Banker To Banker

Banking Platform Choices - Picture of basketball

It’s March, so that means tournament time – the Zags, Cavs, Blue Devils, KCats, Heels and, of course, our dark horse, FL State. Along with college basketball, it also means we update our strategy on bank delivery transformation. This year, we focus on taking a look at all available digital banking platforms to see which fits what type of bank. We will do this in an NCAA college basketball format (‘Tis the season) with the goal of choosing the best platform given a set of predefined criteria.

Focusing on Mobile Banking - Picture of Man looking at his mobile phone

Yesterday, we looked at overwhelming data that shows, when given a choice, bank customers will use a variety of banking channels to complete a transaction such as account opening. In fact, 40% of customers, as of the end of 2018, used multiple channels such as phone, online, branch, call centers, and mail to open an account.

Bank Technology Strategy - Picture of laptop with banking application open

Go to any bank conference or talk to any consultant and you will hear how your bank must be able to handle transactions wherever and whenever the customer wants. Retail and commercial customers must be able to start an application or transaction in a branch, update their information on their phone in the parking lot and then finish off the effort at night, at home on the laptop after everyone has gone to bed. The problem is, pulling off proper omni-channel banking is ninja-level in complexity.

The Strategy of Bank Technology - picture of a mobile banking app

Banks think about technology as an added cost. Adding person-to-person payments, online account opening, a data lake, or any other piece of technology is sometimes talked in terms of “being defensive” and an “additional cost of doing business.” Not only is that 180 degree the wrong way to view technology investment but using that framework will lead to sub-optimal decisions that could potentially hurt a bank’s business model. In this article, we explore a person-to-person payment case study and show what we believe is a superior decision methodology.

Enhancing Lending Skills - Picture of lenders at a table

Many community bankers have expressed an interest in adopting debt-yield ratio for underwriting purposes.

Improving CRE Underwriting - picture of a office building

In one of our blogs last week we discussed why community banks should adopt minimum debt yield ratio for underwriting purposes.  We demonstrated how a debt yield ratio could help community banks properly measure the interplay between cap rates, interest rates, and cash flow.  We analyzed how real estate loans originated today at 1.20X debt service coverage ratio (DSCR) and 75% loan-to-value (LTV) may quickly become substandard credits if cap rates normalize, interest rates rise to long-term averages, or NOI is stressed in an economic downturn.

Bank Sales Persistence

One reason why your bank is not selling more loans and building more deposits is likely your bankers may be giving up too quickly. While banks may know all the data about their balance sheet, when it comes to selling, most banks could use a crash course in focus. When it comes to bank sales, it is often not the bank that offers the best rate or the best product, but the banker that puts in the work to get the sale over a long period of time.

Virtual Reality and Banking - Picture of Fortnite on Cell Phone

If you don’t have a teenager in your house, you might have missed one of the largest events ever held last week. Nope, not Super Bowl, but on Saturday, D.J. Marshmello held a virtual concert in the game Fortnite. The event altered human trajectory and every banker should take notice for the ramifications to our industry, particularly for marketing and product development. In this article, we recap the event and analyze the potential.

 

Background

 

Enhancing CRE Underwriting -Picture of a industrial building

In one of our blogs last week, we discussed why real estate loans originated today at 1.20X DSCR and 75% LTV may quickly become substandard credits if cap rates normalize, interest rates rise to long-term averages, or NOI is stressed in an economic downturn.  We argued that community banks should be favoring 1.50X DSCR credits, as that is the minimum cash flow required to withstand a standard recession.  We also stated that lenders must incorporate a minimum debt yie

Take a second to think about how much of your operating, sales and marketing effort is spent acquiring new customers versus growing your existing customers. If you are like most banks, 95% of your effort is directed at new customer acquisition and not at increasing product usage. This is an area where banks can improve as when you look at conversion rates for bank products, the highest probability of sale is in those loyal customers that already use a product, just not to its fullest extent.

 

Pages