaway for us. So we're repositioning ourselves to provide products and technology that are scaled for them. And that doesn't just mean the small customers, but improving the level of sophistication for our large commercial customers. But a big takeaway is that they equally value the branch and relationship manager with technology, whether it's sophisticated or simple. So we double up our efforts on building business-savvy customers -- or business-savvy bankers who work with our customers and giving them real authority. And we believe that's going to be a key differentiator. That real authority, that savvy banker in the market in front of customers will be a differentiator. We align our complementary businesses, okay, with that customer base, which is something we've done and continue to do. And the result is that we think we'll be able to accelerate our growth and revenue with this valuable customer segment. So with that, questions? We have time for questions, James?

Let's go ahead and do -- thank you, Keith. We're going to go ahead and do a few questions, and we're obviously running a little bit behind schedule, but that's -- we're going to -- that's okay. We're going to be all right with that. You guys have come a long way. We're going to take some questions. So we're going to have 2 microphones that are going to run around the room. And [ Zalanta ] and Julia, thank you very much for your help. And so let's go ahead and just raise your hand and we'll run the microphone to you. Over here to Ken Zerbe from Morgan Stanley.

Great. I guess, the slide you talked -- you had on there about empowering the employees, right, to help them make more lending -- better lending decisions themselves, more pricing decisions themselves. There has also been a trend in the rest of the industry that has kind of said, okay, we tried that. It didn't really work out as well as we expected. Like let's centralize everything. Let's really make sure the bank, you guys, like the bank management, has a much better handle on what the pricing decisions are or the lending decisions. So you're not getting too far out of the credit box. The question is, why -- if a lot of other banks have moved towards centralizing after trying what you're doing, why is doing it this way the right choice for Zions?

So I think there's a couple of things. One is, let me paint a picture of the reality of how this plays out. They do -- there's not a unilateral pricing authority that everybody in the field is going to get. It's limited. And the same with credit authority. So I don't want you to go away with the impression that every branch manager in our system, all 425 of them, are going to have $1 million of credit authority. It doesn't work that way. And the reality of how the credit process works is they're best off having that underwriting done centrally. But they have the ability, at a very low level, and largely probably in the card space to make a credit decision. So I just want to make sure, from a scale standpoint, I'm clear about that. But I think what's different is can -- you have to be willing to engage in educating and helping train up our bankers. And I think that's what's difficult, particularly with the churn that you typically see in retail banks at the branch level. There are so many people coming in and out, that to keep up some kind of really consistent quality training program is difficult. And so that's where we've spent most of our time, frankly, in this initiative in the last 12 months, is developing a robust training program that can live beyond an initial training period, that will live working with or training up that next group of bankers that comes in. Clearly, that is the most labor-intense part of this. And that's where, frankly, the big commitment is.

Next question is...

James, I might just add to that, that...

Yes. Scott and Harris and Paul, if you want to jump in here, feel free.

I might just add to that, that it is a contrarian view that we're taking. And it's based on the fact that our customers already see us making decisions. They see us doing something that's different today. So this isn't a new thing we're taking on. It's -- our customers already experienced this. This is what surveys tell us, and this is what they tell us. And in addition to the branch managers, we have this layer of what we refer to as business bankers, okay? They are credit trained, highly experienced, they have more authorities. And they're the ones that are really facing off with our borrowing, the 20% of our small business customers that borrow, 80% are deposit only. And so they have a much longer tradition of actually making credit decisions. And so we just think it's what customers have expected of us. It's why they bank with us. And rather than go away from it, we're going to -- based on what Harris noted in the shareholder letter last year that Keith read, we're going to lean into it, not lean away from it.

Marty?

Two quick questions and then something very specific. The employees that you're getting, when we're talking to banks across the country, the hardest thing is to get employees with some history or experience with these credits. You're sending them through a training program. But are you seeing that you're being able to -- because your system is different, attract other employees from other places? Or kind of just tell us a little bit about where these employees are?

So I think we'll find that. It's a good observation. I think we'll find that across the enterprise. What I would say is that we're actually a few years into this program for a different reason, in Arizona and in parts of California. And what we find is, at first, we just need to recognize you have to attract a different kind of person, somebody who actually has an affinity for this, who has a desire to learn and grow as a banker. But once you do, then you're able to -- you get known in your market for that, that it is a different kind of position. It does have a different kind of opportunity. It becomes a positive thing. But there's clearly a transition period that goes on.

Then the value you're adding to these customers, do you see that they're less price-sensitive? Because that's the other thing that we're hearing is the price competition that's out there.

Yes, yes. I think the biggest thing we see is that they feel there's a value add. And so when we look at those attrition statistics, I think most particularly, that's where we have started to see, and I think we'll continue to see less attrition, which net-net means you'll grow customers. We historically have thought, as a company, that this kind of approach, particularly on the commercial banking side, yields something on the order of 25 basis points of value that we can sell over just based on relationship. And I think that's kind of what our history has shown.

And then lastly, on Page 32. It was interesting that your actual satisfaction across those 4 categories wasn't very different. I mean it was 8.6 at the top to 8.2, but the attrition rate was 3x higher. So I just was curious why the satisfaction rate wasn't picking up some of the difference there as well.

I think the satisfaction -- you're absolutely right. I touched on this, it's the same. I think the big thing is that the ability to unplug here and plug in somewhere else when you are a digital-only customer and you don't have any kind of real relationship you've developed is so easy that, that's why we see that happen. And I think it goes back to what I was mentioning early, that it's not that we've necessarily done anything to anger a customer, but they see a bright shiny object down the street, they don't really know anybody here. And if you only bank with us or anybody else digitally, unplugging here and plugging in there is not a big deal. And I think that's why you see that churn at more than 2x.

John Pancari, Evercore.

Keith, just a question on Wealth. A lot of other banks are also focusing on it. Could you just give us an idea about what your target is there? I mean it's about 2% of revenue here. So not the largest contributor. How big do you think you can get it? And what's the time frame?

We -- I'll go give that to -- Rebecca Robinson runs our Wealth Management...

Rebecca, come on up.

And -- so my answer is going to be it needs to be a whole lot more. I think it's got a longer sales cycle than most products and so we need to recognize that. But Rebecca is the one that's led this complete realignment, and so it just takes time. We now have things realigned, we have momentum. But where do you think this ought to go?

I mean, I think realistically, right now, just with our own organic growth. And right now, all of this growth is organic. We're not out acquiring books, and we're not paying for it. It's not unlikely to see it be 4 to 5x the size it is just to put us on par with our competitor banks. So there's a lot of organic opportunity there. The other piece is because we're focused on the advisory piece and the recurring revenue, we do see a slower, obviously, burn-in from that, but it's also the type of revenue that we start with that base every year. It's also less fee-sensitive, and it is a much longer-term relationship as well.

So what's the time frame to get that 4 to 5x the size?

Well, I can't commit to that now.

Try again.

I think within a 5-year period, we will see significant growth. But it really depends on our integration at this point.

So I think the other thing comes back to as we talked for a minute about business transition. So we've got all these businesses, and so the first thing we've had to do is just get introduced to these business from a wealth planning perspective. And so as we have done more and more of that now, if these businesses transition, we'd have been there. It's just that's an investment in time. So I think if that transition accelerates, that's where you'll really see acceleration in the Wealth business.

Steven Alexopoulos, JPMorgan.

So, so far this morning, this was in Harris' presentation, you showed us that Zions is in one of the best geographies in the country. You're leading in technology, customer satisfaction is better than the average bank. You're putting experienced bankers in front of your customers. Why are you not showing better growth, right? When I look at fee income growth, you're half of peers. If you look at loan growth with municipal, you're in line with peers. But ex that, you're trailing.

I think Scott is dying to jump on that one.

No, no. I'm happy to. It's a great question, Steven. I think part of the answer lies in what we don't do. And I think what we don't do is going to serve us well if and when we go into another downturn. And so what we don't do is we have really slowed and reduced our construction lending. I think we have a slide later in the risk section that shows the growth of construction lending of banks our size and smaller. And it's -- ours is virtually flat for the last 4 or 5 years. Our peers are through the roof. So what we don't do. We are not nearly the construction lender that we used to. We're not a big card company, okay? We don't have big growth in card. We don't have big growth in auto. We don't have big growth in leverage lending. And our leverage lending portfolio is, by Moody's estimate, materially smaller than our peers. So the answer is more in what we don't do, and what we don't do, I think, is going to serve us really well in the next downturn. But what we're basically shooting for is kind of mid- to moderate single-digit growth in commercial. That's 50% of our portfolio, C&I, kind of mid- to moderate single-growth, that's what we've done recently. And to see our 1-to-4 family portfolio, which is about our residential portfolio, 1-to-4 family and HELOCs to see that portfolio going mid- to moderate single-digit growth. And we'll see CRE coming along at kind of mid- to less than single-digit growth. And that -- we can operate just fine with mid-single-digit loan growth, the way we're structured. We're having great deposit growth and happy to talk about fee income more, but I think I'll stop there and allow another question.

Can I ask a follow-up?

Yes.

So at the last Investor Day 2 years ago, we spent a lot of time talking about fee initiatives. So it's a little bit like Groundhog Day hearing these again. And you've compounded at less than 2% over 2 years. Peers are double that. So I hear you why some of your lending has been slower. Why haven't you seen better traction on the fee income side?

Yes, I -- we'd have to unpack fees for you, but our customer fees, okay, if you look at customer fees, which is about 95% of our fee income, customer fees over the last 4 or 5 years have been growing actually about 4%. And when you take out businesses we've sold and accounting changes that we've made, we don't disclose a lot of that. But the way we look at our customer fees, they're growing about 4% to 5% over this 4, 5-year period, which is the mid-single-digit growth that we stated back on June 1 of 2015. And that's nothing to write home about. It's not terribly exciting, okay. But it's what we said we would do, and that's what we based our financial model around. We're seeing really strong growth in the area of capital markets, which is about an $80 million revenue business for us. It was a $40 million revenue business for us 2 years ago. This is foreign exchange, syndications, interest rate swaps. It's almost doubled in revenue in the last 2 years. That's about $78 million last year. We are seeing growth in Wealth, as Rebecca talked about and as you saw some of those numbers. We're seeing growth in our Corporate Trust business, a small business for us, but really a nice growing business. And we think we're going to see really nice growth in our Consumer Conventional Mortgage business. With this new Zip Mortgage, we have originated very few traditionally consumer conventional mortgages, which is where you generate mortgage fee income, okay? We think it's one of the single largest fee income opportunities we have in terms of short-term growth, is the origination of conventional consumer mortgages. And then our traditional businesses, our big workhorse businesses like Treasury Management, Personal and Business Service charges, et cetera, those are all going to be kind of low single-digit to mid growth businesses, but they are outstanding businesses for us.

I'd just add, I think, yes, the other observation I would make is that if you take the whole portfolio of fee income businesses, there's still a big chunk of consumer kind of deposit-based fee revenue there, and it is a real drag. I mean it's just not growing. I think that's probably, kind of, generally the case across much of the industry. Customers are becoming much, much better at avoiding overdrafts. We're giving them tools to do that. They -- back in the day, you just kind of routinely increased overdraft service charges every year. I mean it's -- and they just topped out. You just can't do that, okay? We've reached the point where customers won't take that. So that's a challenge. I mean it's kind of an anchor. And we've got some other businesses that are growing actually really well. We're seeing really good growth in Corporate Trust. We've seen really good growth in Capital Markets. Wealth Management is coming along nicely. So I think some of the places where we're really trying to focus are coming along nicely. But boy, it's -- the consumer piece is a heavy weight to drag around in terms of the total number.

Thanks, Harris. Brocker Vandervliet, UBS.

You got the last name, right. That's awesome. Just a follow-up for Keith. You talked a lot about many different things, but you didn't touch on comp and some of your competitors, particularly some of the smaller banks, have done, I think, some pretty radical things to incentivize bankers to really require deposits, even going so far as writing them into loan agreements or that they require the operating account or have liquidity requirements for a loan relationship. And how much have you worked around comp and how you pay...

So just a couple of things there. I mean, one, all of our bankers, particularly when you think about the front line in the more retail business banker-focused have comp plans that generally have multiple components in them. It's not just loan-driven because we've recognized that's not where the value is. They typically have a deposit component. They typically have a fee income component that they're responsible for. I think that -- when I think about comp and what we talked about, the one thing we're going to be working on in 2020 is revamping the comp structure for our frontline, again, branch manager, business banker employees. Because if we're going to go so far as to invest, as we talked about, in making them better bankers and give better opportunity, we need to think about compensation a little bit differently. Or what's going to happen is those bankers are going to get picked off and taken away. So that's probably the biggest thing in my mind from a comp standpoint right now.

Let's go to Paul Shifflet from Eaton Vance.

I'm curious if you could speak a little bit about maybe the secular threat from fintechs like Square. They are kind of expanding their capabilities in serving small businesses beyond payments. Are there parts of your small business and micro business portfolio that are more at risk as a result? And then also thinking about that chart on 32 that Marty referenced. How has that evolved over time in terms of propensity to attrit for the different reasons?

So the second question, this -- we've just started looking at it. So I don't know how it's evolved over time. I don't know if it's any different today than it was 3 or 4 years ago. It's just point in time. But as we think about the fintech competitors, I go back to actually that slide and this ease of plugging in and unplugging when it comes to a digital-only relationship. And the competitors you're talking about are digital-only. So I think there are 2 things. One, they're digital-only, but they're very attractive from a digital perspective. And from a product set standpoint, they're relatively limited. So if there's an issue that we see, it's on the smallest end of the scale of those customers that we have, that have an attractive fintech alternative. And if, in fact, they're digital-only with us, it's easy for them to unplug with us and plug-in there. But I think as customers, I know and -- as we talk to our customers and as reflected in the material multiple times, as businesses grow and become a little bit more sophisticated, that relationship with a banker becomes critically important. And as you saw, a branch located near them becomes more important. So I think where there's pressure for us, it's down in that micro segment, that smallest segment. But as those customers mature, this is what you see. They want a branch, and if we've got a multitude of touch points with them, we're not going to lose them.

Can we take maybe one more question, if there are, and then we'll move -- to the back. Can you -- back, in the back.

If you could talk a little bit about just the different regions you operate in. And maybe any of the differences in sort of applying some of these plans, like say, in Southern California versus here in Utah. You've got great franchises around the country. So I'm kind of curious if there are areas where, for instance, mortgage is a bigger opportunity here versus, say, wealth management in another area.

Okay. So couple of things. As we think about the geographies we operate in, there are strengths and weaknesses with the organization. Each one of them, orientation is a little bit different. So let me start with the strategic objective, we talked about this one, we spent time on today, this double down on Business Banking. Every one of our markets is owning that. It's important to them. What's different is the level of maturity by market. So again, maybe the most mature market with where we want to take this is Utah and Arizona. That's where there are groups of bankers, frontline bankers, in the retail side of the bank that really understand businesses and how to deal with businesses. Now obviously, we need to go deeper in those markets. But if I think about some other markets we're in, maybe Colorado, where we've had more consumer retail-oriented people, we've just got -- we've got further to go. But that doesn't mean that they're not engaged with this as a strategic objective. So I hope that helps answer your question. As we think about other product, it's interesting. Mortgage is becoming more universal in its acceptance across the company or adoption as a key product. 3 or 4 years ago, a substantial amount of the mortgage we generated was in Texas. That was kind of where our mortgage team had started. Today, the percentage of production that's out of Texas is a good bit less than it was 3 or 4 years ago. So that adoption is more universal. And I think it comes from all of the regions owning it as an objective and then digesting it, and that's the outcome. That's what we hope for in the Business Banking side. On the Wealth side, I would say it's just -- it's kind of hit and miss. Ownership in the Wealth Business by affiliate is almost as much by just relationships in those organizations. Rebecca, you got -- I don't know if you had any comments there, but...

Yes, just on the Wealth side, predominantly, historically, it's been here in Utah. But you look at our markets and you look at the growth in wealth and the transition of businesses, we really see substantial opportunity in all of our markets. Also just because we have a very, very low level of customer penetration at the moment, there's a lot of room in all of those economies to grow.

I would say the one that stands out, particularly, though, is when we talked about how to de-simplify the business a few years ago, probably where there was the most damage done internally was in Texas. And I would tell you that in the last couple of years, Texas has re-engaged and onboard with the new program. And the results out of Texas have been awesome. Okay. Thanks.

Thank you. Thank you, Keith. Thank you, Rebecca, for joining us. We're going to move next -- I'm going to ask Scott McLean, our President and Chief Operating Officer, to come up and introduce the next section, which is technology.

James, thank you very much, and good morning to everyone. We are about to go take you on a really deep dive into technology. So you need to get ready for that. This is going to be much deeper than just a glossy PowerPoint presentation of a lot of cellphones and what you can do with cellphones. So you're going to get a chance to interact with a lot of the leaders in our company that are leading these initiatives for us in these technology projects. And I hope it gives you a better understanding, certainly, about us. But one of the goals we had in designing this period was to -- this next section, was to help you be better informed on what questions to ask our competitors, okay? So we do have sort of an ulterior motive there, and I think that should be good for you. But by you understanding better how to talk to our competitors, I think that will help you understand us better as well. As you can see on this slide, on the right-hand side, there are some key themes. And I would just -- just 5 buckets. And I'd really encourage you to just sort of tear this page out and as this next -- probably close to 90 minutes goes along, I'd really encourage you to just write some notes because you'll fill up these 5 buckets with examples of what these themes are. And first, acting as one company with no silos, not a company with many silos. Our competitors fundamentally operate with a multitude of silos. They have retail banking, commercial banking, wealth, capital markets, blah, blah, blah, okay? And we fundamentally operate as one company. And that may sound like corporate speak, but I'll tell you what it looks like on a day-to-day basis. What it looks like when we're making decisions is we make decisions, it helps us prioritize, and it helps us spend less money fundamentally in our technology dollars. But I'll tell you the other piece that is most important is our customers want to feel the bank with one bank, okay? If you're a customer at a bank that has many silos, which is almost all of our peers, you might be "owned by the private bank" or "owned by the retail bank" or "owned by the commercial bank." First of all, customers don't want to be owned, okay? Secondly, most customers have needs that are well beyond the silo that owns them. And what they will tell you is that if they're a private bank customer and they happen to own a small business and they happen to need 3 other items, they feel like they have 5, 6 different relationships with that bank. This is how we are fundamentally different. We are a contrarian in terms of leaning into building the capabilities and authority of our bankers in the field. And we are a contrarian in wanting to be silo-free, okay? It absolutely makes a difference. You heard Keith talk about these Greenwich survey slides. They're very nuanced. But when you really get behind the Greenwich data, what it says is our customers are business customers by a significant margin versus our global bank peers, okay? They think that we value relationships more than our global peers, the 4 or 5 big global banks, and they believe that we are a bank that they can trust. Those are two really important things. And Harris talked about capability building, Keith did in our bankers. Our customers, our business customers, value relationships. And so in our technology spend, what you're going to hear over and over again, we're not trying to replace our bankers. We're just simply trying to extend and enhance their ability to build relationships. This is really, fundamentally a very important element because many banks will tell you, "Hey, we're trying to make it totally digital, totally automated. You don't need anyone in a branch. You don't need to talk to a human." It's not where we're going. We're simply trying to take what we know our customers value and enhance it with technology. The third item is, I think, a great -- if you're going to compete from a position, it's really nice when your customers believe that you're on par or better when it comes to digital technologies, and this is what external surveys say. It's what Greenwich says, which is sort of the gold standard for this kind of surveying, and it's what others say. So our business customers already believe that we're on par or better than our global bank competitors. That's an awesome place to compete from when you hear about all the things that we have been rolling out in the last couple of years and the things that we have coming. Finally -- well, fourth is our commitment to our core transformation. We're not just that crazy bank trying to create -- trying to replace its core loan and deposit systems anymore. We're not the only bank in the United States trying to do this, with heavy emphasis on the word trying. We now have virtually all of our loans on one modern core system. There is not another major bank in the country that can say that, okay? I say this in public all the time. I have never had another CEO or President walk up to me and say, you can't say that anymore. It is true. And deposits will be here right around the corner. At that point, every other bank in the country is about 6 to 8 years behind us. And why is this important? If you want to survive in a digital world, you have got to be digital to the core. Data is absolutely critical. Flexibility is critical. And in our case, I think we have a powerhouse partner in TCS, Tata Consulting Services (sic) [ Tata Consultancy Services ], arguably the largest IT consulting firm in the world. This is a distinct strategic advantage for us versus our competitors. And finally, you're going to hear about continuous improvement. This is an awesome topic. We talk a lot about -- I'm sure we'll talk about expense and cost control later, the discipline we have around automation and AI and what we're doing in this area, it's just -- it's creating effectiveness gains, whether it's customer satisfaction, employee satisfaction, work avoidance, cost savings, revenue growth. It's just producing a bucketful of examples that are making a difference in our company. So these are themes -- we're about to take you really deep. We're going to dunk your head under the water for about 1.25 hours here. And I would just keep asking you to refer back to these themes because everything you hear will be directionally supportive of this. I now want to introduce Jennifer Smith. Jennifer is our CIO. She joined us about 14 years ago as head of our audit practice in the company as our Chief Auditor. For the last 4 or 5 years, she has been our CIO, having moved into our technology and operations group several years before that. She was -- before joining us 14 years ago, she was with Wells Fargo for 11 years in their operations area, heading up a large part of their risk practice and then had responsibility for audit in their technology and operations group. She brings great experience to us. She's also been recognized by American Banker on a number of occasions as one of the top executives in the country. And every year, she's recognized by some technology group, either regionally or nationally, as one of the top technology executives in our country. So Jennifer is a fantastic leader for our company, a wonderful colleague. And I'm going to turn this part of the program over to her now. Jennifer?

Thank you, Scott. As you've heard over and over again, relationships are critically important to our organization, relationships with our community, with our customers, but that ethos starts within these walls. Today, I have the honor of representing the good work of my partners across our entire organization. You will hear from some of them as well in our panel discussions. Those partners help us deliver on 3 strategic imperatives: customer first, empowered local bankers and digital to the core. As we move through this conversation, we have a few demos to show. And unfortunately, we can't broadcast those, so we'll get those demos posted online while we show them in the room, so be patient as we flip back and forth between them. If you enter into an unnamed global branch in Manhattan, and maybe some of you have, you may be -- you may meet Pepper, a humanoid banking assistant. Pepper will give you product advice just by speaking to her. If that freaks you out a little bit, you can click on her screen and get the product advice that you'd like. You will not find Pepper in our branches. What you will find when you walk into one of our branches is a human and a banker who knows your name. She will know your name not because there is an RFID chip in your credit card in your pocket that just alerted her that you walked in. She will know your name because she has been solving problems with you for years, helping you grow your business. She may know the names of your children. Soon, she will be equipped with a digital device that will have insights on how to better serve you and productivity tools that will help her get out from the branch and even go in to your place of business to better serve the work that you're doing. As you continue to hear about, we're spending a lot of time on our core banking replacement. That work is not work for the faint of heart. It takes the commitment from the Board. It takes the commitment from the CEO and the entire C-suite for years. It takes resilience and it takes courage. It takes some money to do this important work. As many other banks are now starting to look at replacing their core systems, their ability to stay focused on this for multiple years will be a key to their ability to execute. It won't be easy. Going back to when computer technology actually started to capture the attention of bankers decades ago, and I want to share a video of a banker, Lloyds Bank, in London, this is a real banker, in 19 -- about 1980. We'll see if that plays back there. [Presentation] That takes you back to the early 1980s. The reason I show this is because that's fundamentally the same technology architecture that is running all large banks in the country today. It was running those ATMs. It was running those sorters. It was running those Bunker Ramo terminals that plugged right into the mainframe. That's fundamentally the technology running organizations. Legacy technology is something, for any bank that's been around for a long time, needs to address. All right. We'll flip back. Okay. Let's see, I think we're missing -- back one -- it's one slide before this. Yes, okay. I think we're missing a slide, but what I will share with you in regards to our technology spend. Some numbers you might want to write down. Our technology spend is approximately 10% to 12% of our revenue. 1/3 of the total technology budget is on technology, new initiatives. We think 10% to 12% is on par with our peer organizations. We -- after we've made significant investments in what we know as transforming the banking organization, we've been able -- and transforming investments are those investments that are generational in nature. They are the investments that our organization has taken on over multiple years. We've been able to shift some of that spend to digitizing our front-end customer experience as well as increasing the spend supporting some of our investment in improving and strengthening cybersecurity controls, reducing end-of-life system footprints as well. But I mentioned our spend is 10% to 12% of revenue. We think that, that's on par with our peers. There's no magic formula to determining what to include in technology spend for apples-to-apples comparison across organizations, but the fact still remains is we don't have the same scale as these large national banks even though the percentage of spend is similar. What's important to know is that we have a disciplined process about being deliberate and effective in how we spend our dollars. There are 4 areas to know about how we manage that spend. And Scott mentioned, the first one is how we lead as a leadership team. We debate often, are we aligned with the strategic initiatives of the company? Are we developing common practices so we don't create technology silos? And a technology silo is when we implement a similar system in different product lines in our organization that. Increases our spend. It's the ability to knock those silos down that allows us to be more effective. And we also aren't chasing bright and shiny objects. Now we have strong practices here, but we do have some technology debt from years ago prior to charter consolidation of having some of those technology silos. Next, we are relentless in understanding what our customers want. This is a developing practice, but it's important because as we look at what a customer wants, it saves us from having to go and invest in areas that are bright and shiny objects or humanoid banking assistants that are actually pretty cool technology, but they're not cost-effective technology, at least for us. Next, we leverage our banking relationships. Again, you continue to hear this, and I know we spoke about Greenwich data showing that our relationships and trust with our customers is rated very high next to our peers. They also -- those small businesses and midsized businesses ranked our technology, digital capabilities higher than our peers. I don't -- I haven't -- we haven't broke the news to them, but our digital technology is on par with our peers, it's the -- the large national banks. The difference is, is how our customers see us because we're so focused on doing what we need to do for them and we're coupling that with the relationship. In their eyes, we win on all measures. That is more cost-effective than pursuing some niche investments in the digital space. And then lastly, we are not afraid in making transformative generational investments for the decades ahead to continue to ensure we're relevant and that we're able to provide fast solutions at a more cost effect -- in a more cost-effective way long term. A couple of years ago, as I stood up here in front of you, I shared what our technology road map is, and we've delivered on what we said we were going to deliver at the time, including replacing all of our treasury Internet banking systems, the enrollment process for those treasury customers. As a reminder, those treasury customers support $100 million in revenue for our organization. We've also, in the last couple of years, since we last were together, have replaced or implemented digital account opening channels for almost every product that we have. Again, as Harris mentioned, we can open accounts in 5 minutes, have funding quickly for our customers. Our customers rate us 9 out of 10 in the customer satisfaction scores in our digital account opening capabilities. We have a lot more on our road map and we're going to get into that in panel discussions. And how that's going to work, we're going to have 3 panels around each of our strategic imperatives. I'll ask some questions to get us going. And at the end of each panel, we'll invite you to ask questions on that topic. The first panel will be on customer first. We'll probably spend 20, 25 minutes on that topic. I'd like to invite up to the stage to join me, my partners from around our organization who are focused on delivering the right products to our customers. Olga Hoff is our Director of Enterprise Retail Banking; Jake Heugly, Director of Fee Income and Commercial Products; and Jason Brock, Director of Digital Banking Product and Strategy. And I think we can grab some mics. All right. In our customer first space, we have 3 key areas of focus. The first is that welcoming first impression, the front door, where our customers land when they come into our digital channels; the next is fast and easy account opening; and finally, a digitized end-to-end customer experience. By the way, I want to comment on this digitized end-to-end customer experience. Fintechs are really, really good at that first impression. They're not as good at automating and digitizing the entire experience end-to-end and having the robustness around compliance and risk and availability that, speaking from a banking industry standpoint, we'll have in place.

So we're going to jump right into this topic. I mentioned that understanding our customers, our relentless focus is important to us, not only from a customer standpoint, but also in just managing what we're delivering to them. Jake, this is an area that you spend a lot of time focusing on. What do small business and middle-market customers want?

It's a great question. First of all, it's good to be with you here today. When we look at our small business customers, I think we have a really good grasp on what they want from us digitally and in general. In fact, if you were to talk to a lot of these small business customers, what they value most is time. That's the limited resource that most of these small businesses, when we're in front of them, that's what they complain about, it's not having enough time. What they want is access to technology that makes them more efficient, that makes their business run smoother so they can compete in a really aggressive environment. Where Zions is unique in the industry is we've invested a lot into our treasury capabilities that Harris and Scott have mentioned. We make those available to all of our customers regardless of size. Keith talked about that not every small business customer is going to use Lockbox and all of the different technologies that we have, but they do find value in some of the services that are available that are unique to them. That's what the differentiator is. When you go upmarket into that middle market space and you talk to those customers, they value data integration. They value cutting-edge products and capabilities, which we deliver. And it's really, today, it's the relationships, the advice that we're partnering with that technology that is the key differentiator in educating those small business customers on what's available. Today, I think what's making us succeed is we're challenging our clients to think differently on how to manage their business.

Thanks, Jake. The -- one of the other areas that we're focused on is bringing a new digital platform to our treasury customers, the landing page, which we call Treasury Gateway, and that whole new customer experience front. And we've learned a lot as we've completed some of the customer studies and user testing. Can you talk about the digital experience platform? And what is your view on how Greenwich thinks about our digital capabilities for these treasury and small business customers?

Well, first of all, I think Greenwich is correct. I think we do a great job with our products. We are at parity with our competition. But if you look at the digital experience platform, first thing to note is that we've done a great job at continuously improving our digital capabilities over the years. It's -- we're consistent at it. And our clients have come to expect that from us in having upgraded technology. What we offer though today is 16 different digital products that our clients leverage from us. That's how they are accessing and working with the bank. The DXP or this gateway or the doorway that they have digitally as they enter into the bank is what we're enhancing that experience for them. I liken it to like this. When I used to do my Christmas shopping, I would go to Barnes & Noble, then I would go to Target and I go to Gap. I buy those products. It would take me multiple weeks, and I'd get it wrong. My wife would tell me I did it wrong. Then all of a sudden, the -- those websites became available from those companies and I could go online and buy the products. That experience was really improved and I enjoyed it. It took me then a day to get done my Christmas shopping. Now I use Amazon. Amazon does everything for me. They know who I am. They know what I'm used to using. They know what kind of products that I'm buying for my children. And I love that experience. The DXP is like that for our customers. They have access to all of the different digital capabilities, but with a single entry point. We take the things that they're commonly using to transact their business and making it at their fingertips. Instead of having to go into Gap and then go into Target and the different websites, we make it available all at the beginning. That's what's changing that experience and then we're looking forward to that for our customers.

This is -- that particular system, one of the systems that sits behind it is a workhorse for us. We have 60 customers log onto that system, on average, 60x a month. It's tied to our onboarding process for our digital -- digitally for our treasury customers. This is another area that we've been moving like gangbusters on to improve the experience. But it's all -- fundamentally, it's using our digital signature capabilities and the -- and DocuSign is a key component of it. Everybody here has used DocuSign. So why is this different for us? Why is this a game-changer for us, Jake?

It's a great question. So first of all, not all digital signature applications are created equal. You talk to your customers and they'll be the first ones to tell you that with our implementation of DocuSign, we have seen that our wet signature process, what we went through -- because remember, we went in and tried to enhance the agreements and tried to cut down as many signatures as possible, making that the convenience. That's not what they were looking for. They were looking for a digital signature capability. That digital signature went from 7 days on average for us to get an agreement back from a client to, right now, we're averaging 2 hours. Think about that, 7 days to 2 hours. That's why it's convenient for us. Our customers are getting access to technology quicker than they ever had before. You don't make the sale, you don't get the revenue until the client is using the product. And if it's taking you beyond 7 days in order to get just the signature and the agreements back, you've sometimes lost those clients. The second thing I'll mention is this. Our improvement on the abandonment rate has improved by 27%. That's clients who start the application and then say, yes, I'm not interested anymore. They're tired of it. That manual process was cumbersome. So moving from what we have down to 2 hours is a game-changer. The other thing, it's making our officers more efficient. Our calling officers aren't going out there and tracking down signatures and following up with the client. They're out having additional conversations with their customers.

And amplify an item here, too, that goes back to how we lead in our organization. So we have multiple different agreements. And it was easier to implement different agreements because then we didn't have to go through the process with -- that all organizations have to go through with risk and compliance and other bankers out in the field to get consensus. We went through that together in order to arrive at this solution, even though it was hard work, to provide a better experience for our customers. In this space, we've been speaking about the products that are primarily impacting the deposit and payment side, but we're doing a lot of work as well in the small business lending side, digitizing their onboarding process as well. Credit cards and small business lending, Olga. Olga would you share with the group here what problems were we seeking to solve?

Yes, that's a great question. Happy to do that. So first of all, we looked really at the needs of our customers in the lending space. And as Keith mentioned previously, if you look at our business banking customer base, starting from the micros to large commercials, 68% of that customer base is really micro businesses. We know that this customer segment is increasingly being targeted by fintechs, and they've come to expect the quality of experience that typically gets delivered by fintechs. We also know that given the size of this customer base for us and given the size of their lending requests, being able to complete these loan origination requests in a very efficient way was a key priority. So to really summarize it -- summarize what we were solving for, we were really solving for experience and inefficiency. Our digital application was built in partnership with a fintech. What's truly amazing about the results we've been able to demonstrate is that in less than a year since its launch, we converted from 100% paper to over 2/3 of these applications are being completed as digital applications. So I hope the demo plays. Let's take a look. And it does play. Great! So what you'll see is a clean, uncluttered user experience that creates the perception of simplicity. And it's not just the perception of simplicity. The experience is really fully optimized to render on any device. So the customer can apply from a mobile device. We know that our customers really value mobility and so that was one of the key features we were solving for. In sharp contrast to where we started from, and that was a 7-page paper application, was intimidating, a fine print of legal disclosures sprinkled throughout it kind of interrupting user flow, which, by the way, is still very much the experience that many of our competitors offer in this space. What you see here is a conversational style application that expands dynamically based on the questions that the customer is completing. We know that security of their data is incredibly important to our customers. So we highlight these capabilities during the application experience in a very prominent way. And finally, with less than just 2 minutes of their time invested in this process, we are able to give the client certainty about the product they're applying for and their prequalification. What we found is that this prequalification approach is fundamentally, incredibly helpful for us in transitioning this client from a prospect to a customer and helping them complete their shopping journey with us.

Thanks, Olga. One of the things I love about this product is a mom who's at home late at night after the kids have gone to bed, she can apply for a small business loan for that business that she may be running out of her home; or if she gets stuck, she can go in and speak to her banker the next day at the branch. Olga, how is it different, though, from a fintech experience?

That's a great question. I think we've demonstrated that we are really happy to deploy the best of what the fintech community offers in terms of user experience, but what we're truly focused on is what makes us different, and that's really the expertise and experience of our bankers. So this particular experience was really built as a collaborative experience between the banker and the customer. So the customer can start the application themselves. And if they, for example, encounter a problem, it will be picked up by the banker who will help them complete the process. The banker could start the dialogue and kind of the selling process with the customer in a different context and then invite the customer to apply digitally. And finally, in an experience that no fintech is really positioned to replicate, the customer can come into a branch, learn about the product and apply at a branch. So what makes this experience really, truly unique is the fact that we've given our bankers the ability to start building a relationship, really explore the customer's needs, understand their business and really move the relationship beyond just the origination of a single financial transaction.

Thank you, Olga. Well, we've been speaking about has -- yes, what we've been speaking about is new product offerings for our small business customers, for some of our larger treasury customers, but at the end of the day, the real workhorse is our digital banking platform. We are in the middle of a replacement of that platform, and we are really excited about it, Jason, of what we're going to be able to deliver. We're closing some gaps as well, perhaps you could walk through what we're doing there.

Yes. I think we have a demo for this as well, if we could play that, and I'll just speak over it. You'll see here kind of a modern look and feel, but beyond that modern look and feel, as Jennifer mentioned, we're going to close over 50 competitive gaps just out of the gate, kind of day 1. As Keith mentioned earlier, launching with small business in the first half of next year, but we're actually already live with the platform in production, kind of taking a minimum viable product approach here. And so it's live software. It's not just vaporware. And consumers should largely be migrated by the end of this year onto this new platform. But you may be asking, so how does this stack up, right? What's the baseline? What's the benchmark versus big banks? And how does this compare? And I'd say, in the eyes of our customers, this is going to be just as good as what big banks offer. How that's possible is really kind of twofold. One is, again, this is really based on open technology and it's a modern platform and so it's highly flexible, highly extensible. We can build on it ourselves. We're not tied to the road map of a vendor. You've heard of -- you've heard from probably other CEOs at smaller banks who complain about their vendors and their dependency on their vendors, and this is really a platform that small banks aren't sophisticated enough to really build on themselves and so they'll still kind of be behind in this sense, but for us, we're large enough and we're sophisticated enough that we can actually extend this. So if it's an integration with a fintech solution and we want to plug that into this platform, we can do that without having to wait for a vendor. And so really, out of the gate, it's on par with the best technology out there. Secondly, we -- and Jennifer spoke a lot about this earlier, we avoid chasing the very tail end of a diminishing return curve. And I'd say 2 things about that. One is we avoid chasing the tail, all those shiny objects, all those really marginally impressive features that a big bank or a fintech may provide. We avoid chasing that by understanding our customers and what they really value and what they will actually use. The other thing is I would challenge you to think about the differences between a big bank's diminishing return curve and ours. And I'll give you an example. As we replaced our commercial loan origination system several years ago, we dealt with like 5 or 6 integrations. And a competitor bank recently merging, I guess you can guess which of the 2 I'm talking about, but when they moved, they had 70-plus integrations that they had to deal with. So we have far less complexity. Big banks have to spend fundamentally more to get to the same place just because of their complexity than we do. But again, the other part of that story is that we're not chasing every bell and whistle out there. We're really focused on understanding our customers, what they will actually use, what they actually value.

Can you give an example of a bell and whistle we may not be chasing?

Yes. So when you think about what's in digital banking, you've got alerts, you've got card controls today, you've got personal financial management capabilities, so that's budgeting and personal financial management tools. This platform will have a very strong PFM offering out of the gate, but there's a lot that you can build around that, lots of, again, bells and whistles on there. We know that only about 3% of our customer base will actually use that functionality when we go live. It's important to have, right? It could be viewed as a competitive disadvantage not to have something in that space, but we're not going to chase every last little feature that you could build around a personal financial management software because we understand that our customers largely aren't going to use it.

Just to punctuate maybe this point from a perspective of how we think about product development. What we learned from listening to our customers is that interesting and compelling products come from solving interesting and relevant problems for the customers. So that's what we're really chasing, not really overloading applications with features that essentially create feature bloat, that creates maintainability, supportability and long-term coast -- cost.

As we think about our customers, I hope you've heard our focus on a relentless understanding of what our customers want, what problems they want us to solve and how we use our relationships to augment our digital capabilities. Let's open it up to questions from the group.

Make sure we're on. Chris Spahr, Wells Fargo.

So does the different affiliates cause any problems towards implementation or rollout? Or have you had any customer confusion? Obviously, your customers are not going to be stuck to just one's particular boundary.

They're really great...

And on a related note, I mean, just doing a quick search, all of your ratings on the apps have different scores across your different affiliates.

Great question and great observation. Jason's team studies this and actually has been deeply involved in the implementation. So Jason, I'll let you answer that.

Yes. To be honest, it adds a little bit of work. I would challenge you, and I think Harris speaks to this frequently, to find a large organization that doesn't have some sort of matrix to it, right, where you're dealing with, across one dimension or another, layers of complexity. So for us, the affiliates and having to work with multiple partners there is -- it's a slight drag. I wouldn't say it's -- it's pretty nominal. We also have partners like Olga for enterprise retail banking that helps it kind of in between to help us kind of consolidate the different affiliate views. But when we release technology, it is the same technology across our affiliates. So that wasn't always the case, but we no longer have differences in the versions or the things. The App Store ratings, longer conversation there in terms of root causes to why you might see different ratings there, but it is effectively the same technology.

Ryan Nash, Goldman Sachs.

Jennifer, this is more of a bigger picture question for you. So when Harris spoke earlier, he talked about the 7-year technology journey you guys have been on and then the hope, over time, to potentially get to a mid-50s efficiency ratio. I guess, when I look at the listing of all of the things that you've done and things that are still on the come, it seems like over the next 2 to 3 years, we should hit an inflection point with most of the major initiatives being completed. So given where you are from a -- you are and will be from a technology standpoint, what does this mean for both the cost structure and the efficiency of the organization? Does all this investment eventually result in better-than-peer profitability, better-than-peer efficiency? Help us understand what this does for the overall bank over time.

Yes, a really good question. First, I expect our technology spend to remain about the 10% to 12% of revenue of where it's at because as we complete our major projects, there's a depreciation schedule and then we continue to need to reinvest it. Next is the technology spend is actually helping us be more efficient. And whether that's talking about some -- as Olga was mentioning some of the benefits we've received by automating the end-to-end process of the digital loan application, that Keith mentioned in terms of our mortgage application that it costs us less now to produce a loan, you'll hear more in another panel about the benefits of automation that we're seeing. And I won't give away that punchline yet, but in very specific places, technology on its own will absolutely help us in reducing our efficiency ratio. But there's -- as you know, there's an entire -- there's a lot of complexity that goes into those numbers, and technology is only one driver of that.

I'd probably add on to that. I mean, there's obviously the 2 major components to an efficiency ratio. She spoke, I think, largely about the cost side of it. I think what we've been doing for the last several years is really kind of -- really kind of winding up the spring and really kind of loading it up from a revenue standpoint, and I think that those take time to develop. We've got a lot of building blocks that we've been working on. I think you will see us over the next year in particular, but over 2 years really, increasing our focus on digital marketing. But all of these tools that you're seeing demos of, right now, they're either recent or forthcoming in the next -- I think your observation is accurate. In the next 2 years, I think you'll see a big lift on the revenue side.

I guess, just as a follow-up to that. I mean, cost is just one part of the equation. But what do you think this means over time for revenue enhancement, getting products to market faster and the overall customer experience?

Yes. The -- as it relates the overall customer experience, essentially everything that we're putting out there from a digital standpoint is helping the customer experience. And we have to couple that with the banking relationship as well because those 2 together create the best customer satisfaction scores, the best retention scores. As Jason mentioned, we're making investments in digital marketing that will help on the acquisition side. That's really critical as well from a revenue growth standpoint. And I think I missed one element of -- okay.

Other questions? Marty?

I think this will lead us to the next section, too, but I think there's 2 waves in technology. If you're a big national firm, you have to use artificial intelligence and technology to run the whole decisioning process. I mean, the reputational issue that's haunted one of our peers in the industry, I think, has taken away the ability for people in those franchises to be autonomous. You have to be controlled, but what's happening in the control center? Whereas what we're talking about, I think, in the next section is engaging the person. And I think that's a completely different technological rollout and model. Costs are different. The whole experience will be different. And just explain those 2 different avenues because to me, I think, that's pretty critical in understanding what you're saying in how you're trying to automate and engage a person versus take away the person's ability to help in the process.

And you're right, we will get into that a little bit more in the next section. So I'll just briefly touch on it and then we can go deeper later. I mean -- first, I mean, you heard Harris talk about putting more out into our -- with our bankers and giving them some authority to make some decisions that, in the past, have been more central. So that's one aspect. The other around the intelligence, artificial intelligence. It's really analytics and analysis that we have at play here is going to be focused initially on offering insights to help our bankers better serve and sell to our customer base. In terms of using intelligence around like credit decisioning process, we're still relying on the models that we have in place.

Okay. Maybe one more? Jennifer, is that -- does that keep us on time?

Yes, one more.

I was curious, on the new digital offerings, Jake, I think you said there were 16 of them, how much of this are you doing on your own? How much are you doing using fintechs?

Great. Jason, I think I'll let you take that one.

Yes. So to be clear, the 16 are underlying applications within our treasury portfolio of offerings and so that was specific to the Treasury Gateway discussion with Jake on the digital experience platform. I think where you're going, though, is really an important point that these platforms now -- technology has really evolved. And this goes back to scale, right, and this kind of supposed advantage that big banks have in scale. They just have a lot of -- it actually doesn't take a lot of dollars anymore because of the openness of the technology and the architectures out there. And so we have a digital experience platform vendor for the Treasury Gateway that, sure, they help us, they give us some advice, but we're doing basically all of the build ourselves on that platform. So the platform gives us a bedrock of accelerated development, so it's a really powerful platform, but we effectively own it. We own the experience. We build whatever we want on that platform.

It's the -- so the digital, you'll hear a little bit more about our platform strategy in -- I feel like I keep deferring to the next conversation. But the digital experience platform is essentially a concept and tools -- multiple tools that allow us to control the relationship with our customer and not outsource it to a vendor -- a vendor's interface. And so what we can do is we can plug in all sorts of products into that platform and create a cohesive experience for the customer from a UX standpoint.

And this is James Abbott. I'll just add that one of the comments that I've heard from other banks is that it's really, critically important to build our own from scratch so that it's universal, and it looks the same across the board, and the customers value that and so forth. And the smaller banks can't possibly compete against that. So that's kind of what you're speaking, yes.

It's a really good point. The large national banks do have the ability -- they've -- they may not have a platform. They may do all the development themselves. So this platform approach allows us to do -- to control that user experience by accelerating our capabilities, as Jason said. Going downmarket to small business and middle market customers, this is the place where small community banks aren't able to offer the same kind of experience that we can and large national banks aren't spending the time to build a relationship with these customers. So it's those 2 things together that allow us to win in that space. I'd like to thank Jake, Olga and Jason for joining me. And we'll move to the next panel. We have 2 repeat panelists up here. And I'd like to welcome Brandon Thomas as well to our panel. Brandon is the Chief Data Officer for the company. We are going to spend some time talking about empowered local bankers. And this is a subject that has been enlightening to me as I hear from my partners on the business requirement. A few months ago, Jake, you shared with me how the sell cycle has drastically changed in the last decade and the reliance on technology for selling and actually customer acquisition has changed from a banker standpoint, not only a customer standpoint. Can you share more about that?

Yes. We were talking about how the buying dynamics have really changed from our customers, and it's forcing us to pivot on how we engage our clients in having conversations with them. If you looked at it 2 decades ago, I would tell you that the sales folks, when they would go out and talk to clients, they focused on the features and the benefits of the product. They were trying to raise the awareness of what we had built because if you build it, they don't come. You got to get out and have a conversation with them and use technology or ways to engage clients to educate them. If you look at what they did last decade, the sales folks would focus on value selling. They would increase the importance of the product, the value of that, so that they didn't focus a lot on the price where they looked at the cost of what we were offering and making sure that there was a higher value-to-cost ratio. Today, the dynamics have really changed, and it's on insight. It's finding information and trends and things that our clients care deeply about and educating them, making them smarter. There was a study done by Gartner recently that did talk about the customer purchasing journey. They said that 57% of that journey is completed before we walk through the door now. Years ago, that wasn't the case. It was a matter of just trying to raise some of the awareness and the education. If we don't change our bankers' mentality and getting the team focused on the 43% and partnering with Brandon and the other groups in our company with information, we're going to find ourselves as a commodity. And that's where we've really differentiated ourselves. It's not a race to the bottom when you're adding value and discussion around where we can help make our clients smarter.

Salesforce is a tool that everybody -- every bank uses. Jason, this is an area where we actually believe we're doing something different than other banks are doing with the financial services cloud -- our financial services cloud implementation. Can you share why it's different?

Yes. It definitely is different. And we've talked already today about why we're taking a contrarian kind of approach in being more people-oriented than large banks and kind of -- I hope that you'll see this when we talk about Salesforce. But before I get into this, I just want to make sure, everyone in here familiar with Salesforce? Okay. All right. Good. How many of you know what positive pay is? Anyone? None. Okay. So that's why we have people like Jake sitting here because as much technology is already out there, as much digital is already out there, none of you know one of our top Treasury Management products that we sell day in and day out, and we sell it as well as big banks. In fact, we outpace them on that product by a long shot. We have almost as many positive pay users as the big banks do at a fraction of their size. This is why there is this coupling and it's so critical to get the coupling right between what you're doing digitally, right? And I don't actually -- let me take that back. Digital is pervasive across everything, okay? So there isn't a non-digital. Think of what's not digital today. I mean, you can't open an account in a branch without using a digital tool. So to say there is this kind of dichotomy or this tug and pull between digital and not digital, I don't even know what not digital means. There's really a spectrum of self-service, kind of totally on your own banking transactions and activity that go on and then there's something that leans heavier to human-assisted. There really isn't a digital side of that spectrum. It's all digital. What we're doing with Salesforce really is unique. And this is not just by kind of the competitive intelligence we receive from bankers coming to Jake's team, for instance, from large banks and kind of what we learn about what they're doing there, but also from Salesforce itself in terms of what we're doing. We are getting to their latest and greatest financial services cloud built for banks version of Salesforce and we're going to one solution. At other big banks, you will see that they have deployed multiple versions of Salesforce. Each business unit tends to have its own version. They've customized the data around it. They have different function, features of it. And it makes really taking a holistic approach to relationship management, it really makes it difficult, if not impossible. Linking different versions of Salesforce is actually really hard if they've been customized like you find it pretty much all large institutions. So that's very unique. Why is that important? Well, think about your favorite doctor's office experience, okay? So you call up, you've got a pain, you explained to a person on the phone, hey, I need to -- I got this pain, who do I need to see? Set the appointment. Days later, you walk into the office -- the doctor's office. You fill out a form and you reexplain everything you've already told the first person you talked to on the phone. You wait in the waiting room. You get into the doctor's office. Finally, you sit down. A nurse comes in. You explain to him everything you've already explained on the form and when you made the appointment. It goes on and on, right? Doctor comes in. You reexplain everything. This is probably something we all can relate to. Oftentimes, what do you get? You get a prescription. You get, hey, you need to get a brace for your knee that you can buy on Amazon. It's kind of a very frustrating, painful experience to go through. This is actually the small business experience at large banks today. They get tossed around. They go from one product group or business unit to another, and that's not what a small business wants. We've talked a lot about the fact that they are very time-constrained. Time is kind of the highest value commodity they have. And they don't have the time to get tossed from department to department to get their problems solved, right, to get that pain solved. And our installation of the financial services cloud will be unique in the industry. Again, don't take it from me. You can ask other banks. You can ask Salesforce directly. But it will allow us to get to that more seamless -- when a human is involved, right, which, again, Greenwich shows that they care about, all the surveys show that they care about it. Not all the time, some stuff they want to do on their own, right? And we'll have those self-service capabilities as well. But when the banker is important to the discussion, when they want to get a holistic approach to solving their problems, our version of Salesforce will be very different and unique. And it will couple, again, the technology to our human interaction and personal relationship management.

Let me jump in real quick on that. From the sell side, I can tell you what Jason is talking about is a game-changer, having the information available at the fingertips is what we're doing today and empowering our bankers with information through their mobile capability. One of the surveys that I did recently to our new hires. We asked those who had been new to our organization within the last 2 years, how many of you used a tablet in order to conduct your daily sales activities? Only 20% used a tablet in their day-to-day activities. And of those, the majority only had preloaded marketing material or a demo that was available to them. So if you think about that, that's just digitizing a brochure, and they would put it in front of the customer. That's not really empowering the banker. And so when we've had and attracted talent over here and showing them that we issue an iPad or a mobile capability, putting Salesforce, this type of information, in addition to all the other tools, the productivity tools that we're adding to it, is going to be a difference-maker. In fact, when we did this survey to those who currently have our tablets that have been out there, they've seen a 50% improvement in getting out in front of customers. The name of the game is getting in front of the clients and having these conversations, augmenting them with this insight and the data that Brandon's team has done a fabulous job at providing for us.

Thanks, Jake. And I didn't give Jake an adequate introduction. I think he's one of our best salespeople in the company. And when I hear him speak, I want to go out and start selling myself. Brandon on -- for -- to do all the work that Jake and Jason were talking about, it requires a lot of data. Data has been characterized as the new oil, and that's a lot riding on your shoulders as the Chief Data Officer. So how are you approaching this?

Thanks, Jennifer. Jake is putting a lot of pressure on us as well as Jason, and it's good pressure. So I wanted to maybe spend a minute with you just on the foundation and get you thinking about the foundation that needs to be put in place. And to do that, I thought I'd pick an example that you might relate to. So it's -- how many of you are using SNL or its new -- I know it changed hands. So many of you are relying on that. So I want to walk through a scenario with you, just if you'll play along with me a little bit. Imagine if today, I was to just, right now, remove your access to SNL or any of its competitors and you no longer had the ability to have that data just right at your fingertips. So that means you're in a scenario where now banks are sending you call reports or you're going and hunting them down, financial statements, press releases, you're coalescing all this data yourself. So while you're thinking about that, I want to take it one step darker and imagine that I also removed from you the regulatory definitions that exist around all this data today that all of you rely on. So now you're in a scenario where banks are producing their own net interest margin definitions. They're not disclosing it. Or maybe you're arguing with one of your fellow analysts about the total asset size of a bank. That's the kind of scenario that banks are dealing with and have for a long time. And I just wanted to paint that picture for you so you can understand why this role and what we're doing is so foundationally important to the analytics that Jason has been speaking about. I mean, our -- when I was put in this role about -- in 2015, it's not that the bank wasn't focused on data governance and on this foundation, but in order to deliver the real-time, the expanded data needs, we needed to strengthen it. So we've been hyper-focused on delivering the most critical data elements to our company so that we can do that, focused on not only just general data governance, stewardship, but data lineage, understanding these definitions, understanding and being able to speak to them in a very specific way. I know today that we have 4,000 data elements in our company. That's our universe of data elements, and 575 of those are critical to our business. So we're monitoring and watching those and delivering those in a way that's new and unique and for me, exciting. So...

Great. Okay. All of that work creates the insights that Jake spoke about and Jason did as well. So our bankers have the information at their fingertips to drive increased production. We will turn the time over to you now for questions to this panel.

Questions? Going back to Chris. Chris, we should have had you sit at the front.

So of the 4,000 data elements that you're talking about, I mean how much, do you think, are completely leverageable, usable now? How is -- I guess you have this coming up in the next presentation, FutureCore impacting that. And I mean are you going back and going through and rethinking how all the old data you have been -- what I'm getting at is like how sophisticated is your data lake?

Yes. That's a great question. So I mean the way to do that is to work with all of our partners in the company with the business and have them help us define what's most critical. So you can't just attack all 4,000 at once. So that's why I called out that 575. We have to allow our partners to say, "This is what I have to have in place." So has our ecosystem been changing? Absolutely. We've been expanding it to deliver those data elements faster than ever before. But we're really letting our partners drive what's critical. Does that answer your question?

I'd like to add to that is we have -- so we have one data lake. We aren't an organization that has multiple data lakes or data warehouses sitting around the organization. We've brought that together for us to leverage. Next, our lending data is in better condition than it ever has been because of the work of FutureCore. We went through an enormous amount of effort to make sure it was consistent across all of our affiliates as we went from 6 instances of our lending systems to 1. Could actually maybe say that was more when we considered construction lending as well. So our data is in a pretty -- particularly in the lending space, in really good shape.

Maybe if I could add. I mean that's something that's unique, big banks really struggle with. So big banks have multiple data warehouses. They're -- what they're doing [ data with their business most ] often is just business line focused. What we're talking about with you today is enterprise-wide, and we think that's a competitive advantage for us.

Next question. Jennifer Demba with Trust.

SunTrust?

It's still SunTrust Robinson Humphrey. So this may be a stupid question. You've talked about where you think all these investments are that are giving -- going to give you an advantage. Where do you think -- once all that is complete, based on what you know about your larger bank competitors today, where do you think you could still be at a competitive disadvantage versus those larger competitors once all the dust shakes out here?

That's an excellent question. The -- as long as we stay focused on what problems we're trying to solve for small businesses and middle-market customers -- because the national banks are focusing. They serve this client segment poorly or at least in a fractured way. As long as we keep focused there, we're going to be in really good shape. If I think about just from a digitally competitive standpoint, there's likely something that's going to grab hold that we're going to have to catch -- we may have to play catch-up on. But there's not anything immediately coming to mind, Jennifer. I'll give it some thought to see if something pops up. Anything you would like to add?

Yes. The additional thing I'll say is on the large competitors, the biggest challenge, I go back to a story years ago when I was talking to a customer, the customer said, "I'm tired of hearing from your competition what products that you have to offer." I think the biggest challenge is making sure that we continue to educate our clients and our bankers and keeping them informed of what we've built, what we're making available. And that's why the strategy in having everyone talking to each other around this table is what's making it a competitive advantage. We're not built in silos where I don't know what I'm doing in foreign exchange and what we're doing in international, what we're doing in card. We have awareness on all of that. So when we have conversations with clients, they're not feeling left out that they're not getting the full technology. That's how we're competing against the bigs.

A quick, unscripted question. Jake, talking about Salesforce, and one instance of Salesforce may not sound like a big deal, but I think we hit this pretty hard. When you're operating in a company that has 6, 7, 8, 10 different instances of Salesforce that really don't talk to each other, describe the friction that exists for fee income groups that are just trying to get referrals from the line, pursue referrals, close business, just that friction because there's no communication for a fee income group.

Yes. So I have a lot of the different fee income product groups. And Scott, your point is well said. It is really difficult when you have multiple Salesforce instances in trying to get referrals routed to the right people, making sure that people are monitoring the right queues, integrating the data into one instance that uses definitions differently. It's -- it is extremely challenging. And what we're doing with the Salesforce unification is it puts everybody -- the definitions are the same, the way that we talk from a fee income standpoint, we're going to get that information in our employees' hands quicker. You don't have Texas who understands really well what's going on in Treasury and maybe California who doesn't. When you consolidate those Salesforce instances, you get access all of that information across the board from all of the product groups. It's going to help us be more effective in generating revenue.

Rick Roberts, Vulcan Capital. The bank sits at this unique nexus of having all commercial relationships or predominantly commercial relationships, and you have this 2-sided network really embedded in your client base. I'm just curious, on the digital side, how you are thinking about monetizing that from a digital perspective. And the second part of the question is, is the process of building tools prescriptive for the bankers? Or is it just data for them to use on their own in ways that they choose?

It -- so if I could restate your question to make sure I understand it is I really hear you saying how -- we're giving them these capabilities. How do we monetize the investments that we're making and...

That's the second question.

Actually -- and the first, I may need you to clarify.

The first one is that you've got commercial relationships, and you're building this digital platform. And I'll pick on a specific example that may or may not be on your road map. But like accounts payable, AR-type automation, auto rec capabilities for financial statements, gives you information and insights into the business for credit. I mean there are just a host of ways and interchange and all sorts of things, and I'm just curious whether things like that are on the road map and how you think about it.

I -- you'll have to let me know if I don't answer your question, but I'm actually really excited by what I'm hearing in your question is you're right, there's a lot of information that banks have that we gather on our customers' payment information. We can offer insight to a customer on how they're performing against their peers simply from the information that we have. There's real power in the data that we can offer to our customers. That's an opportunity for us. Second, I think Keith spoke about this, too, which is the investments that we're making into our digital ecosystem and an open architecture allows us to plug in providers around the entire financial life cycle, whether it's payroll providers or other providers, maybe insurance providers, into one place that allow our small business and middle-market customers to be served by a marketplace overall. That's the opportunity with the investments that we're making now and that we'll be bringing online further down the road. Did that answer your question?

Yes. The word marketplace answers the question. Yes.

Okay. Thank you.

And integrated receivables, integrated payables, those types of solutions are absolutely what we offer to our customers today. They're part of that 16 different digital capabilities that we spoke about. Taking the information, the data that Brandon's team is doing and making it actionable, we're doing that today and informing our bankers, not just providing the data. We're not giving them call sheets and saying, "Good luck, and call these and see what they're out there." We're being very prescriptive on who we want them to talk to, what kind of conversations to have.

And Steven Alexopoulous, JPMorgan. We'll take this. After this, we'll move on to...

So I get the strategy of empowering bankers, right, ex on the robot. But when you think about the capabilities you're building, what are the thoughts on a national digital-only bank to selling to that digital-only channel to small businesses even separately branded from Zions?

Yes. I mean we certainly are in those conversations on an ongoing basis if that would make sense in our marketplace. And it's -- we're discussing if that's viable. It's probably all I have to say on that unless someone else wants to say something. Okay.

Okay. Thanks very much. Thanks to you for your question. And thanks to this panel. Thank you so much. Jennifer?

All right. Thank you very much. We are going to move into our Digital to the Core conversation, and I'd like to welcome to the stage my colleagues Dave Stirling, Head of Technology Governance and our Chief Information Security Officer; Ken Collins, our Director of Business Technology; and Kristiane Koontz, our Director of Banking Transformation and FutureCore. We'll jump right into this dialogue. The whole -- everything we've been talking about is powered by being digital to the core. And I know that sometimes talking about the fundamental architectures and infrastructures of technology could be kind of boring, but I get really excited about it because of what it's going to create for our organization. It will allow us to move with much more speed. It will allow us to get features out to our customers when we are -- and I really -- I feel like about 2022 is when we really start to see fast, fast acceleration from these investments. We're already seeing the benefits from them today. Legacy systems in banks is a huge issue. All you need to do is simply google legacy core banking systems, and you will get a plethora of information on the size of this challenge for our industry. As has been mentioned earlier in the day, we believe we are 6 to 8 years ahead of our peers in replacing our core banking systems, and the others are going to need to do it. And it is a huge investment of time, and it can't be accomplished unless you have a dedicated, a committed leadership team and board to be successful. So we're going to jump right into the history of core systems to set some context here. Kristiane?

type="E" /> Thanks, Jennifer. And I think we saw this in the video, but I just want to unpack it a little bit. This is the video that Jennifer shared earlier. And so if we go to the next slide, you can see here -- and before the 1970s, banks, bankers had paper ledgers in branches to record customer transactions and balances. In the '70s and '80s, this became mechanized through terminals in those branches. And these were systems that were built for internal use only. They were designed for high accuracy and reliability, and they required these long overnight batch processing systems to be able to open the bank the next day. As new technologies were developed over the coming decades, these channels were layered on top of these core systems, channel over channel. The difference here was that these are often designed for externally oriented communication instead of those internal ledger functions that these cores were originally designed for, particularly in the 1990s when we got to the advent of online banking and mobile banking. So we're now in the era of the Internet of Things or, in our context, I'll call it the Internet of Everything. And yet, no bank in the country has fully re-architected their 40-year-old core systems to be compatible with this modern era of real-time, externally oriented interaction. Quite frankly, these systems that are -- I'm outing myself a little bit here, they're older than me, and they've been here longer than 95% of our employees.

Maybe you can share a little bit more about what -- what are the imperatives around replacing a core system. It's a big investment. Why do it?

type="E" /> Absolutely. So we see 4 key drivers, Jennifer. One is just simply the legacy vendors here, especially those big 4, they're either ending their support for the platforms or they're forcing costly upgrades onto the banks. Second, over time, these systems have become heavily customized, and that customization becomes very expensive to support and to integrate and take advantage of all of these new digital technologies that we've spent the morning talking about. Third is because of that heavy customization, these systems are inherently risky. They've been stretched to their limits over 4 to 5 decades of customization. They're prone to code flaws, to lack of understanding internally about how these systems work. And just due to their age, the folks that do understand how they work are now retiring. The last key driver is really the exciting one that I think we've been touching a lot on today that actually many of your questions are starting to get out. And that's around those digital customer experiences, digital regulations and the next-gen digital operating model. In the context of the core, this is partly about speed, and it's partly about function. So on the speed side, with these old cores, banks are finding that they can't integrate new technologies and solutions quickly or cost effectively. And then on the functionality side, they can't do those truly digital, data-driven, real-time products and services.

So a modern core -- I mean can you put this in layperson terms a little bit, please?

type="E" /> Yes. Definitely. And I'm going to try an analogy here. I want to be clear. And actually, some of the really wonderful questions earlier were hinting at this as well. This core investment is just one component. It's one investment that gets paired with many other investments that you heard my colleagues speak about earlier to create a digital operating model. And this digital operating model, when paired with the investments in data, in our digital front doors and in our API platforms, is what will help us to create a model that's optimized to cost-effectively deliver on those customer needs while also supporting the ability to double down on our bankers like Keith and others spoke to earlier this morning. So I'm going to try an analogy. Bear with me. Dave, will you take out your phone for me?

type="E" /> Sure. Okay.

type="E" /> Roll with me on this. Now I want you to think about your phone like it's a modern core banking system. And for many of us -- it's a pretty sleek one -- for many of us, we've become sort of inseparable from our phones over the last decade. What makes your phone so essential to your daily life?

type="E" /> Well, I guess like all of us, it's got everything I need, and it's easy to use. It's versatile, and it integrates. So whether I'm doing communication or business travel or whatever it is, it's all right here.

type="E" /> It's got everything you need. There's an app for that. Awesome. So in that example, for Apple, for them to create all that customer value and all that revenue, they didn't have to go out and create all those apps themselves. If they did, it would have taken them years longer to do that. So instead, what they did is they created the platform, and then they allowed developers to build on top of that in a controlled way so that they could actually answer all of those customer needs. So the App Store, right? And those apps, they pull data directly from the phone's system as well as from across the Internet in order to deliver those rich customer experiences. And so when you combine that really easy-to-use user interface of the iPhone with the richness of the App Store, it's one of the things that continues to give Apple devices a leg up over other smartphones. And so in our future, we'll have that same thing.

This is -- maybe you touched on this as well, Kristiane.

type="E" /> Yes. And this actually goes to the question that was just being asked. So we think about how do we use this, right? How do we use this combination of investments that we just saw here in order to create those incremental opportunities. And so this shows -- this is actually our API marketplace from TCS. It's one of our partners. We've also just launched into production Google's Apigee API management platform. But we're looking at different ways. So with our customers, we can pull data out of the core and do advanced insights, analyzing those transactions in order to offer them cash flow analysis. Someone was talking about accounts receivable, procurement, et cetera, all of these sort of value-added services that either we develop and deliver or that we partner with fintechs to deliver. And then internally, we'll use this to very seamlessly and quickly connect new applications, new technology capabilities into our environments without having to repeatedly rebuild the same thing by being able to pull those out through APIs.

This is one of the advantages, as Scott mentioned, having a partnership with TCS. There aren't other core providers who are thinking about creating a marketplace like that, that allows us to tap into their API environment. This has been a long journey, Kristiane. Where have we been? Where are we going? When will we get there?

type="E" /> Yes. That's a fantastic question. So as was mentioned, I think, a few times this morning, we're about 70% of the way through our journey with the completion of all of our loans onto a single, integrated modern core platform. We're in the seventh inning, so to speak. And this will be, as you can see here, a 10-year journey for us. This is really hard work, and it's work that not every CEO or leadership team will sign up for because the benefits of this type of work take years to realize. And oftentimes, in many other banks, the CEO won't be there to take advantage of the benefits. And so it really takes a very different kind of leadership and kind of organization to be committed to these sorts of long-term investments. I'll also say, I think, that we've arguably now, because of the 7 years that we've been on this journey, we've developed one of the best teams in the industry at doing technology-driven banking transformation. And I don't say that to brown-nose to my boss or to toot my own horn, but I say that because every single one of our peers is going to have to go through that kind of transformation. And we are years ahead of them in the making. They may not find that they have the capability or, quite frankly, the stomach to do this kind of really difficult work.

That is true. I'm going to shift gears here. There are some questions on the digital experience platform. Steven, you had some questions about that, too, and the marketplace capabilities that we will have, the Treasury Gateway that you saw earlier was using this technology, but it's a little bit broader than just Treasury Gateway. Ken, can you share more about that, please?

Yes. We're focused on eliminating legacy system architecture from our environment and building solutions where we can control the experience that we give to both our customers and bankers. Our digital experience platforms -- platform allows us to do a lot of things. It allows us to create portals, Internet, externets, websites, forms, workflows, and it allows us to integrate with other systems and other fintech solutions to create and deliver a cohesive and connected customer experience. That's different than many banks we've talked about that are dependent on or reliant on numerous vendor point solutions that deliver a disconnected, inconsistent experience. That's no longer acceptable to customers, nor does it allow bankers to effectively service customers.

This is -- in Kristiane's analogy of the iPhone, so the iPhone operating systems, the core banking system, and on top of that, you have the experience that Apple offers through that digital -- their digital experience interface. And then eventually, you start to plug applications into that interface to create a great experience for our customers. We -- if you recall early -- way back when we were on the Customer First segment, there is an element around digitizing an experience end-to-end and what we can do differently than what we think fintechs are doing -- and this is true probably for the banking industry digitizing that experience, automation is a key area for us to win or to reduce our costs and take advantage of these technology investments. Ken, share some of the work we're doing in the automation space.

Sure. Automation, when I'm talking about automation, this includes artificial intelligence, IQ bots, machine learning, robotic process automation, all types of different technology and tools. And automation is a lever, just like other levers, like lean process redesign, digitization or advanced analytics. And all these levers are creating tremendous value. But just to step back and talk a little bit about what Scott said, the driving force creating operational effectiveness and efficiency for our company is our culture. And our culture is more important than any program or lever because it enables and empowers our team members and teams to improve their work, utilizing all the various levers. Speaking specifically about automation, as you guys know, most big banks have dozens of automation solutions spread across their organization. In order to maximize value, we've created an automation center of excellence, and they use a variety of automation platforms and tools to deliver value. Everyone in the organization has access to the automation center of excellence, and so far, it's delivering tremendous results. In 2019 alone, we automated over 200 processes that have saved us 78,000 manual hours of work.

That's huge in terms of the impact that your team is having. But could you take it down a level and share an example of some of the automation that the team's accomplished?

Sure. I'll share a couple of examples. The first one, which is -- was on a slide earlier, we're leveraging robotic process automation bots, and these bots don't look like Pepper but they have digital skill sets, and they interact with systems, just like people do. And in the fourth quarter of 2019, we updated over 2,000 telephone numbers to our core systems that were provided through customers...