One common question for banks is how much to spend on innovation and technology. We are not sure that is the right question as it all depends on your vision for your bank and what you are trying to get accomplished. Some banks are sacrificing material current year earnings in order to transform their bank while some banks are spending the bare minimum. For 2018, bank spending on technology is expected to grow 4% over 2017 spending.
Far and away the most profitable asset for a bank is its people. It stands to reason that optimizing your most important asset is critical to increasing efficiency and becoming a top performing bank.
Next to digitizing the credit process and allowing for online/mobile account opening, building out your commercial treasury management platform should be under consideration by every bank over $700 million in asset size. A good treasury management platform helps acquire valuable commercial customers, assists in building balances, generates fees and, most of all, dramatically boosts the lifetime value of customers by jumping up retention rates.
The Role In Relationship Banking
If you make the argument that your bank’s brand is all about the face-to-face visit and you believe branches are more important than ever, then it makes sense that you should be optimizing your traffic to drive customer engagement and sales. After all, your branch is the most expensive marketing tool you have so to improve bank performance you should be leveraging that traffic. In this article, we look at some experiments we are doing by leveraging data from our customer’s cell phones to boost engagement.
Like the red balloon in “It,” frictionless onboarding of customers is an attractant to bankers. Easy and quick account opening is a must have for banking, but like an evil clown in a sewer, if you are not careful, you are in for a world of hurt. Stephen King’s “It” was in the back of our mind when we sent some of our best bankers (We didn’t tell them about the “Loser’s Club” moniker) out into the wilds to test online account opening at some top banks. In this article, we highlight our journey and discuss what we learn to keep bankers safe.
The website, as bankers know it, is going away. It is likely you think of a website as a static set of electronic pages that reside on a server somewhere just waiting to be viewed. Given the rise of data, personalization and machine learning, that idea is getting quickly dated and a new “cognitive website” is now being tested. Here at CenterState, as we lay plans to update our site, we are starting to recognize that a cognitive site takes two to three years of planning.
Happy B-day ATM! Today marks the 50th anniversary of the automated teller machine (ATM). This first banking robot was rolled out on this day in 1967 by Barclays in their central London branch. The ATM revolutionized both the operations of banking and the banking psychology of the public. Prior to the ATM, it was common practice to both wait in line to deposit your paycheck and also go to the branch every Friday to withdrawal enough cash for the weekend.
Many banks are now investing in loans originated by online lenders such as Lending Club, Prosper and OnDeck. Whether this is a good move or not, comes down to the accuracy of each originator's credit model and the strategic position of the purchasing banks. For some banks, purchasing loans from these lenders is absolutely the right move as it leverages capital, increases diversification and puts underperforming equity to work. However, for other banks, who just dabble in these investments, partnering with online lenders is a valuable learning experience.
Last week both YouTube and Facebook rolled out updates to their respective messenger apps in hopes of better competing with iMessenger, Snapchat, WhatsApp, Viber, and others. We use or have tested all these, and we believe Facebook Messenger holds the most promise for a standardized and efficient platform for banks to leverage in order to increase communication with both their retail AND their commercial customers.
Given that our latest TV obsession is Westworld and that we are focused on innovation, it was with great interest last week that we learned that the OCC is prepping to open a “Responsible Innovation Office.” This makes sense because not only do we need help with fintech, but someone needs to explain the time/space continuum, why there is a player piano in every episode and about a dozen of other plot points of the hit HBO series.