In our series of using machine learning on deposit management, one lesson that we picked up is how to segment a market to gather the deposits and the customers that best fit your bank. As we pointed out in previous articles, one problem with our industry is the “lazy carpenter syndrome” which is derived from the old adage that when you have a hammer, everything looks like a nail. For bankers, most potential deposit customers are viewed only through the lens of rate.
Banker To Banker
First Reliance Bank ($534mm, SC) recently took their strong culture on the road, in a manner of speaking, as they rolled out a new marketing campaign called “Ride for the Brand.” This is an easy campaign to pull off yet only a small percentage of banks do it. The campaign asks employees to put their logo sticker on their back windshield or use one of their rearview mirror hanging tags. To encourage participation, they did a drawing for Roomba robotic vacuum for everyone who displayed the “Arc Logo” (below).
It has been six months since Citibank released their upgraded mobile app. During that time, their app has garnered a following and we have been able to collect data on the user experience. We now rank Citi as the third best banking app behind Wells Fargo and USAA and it is moving up. Citi has closed the gap not only with all banks but with most fintech firms as well. This new app is the foundation of their yet to be released digital bank which is why everyone is paying such close attention.
Earlier this week we highlighted the lessons that machine learning taught us about the Unified Deposit Formula (HERE). Embodied in the Unified Deposit Formula is a marketing and amplification equation. In this article, we expand on the lessons we learned from artificial intelligence when it comes to deposit gathering and explore how we can better use the Formula to optimize deposit gathering.
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.
In the attempt to win more business, banks sometimes offer what is commonly referred to as an “extendable,” “flex,” or “structural flex” commercial loan in order to give the borrower more flexibility. The option allows a borrower to move out their maturity date and allows more flexibility. While this structure is a popular way to win business, some banks may be inadvertently increasing their credit risk. In this article, we review the structure and look at the right, and wrong way to structure the extendable loan.
If you are looking for insight on how artificial intelligence can help banking, we give you the Unified Deposit Formula. Prior to using machine learning, we, like most bankers, thought about deposit pricing along a single dimension – price and sensitivity. However, it turns out, that price is not only just part of the equation but often a small part. There are thousands of other factors that play a part.
While many banks get involved in tax-exempt loans or bond purchases, many overlook the much smaller but vitally important taxable market. While larger spreads can be achieved in the tax-exempt market, that market comes with the risk that the bank’s tax position could change. This could happen because of either a tax law (i.e., like just happened with tax reform) change or because the bank records a loss for a year, and it cannot take immediate advantage of the tax-exempt income.
We are big proponents of developing a sales process for bank calling officers. We believe that without a well-defined and implemented sales process, a community bank cannot succeed as a sales organization. One very effective tool that more bankers should be deploying for their sales process and training is role-playing. However, few community bankers are doing so, and at a recent bank meeting where we discussed role-playing as a sales tool, we had two bankers (a CEO and a CLO) roll their eyes at us and state that they would not subject their
Recently, we sat down with Jack Hubbard of St. Meyer and Hubbard to compare sales call note-taking approaches. We were both amazed at how few bankers take notes during meetings and sales calls. While there are lots of reason not to take notes, there is one scientific study out there that shows you can have 70% or better recollection of an event past three months. Since the customer is one of the most important assets to your bank, and you likely pride yourself on being relationship-driven, then it only makes sense that every banker should take notes.