February 2020

How Banks Are Paid For Interest Rate Risk

PROTECTING BANK MARGINS
PROTECTING BANK MARGINS

We have written numerous blogs about why banks should reconsider the risk-for-yield business model when it comes to credit or interest rate risk. The return on equity (ROE) in risk-for-yield businesses is low, and the business outcomes during downturns are adverse.  Instead, banks should construct an advisory business where taking risk may be just one element in delivering a customer-centric solution.

Using The Content Blender To Expand Your Marketing Budget By 5x

THE BANK CONTENT MARKETING HACK
THE BANK CONTENT MARKETING HACK

Banks that complain about not doing enough in marketing or not having a big enough budget may just not be taking the right approach. We rarely see a bank fully utilize their content. If done right, you can get at least five times the conversions for almost the same expense as you spend now. What bank wouldn’t want five times the loans, deposits, or fees?  In this article, we explore our approach to content marketing and how to “Relate, Repurpose, and Recycle” and how to use the “Content Blender.”

 

Using Floors On Commercial Loans

Profitability Management

In our last blog, we reviewed ZIRP (zero interest rate policy) strategies deployed by various central banks.  We discussed how ZIRP strategies had been deemed by many economists to be ineffective over the long-term to stimulate economic growth and stoke inflation. We considered forecasts by economists, the forward interest rate market, and FOMC policy member’s future rate path expectations - all point to a low probability of decreasing interest rates. However, one loud voice has been a champion of lowering rates to zero or even negative – the President of the United States. 

 

Why Banks Need To Develop Their Own Customer-Facing Technology

Controlling your tech future - picture of a mobile phone
CONTROLLING YOUR TECH FUTURE

The build or buy decision should be a constant question in most bank’s decision making, and unfortunately, most banks default to the “buy.” In some cases, this is appropriate, but in many, it is not. In this article, we look at the two major overriding reasons of why your bank may want to hire and build out a development team in order to deliver a more customized banking experience to your customers. If you think your bank is too small, then read on.

 

One Reason To Develop Your Own Customer Interface

How To Compete Against GSE Multifamily Lending

Multifamily Lending
MULTIFAMILY LENDING

Government-sponsored enterprises (GSEs) have been lending to borrowers for many decades.  The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) have popular multifamily lending programs so much so that they now control the bulk of the market. For example, Freddie Mac’s total multifamily finance activity for 2018 was $77.5B, and Fannie Mae’s was $65.4B which means that if you have to compete, your bank needs to do so carefully as you have a high probability of getting adversely selected. 

 

Don’t Make This Bank Marketing Mistake (It's Common)

Bank Marketing
BANK MARKETING

Since you probably spent time today discussing the Super Bowl ads (Smaht Pahk, Google, and Snickers were our favorites), we wanted to highlight an all-too-common mistake that many banks make. It can be argued that despite its high price, Super Bowl advertising is one of the best deals in marketing as you are assured a certain level of attention. Unfortunately, some brands waste it.  Tim Pannell, the CEO of Financial Marketing Services, asked us last week what we thought of the picture below as it highlights the concept of waste in marketing.