Part of the problem with banking education is that it is incomplete. Banking schools like Stonier and Pacific Coast Banking School are good but they just teach part of the picture. They can talk about how to underwrite a loan or understand risk, but they leave a chasm in understanding about the true risk of underwriting. Outside of banking schools, most loan officers these days are self-taught practitioners in the art of lending and have learned their knowledge through a series of trials by fire.
Banker To Banker
If you drive a fair bit, you probably agree with us that gridlock is bad, but it is starting to get better. It used to be we used to drive to work only to use the bathroom and then start to commute home. Now, with many of the major Stimulus Package projects coming to an end, we can make it to work and discuss the latest episode of Homeland before having to turn around - And this is a problem.
Over the years we have experimented and collected data on all sorts of different approaches to building a customer base during the holiday season. If you are the sentimental type, this approach likely isn’t for you as this combines sentiment with a heavy dose of quantitative data culled from years of experimenting. The goal here is to not only spread sincere thanks, but build business in the most efficient manner possible.
In case your sports calendar was full this weekend, you might have missed the 2013 FIDE World Chess Championship. This is the most anticipated chess match in decades and, so far it is been a classic duel giving bankers insight into both strategy and tactics. The Championship pits The Tiger of Madras, Viswanathan Anand against Norway’s Magnus Carlsen.
On this Veteran’s Day our love and support goes out to all those Americans that have sacrificed or are sacrificing in order to protect this great land of ours. While many banks have a military, public service or “Hero Account” (which is what we call it here at CenterState), more retail banks should. Not only is it a supportive thing to do, but it is also good business.
While the Twittersphere has been agog about Twitter’s IPO today, we have been staying focused on Tweeting (@CSB4banks) about bank performance (with some banking sarcasm thrown in). It is a new medium for us and we still struggle to think in 140 character strings.
Many banks wait until the last possible period before renewing a loan. Waiting often invites competition, as other banks with loans out to that customer know exactly when other bank’s loans mature (hopefully you are capturing this information as well). To beat this problem, banks are smart to lock in renewals in advanced in order to minimize competition. Not only is a renewing loan likely a better credit risk (you have a payment history for starters), but banks can garner a larger spread making the risk-adjusted return more profitable.
A couple years ago, I wanted to see what the “New JC Penney” looked like so we took a stroll through one at the local mall. While I was intrigued with the concept of doing away with sale prices, wider aisles and easier to read signs, the wife doubted if not having sales would work – “people love sales,” she said.
When it comes to checking accounts, one trend is to charge your customers to use your branch. The idea sounds crazy, but it is a very sane response to a difficult problem. There are a group of banks, most recently BBVA Compass that have introduced checking accounts such as their ClearConnect that has no monthly fee and free online/mobile banking, but comes with a $1 fee for each check processed, $1 fee for in-branch withdrawals and a $4 charge for each deposit completed in the branch after the first per statement cycle.
Yesterday, we covered a set of economic indicators that have proven to be unreliable at predicting the future of rates, credit, loan or deposit growth. The subject is topical as many banks are working through their budget forecasts and instead of just relying on history, many banks seek to increase the accuracy of their predictions by utilizing these indicators. One way to do this is to incorporate forecasts of these economic indicators and then use that as the basis for fine tuning bank budget variables.