In this episode of The Purposeful Banker, Nicholas Koutouras, VP of Product Management for Q2’s Relationship Pricing and Profitability business, discusses why repeated late saves can signal deeper drift inside a bank and how disciplined banks create consistency to help teams spot issues earlier and make steadier decisions.
[Playbook] Beyond Pricing. Disciplined Performance. Real Impact.
Cheryl Brown
Welcome to The Purposeful Banker, the podcast brought to you by Q2, where we discuss the big topics on the minds of today's best bankers. I'm Cheryl Brown. Welcome to the show.
Over the past couple of conversations with Nick Koutouras, we've talked about shared economics, operating rhythm, and how banks can close the loop between what gets approved and what actually happens. Today we're going to take that one step further because discipline isn't just something that shows up in dashboards or review meetings. You can actually feel it inside the bank in how consistently standards are applied, how early issues surface and how much trust teams have in the decisions being made.
As a reminder, Nick leads our relationship pricing and profitability business, and he's been writing about his experiences with going beyond pricing, exploring how banks move from pricing transactions to managing relationship performance with greater consistency. And his latest writing gets into something especially important for leaders: discipline as a lived operating reality. Not just what the numbers say, but how the decisions feel to the people inside the bank.
So Nick, it's good to have you back on the show.
Nick Koutouras
Thank you for having me back, Cheryl.
Cheryl Brown
So we've been having lots of conversations in this series. This one resonates for me especially. So in one of your recent blogs, you write about the difference between disciplined and undisciplined banks and how that's rarely found first in strategy decks or public results, but you feel it internally. I know I've been part of organizations where you had that feeling internally, and I thought that was a really interesting way to frame this. So talk to me a little bit about that feeling. What does that feeling feel like?
Nick Koutouras
Yeah. So this one comes down to a very nuanced experience when you ask what's a discipline bank or not. And it's really also in our lives, what's disciplined or not? And it's made up of a lot of different things. It's almost like I can't really put my finger on it, but I know it when I see it. And so there's a calmness behind the urgency. So it doesn't mean that we go slower, but there's a calmness. There is clarity. I think that that's an important hallmark in a disciplined institution is everyone knows what we're trying to do and it's easily measured. You end up then finding this rhythm because now we're all moving in the same manner. So it's almost like we're marching down with the same cadence.
I know that when we rolled out PrecisionLender and the framework that we've talked about here before at US Bank, I sat down with a friend of mine from a different institution who was in town and we talked about it and he said, "Congratulations, Nick. You've just implemented discipline in an institution." And he said, "That is just so hard to do." But by doing this, this is where you can then get everyone working in the same direction and in a calm, comfortable manner. And then you can really surface where more difficult conversations can be had, but it's again, the emotion has come out. And so those to me feel like a lot of the hallmarks of what discipline looks like.
Cheryl Brown
And I mean, I can imagine how that translates to executive meetings and pricing decisions, but that even trickles down into frontline commercial bankers as well as those outside the bank. What does a disciplined bank look like from the outside?
Nick Koutouras
From the outside, you would see steadier performance. You wouldn't see the volatility or variability in the results. Forecasting precision. So whatever was said or committed in a forward guidance was actually achieved. It's a lot of those aspects and that's what it appears like for the financial stakeholders. What's also really important for bankers is how do you appear for your clients and your communities. And so understanding what is the direction of the institution and really what the full suite of the bank that can be delivered to the client, understanding that from a banker's perspective, then it's easier to talk to their clients and the clients then can rely on the institution to help them in times where they're trying to expand or shrink or change. And so the bank can then be that partner.
But again, that discipline helps that banker present the bank to their client in a very, very calm and consistent manner. And that's one thing that we see. And we talked about it inside of our institution is like some of this stuff is not a faucet. The clients that these banks serve, they tend to be, that's their baby. And so you want to be there and support it and you can't waver on that and you can't come back and say, "You know what? I can't support you on this round. I can't accept that deposit right now because our liquidity position's a little bit different and we're kind of slowing down our liquidity growth expectations." That kind of inconsistency, it comes out with the client and the client then questions the commitment of the institution and goes and finds another institution. So those are the ways it reveals itself in the public.
Cheryl Brown
Well, so you mentioned PrecisionLender, and one of the lines from one of your most recent blogs that stood out to me is that technology is often described as a solution, but in practice it can expose behavior, and that feels like a really important distinction to me. So what kinds of behavior do they tend to reveal inside commercial banking teams?
Nick Koutouras
So that discipline and the technology and the tools, discipline and its partner consistency, what it reveals are things where there's training opportunities and that's what comes out in the behaviors. So if we feel that a banker's not comfortable talking about foreign exchange or interest rate derivatives or syndications or different treasury products, it reveals itself because you start seeing fewer and fewer of those opportunities presented in pricing committees. And then that's where the leaders pause for a second and ask the deeper questions like, "Well, why aren't you comfortable talking about that?"
So those types of behaviors you start seeing, and in some ways also you end up with bankers perhaps being too cautious and limiting what they want to present to the client. And a lot of times those are great learning moments. And to me, that was the single greatest revelation when we rolled up PrecisionLender is that through the process of looking at relationships consistently and with discipline, we started identifying patterns and those patterns or signals were really training moments and were able to help really bring those tools to the bankers so they can even be more successful with their clients.
Cheryl Brown
And so in a disciplined bank, you've rolled out a framework, which we've discussed the framework, but how do you distinguish healthy judgment decisions—discernment—from people who are just bending the framework? What's the distinction there?
Nick Koutouras
Yeah, we would see that. You can see some patterns in early days where individuals were just pricing to satisfy a hurdle or a criteria so they wouldn't have to go talk about their relationship. And so what we would then do is we would adjust that framework and then start having those conversations with those officers on really understanding what was happening behind that.
So we wanted to encourage aspirational account plans. And so at the beginning it was they were cautious and really we weren't finding that performance that we were looking for. But once we started establishing the trust, and really that's really ultimately that's behind all this is that trust, is once the banker began to trust the process, they were able to see that the institution and the individuals that were running this process were there to actually help them. And so they became more vulnerable in asking for help and the institution was much more receptive to giving the help. And so those two forces that came together then we started finding really that performance.
And so that's really how it all kind of ties back together. But trust got to then drop the veneer of either caution, exposing that vulnerability and then ultimately finding those opportunities.
Cheryl Brown
So I want to switch the conversation a little bit to the word “drift,” which you've used in your writing a bit. And to me, the word “drift” connotes slow-moving change, not a dramatic sudden change, but something slow moving. And it sounds like it happens in ordinary places: in meetings, in exception conversations, where stories maybe get celebrated and questions don't get asked. So where does discipline usually start to drift? Is it the everyday conversations where deals get reviewed?
Nick Koutouras
Yeah, it's there. I think when it really starts drifting, the seeds get planted after good quarters, good periods. We are a good cycle. We started growing and we started finding some performance. We started improving our pricing. We started deepening our relationships. We were happy with how we were presenting in the community. Our returns started improving. And so then you start relaxing a bit and you kind of come back and say, "OK, well, we've built a little buffer. Let's rethink this or maybe let's relax the discipline because we feel that maybe we've cemented what was good and desirable in the institution and what we can bring to the clients."
And so then slowly pricing starts to relax a little bit and then a couple basis points and then a couple basis points in the next deal and a couple basis points down on the next deal and then you start seeing this layering. Then perhaps you start seeing fewer product opportunities again, start relaxing it a little bit because either someone believes there's some fatigue there or we're maybe good enough. And then before you know it, you're two quarters out, you see this compression that's occurring in your pricing and then now you have to revisit your targets and then come back and say, "No, we've got to switch behavior."
So it's this thing that it's almost like this comfortable illusion that's out there and you kind of feel like everything is good. And so if everything's good, then maybe I can just let up a little bit. And then that letting up is really where that drift starts occurring.
Cheryl Brown
It makes me think of New Year's resolutions. You have all these great intentions in January and then the drift begins and maybe you even start to make some excuses or you start to reason with yourself. And I think one of the ways that banks reason with themselves, actually not just banks, but pretty much every company I've been a part of, is you have these hero stories. And we all love a good hero story, right? The sale that rescues the quarter, the team that finds a way, the deal that carries the year. And in your writing, you're honest that you understand the appeal of that, but you also make the point that heroics can become a warning sign of uneven enforcement. So talk about why is that uneven enforcement so damaging over time if it's so good for the bank in the moment?
Nick Koutouras
Yeah. So just I think they're fantastic. Those are great opportunities that need to be celebrated, but if an institution learns to live by those, then it gets very, very uncomfortable in meetings because then we're consistently comparing to the past. "Well, remember three quarters ago where we landed that big piece of business?" And so everything kind of gets linked back to those prior quarters and prior periods and now we're looking backwards and that's exactly what we don't want to be doing because we've got to be looking forward.
And so if you have the discipline, you have that base that has created really a platform then to find that next opportunity. But what ends up happening is if there's too much celebration and too much backward looking, that's where it really gets a little bit awkward. And then you find yourself writing longer and longer explanations if you're doing a business review, you start qualifying your performance. "Well, yeah, our year over year is off because remember in 2023 we had that big swap?" And that's really not a healthy way to be running an institution. You want to be looking forward and looking at your relationships and what's next.
And so even some of the elements inside of PrecisionLender in the way that we view our measures there is that we have a measure right in the middle that is the one that's most discussed inside a bank is the existing ROE. And so a lot of people will come back to me and say, "Well, yeah, but ..." They give me the "Yeah, buts." "Yeah, but Nick, remember in 2023 I had this deal?" It's like that was great then. However, what we're measuring right now is if we do nothing. And so we're at this point, we can't go back in time. So let's focus on what it is now and then what are we going to do to either get back into the rotation to get another one of those big wins or how are we going to build an opportunity to create more of a steady state so we can then anticipate a more even growth rate?
Cheryl Brown
If you're one of those banks that has been living on these heroic measures, you've been surviving on this for a while and you suddenly are no longer encouraging that, right? How can leaders celebrate effort without normalizing these rescues? How do you keep up the morale and the encouragement of your bankers?
Nick Koutouras
It requires, I think, an artful approach. I think we have to celebrate the good news, but I think we have to temper those victory laps and the leaders that I've worked with really acknowledge that effort and that outcome, but they quickly come back around and I've heard that phrase, "Look guys, no victory laps. We got it. We crushed it." So if it gets a little too much, actually it creates this tension in the room with executives that say, "Well, we expect that to happen too. So I want to focus in on what's not happening or where we're not finding more of those opportunities." And so those effective leaders celebrate it, embrace it, reward it, and then quickly pivot and say, "OK, now what's next? Because that was then and now we've got to keep on going." Because if banking's not a point in time, it's a continuous action.
Cheryl Brown
Yeah. So in your last blog, which just posted yesterday, by the way, you write that beyond pricing sits a governance decision and that's whether economics shape behavior consistently or remain explanations after the fact. And that feels like the heart of this whole series. You say that the broader argument is intentionally narrow, that silos persist because economics fragment, insight fails when it comes too late, and discipline erodes when inconsistency is tolerated. So why is that narrowness so important?
Nick Koutouras
Yeah, it's a multipart solution, but the glue that holds it together is that consistency. So you've got the simplification of the metrics and sometimes I just sort of quickly say, "Oh, let's get the math right." But we've got to simplify the metrics. We've got to make it easy to understand because when you have so many different organizations inside, or so many really different departments and divisions and functions inside of a bank that are constantly looking at these transactions from different points in time with different measures, every one of those is right, but they're not telling the complete story. So that's why that simplification, standardization, getting down to the basic metrics that really say, "This is good, this is not. It's OK to have some that are not, but let's just understand what those are and make sure we don't load up on too many of those." So that's kind of one part of it.
But then really what comes back in is the word you use is consistency. Consistency is really important because you've got to keep doing it. By doing it and doing it and doing it, you're reinforcing that message and then you kind of get into and you find that rhythm and that rhythm can then easily consider difficult relationships and they're there. You just can't have a portfolio of every relationship is above your target because then your target would go up and it's not practical because you have a portfolio of different transactions. And a lot of times my team would question like, "Nick, well, this one looks really difficult. Are you going to support it?" And I said, "Well, what I'm grateful for is that we have a measure that comes back that consistently has said, yeah, in the spectrum of what we have and these deals, that one is kind of thinner than what we would like."
However, there's other attributes. It's just not numbers. It's a strategic importance to the office, to the bank. It's a client that has a great reputation. There are other factors that come into it, but again, if you're consistently looking at it, then you can then start understanding where you're making those investments and where you're comfortable with those investments. But again, it's easy to compare that side by side and then that becomes the bedrock where you get then stability in your forecast, you get better capital allocation decisions and really based on data and facts and then you can continue to drive your plan.
Cheryl Brown
And I think it's important to note that you don't have to recreate the wheel. Maybe you're just changing the tire. Banks may already have in place some of this that they're just not using it consistently enough.
Nick Koutouras
Yeah. And that's what we found. We had people coming through with different metrics and said, "That one's bad." And it's like the next person would come in and say, "Well, no, I think that is good." And so they're looking at it from different metrics. Again, different ways of thinking about it. And so that's where we needed to get the institution into this one consistent lens so that way we could always be looking at it the same way. And then when we're making this decision, this is how we're going to decide it.
And then those metrics and methods were then linked into the financial plan, into the ALCO plans and all the credit risk models. Everything was linked together, but this ended up being the clearinghouse for those decisions because the sum of all those decisions then produced the financial results. And so that consistency, that single lens then helped drive the financial plan that was committed by that line of business.
Cheryl Brown
Well, Nick, one thing I've appreciated in your writing is that it doesn't come across as a clean, perfect transformation story. It's definitely your story and you describe it as persistent, maybe sometimes ugly, sometimes cobbled together, but ultimately it was effective. And I know it was a passion project for you to put your story in writing and not just in the blogs and on your LinkedIn, but in your playbook, which we're finally sharing, it's linked in the show notes. But tell me a little bit about what drove you to document this experience.
Nick Koutouras
The motivation to document this was really a lot of conversations I kept on having and kept on arriving to the same point when someone asked, "Well, how did you do it? Because you seem to have done something that's a little bit different." And what I'm saying is not really profound. It's actually very basic is like, let's just make it easy and measure. But we end up creating a lot of chatter or noise around that explanation. I thought I needed to find a way to capture that and then sit down and say, "From A to B," or I'm a Greek guy, "Alpha to Omega, this is kind of how we did it." And we stepped through it, "And then this is how you just repeat it and repeat it and repeat it."
And seeing these bankers after they get through that phase of trusting and understanding that this mechanism is really intended to help them help their clients and help them get their deals approved and help them protect their transactions and opportunities and relationships, then it becomes really smooth and it became an enabler. We were discussing pricing conversations. We went from sometimes an hour in the early days to minutes quickly because everyone had understood exactly what the math was, what we were looking at. We can quickly assess whether there was an incredible account plan. We were comfortable with the outcome and the decision was quick.
So this really created that smooth rhythm and allowed the bankers to go out and delight their clients, but that was the motivation. I wanted to get that story out so people can find a place to attach to their world and then maybe apply one or two of those ideas.
Cheryl Brown
Well, I think you've done it. I think it's a great story and I've appreciated being able to talk through it with you. I've learned a lot about commercial banking through this process. So Nick, thanks for joining me.
Nick Koutouras
Thank you so much. This has been a lot of fun. And as you said, this is something that I believe in. I'm passionate about measurement and using measurement to drive behaviors to help communities.
Cheryl Brown
Great. Well, listeners, that's it for another episode of The Purposeful Banker. You can subscribe to the show wherever you listen to podcasts, including YouTube, Apple, and Spotify, and you can see our archive of podcasts at hub.q2.com/podcast. Until next time, this is Cheryl Brown, and you've been listening to The Purposeful Banker.