While religion and wine have a long history together, if you pitted them against each other what would happen? Both customer segments are currently doing well but understanding the trade-off is a good exercise in capital deployment.
Seasoned bankers call it “The Distributor Tactic” and it is a little-discussed technique used for ages in banking to speed up the sales cycle to land small business deposit and treasury management accounts faster. The key to this tactic is to know that very few commercial checking customers utilize any medium or high-value treasury management services at banks (see below). These low penetration rates present an ideal situation to market your bank’s services and disrupt the competition.
Let’s Make a Deal was a game show that originated in 1963 and starred Monty Hall. Audience members were offered a gift and then asked if they want to trade it for another gift of unknown value. Hilarity ensued when we watched people trade luxurious Hawaiian vacations for a pack of goats.
If one of your bank’s strategic goals is to provide an above average return to your shareholders, then equity price management must occupy a certain amount of executive time. Like loans and bonds, every shareholder has a stated, or at least, an implied “life of holdings.” As interest rates and your bank’s value moves up or down, that life either shortens or increases depending on the goals of the shareholders. In this article, we look at better understanding those goals, the life of holdings and how your shareholder base can predict your destiny.
Funds transfer pricing (FTP) has been an important tool for financial institutions for several decades. The methodology was introduced to banks in the early 1980s to help allocate corporate costs among business lines. Since then, the mechanism has been central to also helping allocate risk among business units. For instance, if your bank has interest rate sensitivity, what portion of the risk is driven by fee lines (f.e. mortgages), loans and deposits. In this article, we look at the concepts of FTP and detail how banks can use the methodology to better manage risk.
Go to any bank conference, bank investor gathering or analyst meeting and the hot topic is the slowdown in deposit growth. As the economy keeps rolling and the Federal Reserve continues to raise rates, the topic of a bank’s increasing cost of funds, slowdown in deposit growth and the jump in liability interest rate sensitivity are on everyone’s minds.
Do you take Binion or Floyd this round? That was the question that was asked at one $400mm community bank’s annual board draft. This bank produces a net growth rate for loans AND deposits of 20% per year and stands out as an institution that has strong credit, marketing, and a strong sales culture. In this article, we take a look at one tactic that makes them stand out.
As most of our readers know, we are big fans of using content to inexpensively acquire customers. The tactic helps to pull prospects into our brand, helps generate leads and helps with conversions. Content is an approach that can differentiate both the bank and the relationship manager. As they say, if you are using content, there is no such thing as a cold call.
Cost of funding for community banks has risen notably, but the banking industry’s rising deposit betas is creating a greater challenge for community banks. Deposit beta is the change in funding costs divided by the change in interest rates. Rising deposit betas may require some community banks to change their focus on customers, products and ALM assumptions or risk a reduction in NIM and profitability. In this article, we highlight the current and projected state of deposit betas and then outline ten of the best tactics for dampening or even lowering the beta at your bank.
Last week’s article on branch transformation generated more questions than usual with many bankers asking what an “optimized” branch network looks like in the omnichannel model. While we are not confident that most community banks can achieve that model and would be better off focusing on a mobile-first architecture, most banks are in the process of trying. In this article, we review what a new branch delivery portfolio might look like, looking at both the economics and engagement of each location tactic.