KeyBank CEO Assesses Business Landscape and New Offices

KeyBank just renovated its offices in the Larkin at Exchange building, and the boss likes the results.

“I believe people need to be in the office,” said Chris Gorman, the bank’s chairman and CEO. “And I think having an office as beautiful and new as this is a new impetus to bring the energy and environment that is needed for teamwork.”

Gorman and other Key officials recently toured the bank’s second-largest market. Buffalo is Key’s Northeast regional headquarters, based in Cleveland.

Like many employers, Key has found a balance between remote and in-person work, depending on the specific tasks of its employees. The renovated 10th-floor office offers more space for collaboration and plenty of natural light.

Key managers also spent time visiting area branches, customers and prospects. Here are some of their observations:

• Interest rate. “We’re doing very well at Key,” Gorman said. “We’ve positioned our balance sheet for the environment we’re in.

“I’ve thought for some time that interest rates would stay high for longer, and that’s exactly what’s happening.”

• Mortgage and refinancing activity. Key’s offices on Ridge Lea Road in Amherst are a hub of Key’s mortgage operations, so the fortunes of that business segment have hit home.

Victor Alexander, head of consumer banking at Key, said the mortgage business in Western New York “has actually been a little more resilient than our business nationally, just in terms of volume.”

“It’s a measure of the clientele that we have here, the quality of people that we have on the ground, the focus that we’ve had on really integrating ourselves into the community over the last couple of years here,” he said. “It’s certainly not the volume of business that we had a few years ago, but in targeted locations, it is.”

Gorman issued a warning.

“Remember, even in a high-rate environment over a long period of time, people need to buy a new home, they need to sell a home, they take a new job, they outgrow their home,” he said. “On the buying side, there’s still activity.”

• The importance of the buffalo. Some of the key branches with the largest deposit totals in the bank’s territory – which spans 15 states – are in the Buffalo area, Gorman said.

Alexander said Key’s services for its affluent clientele, aimed at households with investable assets of $250,000 to $2 million, have been exceptionally well received here.

“We’ve seen very significant growth over the last 18 months, and Buffalo is our largest and best market in this segment nationally,” he said.

“I think it’s the strength of our overall customer base and the caliber of our employees,” Alexander said. “We’re fortunate to have a lot of customers who are resonating with the new offering.”

• Artificial intelligence. Gorman called AI “one of the great milestones in the advancement of technology and in the advancement of the appropriate use of data.”

But AI doesn’t have a direct impact on Key’s customers yet, he added, because the bank focuses primarily on internal uses of AI. For example, bank employees use AI to answer customer questions on a wide range of topics.

“AI will allow us to free up our people to have more in-person conversations with our customers and prospects,” he said.

Fighting fraud also lends itself to the use of AI and machine learning, “because it’s really about pattern recognition,” Gorman said.

• New competitors. NexTier and Chemung Canal Trust are preparing to enter the Buffalo area banking fray with their first full-service branches in the region.

Michael McMahon, president of Key’s Buffalo market and regional commercial bank manager in upstate New York, doesn’t expect the new arrivals to have a significant impact on Key.

“I think what you’re seeing right now is a new competition coming into the real estate industry,” McMahon said. “I think the competition for us is the same as it’s always been. It’s HSBC, it’s M&T. Sometimes we’re our own competition.”

McMahon said, “The competitive landscape in the commercial banking industry hasn’t changed much. We’ve continued to gain market share and grow our market share.”

• Is a recession on the horizon? “The answer is I don’t know,” Gorman said. “There seems to be a general consensus that it’s a soft landing. I hope people are right. We’re positioning our bank and our ability to serve our customers in case it’s not a soft landing.”

Welcome to Buffalo Next. This newsletter from The Buffalo News will bring you the latest on what’s happening in Buffalo Niagara’s economy, from real estate to health care to startups. For more information, visit BuffaloNext.com.

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