The Renaissance banker

By Evan Sparks

One day, not long after he became CEO of Detroit’s First Independence Bank in 2017, Kenneth Kelly saw what he calls “a unique instrument” on a team member’s desk.

He called the employee’s team leader over and asked, “What is that?”

They explained what they used it for.

Kelly was unconvinced. “You have 28 business days to get it out of here,” he told them.

The unique instrument? A typewriter.

“That was just part of the culture and people were used to it,” he reflects. They had legacy paper-based processes for paper forms and cashier checks that worked — but weren’t scalable. “There’s a reason that IBM got out of that business in 1991, right?”

It might be an extreme example of legacy technology in banking, but legacy tech isn’t the only risk to community banks. Legacy thinking can become a risk too. The challenge, as Kelly sees it, is to balance being firmly rooted in a shared and consistent culture, while constantly bringing new ideas about how to extend that culture.

A legacy of renewal

The story of First Independence Bank’s culture begins in 1967, when five days of rioting left 43 dead, nearly 1,200 injured and more than 400 buildings destroyed. The riot accelerated flight of businesses and residents out of Detroit and, in the words of Mayor Coleman Young, “put Detroit on the fast track to economic desolation.”

Out of this civic trauma, citizens realized “there was a need for a financial institution that would serve the minority community here in Detroit,” says Kelly. Twenty-two Detroiters put together some capital and opened the bank in 1970. During the economic hard times of the 1970s, Kelly’s cousin Don Davis, a successful record producer, ended up buying and recapitalizing the bank and ran it until his death in 2014.

In 2015, Kelly was invited to take a more active role in the bank’s oversight, and in 2017 the board elected him chairman and CEO. “Never in my life have I met a quicker study than Kenneth,” says bank board member Alan Young.

Engineering a future

Kenneth Kelly grew up in the rural community of Eufaula, Alabama. He opened his first bank account with the proceeds from second prize in a 4-H public speaking competition. After finishing high school, he went on to Auburn University to study electrical engineering.

Kelly spent the first stage of his career at Southern Company, a major utility holding company. He worked across Alabama and Georgia, starting as an engineer and eventually being promoted to roles in marketing, corporate finance, human resources, supply chain management and M&A. His stint in Mobile, Alabama, was particularly fruitful — it was there he met Kim, his wife of 30 years. They have two grown children.

Kelly also earned an MBA from the University of Alabama. When asked about the rare feat of combining Auburn and ’Bama loyalties in one person, he shrugs and says with a smile, “the best way I could sum it up is one of the great things about my leadership style is understanding how to collaborate.”

While Kelly brought a broad range of executive experience, one thing he had to adjust to was the culture of a community bank after spending his career in a 30,000-employee Fortune 500 firm. “You can hire someone from the outside, but if they don’t have a high level of respect for your culture, they won’t last,” he says. “It meant leaving a corporate entity and coming into what was a small, family-friendly entity and understanding how to relate my leadership skills in this environment.”

‘Think like a technology company’

Which is where the typewriter story comes in. (Here’s how the story ended: The bank’s chief compliance officer, Lindsay Karczewski, recalls that some employees were treating them like a “security blanket” and would hide them away. But Kelly was serious — he found a stray one in a corner, unplugged it and put it under lock and key in his office.) The bank’s culture had over the years grown to emphasize stability — but Kelly wanted to push the bank to get outside of its comfort zone.

In fact, he emphasized that leaving the comfort zone was essential to the bank’s survival. “I tell people, and in particular the board and our teammates, that we have to act and think like a technology company,” he says. “The logistics of moving money, that’s what we do as a bank.” During the COVID-19 pandemic, the bank switched to a modern core, and Kelly is proud that the conversion happened on time.

To help the bank pivot toward this future and identify a pipeline of emerging leaders, Kelly established a “next-generation board.” Members attend bank board meetings, learn from the bank’s leaders and then become ambassadors for the bank in the community.

Ashley Williams, founder of Rizzarr, a Detroit-based digital marketing firm, served on the nextgen board. “Kenneth is very intentional about making sure the industry is moving forward and pushing forward and changing the status quo of how generations beforehand and upcoming generations see the banking industry and see the need to partner with it and to align with it to help them reach their goals,” she says.

Kelly also embedded himself in Detroit — serving on the board of the Detroit Regional Chamber and other blue-chip organizations amid the city’s striking recent renaissance — although his admittedly folksy southern sayings sometimes mystify his Detroit colleagues. (“What does ‘Bless your cotton socks’ mean?” asks bank board member and Cummins CIO Earle Newsome with a smile.)

‘Beacons of hope’

“When you think about banks, banks are beacons of hope,” says Kelly. “You can’t go to any major city and not find one of the tallest buildings in that city and not see a bank name on it.” He knew that First Independence had been a beacon for hope after the Detroit riots. Following the 2020 rioting in the Minneapolis-St. Paul area after the murder of George Floyd, Kelly saw an opportunity for the bank to be a beacon again.

The moment after the George Floyd protests was also a critical opportunity for a minority depository institution like First Independence. As Kelly likes to say, “let’s put the hay in the barn while the sun is out.” He tapped into support from Bank of America, Bremer Bank, Huntington Bank, U.S. Bank and Wells Fargo — support that included capital investments, research and marketing — to facilitate First Independence’s expansion into the Twin Cities.

“Moving into that market allowed us to really expand — not only going into that market, but also organically in our current footprint, because people saw us as being a very relevant institution and one that brought a lot of pride to the city,” he says. Since Kelly joined the bank, its assets have more than tripled to $650 million.

“Every day we are thinking about, ‘How do we grow in such a way that’s responsible, but also connotes that beacon of hope for the community to see that the ownership that looks like me have an opportunity to serve a community that is in need of that capital?’” he reflects.

The investment in a new, open core helped fuel out-of-state growth as well. “Our platform gave us the digital capability to open up accounts online, which gave us that reach outside of the state of Michigan,” says Dimitrius Hutcherson, the bank’s president. Part of that growth involves building partnerships that help First Independence chart a long-term path to independence. “The top six banks in this country have investments in First Independence Bank,” says Kelly.

“You can hire someone from the outside, but if they don’t have a high level of respect for your culture, they won’t last. It meant leaving a corporate entity and coming into what was a small, family-friendly entity and understanding how to relate my leadership skills in this environment.”

Linda Forte, a longtime executive at Comerica who joined the First Independence board after retiring, notes that these partnerships benefit both parties — helping “a larger institution deepen and broaden its reach into communities that heretofore have, then underrepresented in the banking arena,” combined with the “tremendous value” that large banks bring to smaller MDIs through product sophistication.

On Sept. 10, Kelly was invited to testify on ABA’s behalf before the Senate Banking Committee on the task force’s recommendations.

Advocate, partner, catalyst

Kelly emphasizes three priorities — drawn from ABA’s strategic plan — for his year as chair of the association: be a unifying advocate, trusted partner and innovative catalyst. Unity is important to Kelly. “He takes time to recognize each perspective and works to bring consensus in that collaborative space — recognizing that everyone may not agree, but getting everyone to common ground,” says Rann Paynter, president and CEO of the Michigan Bankers Association.

Case in point: ABA President and CEO Rob Nichols appointed Kelly to chair a banker task force on deposit insurance reform. Kelly took an issue that had divided up the industry and worked with the group — which included representatives from all asset size ranges — to develop a set of shared principles to inform policymaking and ABA’s perspective.

Sandy Baruah, CEO of the Detroit Regional Chamber, has a word of caution to ABA members: “Buckle your seat belts — because he’s going to be asking questions, and he is going to get down to the root cause of things.”