Tag: Customer Profitability

How To Use “Strategic Product Communication” In Banking

Better Customer Communication

A recent survey from the CFA Institute caught our attention on why wealth management clients leave. 47% of the respondents said they left because of the poor portfolio performance. That makes sense. But, do you know what the second highest reason for leaving your wealth manager was? Communication. 43% of the respondents left because of the lack of communication. That got us thinking about how we can improve communication with our commercial customers.

The Biggest Mistake When Pricing Deposits

Better Deposit Pricing

Many banks work hard to have a low-cost deposit base only to undermine their efforts. One of the biggest mistakes banks make is to advertise an above market rate thereby not only shortening deposit duration and increasing negative convexity for that one account, but for the whole product offering.

Commercial Lending Strategies That Work

Using hedge and swaps in commercial lending

The competition for qualified borrowers is intense, and both pricing and structure are being compromised.  In our dealing with hundreds of banks and thousands of borrowers, we observe strategies and structures that have worked for our customers.  In today’s competitive environment, it is important that bankers keep a close watch of what is working and think creatively to try to maintain structure and price.  We would like to share ten strategies that we and other community banks have effectively deployed to win bus

There Are Some Profitable Bank Customers That We Don’t Want

Bank Customer Focus

One of the best lessons that we have learned when it comes to bank marketing is not every potential customer should be a customer. Of course, what that means is that at some point you have to tell a profitable customer that we are not the bank for them and make the introduction to a competitor. This is hard to admit, particularly when you see a customer with strong deposit balances and a healthy appetite for loans that really want to do business with you.

Managing Interest Rate Risk Prior to Loan Closing

Managing Rate Risk At Loan Closing

Bankers are a conservative bunch. For instance, we like to refrigerate our soy sauce, ketchup and mustard. Why? Have we heard of someone keeling over due to bad condiments? Millions of restaurants keep their condiments on tables for months at a time. The high acidic content and salt in all three make bacteria and mold unlikely, yet thousands of bankers harm perfectly warmed food by putting cold condiments on them, not to mention degrade the taste of the condiment.

Why Some Banks Are More Profitable Than Others – The Nonlinear Customer Equation

Customer Profitability Equation

Why do some banks grind it out and struggle to produce a 9% return on equity ("ROE"), while other banks such as Bank of America and Chase produce 30% plus ROE for the same business segment? One answer is that banks that produce an above average ROE either have a more profitable customer segment focus, more profitable products or a more profitable business model. While we have covered the first two in previous blogs, today we highlight an aspect of a more profitable model known in bank profitability circles as the “non-linear customer equation.”

Here Is One of the Most Profitable Customer Segments That Banks Can Go After

Segmentation Marketing

If you are looking for a sweet spot of a new customer segment then we submit to you that you should be going after accountants, CPAs and tax preparers (collectively, “accountants”). While you might have competition, this group is less banked than the doctors, dentists and other medical practitioners, plus accountants are almost equally as profitable. When you consider that the average accountant provides a bank with five or more business or household referrals per year, the total profitability jumps almost to the top of the list.

Use This Tested Process To Create Value In the Customer Experience

Customer Onboarding

As you look for ways to increase your brand without driving up your cost and you are building a business model around service, having a formal process around onboarding your customer is one of the best things you can do to start a culture of service. When a new client leaves your office or completes an online transaction for the first time, the honeymoon period begins.

Proactive Strategies To Keep Loan Customers (and $170k)

Using ARC For Profitability

What is your bank’s strategy for keeping good loan customers? If you are like many banks, you may not have a formal strategy and with prepayment speeds averaging 24% for fixed rate loans. That is a tremendous amount of value running out the door.

 

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