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Scott Kwarta
Chief Risk Officer, The Cooperative Bank of Cape Cod
Age: 55
Industry experience: 33 years
As chief risk officer at The Cooperative Bank of Cape Cod, Scott Kwarta wants staff to see risk not as an obstacle but as an opportunity for the bank and its customers. Kwarta oversees the bank’s risk management, compliance, credit, loan servicing, technology, information security and operations areas, and he spends part of his time visiting the bank’s offices to help employees understand how to think differently about risk.
After starting his career in accounting at KPMG, Kwarta spent 10 years at Citizens Bank, where he started the bank’s first operational risk program. He then worked at OpenPages, a risk and compliance software company that is now part of IBM, before getting back to banking with positions at BankNewport, UniBank for Savings and Workers Credit Union. Kwarta joined The Coop, which has about $1.4 billion in assets, in 2020.
Q: What does your day-to-day job involve?
A: Part of it is working with my different teams and the management of those areas in day-to-day operations, and also helping to identify opportunities from a customer experience standpoint, efficiency standpoint and risk management standpoint. I’m trying to shift the culture here so that everyone looks at risk management in everything that they do. I’m really encouraging people to say: Why are we doing this? What’s the reason? What’s the risk we’re trying to manage? Are we over-managing it? Can we take on more risk or do we need to address certain gaps?
On the technology side, we’re starting to be much more strategic in how we’re looking towards the future and making sure that we’re starting to build out a strategic plan and roadmap. One of the greatest risks that banks face now is the rapid change of technology, the competition coming out of nonbanks and fintechs and how do we keep up in meeting customer expectations – managing the costs and ensuring that our processes are aligned well with technology to meet those needs.
Q: What are some steps to changing the risk culture?
A: Any shift in culture involves some heavy lifting. It needs buy-in from the top on down. Our board and CEO Lisa [Oliver] are very, very supportive of risk management and taking advantage of the opportunities that we have in being better at managing risk. Every interaction I have, I make sure I’m living the culture that I’m trying to move us to: really looking at risk as an opportunity, not an obstacle. When we look at risk here, we really try to balance it not only with the bank’s objectives, but with the customer experience, because one of our main missions is to serve our customers and communities the best that we can. For some people, when they come from a culture that was much more risk-averse, sometimes it takes a little time for them to get more comfortable with making some decisions or taking on certain risk factors.
Q: How do you approach technology from a competitive standpoint?
A: Traditionally, the bank has been slow to adopt newer technologies. Also, like a lot of banks our size, we’ll bring in a new technology, and we don’t necessarily leverage that technology as fully as we can. One of the things that we’re focused on is not just what our competition is doing, but what’s our customer expectation. What’s the experience that they’re looking for and how can we best meet that experience with existing technology, and then potentially where we need to make some changes? Given our size, we’re not going to be leading-edge technologically – that’s a very expensive place to be on the Cape. I don’t know if that’s right for our customer base as it stands now. At the same time, demographics do change, and we need to make sure we’re keeping up with that change.
Q: What are some other keys to managing a risk culture?
A: A lot of organizations face this, where we’ve got a lot of data, but we don’t necessarily have the right infrastructure and tools to easily access and pull that data together. When we’re looking at risks – when we’re looking at just general operations and our strategy – it becomes very important that we’re able to look at the data and understand what are the risks that we’re facing, what’s trending and what’s going on. We’ve got some initiatives in place to improve our access to data and how we’re pulling that data together and reporting it. Our risk appetite is changing because we’re realizing we need to look at risk as an opportunity, and as long as we’ve got the data and metrics to track and monitor and manage it to an appropriate level, then we and our customers can reap some of the rewards from that.
Q: What have you experienced at The Coop since Silicon Valley Bank’s failure?
A: I think certainly we had a lot of questions from customers. One part is understanding the FDIC insurance structure and the Massachusetts Depositors Insurance Fund. We’ve had some customers and non-customers bring deposits to The Coop because they’re trying to diversify funds that they have at other banks that are not fully insured. We’ve had some customers who had some general questions about the financial stability of the bank, and certainly we are very stable, very well-capitalized, very well-diversified and have significant availability of liquidity.
Q: Is there anything you’re looking at differently based on what happened to the failed banks and how customers reacted?
A: We’re not looking at new things or looking at different metrics. We certainly have revisited and highlighted some of the areas that we do look at that relate to what happened at SVB. We do a lot of stress testing to understand what the impact will be both from an interest rate perspective and a liquidity perspective. So, should there be a situation where there’s a significant decrease in deposits, what does that do for our ability to provide those funds to depositors and continue to run the bank? It’s nothing new that we’re doing, but certainly we’ve gone through and highlighted those areas that cover those concerns, relooked at them and relooked at our stress testing so that we continue to be confident.
Kwarta’s Five Favorite Recipes
- Parmesan risotto with peas
- Golumpki (Polish stuffed cabbage)
- Potato and cheese pierogi
- Shepherd’s pie
- Crepes-style manicotti
