In the quest for greater profitability, one strategy that we are employing here at CenterState Bank is the move to be less transactional and more relationship based products. While lots of banks say they are about the relationship, few banks can point to anything more concrete other than delivering “the personal touch.” Having good people and an accessible CEO is just the price of entry for relationship banking. True relationship banking requires products, process, culture and marketing in order to capture the hearts, minds and wallet of the customer.
Tag: Fee Income
Ask bankers what they believe is the number one driver of return on assets and many will answer “net interest margin” (NIM). Year after year, net interest income has very little correlation to a community bank’s return on assets (ROA). Chart ROA and NIM together and you find that the most profitable banks don’t have the largest NIM. Despite the lack of correlation, the perception exists that increasing NIM will result in better performance. While a larger NIM is always preferable to a smaller NIM, NIM is just one very small part of the bank profitability story.
The “Internet of Things” is well on its way of changing how we move around the physical world, and 2014 marks the first time banks are starting to capitalize off this trend. Manufacturers are embedding sensors, tracking devices and actuators in various devices and linking them via the Internet. These devices form a network that not only churn out a steady stream of raw and analyzed data, but are able to be communicated with. The result is a “dynamic information layer” that adds value to any activity touching this network, including bank financing.
Yesterday, we had the opportunity to attend Finovate, the Super Bowl of financial technology held in San Jose, CA. We came away a little underwhelmed from the community bank perspective but were pleased that most of the technology was headed in the right direction. The venue and the show were up to its usual high standards and seeing 33 companies in one day was highly efficient. However, the discussions could have taken place three years ago.