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Welcome to Innovators and Ideas brought to you by RBC Capital Markets. I'm your host, Joe Coletti. Today, we're here at our Global Financial Institutions Conference and we're sitting down with Nitin Malhotra, CEO of Berkshire Hills Knitting. Thanks for joining us. Good to be here. So I want to start off with an easy one for you. Maybe you could talk a little bit about Berkshire Hills.
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Tell us a little bit about sort of vision, purpose, the values of your company. Sure. Happy to. Berkshire is a 177 year old institution headquartered in Boston, Massachusetts. I'll be being for those hundred and 77 years a community dedicated, purpose driven, values guided institution with about 13 billion in assets size that offer consumer personal business banking products along with wealth management and SBA products.
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And we're passionate about doing well by doing good. Our vision is to be a high performing, relationship, kind of driven, community focused institution. And our mission and purpose is to empower our communities by helping consumers, businesses and communities better access to financial products and services, which we can deliver with a touch of a smaller community bank. That's great.
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Now, you guys are even recognized as one of America's best regional banks. So congratulations. Thank you. You have a real unique perspective being in that seat on kind of what's powering markets today. And so you became CEO in 2021 and you've steered Berkshire Hills to a high performance through one of the most disruptive eras of macro volatility. Right now, and particularly in regional banking history.
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Can you talk us through the changes you've seen in the last three years and what strategic, innovative ideas helped get you through that initial period of disruption? Sure, happy to. It has been an interesting journey for us. You know, certainly in the last three years where we had to undertake a transformation journey which we internally called as a our best program, Berkshire's exciting strategic transformation.
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And the key components of that transformation was really to say, where are the opportunities for us to optimize the organization, digitize the organization and enhance the value proposition for our bankers, clients, communities and shareholders. And what we did as a result of that was we truly looked at everything that we could optimize to get more effective and efficient.
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We looked at optimizing our channels, our businesses, our processes, our balance sheet, and then tried to digitize as much as much of the bank that we could. And we have invested heavily in technology over this last three years. So starting with cloud migration to data warehouse being to CRM solutions, to creating a more state of the art digital experience for the client has been part of the investment.
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And I think all of that has shown in results where we moved from a 3%, you know, return on equity to close to 10% return on equity. And while we're pleased but not satisfied because we believe there is significant runway for us to do even better. But I think those have been the key components of that transformation so far.
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Let's stay on that digital transformation just a little bit more. Let's talk about your digital touch service, which is delivering sort of a user friendly or more user friendly digital experiences to your clients, but also maintaining that that high quality kind of personal service, human touch, you know, that people expect from their community banks. How important is that sort of human touch to the values that define your company and how difficult is it to maintain that as technological, technological innovations like, you know, A.I. machine learning accelerate sort of digital platform efficiency and really drive real estate rationalization?
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It's a great question, and I think it is incredibly important. I think, let's say banking sector has moved away from being a fully analog kind of system to being a more digitized system. And I think the the bridge from that fully analog to potentially fully digital work is that digital, such as we call it, it's a it's a platform that we've service marked actually.
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And what that means is we will deliver the high quality writing towards best in class technology platform, but without losing the touch of a smaller community bank. And what that means is we have partnered up with the below top, not institutions, to provide that digital experience, but we are also on the back in making sure that if clients have a challenge or a service issue.
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We are able to connect them with the banker that they trust immediately, whether it's through their call center services or through our program called My Banker, which is a concierge service for our clients or through the network that we have of our bankers across the footprint. So I think that's the interesting part and interesting combination that we believe differentiates us, because that's when we go out in the market and say, Hey, we provide the large bank products and services while retaining the personal touch of a small community bank.
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Now, it's it's critically important for the client experiences. Let's talk a little bit about your priorities as Sierra. Now, can you maybe outline sort of your key focus areas, you know, in the next 12 to 18 months? Right. And I think in terms of priorities, the transformation continues to focus on optimizing the organization, digitizing the organization, and enhancing the value proposition.
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But the most immediate priority is just given the environment that we are in with the inverted yield curve for that is, you know, there for now the longest period is to focus on expenses and make the organization as efficient as possible, focus on deposits, because that's going to fuel the growth in the future and focus on credit through the cycle where there is significant amount of, you know, questions around credit normalization.
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So I think if you manage the expenses tightly, find ways to improve your deposit mix and deposit growth and deposit beta and manage credit through the cycle, I think you will come out as a winner on the other side of it. Now, we already mentioned and everybody knows the macro volatility environment we're in, but also just specifically what it's been like for regional banks over the last year or two.
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Can you talk a little bit about how sort of market disruption has been impacting your company? Yes, and I think there has been significant market disruption that has happened over the last three years. The pace of M&A clearly has slowed down in the last few months and quarters, but the disruptions that have happened have actually been beneficial to Berkshire Bank because we are getting opportunities to attract new bankers and the clients that are feeling disenfranchized as they're serving banks become larger.
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So we've benefited from that and we've hired really talented bankers that are bringing in new clients to our fold, and we are beginning to see the traction that we're getting through deposits, through the depth of client relationships that we're seeing. And we've been able to attract both of banker's clients and in some cases even some of the new executives and board members.
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As a result of this. So I want to talk about you a little bit more as sort of the leader of this company, the CEO of this company. If you think about yourself, can you talk us through how you've approached and what your own leadership values are and how you're trying to bring them to life in the workplace?
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I sure will. And I think I tell my teams there is no such thing as over communication at work, shebang. So we constantly keep in touch with all our bankers and the values that I communicate as the values that I cherish the most are authenticity, passion, empathy, inspiration and collaboration. And I try to live those values everyday. I judge myself by those values.
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And my view about those values are the more I display those values every day to our bankers, they embrace the ones that make sense for them and try to bring that to life for the organization. Have any of those values evolved or changed at all, or have you, especially since you've been CEO in 2021? No, they haven't, I think.
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And that's the beauty of having values that you believe that the authenticity of those values is that's who you are and you really don't change that much. Despite the external circumstances. And I think those values remain. And I used to say in my previous life, the your vision may expand and your mission may fall, but the values never change.
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So if you think of the firms that are going to emerge as sort of the next industry leaders in the years ahead, you know, five, ten plus years, what are the qualities that you think will differentiate them from the rest? You know, strategically, what decisions define those who, you know, maybe will succeed or or who won't. I think the biggest change that has happened, especially in the last potentially ten plus years, is banking has always been a commoditized business.
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But now, increasingly, the pace of change in the technology world has really made kind of the imperative that the leaders of the banks embrace technology as an enabler to the future. So to that extent, the folks and the the banks that will do well would be the banks that embrace technology, define their value proposition. And I think the one that's going to be most interesting as a transition going forward is how do you create a value proposition that appeals to both the emotional and the rational part of the decision making for your consumers and businesses and communities?
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So how do you build that value proposition that's unique to you? And then once you build that value proposition, how do you create a delivery system that makes it easier for consumers to access that value proposition, that saves them time, effort and money along the way? And then how do you embrace technology? So it's an enabler and not a substitute.
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So I think most of the times and in fact, you know, awfully the flavor as everybody's talking about, I and I keep reminding our teams that if you use A.I. as a artificial intelligence that places people, I think it's going to be embraced less, less so as compared to using A.I. as the augmented intelligence to help our bankers serve our clients better.
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And I think that's the journey we're undertaking going forward. You know, we've talked so much about technology and digital transformation. And, you know, at RBC, we obviously talk about the fact that, you know, technology is advancing and changing our banking capabilities, as I'm sure it is yours, through the transformation that you've already gone through. And I know it continues.
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Are there any sort of like big lessons that you've taken in terms of like how to do this effectively? You know, in an organization, the things that you have to do to really get it done right for your clients? Yes, I think I would start by saying you need to build the North Star for your institution as to what technology does for your bankers, your clients, and your value proposition.
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But after that, what we've learned along the way is if you try to boil the ocean, I think invariably leads to higher failure rate. So I think there is a notion of high frequency continuous improvement that you do. So you build those platforms in phases and the if you do that, you have better opportunities to make pivots along the way, because what happens is technology changes rapidly as well.
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So if you put something together that's going to be I'm going to completely redo my core system. Invariably those projects end up being three, five, ten year projects, and by the time you get to the finish line, the goal post has changed because the technology has changed and you know, the rate of change or technology is so rapid that you really can build.
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So I think the element of continuous improvement needs to be built into the embracing of technology and building. Do not start I think with that will in their knitting. Really appreciate your time today and good luck in all your meetings today. Delighted to be here. Thank you for your time. Be well.