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An Interview With Louis Hernandez Jr., Author of “Too Small To Fail: How the Financial Crisis Changed the World’s Perceptions”

Oct 29, 2010

Louis Hernandez Jr., is the chairman and chief executive officer of Glastonbury, Conn.-based Open Solutions Inc., a provider of integrated enabling technologies for financial service providers throughout the United States, Canada and other international markets. Mr. Hernandez recently wrote a ground-breaking new book titled, Too Small to Fail: How the Financial Crisis Changed the World’s Perceptions, that offers a comprehensive analysis of the current financial environment and concrete solutions to the challenges facing the financial services industry. Turning the “too big to fail” theory on its head, the book explains the rapid changes that occurred in the global marketplace, highlights the importance of new technology in the shifting financial industry, the evolution of consumerization, and the importance of brand. National Mortgage Professional Magazine sat down with Louis Hernandez Jr., to get a briefing on his new book. NMP: Could you take a moment to explain to our readers why you wrote this very relevant book, “Too Small To Fail?” Hernandez: Our company recently came off a major transformation and I felt we were in the perfect position to help—which is why I wrote the book. Inspirational leadership is needed in our industry and to lead the economic turnaround. I’m hoping through Too Small to Fail, we can shed greater light on the importance of community-based financial institutions. In addition, I’m always asked questions about the industry, how it’s changing and where it’s going from CEOs and board members nationwide. People are looking for guidance and comfort to navigate through change and a difficult economic climate. I’ve written several white papers, but rather than write another white paper, I decided to write a book in order to have a more in-depth discussion. NMP: The concept of “Too Small to Fail” is very interesting, could you please explain it to our readers? Hernandez: By “Too Small to Fail,” I’m referring to the more-prudent community-based institutions that largely avoided the sub-prime crisis by maintaining direct ties to their communities. This collaborative network of community-based institutions shows renewed value, reflecting a relatively unique pillar of stability for our economy. They are too small to fail—because they can be the drivers of an economic turnaround. The financial sector may be the ideal industry to stabilize the markets and drive the economic engine. Trusted community institutions, as opposed to the large banks which consumers no longer trust, can lead the way. NMP: In general, what is the book about? Hernandez: The book takes a look at how the banking industry is changing more rapidly than ever before. I put that change in historical context, showing that there’s always been change, and we’ve dealt with that change. However, the pace of change has been increasing. Our industry faces major challenges, not just from the financial crisis but also from the impact of technology and the interconnectedness of the world. The entire business model for our industry has changed and created a moment of clarity for the value of community banks and we need to communicate this message. Interconnectedness has led to consumers demanding more products, services and conveniences. Our industry must meet those demands. A big piece of navigating forward and meeting today’s challenges is technology. Our technology must be the right technology for today and the future. Community-based institutions can lead the economic turnaround, one community at a time, just a few extraordinary leaders are needed. NMP: For an individual to be an extraordinary leader, what are the characteristics they embody that come to mind? Hernandez: That’s an excellent question. The degree of uncertainty will redefine how these leaders compete moving forward, that is why it is so critical. Certainly qualities, such as agility, flexibility and drive are important, but above all else, today’s leaders must anticipate change and be well-prepared for what that change may bring long in advance. NMP: How will new banking regulations impact community-based financial institutions? Hernandez: The interpretation of these new banking regulations over the next months will impact our industry, as well as the economy for a very long time to come. I feel strongly that this presents a unique and critical opportunity for community-based financial institutions to lead the interpretation. Our economic vitality is dependent on the health of Main Street America, and community-based financial institutions need to evolve how they work and claim their position as the pillar of their local economy, driving economic growth. It will be very interesting to see what develops. NMP: You talk a lot about community-based financial institutions capitalizing on their innate brand, how can they take that local brand and make it global? Is that even possible? Hernandez: No matter where an institution is located geographically, the globalization and interconnectivity of people affects that institution. There’s a pressure today for all business to serve a more global marketplace. The flow and interconnectivity of information is so immediate between entities and individuals that financial institutions now must consider what’s happening in other parts of the world, even if they’re focused locally and it creates expectations and higher awareness of the world and reinforces the fact that we must think globally. Your customers are doing business all over the world. Collaborate with a global network by sharing ideas, products, innovation and technology. This will drive growth through collective strength Technological advances have had a major impact on globalization. Through technology—the Internet—a financial institution can serve customers no matter where the institution is located and use technology to build its brand. Nearly two billion people (25 percent of the world’s population) are connected to the Internet. The American Bankers Association found through a survey that 25 percent of bank customers like doing their banking online. Other financial services providers take advantage of technological interconnectivity—ING Direct, USAA, Discover Bank, Ally, HBSC Direct—and so can community-based financial institutions in a way that leverages their competitive strengths. NMP: Could you tell us about Open Solutions and how the company is helping community-based financial institutions with these challenges? Hernandez: Our business solutions leverage the trusted role of community-based financial institutions to open up new avenues of growth through streamlined operations and allow for greater innovation at a lower cost. These financial institutions belong at the heart of their communities, where commerce and exchange are the center of activity. We have created a better way for institutions to operate using relational database technology to promote more dynamic customer relationships. Our enabling platform can provide new avenues for cost savings opportunities to diversify products and offer new ones. The banking industry has some of the oldest technology in use today. The industry had breakthroughs in the 1960s but hasn’t updated it since—all the technology is layered and layered but at the heart of it all is the old technology. We are trying to lead the replacement of legacy systems. Open Solutions’ full suite of products and services for community-based financial institutions to better compete in today’s aggressive financial services marketplace and expand and tap their trusted financial relationships, client affinity, community presence and personalized service. NMP: Lastly, how can our readers purchase a copy of Too Small to Fail: How the Financial Crisis Changed the World’s Perceptions? Hernandez: Major online retailers, including and, or directly at Net proceeds from the book will go a charity that supports advances in healthcare and education, and provides opportunities for children. To learn more about Louis Hernandez Jr. and his book Too Small to Fail, please visit or on LinkedIn at: Louis Hernandez Jr. - LinkedIn.
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