August 2019

Bank Worker Productivity and The Technology Imperative

Bank technology investment
BANK TECHNOLOGY INVESTMENT

Back in the 1980s, there were more banks, smaller banks, and little technology. We were still driving checks around, there was no online banking, and networked ATMs was the latest in bank technology. At the time, the rule of thumb for bankers was that each bank employee produced about $20,000 of operating profit per year. Since each bank had about 100 employees, operating profit was about $2mm per community bank. In this article, we look at how this equation has changed and what it means for the future.

 

8 Ways To Attract The Wrong Clients To Your Bank

MANAGING BANK CULTURE AND PROFITABILITY
MANAGING BANK CULTURE AND PROFITABILITY

Given that strategic planning season is upon us, one key affirmation is to verify if you are targeting not the customers that you have now but the customers that you want. Chances are, at least at some level, you are attracting the wrong customers that are not profitable, not engaged, not being a raving fan, causing some level of pain, or all four.

 

A Loan Strategy Given Lower Rates

Increasing Lending Profitability
INCREASING LENDING PROFITABILITY

Many industry analysts are increasingly gloomy on the banking industry, trimming expectations for net interest margin, interest income, and total profits. With long-term interest rates declining within a whisker of the lowest level in history, many analysts are reducing their forecast of banking profits by up to 10% through 2020 or 2021. However, we would like to share a current proven strategy for community banks to make the best of the current interest rate environment, lock-in their best clients, increase cross-sell opportunities, and actually increase margins. 

 

Two Proven Secrets To Faster Bank Decisions - Part II

Critical Thinking
CRITICAL THINKING

In Part I, we highlighted how having too much information about a decision often increases the confidence about the decision but usually doesn’t change the accuracy of the decision. In addition, gathering information takes time and effort, so the result is a more expensive and time-consuming decision that gives you a false sense of comfort. While most banks use the basic seven step process outlined below, in Part II, we highlight two additional rules for the decisioning box that can help increase decision effectiveness.  

How Your Bank Can Pick Up 40 Basis Points of Margin

Improving Net Interest Margin
IMPROVING MARGIN

Community banks face intense competition from different institutions and various industries.  There is currently a market phenomenon that is creating an unusually challenging environment for community banks that compete for real estate financing. This phenomenon is creating an advantage for some lenders in the amount of seven to 42bps, and community banks must be aware of this aberration if they want to win more quality borrowers.

 

Swap Spreads

 

How To Use Goal Gradient Rewards In Banking

Behavioral Bank Marketing - Picture of a gift

Put a rat in a maze, and they will speed up as they get near the end as can smell the reward. Forget rats, human sprinters also run the last 15% of a race faster than the previous 30%. Forget athletes, citizens make more donations to a charity as that charity gets closer to its fundraising goal. Forget citizens, bank customers also complete more new account applications, hit savings goals, and complete conversions if they can view a goal that is close.

How To Use The Hybrid Loan Structure To Win More Profitable Clients

Profitable Loan Structures - Man staring

It sometimes pays to be opportunistic in marketing your community bank’s products. There is currently an exceptional market opportunity for community banks to win profitable business from larger competitors. The recent decrease in interest rates presents an opening for smart bankers to poach good quality clients and lock them in as customers for a decade. Our bank recently did just that, and in this article, we would like to share this strategy through a case study.

 

Interest Rates Dip