Banker To Banker

PROFITABLE BANK LENDING
PROFITABLE BANK LENDING

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

 

Bank Technology At Finovate 2019

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.

 

BANK TECH SPENDING
BANK TECH SPENDING

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?

Protecting Commercial Loan Profitability

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. 

 

Better Bank Sales Calls
BETTER BANK SALES CALLS

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.

Digital Account Opening

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.

INCREASING LOAN VALUE - Loan prepayment provisions
INCREASING LOAN VALUE

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

Mobile App Usability
Mobile App Usability

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.

Mobile Banking Usability
Mobile Banking Usability

After getting frustrated with not being able to find usability data for mobile banking, we gathered 415 customers and potential customers to ask them what they thought of a variety of features. The results surprised us. We presented some of our findings earlier this week, and now we present Part Two of three covering four more specific topics. In each case, we chose a base case and then compared variations for usage and desirability by each customer. The numbers below are the percentage points difference, positive or negative from the base case (Version A).

Credit Management
CREDIT MANAGEMENT

In just a couple of months, the current economic expansion will be the longest in US history.  Since the mid-19th century, the country has experienced 33 business cycles in all, with the average economic expansion lasting a little over three years, and the average recession lasting just under 1.5 years.  The current expansion will, without a doubt, outlive the previous longest period of economic growth that occurred from 1991 to 2001.  However, no one has

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