July 24, 2025 • 23 mins
Alongside the commercial and consumer markets, institutional banking is one of three strategic pillars of $70 billion-asset UMB Bank. On the latest episode of the ABA Banking Journal Podcast, UMB’s Phil Mason discusses:
- How institutional banking — which includes capital markets, corporate trust, custody and health savings accounts — fits into the business model of the Kansas City, Missouri-based bank and helps extend its footprint coast-to-coast.
- Investments in technology to support the growth of institutional banking.
- The recent expansion in HSA eligibility and how UMB Bank uses the product to engage both business clients and consumers.
- How UMB sources the right mix of talent — particularly from within — to support the diverse and individualized needs of its institutional clients.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Phil Mason (00:02):
Technology is always a challenge.
People build their careers, build theirbusinesses within just one of these
spaces within institutional banking, andthen there's private equity companies
involved and other competitors.
So technology, keeping up with it, keepingabreast of it is, is always a challenge.
As well as many of these businessesare operationally intense, right?
There's a lot of transactions,there's a lot of movement, et cetera.
(00:25):
Making sure that you're consistentlybuilding the business to have all the
right controls and processes in place isreally, really important and something
that can never be too far from your mind.
Evan Sparks (00:39):
From the American Bankers Association, this is the
A BA Banking Journal podcast.
Welcome back.
I'm Evan Sparks, and I'mhere with Phil Mason.
Phil is president of institutionalbanking at UMB, a regional bank
based in Kansas City, but with anincreasingly national footprint as it
as the company continues to expand.
And I'm really delighted to hear alearn a little bit more from Phil
(01:00):
today about how institutional bankingfits into the overall growth strategy
at UMB and, and, and the evolution ofthat line of business within the bank.
So, Phil, welcome to the show.
Phil Mason (01:12):
Thanks for having me, Evan.
Great to be with you this morning.
Evan Sparks (01:15):
So I'd love it if you could kind of just start off, introduce yourself
a little bit and tell, tell us aboutyour background in the banking industry.
I.
Phil Mason (01:23):
Yeah, absolutely.
It's always interesting tohear the backstory, right?
And mine is, mine is super interesting.
I, I grew up in Illinois andwent to the University of
Illinois in Champaign Urbana.
And at that time as many do, I was walkingaround a career fair thinking, whatever
does one with a finance and economicsdegree want to do for an actual job?
(01:43):
I bumped into a recruiter for UMB whowas recruiting in that career fair.
They only recruited therefor a couple of years.
He, through this idea, passed meto come to UMB and be a part of a
leadership program that they had forfolks that were right outta school.
The idea being that you could getbroad exposure to the banking industry
and then eventually kind of find acareer path that worked well for you.
(02:03):
Sounded interesting.
Kansas City sounded interesting.
Had never been to Kansas City a dayin my life prior to interviewing here.
And that was exactly 20 years ago.
And here we sit and if you can tryand count different ways, it's six
or seven or eight different stopsat UMB along the way to get to the
president of institutional banking job.
But really just a testament to how coolthe story has been at UMB and how it's
(02:25):
just intersected with mine, as wellas how awesome Kansas City has been as
a place to build a career in banking.
Evan Sparks (02:31):
Yeah.
So tell us a little bit more about UMB.
I know it's a, I, I know it's a, aregional bank and you know, I, I, I
am, I'm familiar with with a little bitof the, the story of the founding of
UMB, going back to the Kemper family.
But what is UMB like today andkind of what's your, what's
your profile as a bank today?
Phil Mason (02:50):
So again, you know, terminology can, can be interesting
here, but UMB would kind of classify asa super regional bank, right, about 70
billion in assets now that we've got theHeartland acquisition under our belt.
And you know, kind of inthe central Midwest to upper
Midwest to Southwest, right?
If you think about the footprintof the bank institutional banking,
(03:12):
interesting enough, is a very mucha coast to coast business for us.
We have offices in New York,offices in California, but UMB stays
kind of in that more, you know,Midwestern Southwestern category.
The interesting thing about UMB is ifyou look at a lot of our peers, our
business mix is a little different, right?
So we obviously have a, a great commerciallending group a consumer presence as
(03:34):
well, a private wealth presence as well.
But the institutional banking group,which I'm a part of, is definitely kind
of a different business mix than the restof our peers really giving us a chance
to do different things and generatemore fees and deposits is the idea.
When you kind of look across our peergroup and, you know, we almost kind
of look like a somewhat bigger bankin that regard, if that makes sense.
Evan Sparks (03:54):
Yeah, absolutely.
So, so yeah, you, you talked to, touchedon, you know, institutional banking.
Can you talk a little bit more abouthow the institutional banking group
fits within B'S overall strategy?
What's the, what's your scalecompared to the overall bank?
All of that.
Love to learn.
Phil Mason (04:08):
Yeah.
Of course.
So we kind of started atthe very beginning, right?
If UMB, if we're out there talkingto investors, analysts, clients, you
know, frankly, even talking to internalassociates and kind of being descriptive
of what B'S differentiators are.
The pitch really winds up being prettysimple in my from my point of view.
Number one is we've, I mentionedthe commercial lending team.
(04:29):
We have great credit quality kindof above peer median year after
year, after year, after year.
And when you're a bank,that matters, right?
Number two.
Is that we drive a portion of ourrevenue from fees in an outsized
way compared to peers, right?
So peers wind up looking morelike in the 20% of revenue is,
you know, kind of related to fees.
(04:49):
We're in the, we're in themid thirties, a lot of times.
Probably a little bit lower now tothe Heartland acquisition as a board.
And that is and that is in many casesdue to the institutional banking group.
Related, similar, but different onthe deposit side of life with the
institutional banking businesses andother things that B'S involved in.
We have more diverse ways to generatedeposits than a lot of our peers do.
(05:12):
You know, a lot of our peers, if they'relooking to generate deposits, it's
pretty simple and straightforward, right?
It's the commercial bankinggroup generating deposits from.
Those clients and treasury clients,and it's the branches doing
deposit campaigns, et cetera.
You know, we have businesseslike corporate trust and
institutional custody among others.
The healthcare one is another onewhere we can drive deposits for
the bank that again, are just morediverse than many of our peers are.
Evan Sparks (05:35):
Yeah.
What I mean, so what shareof deposits at UMB does does
institutional banking account for?
Phil Mason (05:42):
Yeah, so post the Heartland acquisition, we're in the neighborhood
of 30% or so, and then probably justunder half of the fees of the bank come
from the institutional banking team.
Yeah.
Evan Sparks (05:57):
So you talked a little bit about, you mentioned corporate trust,
you talked about health savings accounts.
What, what are the business lines withinyour, within institutional banking
and and I and I, I'd love to learn alittle bit more as you discuss them.
What are the, what are, what are theareas where you're seeing growth and
where what, what are some areas where youmight see some more challenges in terms
of how those business lines are evolving?
Phil Mason (06:16):
Yeah, sure.
So I actually think it'd bethe way I'm, you know, thinking
about a question like this.
I'll be just descriptive of the businessesreal quick to give you a little flavor.
Sure.
And then I actually think there area couple of thread threads across
the business that we can talk aboutboth growth and challenges, right?
So I. So just in no particularorder, we have a capital markets
business, which is fixed incomesales, trading, and underwriting
(06:38):
of, of all fixed income securities.
Right.
So they are, we're not talking equities,we're not talking m and a advisory.
We're really talking bonds andrelated sorts of instruments.
We sell a lot of those to downstream banksthat are smaller than us, as well as.
Tier two and tier three assetmanagers, those sorts of clients.
There's some other business that'scontained within the capital market
space as well as it relates tomore technical stuff like repo,
(07:00):
foreign exchange, et cetera.
But we have that business.
Secondarily of the corporate trustbusiness and corporate trust has, has
been a very much a growth area for us.
I'll talk about that in a second,but the corporate trust business,
if you're trying to sum it up, is alittle difficult because again, it's
pretty technical and specific, butthink of a really complex document or
transaction out there that requiressome sort of intermediary third party.
(07:24):
Between two other parties andthat intermediary is ensuring
the flow of fund is, is good.
People get paid on time,all these sorts of things.
You know, and it may be lots ofparties involved in those transactions.
Broadly, that's what corporateTrust is doing, and that's
from everything as simple as a.
Municipal bond that you might vote onat your next upcoming election to issue
bonds for a school and as complex astrusts that contain, you know, documents
(07:48):
around airplanes for the large airlinesin the US that pulled those airplanes
within trust and everything in between.
So lots going on there.
Another business we have iscalled investor Solutions.
Simply think of this as backend bankingservices for large broker dealers, right?
So if you're a Fidelity or Morgan Stanleyof the world, your value proposition is
(08:08):
what you're doing on the investment side.
You don't wanna be involved in the ACHscheck writing capabilities, et cetera.
We do that for those folks.
So we have big relationships with them.
Another one that you mentioned brieflyis the healthcare services business.
This is largely getting HSA accountsin the hands of end consumers.
Mm-hmm.
Now, the interesting point is, and you'rethinking, why would that belong in an
institutional banking sort of construct?
(08:30):
Right?
The sale is very much abusiness to business sale.
You're selling to that employer,or you're selling through a broker
or a third party administrator thatis helping those businesses get.
Benefit accounts ofone variety or another.
So there's the HSA business.
And then lastly, there's kindof what I would encompass as
the fund services business.
So this is backend work for mutualfunds, private equity, real estate funds,
(08:54):
kind of all manner of investment funds.
We're doing accounting.
Transfer agency operational workof making sure navs get struck at
the end of the day, taxes get done,audits get done, those sorts of things
again, so that the investment managerscan focus on what they're doing.
And kind of attached to that is theinstitutional custody businesses.
So we hold all those assetsfor, for those funds that we.
(09:17):
We work on, and we also hold assetsfor a lot of clients that aren't
related to the fund services businesswithin the custody space as well.
Typically insurance companies,municipalities, et cetera.
You know, custody business with banks,safekeeping, it all kind of makes sense.
So those, that's kind of a quickflyover of the businesses that
are contained within ib broadly.
A couple things and I guess wecan start with the challenges.
(09:38):
So when you have a mix ofbusinesses that's that diverse.
Technology is always a challenge, right?
Because every one of thesespaces is deep, right?
So people build their careers, buildtheir businesses within just one of
these spaces within institutionalbanking, and then there's private equity
companies involved and other competitors.
So technology, keeping up with it, keepingabreast of it is, is always a challenge.
(10:01):
As well as many of these businessesare operationally intense, right?
There's a lot of transactions,there's a lot of movement, et cetera.
Making sure that you're consistentlybuilding the business to have all the
right controls and processes in place isreally, really important and something
that can never be too far from your mind.
The upside for us has been, and this Iwould say is really across the businesses,
(10:24):
but it's been particularly true in thecorporate trust and fund services space.
Where we've landed as it relates tokind of our size and the services
that we offered has really soldwell over the last five to 10 years.
And to be more specific, we've had a lotof competitors that you know, and for one
reason or another, no fault of their own.
You know, they've gone to kind ofbigger, more standard service models
(10:48):
and we've kept single point of contactservice models and that's been really
important for our clients when they have.
An issue, a question aboutUMB or about their deal.
They have a single person to call that'sgoing to, within the organization,
run all the traps for them and getthem the answers that they need.
And so, you know, thematically,that's worked really well.
(11:09):
And then the other thing that's been atailwind for us too is as the bank, as
UMB has gotten bigger and more well knownacross, and I mentioned earlier across
the nation, that's helped us becausea lot of our clients are on the coast.
In New York, in California.
And so when I'm having lessconversations that start with who's
UMB, that's a good thing for me.
And so as, as the bank grows, wecertainly benefit from that too.
Evan Sparks (11:31):
Yeah, absolutely.
The you know, you talked about the techneeds of, of running a business like this.
What are some of the tech investmentsthat you've been making to help,
you know, continue the process, theability to deliver these complex,
this complex array of services?
Phil Mason (11:47):
Yeah, so I would make two comments on tech real quick.
So one is that we've had a lot of thesebusinesses for a long time, right?
Most of the businesses that Ijust went through, while they may
look a bit different today, theyaren't something that we started
with in the last five years.
UMB has been invested in thesebusinesses for a long time, and a
lot of it is because we think theyalign well with the bank, and in many
(12:07):
cases they sit on bank rails, right?
So they're sitting on the same depositsystem that the rest of the bank is.
Those sorts of things.
However, as we have grown, ourclients have grown with us.
So we've invested specificallyover the past couple of years in
some more sophisticated accountingsystems on both the fund services
and corporate trust side.
(12:28):
And really continue to build out,you know, systems and services
that are specific to our clients.
While the core of it's always gonna siton the bank rails and align with the bank,
we've made some specific investments inthose spaces to make sure that we keep up.
Evan Sparks (12:40):
Okay.
You know, we talked, you talked, youtalked about HSA and I, if I remember
right, you, you, you were previouslyin charge of the HSA business at yep.
At, at, so, so I, I know you have a,a lot of expertise in this and you
know, one of the things I I, I'vebeen talking with my colleagues about
here at a BA, we have the HSA Council.
I know UMB is a member of our HSACouncil, along with some, yeah.
Big HSA providers in the marketplace.
(13:03):
What are some of the opportunitiesthat you see to grow the HSA business?
If the policy environment were to kindof improve and eligibility HSA spending
eligibility were to be expanded.
Phil Mason (13:15):
Yeah.
So certainly in fact, I still get allthe emails from your, your colleagues
on the legislative side with theupdates on a blow by blow basis.
Certainly the ABA HSA Councilis from my perspective a
hugely helpful lobbying group.
That we're, we're, we're strongertogether there than we are separate.
And it's one of those reallyinteresting, you sit in a room with
all your competitors and then yougo off the hill and, you know, argue
(13:37):
for the same things, but the, the sumof it at the end of the day, right?
And even these, even the thingsthat are in the bill as it stands
today is just trying to chip awayat getting more Americans access to
HSAs and then kind of secondarily.
Expanding things thatHSAs can be used for.
So, you know, you think about it, what weall want, you know, and what I certainly
(14:00):
want from a business perspective ismore people to find it easy to open
an HSA, and then more people to go,well gosh, I have no problem making a
contribution to an HSA because I canuse it for not just X and Y, but now Z.
You know, and, and 'cause those arethe things that stop people, right?
That's, yeah.
One of the crazy things about HSAs is.
You think, gosh, if you're in ahigh deductible plan, you're there.
(14:22):
'cause you want an HSA.
The fact of the matter is, you know,while there are 50% ish enrolled in
HSAs who have high deductible plans,there's still a lot of people that
have a high deductible plan thatdon't even have an account open.
And it's just kind of crazy.
So, I heard someone speaking on thisyears ago, and they talked about the
education around the 401k and how thathad to happen over literally decades.
(14:44):
Right?
And if you think about it, we'rejust over two decades into HSAs.
And so I. To be honest with you, thingslike this are helpful for us because
not only could it expand usage but itcould give us an opportunity to educate
people all over again with something new.
You know, for the banks who are stillinvolved in the HSA industry, it's
probably not one big bang right?
Where all of a sudden I'mgonna see, you know, 20 million
(15:06):
new accounts open tomorrow.
What it is, is just broadening thechannels for usage over time, which
is exactly what we want because HSAs,for us, are just an amazing fit with
the bank because again, they sit onbank rails and systems and they're
a source of fee income and depositsfor us that are sticky over time.
And you know, I couldn't, if younamed that in a vacuum, you'd
(15:29):
say, gosh, what count is that?
I want as many as possible.
And that's why we like HSAs.
Evan Sparks (15:33):
Yeah, I did, you know, about six, seven years ago here at
a BA, they switched, they offered,they began offering a high deductible
health plan with an HSA and I, youknow, I'm skeptical at first, right?
I'm like, all right, let me, sure.
And I went through explanationsof benefits and, you know, medical
and like medical receipts forthe past previous like five years
(15:54):
because I'm a documents pack rat.
And so I, so I like calculated allthis and then I kind of recalculated
what it would've been spending itoutta the out, you know, with on the
high deductible plan and everything.
And I was like, oh.
I actually, we actually savemoney, you know, except in the
year when we had like a, had a kid.
And that year, except for that one,you know, it's like in every other year
(16:17):
we save money being on a, on an HSA.
And so we so we switched to that and i'vebecome a real evangelist for the product
ever since because I, I really love theflexibility of being able to, you know,
pay for things out out of pocket andthen, and then get reimbursed for that.
And, you know, it's and it does makeme a little bit more sensitive in
(16:39):
circumstances where, where I can shopfor shop around for medical care.
It does make me more sensitive totrying to find the best price and so
that's, I feel like it's been overallbeen a really good consumer experience
and I have saved money using it so.
Phil Mason (16:53):
Yeah.
And if I could add on two more quickthoughts there, and because I, I,
I'm an evangelist as well, not justbecause I'm paid to be one here, but
because it, you know, like, like you,I've made sense of it in my own mind.
So the two other, you know, quick thoughtson that note is first and foremost, you
know, as far as doing the math on it, dothe math on this, you're able to save a
(17:16):
little bit over time and you're able to.
Grow that money on a tax free basis, ala it being in an IRA and then withdraw
when you're in retirement, right?
I mean that, that starts making youmake all sorts of sense, especially
if you're able to, you know, astime goes on, you got less kid
expenses, et cetera, et cetera.
(17:36):
I've been through that recentlytoo, so I totally with you there.
You, you can start saving some moneyand maybe you have a nest egg for
retirement from a medical perspective.
Right?
Yeah.
Because that's becomingincreasingly important these days.
As, as you said, costs are not going down.
But broadly, what you justtalked about is like what the HSA
industry at the end of the day.
If you're more consumeristic behaviorin medical spending versus just, oh, I
(18:01):
don't know, I only pay my deductible.
I have no idea how it's costing.
That's hugely important.
In addition to being on the HSA sideof the world, I, I am the chair of our
retirement and benefits committee here,and UMB, like many large organizations,
you know, self-insured, right?
So we look at this and look at behaviorchange a lot, and you can do a zillion
things to try and change behavior,whether that's character sticks, right?
(18:24):
But until you start making it aboutthe money coming outta your own wallet
yourself, it just doesn't hit the same.
So you're totally right.
Evan Sparks (18:30):
Yeah.
I, I, I will say I have read alot about the, you know, the, the
idea that you should, you knowpay all your medical bills out of,
out of pocket, save the receipts.
Yeah.
And then reimburse yourself from theHSA when you're, you know, retired.
And I'm like, I got at least20 years to go on this one.
So, you know, I'm like,you know, 15, 20 years.
I do not trust myself to keepall those records that long.
(18:53):
I am a pack rat, but I'm still, I'm alittle skeptical about trusting myself
to do all those records that long.
So I'm like, if I can just get myselfreimbursed within the same calendar
year, that helps me feel like I'm not,you know, I, I'm sure I'm leaving some
money on the table, but it also, I'vegot a factor in the cost of me, you know,
keeping 20 years worth of medical records.
(19:14):
So.
Phil Mason (19:16):
Yeah, I, I, I totally get it.
And, and self-awareness is animportant thing to success in
life in any, in any adventure.
So that's you.
But yeah, I mean, I think I would advocateeven further just try to, just try to
not reimburse yourself for a few things.
Pay 'em out of pocket and throw,throw that in an index fund and see
what that does for you over time.
Right.
And because if I can do anythingto help combat inflation, you know,
(19:37):
and inflation and medical costscertainly outpaces inflation from
a broad eco economy perspective.
That could help over time, but yeah.
Evan Sparks (19:45):
Great.
I wanna quick talk to you real quickabout talent and how you've kind of
organized the business, you know,in terms of the professionals that
you bring in and, you know Yeah.
Particularly as, as, as a, asmaller bank within the market
of peers that you, you know, thatdo the same business that you do.
What's your recipe for finding, sourcingand retaining the right talent to run
(20:07):
the institutional banking group at UMB?
Phil Mason (20:11):
This is hugely important, as you can probably tell, because
we are, we are unlikely to benefitfrom people just going through the
traditional banking ranks and thenpopping over to our business, right?
Because as I mentioned earlier,these businesses are so
specialized in many cases, right?
And they require specializedbackground skills, et cetera.
(20:32):
What we have been able to do isbring people in at kind of entry
levels and lots of these businessesand then grow them internally.
That has been the recipefor success for us.
We certainly have cases where outsidehires have made lots of sense to
come into leadership roles, but I,and I'm, I'm biased, right, because
I've grown up at UMBand I'm in this space,
so I'll just, I'll, I will give my bias away.
(20:54):
People who are able to grow up in thesebusinesses within the constructs of UMB
are perfect for us because not only dothey understand the business itself,
right, which is baseline level ofimportance, but they understand how the
overall business fits into UMB broadly,and I view that as tremendously important.
The last thing I want people on myteam feeling like is that, oh gosh.
There's UMB, the bank, and thenthere's the island that I live on.
(21:17):
No, we're all together.
And that's why I was so specificallydescriptive earlier about how kind of
we add to UMB' overall value propositionbecause people need to understand that
amidst, gosh, whatever they may be doingthat day, whether that's fund accounting
or corporate trustee work, or sellinga bond to a downstream bank or a host
of other things, we're trying to growpeople with those expertises within UMB.
(21:39):
The other thing I would add here too,that's again been a tailwind for us is the
service model I mentioned earlier abouthow we still have single point of contact.
We have lots of folks with alot of passion around that.
And so as other providers have wentaway from that, it's made it an easier
recruitment for us to say, come over here.
We'll have the single, you know,the single point of contact model.
(22:02):
And even if it's helped us sellpast, gosh, it may not be the
newest, shiniest piece of technology.
But that way that we do businessis really appealing to our folks
and they're really bought in.
So we tend to, people havepeople come and, and stay.
You know, turnover tends tobe pretty low, which is the
continuity is really important.
I.
Evan Sparks (22:19):
Great.
Well, Phil, thank you so muchfor being on the show today.
I really appreciatelearning, learning from you.
I, you know, I've been, I, I've beenhaving these kind of conversations with
banks, you know, with this podcast.
We're in season eight of the podcast,but I've been having these conver,
these kind of conversations with banks.
You know, for many years prior tothat, here at a BA and I continue
to learn something new every dayabout this in the banking industry
(22:41):
in the United States, which I love.
It's such a diverse and fascinating space,and you know, UMB and the Institutional
Banking Group, there is no exception.
So thanks for your time today.
Phil Mason (22:51):
No, I, I completely agree.
Learning something new is oneof the most fun parts of my job.
I appreciate you having me onthe show today and getting to
talk a little bit about ib.
Evan Sparks (22:59):
All right.
For our listeners, you can findthis in previous episodes at
aba.com/banking journal podcast.
You can also find us on any ofyour favorite podcast platforms.
Thanks so much for listening, andwe'll be back with you again very soon.
Technology is always a challenge.
People build their careers, build theirbusinesses within just one of these
spaces within institutional banking, andthen there's private equity companies
involved and other competitors.
So technology, keeping up with it, keepingabreast of it is, is always a challenge.
As well as many of these businessesare operationally intense, right?
There's a lot of transactions,there's a lot of movement, et cetera.
(00:25):
Making sure that you're consistentlybuilding the business to have all the
right controls and processes in place isreally, really important and something
that can never be too far from your mind.
Evan Sparks (00:39):
From the American Bankers Association, this is the
A BA Banking Journal podcast.
Welcome back.
I'm Evan Sparks, and I'mhere with Phil Mason.
Phil is president of institutionalbanking at UMB, a regional bank
based in Kansas City, but with anincreasingly national footprint as it
as the company continues to expand.
And I'm really delighted to hear alearn a little bit more from Phil
(01:00):
today about how institutional bankingfits into the overall growth strategy
at UMB and, and, and the evolution ofthat line of business within the bank.
So, Phil, welcome to the show.
Phil Mason (01:12):
Thanks for having me, Evan.
Great to be with you this morning.
Evan Sparks (01:15):
So I'd love it if you could kind of just start off, introduce yourself
a little bit and tell, tell us aboutyour background in the banking industry.
I.
Phil Mason (01:23):
Yeah, absolutely.
It's always interesting tohear the backstory, right?
And mine is, mine is super interesting.
I, I grew up in Illinois andwent to the University of
Illinois in Champaign Urbana.
And at that time as many do, I was walkingaround a career fair thinking, whatever
does one with a finance and economicsdegree want to do for an actual job?
(01:43):
I bumped into a recruiter for UMB whowas recruiting in that career fair.
They only recruited therefor a couple of years.
He, through this idea, passed meto come to UMB and be a part of a
leadership program that they had forfolks that were right outta school.
The idea being that you could getbroad exposure to the banking industry
and then eventually kind of find acareer path that worked well for you.
(02:03):
Sounded interesting.
Kansas City sounded interesting.
Had never been to Kansas City a dayin my life prior to interviewing here.
And that was exactly 20 years ago.
And here we sit and if you can tryand count different ways, it's six
or seven or eight different stopsat UMB along the way to get to the
president of institutional banking job.
But really just a testament to how coolthe story has been at UMB and how it's
(02:25):
just intersected with mine, as wellas how awesome Kansas City has been as
a place to build a career in banking.
Evan Sparks (02:31):
Yeah.
So tell us a little bit more about UMB.
I know it's a, I, I know it's a, aregional bank and you know, I, I, I
am, I'm familiar with with a little bitof the, the story of the founding of
UMB, going back to the Kemper family.
But what is UMB like today andkind of what's your, what's
your profile as a bank today?
Phil Mason (02:50):
So again, you know, terminology can, can be interesting
here, but UMB would kind of classify asa super regional bank, right, about 70
billion in assets now that we've got theHeartland acquisition under our belt.
And you know, kind of inthe central Midwest to upper
Midwest to Southwest, right?
If you think about the footprintof the bank institutional banking,
(03:12):
interesting enough, is a very mucha coast to coast business for us.
We have offices in New York,offices in California, but UMB stays
kind of in that more, you know,Midwestern Southwestern category.
The interesting thing about UMB is ifyou look at a lot of our peers, our
business mix is a little different, right?
So we obviously have a, a great commerciallending group a consumer presence as
(03:34):
well, a private wealth presence as well.
But the institutional banking group,which I'm a part of, is definitely kind
of a different business mix than the restof our peers really giving us a chance
to do different things and generatemore fees and deposits is the idea.
When you kind of look across our peergroup and, you know, we almost kind
of look like a somewhat bigger bankin that regard, if that makes sense.
Evan Sparks (03:54):
Yeah, absolutely.
So, so yeah, you, you talked to, touchedon, you know, institutional banking.
Can you talk a little bit more abouthow the institutional banking group
fits within B'S overall strategy?
What's the, what's your scalecompared to the overall bank?
All of that.
Love to learn.
Phil Mason (04:08):
Yeah.
Of course.
So we kind of started atthe very beginning, right?
If UMB, if we're out there talkingto investors, analysts, clients, you
know, frankly, even talking to internalassociates and kind of being descriptive
of what B'S differentiators are.
The pitch really winds up being prettysimple in my from my point of view.
Number one is we've, I mentionedthe commercial lending team.
(04:29):
We have great credit quality kindof above peer median year after
year, after year, after year.
And when you're a bank,that matters, right?
Number two.
Is that we drive a portion of ourrevenue from fees in an outsized
way compared to peers, right?
So peers wind up looking morelike in the 20% of revenue is,
you know, kind of related to fees.
(04:49):
We're in the, we're in themid thirties, a lot of times.
Probably a little bit lower now tothe Heartland acquisition as a board.
And that is and that is in many casesdue to the institutional banking group.
Related, similar, but different onthe deposit side of life with the
institutional banking businesses andother things that B'S involved in.
We have more diverse ways to generatedeposits than a lot of our peers do.
(05:12):
You know, a lot of our peers, if they'relooking to generate deposits, it's
pretty simple and straightforward, right?
It's the commercial bankinggroup generating deposits from.
Those clients and treasury clients,and it's the branches doing
deposit campaigns, et cetera.
You know, we have businesseslike corporate trust and
institutional custody among others.
The healthcare one is another onewhere we can drive deposits for
the bank that again, are just morediverse than many of our peers are.
Evan Sparks (05:35):
Yeah.
What I mean, so what shareof deposits at UMB does does
institutional banking account for?
Phil Mason (05:42):
Yeah, so post the Heartland acquisition, we're in the neighborhood
of 30% or so, and then probably justunder half of the fees of the bank come
from the institutional banking team.
Yeah.
Evan Sparks (05:57):
So you talked a little bit about, you mentioned corporate trust,
you talked about health savings accounts.
What, what are the business lines withinyour, within institutional banking
and and I and I, I'd love to learn alittle bit more as you discuss them.
What are the, what are, what are theareas where you're seeing growth and
where what, what are some areas where youmight see some more challenges in terms
of how those business lines are evolving?
Phil Mason (06:16):
Yeah, sure.
So I actually think it'd bethe way I'm, you know, thinking
about a question like this.
I'll be just descriptive of the businessesreal quick to give you a little flavor.
Sure.
And then I actually think there area couple of thread threads across
the business that we can talk aboutboth growth and challenges, right?
So I. So just in no particularorder, we have a capital markets
business, which is fixed incomesales, trading, and underwriting
(06:38):
of, of all fixed income securities.
Right.
So they are, we're not talking equities,we're not talking m and a advisory.
We're really talking bonds andrelated sorts of instruments.
We sell a lot of those to downstream banksthat are smaller than us, as well as.
Tier two and tier three assetmanagers, those sorts of clients.
There's some other business that'scontained within the capital market
space as well as it relates tomore technical stuff like repo,
(07:00):
foreign exchange, et cetera.
But we have that business.
Secondarily of the corporate trustbusiness and corporate trust has, has
been a very much a growth area for us.
I'll talk about that in a second,but the corporate trust business,
if you're trying to sum it up, is alittle difficult because again, it's
pretty technical and specific, butthink of a really complex document or
transaction out there that requiressome sort of intermediary third party.
(07:24):
Between two other parties andthat intermediary is ensuring
the flow of fund is, is good.
People get paid on time,all these sorts of things.
You know, and it may be lots ofparties involved in those transactions.
Broadly, that's what corporateTrust is doing, and that's
from everything as simple as a.
Municipal bond that you might vote onat your next upcoming election to issue
bonds for a school and as complex astrusts that contain, you know, documents
(07:48):
around airplanes for the large airlinesin the US that pulled those airplanes
within trust and everything in between.
So lots going on there.
Another business we have iscalled investor Solutions.
Simply think of this as backend bankingservices for large broker dealers, right?
So if you're a Fidelity or Morgan Stanleyof the world, your value proposition is
(08:08):
what you're doing on the investment side.
You don't wanna be involved in the ACHscheck writing capabilities, et cetera.
We do that for those folks.
So we have big relationships with them.
Another one that you mentioned brieflyis the healthcare services business.
This is largely getting HSA accountsin the hands of end consumers.
Mm-hmm.
Now, the interesting point is, and you'rethinking, why would that belong in an
institutional banking sort of construct?
(08:30):
Right?
The sale is very much abusiness to business sale.
You're selling to that employer,or you're selling through a broker
or a third party administrator thatis helping those businesses get.
Benefit accounts ofone variety or another.
So there's the HSA business.
And then lastly, there's kindof what I would encompass as
the fund services business.
So this is backend work for mutualfunds, private equity, real estate funds,
(08:54):
kind of all manner of investment funds.
We're doing accounting.
Transfer agency operational workof making sure navs get struck at
the end of the day, taxes get done,audits get done, those sorts of things
again, so that the investment managerscan focus on what they're doing.
And kind of attached to that is theinstitutional custody businesses.
So we hold all those assetsfor, for those funds that we.
(09:17):
We work on, and we also hold assetsfor a lot of clients that aren't
related to the fund services businesswithin the custody space as well.
Typically insurance companies,municipalities, et cetera.
You know, custody business with banks,safekeeping, it all kind of makes sense.
So those, that's kind of a quickflyover of the businesses that
are contained within ib broadly.
A couple things and I guess wecan start with the challenges.
(09:38):
So when you have a mix ofbusinesses that's that diverse.
Technology is always a challenge, right?
Because every one of thesespaces is deep, right?
So people build their careers, buildtheir businesses within just one of
these spaces within institutionalbanking, and then there's private equity
companies involved and other competitors.
So technology, keeping up with it, keepingabreast of it is, is always a challenge.
(10:01):
As well as many of these businessesare operationally intense, right?
There's a lot of transactions,there's a lot of movement, et cetera.
Making sure that you're consistentlybuilding the business to have all the
right controls and processes in place isreally, really important and something
that can never be too far from your mind.
The upside for us has been, and this Iwould say is really across the businesses,
(10:24):
but it's been particularly true in thecorporate trust and fund services space.
Where we've landed as it relates tokind of our size and the services
that we offered has really soldwell over the last five to 10 years.
And to be more specific, we've had a lotof competitors that you know, and for one
reason or another, no fault of their own.
You know, they've gone to kind ofbigger, more standard service models
(10:48):
and we've kept single point of contactservice models and that's been really
important for our clients when they have.
An issue, a question aboutUMB or about their deal.
They have a single person to call that'sgoing to, within the organization,
run all the traps for them and getthem the answers that they need.
And so, you know, thematically,that's worked really well.
(11:09):
And then the other thing that's been atailwind for us too is as the bank, as
UMB has gotten bigger and more well knownacross, and I mentioned earlier across
the nation, that's helped us becausea lot of our clients are on the coast.
In New York, in California.
And so when I'm having lessconversations that start with who's
UMB, that's a good thing for me.
And so as, as the bank grows, wecertainly benefit from that too.
Evan Sparks (11:31):
Yeah, absolutely.
The you know, you talked about the techneeds of, of running a business like this.
What are some of the tech investmentsthat you've been making to help,
you know, continue the process, theability to deliver these complex,
this complex array of services?
Phil Mason (11:47):
Yeah, so I would make two comments on tech real quick.
So one is that we've had a lot of thesebusinesses for a long time, right?
Most of the businesses that Ijust went through, while they may
look a bit different today, theyaren't something that we started
with in the last five years.
UMB has been invested in thesebusinesses for a long time, and a
lot of it is because we think theyalign well with the bank, and in many
(12:07):
cases they sit on bank rails, right?
So they're sitting on the same depositsystem that the rest of the bank is.
Those sorts of things.
However, as we have grown, ourclients have grown with us.
So we've invested specificallyover the past couple of years in
some more sophisticated accountingsystems on both the fund services
and corporate trust side.
(12:28):
And really continue to build out,you know, systems and services
that are specific to our clients.
While the core of it's always gonna siton the bank rails and align with the bank,
we've made some specific investments inthose spaces to make sure that we keep up.
Evan Sparks (12:40):
Okay.
You know, we talked, you talked, youtalked about HSA and I, if I remember
right, you, you, you were previouslyin charge of the HSA business at yep.
At, at, so, so I, I know you have a,a lot of expertise in this and you
know, one of the things I I, I'vebeen talking with my colleagues about
here at a BA, we have the HSA Council.
I know UMB is a member of our HSACouncil, along with some, yeah.
Big HSA providers in the marketplace.
(13:03):
What are some of the opportunitiesthat you see to grow the HSA business?
If the policy environment were to kindof improve and eligibility HSA spending
eligibility were to be expanded.
Phil Mason (13:15):
Yeah.
So certainly in fact, I still get allthe emails from your, your colleagues
on the legislative side with theupdates on a blow by blow basis.
Certainly the ABA HSA Councilis from my perspective a
hugely helpful lobbying group.
That we're, we're, we're strongertogether there than we are separate.
And it's one of those reallyinteresting, you sit in a room with
all your competitors and then yougo off the hill and, you know, argue
(13:37):
for the same things, but the, the sumof it at the end of the day, right?
And even these, even the thingsthat are in the bill as it stands
today is just trying to chip awayat getting more Americans access to
HSAs and then kind of secondarily.
Expanding things thatHSAs can be used for.
So, you know, you think about it, what weall want, you know, and what I certainly
(14:00):
want from a business perspective ismore people to find it easy to open
an HSA, and then more people to go,well gosh, I have no problem making a
contribution to an HSA because I canuse it for not just X and Y, but now Z.
You know, and, and 'cause those arethe things that stop people, right?
That's, yeah.
One of the crazy things about HSAs is.
You think, gosh, if you're in ahigh deductible plan, you're there.
(14:22):
'cause you want an HSA.
The fact of the matter is, you know,while there are 50% ish enrolled in
HSAs who have high deductible plans,there's still a lot of people that
have a high deductible plan thatdon't even have an account open.
And it's just kind of crazy.
So, I heard someone speaking on thisyears ago, and they talked about the
education around the 401k and how thathad to happen over literally decades.
(14:44):
Right?
And if you think about it, we'rejust over two decades into HSAs.
And so I. To be honest with you, thingslike this are helpful for us because
not only could it expand usage but itcould give us an opportunity to educate
people all over again with something new.
You know, for the banks who are stillinvolved in the HSA industry, it's
probably not one big bang right?
Where all of a sudden I'mgonna see, you know, 20 million
(15:06):
new accounts open tomorrow.
What it is, is just broadening thechannels for usage over time, which
is exactly what we want because HSAs,for us, are just an amazing fit with
the bank because again, they sit onbank rails and systems and they're
a source of fee income and depositsfor us that are sticky over time.
And you know, I couldn't, if younamed that in a vacuum, you'd
(15:29):
say, gosh, what count is that?
I want as many as possible.
And that's why we like HSAs.
Evan Sparks (15:33):
Yeah, I did, you know, about six, seven years ago here at
a BA, they switched, they offered,they began offering a high deductible
health plan with an HSA and I, youknow, I'm skeptical at first, right?
I'm like, all right, let me, sure.
And I went through explanationsof benefits and, you know, medical
and like medical receipts forthe past previous like five years
(15:54):
because I'm a documents pack rat.
And so I, so I like calculated allthis and then I kind of recalculated
what it would've been spending itoutta the out, you know, with on the
high deductible plan and everything.
And I was like, oh.
I actually, we actually savemoney, you know, except in the
year when we had like a, had a kid.
And that year, except for that one,you know, it's like in every other year
(16:17):
we save money being on a, on an HSA.
And so we so we switched to that and i'vebecome a real evangelist for the product
ever since because I, I really love theflexibility of being able to, you know,
pay for things out out of pocket andthen, and then get reimbursed for that.
And, you know, it's and it does makeme a little bit more sensitive in
(16:39):
circumstances where, where I can shopfor shop around for medical care.
It does make me more sensitive totrying to find the best price and so
that's, I feel like it's been overallbeen a really good consumer experience
and I have saved money using it so.
Phil Mason (16:53):
Yeah.
And if I could add on two more quickthoughts there, and because I, I,
I'm an evangelist as well, not justbecause I'm paid to be one here, but
because it, you know, like, like you,I've made sense of it in my own mind.
So the two other, you know, quick thoughtson that note is first and foremost, you
know, as far as doing the math on it, dothe math on this, you're able to save a
(17:16):
little bit over time and you're able to.
Grow that money on a tax free basis, ala it being in an IRA and then withdraw
when you're in retirement, right?
I mean that, that starts making youmake all sorts of sense, especially
if you're able to, you know, astime goes on, you got less kid
expenses, et cetera, et cetera.
(17:36):
I've been through that recentlytoo, so I totally with you there.
You, you can start saving some moneyand maybe you have a nest egg for
retirement from a medical perspective.
Right?
Yeah.
Because that's becomingincreasingly important these days.
As, as you said, costs are not going down.
But broadly, what you justtalked about is like what the HSA
industry at the end of the day.
If you're more consumeristic behaviorin medical spending versus just, oh, I
(18:01):
don't know, I only pay my deductible.
I have no idea how it's costing.
That's hugely important.
In addition to being on the HSA sideof the world, I, I am the chair of our
retirement and benefits committee here,and UMB, like many large organizations,
you know, self-insured, right?
So we look at this and look at behaviorchange a lot, and you can do a zillion
things to try and change behavior,whether that's character sticks, right?
(18:24):
But until you start making it aboutthe money coming outta your own wallet
yourself, it just doesn't hit the same.
So you're totally right.
Evan Sparks (18:30):
Yeah.
I, I, I will say I have read alot about the, you know, the, the
idea that you should, you knowpay all your medical bills out of,
out of pocket, save the receipts.
Yeah.
And then reimburse yourself from theHSA when you're, you know, retired.
And I'm like, I got at least20 years to go on this one.
So, you know, I'm like,you know, 15, 20 years.
I do not trust myself to keepall those records that long.
(18:53):
I am a pack rat, but I'm still, I'm alittle skeptical about trusting myself
to do all those records that long.
So I'm like, if I can just get myselfreimbursed within the same calendar
year, that helps me feel like I'm not,you know, I, I'm sure I'm leaving some
money on the table, but it also, I'vegot a factor in the cost of me, you know,
keeping 20 years worth of medical records.
(19:14):
So.
Phil Mason (19:16):
Yeah, I, I, I totally get it.
And, and self-awareness is animportant thing to success in
life in any, in any adventure.
So that's you.
But yeah, I mean, I think I would advocateeven further just try to, just try to
not reimburse yourself for a few things.
Pay 'em out of pocket and throw,throw that in an index fund and see
what that does for you over time.
Right.
And because if I can do anythingto help combat inflation, you know,
(19:37):
and inflation and medical costscertainly outpaces inflation from
a broad eco economy perspective.
That could help over time, but yeah.
Evan Sparks (19:45):
Great.
I wanna quick talk to you real quickabout talent and how you've kind of
organized the business, you know,in terms of the professionals that
you bring in and, you know Yeah.
Particularly as, as, as a, asmaller bank within the market
of peers that you, you know, thatdo the same business that you do.
What's your recipe for finding, sourcingand retaining the right talent to run
(20:07):
the institutional banking group at UMB?
Phil Mason (20:11):
This is hugely important, as you can probably tell, because
we are, we are unlikely to benefitfrom people just going through the
traditional banking ranks and thenpopping over to our business, right?
Because as I mentioned earlier,these businesses are so
specialized in many cases, right?
And they require specializedbackground skills, et cetera.
(20:32):
What we have been able to do isbring people in at kind of entry
levels and lots of these businessesand then grow them internally.
That has been the recipefor success for us.
We certainly have cases where outsidehires have made lots of sense to
come into leadership roles, but I,and I'm, I'm biased, right, because
I've grown up at UMBand I'm in this space,
so I'll just, I'll, I will give my bias away.
(20:54):
People who are able to grow up in thesebusinesses within the constructs of UMB
are perfect for us because not only dothey understand the business itself,
right, which is baseline level ofimportance, but they understand how the
overall business fits into UMB broadly,and I view that as tremendously important.
The last thing I want people on myteam feeling like is that, oh gosh.
There's UMB, the bank, and thenthere's the island that I live on.
(21:17):
No, we're all together.
And that's why I was so specificallydescriptive earlier about how kind of
we add to UMB' overall value propositionbecause people need to understand that
amidst, gosh, whatever they may be doingthat day, whether that's fund accounting
or corporate trustee work, or sellinga bond to a downstream bank or a host
of other things, we're trying to growpeople with those expertises within UMB.
(21:39):
The other thing I would add here too,that's again been a tailwind for us is the
service model I mentioned earlier abouthow we still have single point of contact.
We have lots of folks with alot of passion around that.
And so as other providers have wentaway from that, it's made it an easier
recruitment for us to say, come over here.
We'll have the single, you know,the single point of contact model.
(22:02):
And even if it's helped us sellpast, gosh, it may not be the
newest, shiniest piece of technology.
But that way that we do businessis really appealing to our folks
and they're really bought in.
So we tend to, people havepeople come and, and stay.
You know, turnover tends tobe pretty low, which is the
continuity is really important.
I.
Evan Sparks (22:19):
Great.
Well, Phil, thank you so muchfor being on the show today.
I really appreciatelearning, learning from you.
I, you know, I've been, I, I've beenhaving these kind of conversations with
banks, you know, with this podcast.
We're in season eight of the podcast,but I've been having these conver,
these kind of conversations with banks.
You know, for many years prior tothat, here at a BA and I continue
to learn something new every dayabout this in the banking industry
(22:41):
in the United States, which I love.
It's such a diverse and fascinating space,and you know, UMB and the Institutional
Banking Group, there is no exception.
So thanks for your time today.
Phil Mason (22:51):
No, I, I completely agree.
Learning something new is oneof the most fun parts of my job.
I appreciate you having me onthe show today and getting to
talk a little bit about ib.
Evan Sparks (22:59):
All right.
For our listeners, you can findthis in previous episodes at
aba.com/banking journal podcast.
You can also find us on any ofyour favorite podcast platforms.
Thanks so much for listening, andwe'll be back with you again very soon.
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