Ramstad: New U.S. Bank CEO impresses with dedication to ‘keep the mission, pick up the pace’

Anytime a new leader takes the helm at a company, employees want to know how things will change.

For Gunjan Kedia, who last month became chief executive of the nation’s fifth-largest bank, Minneapolis-based U.S. Bancorp, the answer is measured. She recognizes that banking is a relationship-based business in which trust and integrity are paramount, yet she sees the need for the company to deliver a better return for shareholders.

A change at the top always presents a ripe moment for broader change, she said in a wide-ranging interview with me and my colleague Bill Lukitsch last week. But she began our conversation with a clear expression of respect for a bank with roots that go back to the Civil War.

“I introduce myself to people as just somebody who is very excited to lead an iconic company into the future,” Kedia said. “I reflect on the impact of the company on Minnesota. We’ve been here for decades and decades, and so many of our values reflect the state’s values — caring, well-intentioned, aspirational.”

Kedia spent the first decade of her career as a McKinsey consultant working for tech and finance clients. Over the next 20 years, she worked in banks, including the last nine at U.S. Bank, initially in wealth management.

She was recruited to the company by Andy Cecere shortly before he became CEO. His tenure included U.S. Bank’s largest acquisition since the late 1990s and expansive spending on new technology. In her first quarterly conference call with analysts, Kedia signaled a desire to stay true to company values, but “pick up the pace.”

Excerpts from our interview:

Q: What do you value in life and work?

A: I grew up in New Delhi to a very loving, big, excitable, energetic family. So if you can imagine, every Sunday, dinners at some aunties’ or uncles’ places. I studied engineering in the mid ’80s in Delhi. It was very unusual for girls to do that, and that was partly why I did it. It was also in the family. All the men around us studied engineering, and all the women studied finance. And here I am with both.

I came to the U.S. in the early ’90s to get an MBA. And that was also a fluke. My father had gotten a job at the World Bank late in his life, and he and my mom moved and they could sponsor us coming here. So that brought me to Pittsburgh and Carnegie Mellon, and that started my love of finance.

So to now answer your question after this whole preamble, I love the industry for being just the right combination of intellectual challenge and pace and mission-driven purpose. There’s nothing more personal than money to people. Good advice at the right time changes the outcomes of people in the fullness of life in a very meaningful way. In tough days at work, that’s what sustains you.

I take our obligation to other people’s money and their life aspirations quite seriously. I also love the fast-paced nature of it. Those are the values we have. Keep the mission. Pick up the pace.

Q: What in your experience shaped those values?

A: Well, the mission work is because I’m a benefactor of it. I’m an unusual candidate to be sitting here, and it was because some opportunity and access and some ability to fund a dream came through. That’s what we do. The mission of a bank is to infuse capital to the right ideas and make something happen in the communities we live in. Because I have moved and worked in so many places, I’ve gotten very comfortable with the art of the possible.

A company like U.S. Bank has formidable assets, a culture that is truly enviable, and 70,000 people who do the right things when no one is watching.

Q: What attracted you to U.S. Bank when you joined it?

A: Well, it was the reputation, which is towering. I had some options I was weighing, and people I trusted all said this was the place to be. They do things right. When I met Andy [Cecere], he was a few months away from being announced as the CEO, he had such an ambitious vision for a digital transformation, for growth. That’s just an exciting journey to be part of and I made a very good decision that day nine years back.

Q: On your first call with analysts last month, you said you weren’t happy with U.S. Bank’s stock price. Do investors not understand the company, or does the company need to deliver more value?

A: Let me step back briefly. In the past, U.S. Bank curated a very attractive set of complementary products and businesses because of its strength in mergers and acquisitions. It was really good at buying revenue, integrating it in a thoughtful manner and expanding the franchise that way.

When the [2008] financial crisis happened, we, like many other banks, turned our attention to risk management. We did that very successfully. In 2017, it had been 10 years since the iPhone had been introduced. We woke up to a customer that was fundamentally transformed in their expectations for user experience and convenience.

That started the process of what’s happening with the stock. We made a very strategic decision for the long term, that we were going to step away briefly from our expense discipline to invest back in our platforms. We did that, and the story was understood by investors. COVID increased our expenses by another level. We were very proud of having over-invested in our employees’ health, safety and peace of mind during that process.

However, when we look back at the collection of all of this, we do find ourselves with too long a period when expenses have been rising faster than revenue. That’s not a sustainable place to be, and our investors are impatient of that picture.

That short statement I made that “I’m not happy with the stock price” reflects all of that history and all of that determination on what needs to be done going forward.

Q: What’s your view of whether the structure of U.S. Bank is meeting opportunities?

A: There’s need, and then there is want. And I don’t know if the company needs a wholesale transformation, but a new leader does unlock the organization in a beautiful way. People are ready for new ideas. It’s fertile ground for sowing new innovation, and I don’t want to miss the opportunity to turn this moment into real momentum for the future.

We’ve invested significantly in building the most differentiated, distinctive set of products, but only 40% of our 15 million clients use more than one product. We have an ability to create some value for them by interconnecting our products so that they naturally migrate and deepen our relationship.

Another one is expanding our reach. Fifteen million clients is good, but it should be 16 million or 17 million over time. We have to cover the areas of the country that we are not in today. That includes opening new branches, but it also includes partnerships with other people. Last year, we announced a very significant partnership with Edward Jones. Their focus is wealth management. They want to provide banking. They have trusted advisors, so we are expanding with them.

Q: What are your thoughts about the branch footprint and the way people use banks?

A: We are migrating to larger branches that have all kind of advisors — wealth, mortgage, small business specialists, and, of course, the traditional bankers — in a place where they can come when they’re thinking about planning and complex questions. So fewer, bigger branches are becoming more important. Branches do matter. There’s something about being able to feel the physical presence, and so digitally enabled branches, larger, fewer of them, is what’s going on.

Q: What do you think of the Minnesota economy?

A: It’s a very vibrant economy, just lots of headquarters and successful companies here. We are growing our headcount in Minnesota and in the Twin Cities. I love the labor pool here. The colleges are great. The work ethic is good, and people are loyal.

Minnesota, like everyone else, is going to have to deal with taxes and weather. In the whole country, we are seeing a migration to lower-tax and warmer-weather states. When you combine that with regulatory environments that are perceived to be more business-friendly, you’ve seen a lot of headquarters move.

If I have a wish list for the Twin Cities, it is to stay attractive to the business community and balance the pressures that most governments feel.