Tag: Lifetime Value

3 Important Things For Banks To Improve Commercial Customer Profitability

Boosting Commercial Profitability

The power of three suggests that things that come in threes seem wittier, more understandable, and more memorable than things that come in other numbers.  This concept is utilized in comedy, academia, and banking.  We identify the three most important concepts that high-performing community bankers are deploying today to drive profitability and decrease risk.  We call it the “2018 Trinity” of community banking.

 

Working With Lifetime Value At Your Bank

Bank Customer Lifetime Value

If you are a bank targeting margin, cost of funds or even risk-adjusted margin you may be using an incomplete equation to drive profitability. This might help explain why your large bank competitor is making loans at margins that you can’t touch. Ironically, some of the loan deals and relationships that banks pass on due to margin might be the more profitable ones. If this has happened at your bank, consider these metrics to have a more well-rounded approach to profitability.

How Your Bank Can Optimize Its Premium Checking Account

Premier Checking Accounts

When it comes to retail checking accounts, a premier or elite account usually tops the list in terms of profitability. The mix of performance characteristics and the larger balances fuels the product to produce better than a 20% ROE at many banks.

5 Ways How Bank Hedging Can Add Value To Lending

How Swap / Hedging Programs Add Value to Banks

Banks all understand interest rate risk, so understanding how hedging managing risk is an easy one. However, there is currently a conflict with banks that on one hand say they don’t believe rates are going up so taking more fixed rate exposure is acceptable, yet have a rate view of that of the forward curve (which does show rates going up). This issue is compounded by the fact that these very banks mostly have loan growth for 2015 exceeding GDP (3%) which would indicate faster than expected expansion and indicates higher than expected rates.

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