One thing that is underappreciated in our industry is the difference between loan structure risk versus credit risk. While these are intertwined, the two risks are different as we will explore.
As banks look for deposits and more profitable relationships, one niche market that has emerged in the last three years is the rise of specialty fitness locations such as Orangetheory, Barry’s Boot Camp, 9Round, Cross-Fit, SoulCycle, FlyWheel, and others. In banking, these have come to be called “small format fitness,” and they represent a profitable and growing banking niche. These businesses have exploded in the number of locations and have capitalized on wellness and group exercise trends.
We have witnessed some banks position their senior secured loans as quasi-equity financing. This plays well to borrowers who are looking for long-term banking relationships, and it has helped these innovative banks secure quality clients, increase relationship lifetime value and drive core deposits. In this blog, we will outline how these banks structure these credits and how they position these loans for maximum effect.
It happens all the time. The next shiny object gets bolted to a bank’s digital platform, and a bank ends up with a hodgepodge of different applications, interfaces, workflow, and user experiences. For example, a bank may use two different applications for consumer and commercial account opening each with a different look and different set of business logic such as identity verification. To make matters worse, a bank may have different applications online as it does for mobile or in the branch.
If a commercial real estate loan fails to pay on time, what is the probability of bringing the loan current?
While most community banks do not use LIBOR extensively for their loans and deposits, many community banks have at least a handful of loans or other cash instruments that do reference LIBOR as the benchmark rate. This article outlines what community banks need to know at this stage of the LIBOR transition period.
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.
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.
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