Aspiring CEOs should check out why Associated hired Andy Harmening

Associated Banc-Corp wasted no time picking its next CEO.

The Green Bay, Wis., company surprised many this week when it announced Andy Harmening would succeed its longtime leader Philip Flynn. The selection came just two months after Flynn said he would retire at year-end.

But the $33 billion-asset company clearly has a plan in choosing Harmening, the head of Huntington Bancshares’ consumer and banking business who led a technological overhaul there, observers say. Simply put: He will be expected to replicate that success at his new employer.

“He’s known for the work he did on digitization at Huntington,” said Scott Siefers, managing director and senior research analyst at Piper Sandler. “Given how meaningfully the pandemic accelerated customers’ moves broadly toward digital in that vein, it made a lot of sense for Associated to accelerate its own offerings.”

Harmening’s rise may also signal to up-and-coming bankers across the industry that the path to the chief executive suite will have to include jobs that build experience in technology.

In his nearly four years at Huntington, Harmening oversaw a transformation of how customers interacted with the $123 billion-asset company. The centerpiece of the strategy was The Hub, an online and mobile interface the Columbus, Ohio, company’s customers use to manage their accounts and investments. The Hub, rolled out in 2018, uses artificial intelligence to help customers change their spending habits, build savings and develop plans for their financial well-being.

Later add-ons gave customers alerts on when their account may not cover certain transactions, when free trials to subscriptions they linked their account to are about to expire and when double-charges appear.

The work paid off.

Huntington’s consumer and business banking unit reported net income of $635 million in 2019, more than double its performance in 2016, the year before Harmening took over, according to the company’s financial filings. The pandemic recession took a toll on profits last year, but Harmening’s department stayed in the black.

“We wish Andy the best in his new endeavor and reaching a career goal of becoming a CEO of another publicly traded company,” a Huntington spokesperson said in an email. “We are incredibly proud of the work that he and our team have accomplished at Huntington, and we are well-positioned to continue that success.”

Over his 11 years as CEO at Associated, Flynn helped put the company on good footing after it teetered on the brink during the financial crisis. Flynn’s work will prove critical to Harmening’s plans to build not from scratch but on top of a growing business — especially in home lending.

“It matches up perfectly with what Associated can do to improve the profitability profile,” said Terry McEvoy, an analyst at Stephens. “He can put a spark, create a fire and bring some energy to a company that’s come through a lot.”

While Harmening — who officially becomes CEO on April 28 —never held the official title of chief technology officer, his embrace of digital and rise to the corner office could be a career-building strategy that others copy.

A report last year from MIT’s Technology Review noted an increasing number of companies like Verizon and GE Transportation were choosing CEOs from the chief technology office.

“This trend highlights the extent to which these organizations are putting technology at the heart of their strategy for future business growth and shows how much the world has changed since technology leaders reported to CFOs, since their department represented an operating cost,” according to the report.

Although it’s been rare in banking so far, Greg Carmichael moved from the tech industry to become chief information officer at the $204.6 billion-asset Fifth Third Bancorp in Cincinnati before moving up the ladder and becoming CEO in 2015.

Tim Spence, who was recently elevated to president at Fifth Third, is seen as a star at the company for his role in embracing the digital transformation there and could succeed Carmichael. Elsewhere, Beth Johnson, the chief experience officer at Citizens Financial Group in Providence, R.I., is climbing the ranks at the $183.3 billion-asset company and has spearheaded major investments in technology.

“For someone to be in line for a management role, specifically the CEO role, that person has to be intimately involved in the digitization efforts,” Siefers said of the banking industry specifically after Associated’s announcement of a new CEO. “At a minimum, it would be very, very helpful to have a broader tech background.”