Tag: Bank Profitability

Bank Worker Productivity and The Technology Imperative

Bank technology investment
BANK TECHNOLOGY INVESTMENT

Back in the 1980s, there were more banks, smaller banks, and little technology. We were still driving checks around, there was no online banking, and networked ATMs was the latest in bank technology. At the time, the rule of thumb for bankers was that each bank employee produced about $20,000 of operating profit per year. Since each bank had about 100 employees, operating profit was about $2mm per community bank. In this article, we look at how this equation has changed and what it means for the future.

 

8 Ways To Attract The Wrong Clients To Your Bank

MANAGING BANK CULTURE AND PROFITABILITY
MANAGING BANK CULTURE AND PROFITABILITY

Given that strategic planning season is upon us, one key affirmation is to verify if you are targeting not the customers that you have now but the customers that you want. Chances are, at least at some level, you are attracting the wrong customers that are not profitable, not engaged, not being a raving fan, causing some level of pain, or all four.

 

5 Closing Tactics of Experienced Commercial Bankers

Bank Sales Techniques

Sometimes in banking, the closing of a particular loan or deposit transaction drags on for no other reason than the customer is reluctant to agree to the terms either for spoken or unspoken reasons. At CenterState, we have learned some valuable lessons from other banks that have helped us close more transactions and can help every relationship manager gain more of an advantage to cut down closing times and increase their closing percentage. In this article, we break down these five lessons.

 

 

How To Stop Treating Bank Departments Like Silos

Breaking Down Bank Silos

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.

Understanding Survivorship Bias In Banking

A more profitable loan portfolio

It is 1942,  you are in Air Force command, and you want to keep our flyers safe. Our planes are being shot down at an alarming rate, and your solution is to install armor. But the armor makes the plane heavier, and heavier planes are slower, less maneuverable and use more fuel.  Realizing you cannot armor plate the entire plane, the question arises what is the optimal amount of armor and where should it be placed to give our soldiers the best chance to complete their mission alive?

How To Manage The Carry Trade in Banking

The absolute level of interest rates is an important factor in bank profitability because of the carry trade in commercial banking. Here, whether banks admit it or not, a material amount of the return is driven off speculation of interest rates and liquidity.

Getting Rid of Paper Statements in Banking

Increasing Bank Productivity

In the quest for greater efficiency, getting rid of paper is low hanging fruit. A typical community bank has done a good job, but they are still generating paper statements for 50% of their accounts or more. The good news is that the percentage of electronic statements has doubled over the past two years so banks are doing a good job at conversion.  The bad news is that some banks are approaching e-statements for 70% of their accounts.

What Machine Learning Taught Us about Our Branches

Branch Models

These days, if you want to make tough branch decisions, use a good college student instead of an experienced banker. We will come back to the college student but, in this post, we pitted experienced bankers against the latest branch models against the latest machine learning applications to see which method was more accurate at predicting branch performance. The answers will not only surprise you but what we learned along the way will help improve your thinking about branching, machine learning and the new paradigm of quantitative banking.

 

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