Banker To Banker
Whenever your bank is looking at underwriting commercial real estate (CRE), you are probably looking at a variety of macro factors such as rent and occupancy trends, absorption, and capitalization rates. However, since we see hundreds of underwriting packages a month from a variety of banks across the country, it is rare that we see banks, and even borrowers, adjust rents for new construction. In this article, we present our methodology, data, and adjustment factors that banks can use to have more accurate underwriting.
Send a bank marketing email out, and chances are 15% never reach the prospect’s inbox. That is not bad considering that it used to be above 25% just a couple of years ago. Bankers have been working hard at collecting email addresses and managing the distribution list. The work is starting to pay off. Email is one of the most effective forms of marketing we do, and the plan is to do more of it in the next year. In this article, we take a look at email marketing benchmarks in order to help your bank gauge your current level of effectiveness.
Commercial lenders should be aware of the important factors that drive customer behavior to borrow funds. Our clients borrow from us when they refinance debt, or purchase equipment, real estate, or finance working capital. However, there are three key elements that make debt especially appealing for borrowers. Commercial lenders that understand these three elements can better position themselves for success.
The Three Key Elements to Borrower
Last week, Finovate Spring 2019 took place in San Francisco in which over 270 banks watched more than 60 companies each have seven minutes to impress you with a demo of their technology. This is speed dating for financial technology, and it is a fantastic way not only to look for new partners but to help your bank hone what is important to its vision. In this article, we recap the trends and highlight some companies that should be worth consideration by all banks.
One question we always ask is if we are spending enough on technology? After that question, we get confused and mired in the quicksand of financial reporting, finance philosophy and technology strategy. “Technology” is so pervasive that it is difficult to determine what the difference is between spending on “digital” projects versus “analog” projects. For instance, if we upgrade our phone system from dedicated copper to fiber optics that is an analog project but if we convert over to a slower voice-over-IP system is that a digital project?
In an article two weeks ago, we discussed why community banks should desire prepayment provisions in their loans. We also acknowledged that in this very competitive banking market banks are unable to negotiate a meaningful prepayment provision. In this blog, we will identify techniques that some banks may use to obtain a meaningful prepayment provision, and we share a video explaining how CenterState Bank lenders use these techniques with commercial borrowers to negotiate a powerful prepayment provision.
Statistics show that bankers do not ask enough questions on a sales call with a customer. The average banker asks about five to seven questions, and unfortunately, most of those are pretty standard like “What keeps you up at night?” or “Do you have your latest financials available?” As we like to say, good questions are better than good answers and customer questions are one easy area where bankers can improve.
While most banks think they need a new digital account opening process, the reality is that most banks need a new digital onboarding process. Despite all of our technological progress, it’s the analog process where the most massive failures are. To this point, we just mystery shopped two renowned banks, Umpqua and Citibank, and in both cases, we were met with adjunct failure. Here at CenterState, we are relooking at our digital onboarding process in hopes of getting it right.
In a competitive lending market, as the case today, banks are looking for an edge to win quality loans. For quality credits, many community lenders are eliminating loan origination fees and prepayment provisions to differentiate from the competition. Since it is easy for an institution to reduce fees and prepayment provisions, that competitive advantage quickly becomes commonplace, and no lender retains an advantage. In this article, we take a quantitative look at the benefits of loan prepayment provisions.
Four Reasons for Prepayment Provisions
In our third and final part of mobile banking app usability testing, we looked at the top 25 major banks, and reduced their mobile banking app to a set of design elements and then turned 60+ designers loose to get creative and come up with variations that fit our brand. We then took various aspects of each design and tested each before 415 customers and potential customers. We looked at usability and asked them to rate each feature. In each case, we chose a base case and then compared variations for usage and desirability by each customer.