From a business standpoint, there is no one good way to make money running a bank. Successful banking is the result of doing a lot of little things right.
Banker To Banker
There is some basic psychology knowledge that all lenders must possess to help them excel on their job. One field of psychology that lenders should understand is the Dunning-Kruger effect. The good news is that the Dunning-Kruger effect is not a disease, a syndrome or a mental illness.
After a bestselling book and new Netflix special, Marie Kondo has tens of millions of people around the world organizing their homes and businesses. The key to the methodology is not minimalism but mindfulness. It is asking yourself - does this procession “spark joy”? If the answer is yes, you neatly put a trifold in it and put it in your drawer or closet in such a way that you can see it. If the answer is no, you thank the object for its years of service and then promptly donate or trash it. Banks should do the same thing.
Years ago, you went to the record store to purchase an album of music. It was curated by the artist, and maybe you liked two or three songs (unless it was Michael Jackson). In 2003, Apple Music was launched, and it soon became popular to purchase individual songs for a mere $0.99 each. However, it took work figuring out which songs to purchase and so by 2015; more people streamed music than downloaded songs. Now you go to YouTube, Spotify, Pandora, SoundCloud, Google or Amazon and simply listen to either their curated playlist or choose one from your friends.
One of the best ways to become a better banker is to pay attention to your competition and analyze their strengths and weaknesses. We pay particular attention to term sheets and commitment letters from other banks to learn what other banks are doing well and where they make mistakes. We intend to capitalize on competitors’ weaknesses and to learn to address and respond to other banks’ strengths. We recently reviewed a term sheet that we thought highlighted some in
Given that it is the start of the year, it is a common practice in banking to clean your desk to kick things off. When it comes to desk cleanliness, you have two choices: leave your desk alone or set it on fire.
If you think your bank has tough employees, consider a bank that brought in a motivational consultant that had the employees walk on a 6 ft. wide path of hot coals.
Knowing who your competition is, what they are offering, their delivery channels and service levels can help community banks differentiate their services and enhance their competitive advantage. Understanding the competitive banking landscape helps community banks set proper pricing, effectively respond to rival marketing, and compete more effectively. Analyzing the competition can also help a bank be realistic about which products it can sell and at what price.
The volatility that is kicking up in the market is causing a resurgence for banks to develop early warning signals on credit. Banks sit on a treasure trove of data that is only partially utilized.