Chris Nichols

Here Is The Latest Thinking For Libor Fallback Language

Libor To SOFR transition

Today LIBOR is linked to over $250 Trillion (that is with a “T”) in financial instruments and has been used as a reference rate for more than 30 years.  However, regulators, for various reasons, are driving a shift to an alternative reference rate.  In 2017, ARRC (Alternative Reference Rate Committee) identified the alternative reference rate in the US as SOFR (Secured Overnight Financing Rate).  Most community banks use LIBOR sparingly in their loan and deposit contracts.  However, if a community bank has even one LIBOR contract, the issue of fallback language becomes essential.

Why Your Bank’s Strategic Time Horizon May Hurt You

STRATEGIC PLANNING AND INNOVATION
Strategic Planning and Innovation

If you look at the sensitivity in a bank’s budget, $1 of investment in a new line of business usually doesn’t break even for two to three years. $1 invested in finding a new customer usually returns about 9%, while $1 invested in a new product is usually above 20%. This all compares to about a 40%+ return invested in improving processes (loan, branch, cash management, etc.) and about an 80% plus return spent on reducing customer churn, increasing lifetime value and/or helping cross-sell.

3 Questions From Kat Cole To Make Your Bank Better

BANK PERFORMANCE
BANK PERFORMANCE

For her sheer authenticity and clarity in thinking, Kat Cole remains one of our favorite corporate leaders in America. We met her at the ICBA a couple of years ago and just saw her last week at the ABA Marketing Conference. She did not disappoint. She gave us three questions to ponder as well as a methodology for a roadmap of things you need to fix at the Bank. The lessons were particularly germane to strategic planning and can serve to boost your bank’s performance immediately.

 

How Your Bank Approval Process Hinders Innovation

Bank Innovation

If you want a more innovative bank, it starts, and largely stops, with what your approval process looks like for new technology. Take a human and force them to grow up in New York City. Around age 20, you force them to go to conferences on living in the outdoors, hunting, fishing, and survival. You also hire consultants to come in and teach outdoor skills. Take your well-outdoor trained city dweller and then put them into the middle of the Colorado Rockies, chances are they become bear-food in a week. That is basically how banks are handling innovation.

How To Avoid Structural Subordination In Commercial Bank Lending

INADVERTENT CREDIT RISK
INADVERTENT CREDIT RISK

Too many banks in the last financial crises fundamentally misunderstood or did not pay attention to structural subordination risk.  We feel that this pattern is partially repeating at some banks today.  Further, most banks overestimate the amount of credit support that can be recognized across corporate entities and individual sponsors, and this leads to misguided lending practices.  We want to explain where banks can buttress their credit underwriting when dealing w

How To Get Conversational For Bank Search Marketing

Enhancing SEO for banks

“What do I need to open a checking account?” and “What is the best savings account?” are two trending bank-related searches that are becoming popular. In years past, potential bank customers used to put in a utilitarian “checking account” to search banks offering checking accounts. Now, given changing search engine algorithms, better content, and more comfort using conversational searches people are using complete sentences in their search query. As a result, some banks are leaping ahead of the competition by leveraging this trend.

Learn From A Pirate - Negotiating Bank Products With Customers

Those Somali pirates are a wily bunch. While pirate attacks off the coast of East Africa are down, the average ransom is up. Most of the increase can be attributed to going after more modern ships and with better negotiating tactics.  The Economics of Security research initiative looked at 179 hijackings and interviewed professional pirate negotiators to see what can be gleaned. The results were not only interesting; they hold the keys for bankers looking to negotiate bank acquisition, a branch purchase, product pricing or a loan workout.

The Best Way To Structure The First Page of a Credit Memo

Improving Your Credit Memo
IMPROVING YOUR CREDIT MEMO

In banking, as everywhere else in life, you never get a second chance to make a first impression.  The first page of a credit memo is essential for credit analysts, lenders, management, and board members.  The first page is prime real estate where the average reader will spend 25% to 50% of the time reviewing the credit submission.  Because the first page commands so much of the average reader’s time, it is vital to draft the first page clearly, concisely and compellingly. 

 

The Credit Memo

 

A Checklist For Any Bank Considering a Payment Strategy

Payments

When it comes to long-range strategic planning in banking, what to do about payments, should be in the top five considerations up there with treasury management, capital allocation, risk tolerance, and human capital. Payments are such a central part to banking and are now undergoing such a radical change that all banks have an opportunity to reclaim transaction market share back from the card networks, card processors and even national banks. Below, we highlight our ten considerations when developing a payments strategy.

 

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