Community banks pride themselves on superior customer service. Our own informal survey has established that 90% of all community banks believe that they provide an above-average level of customer service (the mathematical irony is not lost on us). However, this corporate misperception is supported by a Bain & Co.
Tag: Bank Performance
Banks are famous for operating in “silos.” Loans in one department, deposits in another and mortgages somewhere else. In some banks, every department is left to fend for themselves and turf wars erupt as confusion reigns about who really “owns” the relationship. In most cases, banks often place the burden of selling different products and services on the relationship manager as they pick and choose from a laundry list of products and services in which to position to the client.
If the Yanny vs. Laurel controversy reinforces anything, it is we all have our perception of reality and trying to explain that reality takes some effort. Those lessons are the same ones we are learning about the role that clear metrics play in bank performance. State several performance metrics and everyone will not only have a different reality of what success means but will have difficulty explaining their differences. In this article, we highlight some important bank metrics and discuss the construction of what a powerful set of bank benchmarks could look like.
At the recent ABA National Conference for Community Bankers, Mark King, the President of Adidas North America, talked about his philosophy to make good companies great. Mark has an impressive track record. Starting as a sales rep for TaylorMade he worked his way up to President in 1999. During his 14 years at the helm, TaylorMade became the leading and most profitable golf company in the world, with sales increasing from $300 million to $1.7 billion.
The other day we met with one of the turnaround specialists at the McDonald’s Corporation. If you are one of their 5,000+ franchisees running one of the 30,000 independent locations and you are not performing up to expectations, this guy shows up to help you turn your stores around. We were shocked to find out that other than a few extreme circumstances related to the surrounding area, most every franchise can be saved.
Profitability is the degree to which an activity yields profit or financial gain. While this concept is simple to understand, in reviewing a bank’s financial statements where profitability can be easily measured for past performance, bankers often don’t measure the profitability of a loan at inception and certainly not with the same level of certainty.
Last month we, along with CS Consulting Group and the Banking Exchange, asked bankers to complete the survey on their current challenges and what tactics they are employing to overcome those challenges. An overwhelming 79% of bankers expressed a need to find new strategies, lines of business, methods, or a transformation of their business model, to better compete going forward. While banking faces many challenges, the survey results show that bankers have a clear view of the future and a plan for how to get there.
We recently reviewed and analyzed the commercial mortgage market for 2017 to identify patterns or developments that community banks may utilize to enhance performance.
According to the latest FDIC data, loan credit quality improved in the third quarter with many categories such as construction and multi-family hitting record lows. In general, non-current loans-to-total loans hit 1.20%, the lowest since the second quarter of 2006. Offsetting credit quality, loan growth is slowing which is starting to cause problems for many banks as growth solves many problems. In this article, we look at the current state of commercial credit and look at the how banks might position themselves to take advantage of the changes.
In our previous post (HERE), we discussed the importance of driving bank efficiency to below 45% over the next five years. Many banks have already saved between 5% to 10% of total expenses by cutting waste and renegotiating contracts. Taking another look at your core, online and mobile contracts alone can probably save you that much not to mention taking another look at your purchasing. After that, you need to be strategic.