In our survey, 78% of respondents reported that improving sales skills was their bank’s primary strategy for growth. Customers are already migrating toward self-service channels, but the most expensive channel, the branch system, remains the primary point of contact. Companies: Our Global Banking business works with virtually every company in the S&P 500. 4 The future of growth and the banking industry In the complex environment that defines the banking industry, the simple fact remains that strong customer relationships are still the most important contributor to a bank’s growth … In the contemporary banking environment, state and federal regulators increasingly emphasize collection compliance. CARM-Pro⢠diligently enforces your financial institutionâs strategy by enabling your collectors to store and leverage the data you require into unlimited inclusion and exclusion debtor selection parameters (for any action â communication, work list, etcetera) within CARM-Proâ¢. This helps banks and credit unions manage credit risk and maintain reliable audit records. Every bank or credit union has its own unique banking strategy for growth. However, as the economy strengthens, these gains may be offset by competitive pricing pressure. According to the … Community banks are more dependent on deposit fees compared to larger institutions and this makes them vulnerable to a transactional model where consumers acquire low margin products from their primary bank but use specialized providers for high-margin products, such as investments and loans. Standardized neighborhood marketing programs build on micro-market analytics to focus the right tactics on the right trade areas. There are barriers to the development of … Any reduction of credit standards typically raises concern among executive management. But its growth is expected to slow over the next two years, making for a … Combined with focused sales processes and product-bundling strategies, these methods produced an 85% improvement in household when implemented by one of our clients. Efficient workflows and automated outreach allow for earlier and more frequent debtor communication. Banks are hungry for growth: hungry for new customers, for deeper and more profitable relationships with existing clients and for better alignment of expense against revenue opportunities. Overdraft (OD) fees have been severely constrained, and the situation will only worsen as new regulations from the Consumer Financial Protection Bureau (CFPB) further limit this important source of revenue. McKinsey recommends that banks: 1) Improve risk management with powerful analytical tools. Why is penetration so low? This involve… Indiana, Penn.-based First Commonwealth Bank re-entered the mortgage business. This robust debt collection system enables your collection staff to execute your financial institutionâs collections strategy. Utilize data analytics to improve fundamental product economics. Global Banking … Another type of specialist will be masterful at cross sales … In a rising rate environment that is coupled with strong economic growth achieving deposit goals is the best way to … You can also raise external … Banks need to re-establish the branch as a destination, a place where people want to go versus a stop for an infrequent errand. Lack of the right sales process and lack of the right predictive analytics that target the right customer. Many banks have recognized that they need a truly differentiated … Umpqua’s marketing spend, measured as a percent of assets, is only 65% of the industry average because of its adoption of neighboring marketing. Here are five suggestions for such a different approach: Change the customer acquisition model. There are multiple ways to monetize data. Collector workflows automate customized borrower outreach, to encourage faster payment and ensure that no communication steps are missed. In-depth conversations with the senior leaders on the topic, “What is our core business?”, is the preferred starting point.An evaluation of the overall performance of the core business follows. That translates into fewer natural sales opportunities. The process of identifying profitable growth opportunities most often begins with the Core Business1, that is, the products, services, customers, channels and geographic areas that generate the largest proportion of revenue and profits. This proven software’s comprehensive … In addition to the financial fallout, COVID-19 is reshaping the global banking industry on a number of dimensions, ushering in a new competitive landscape, stifling growth in some traditional … The Right (and Necessary) Policies. Sales excellence should focus on consistent, structured conversations at account opening and other significant client discussions. Consumers report a similar willingness. IBS pioneered customizable debt collection technology to solve the critical challenges of increasing bank profitability, growing loan volume, and reducing risk for all financial institutions. However, this high-end collection system technology allows for earlier and more frequent debtor communication, and manages risk to avoid a corresponding increase in losses and to gain a greater yield on higher interest loans. Integrate your current banking policies, compliance strategy definitions and requisite collector actions to CARM-Proâs unlimited database, and leverage full or collector action initiated work flows. Bank of America Corporation’s generic strategy for competitive advantage (Porter’s model), intensive growth strategies (Ansoff Matrix), and business models are designed to ensure that … For example, the concept of “neighborhood marketing,” pioneered by Umpqua Bank, is based on embedding local micro-market strategies into the marketing and sales process, which can significantly reduce customer acquisition cost. Fifty-five percent of the owners of small and medium sized enterprises are willing to consolidate their personal and business relationships at the same financial institution, according to a BAI Research report. Another is to create new … In our perspective, A Profit Growth Strategy for Small Business Banking, we detail a new strategy to grow share in this high-profit segment by effectively targeting the competition's best customers, … Every bank and credit union develops clearly-defined lending standards. … When collectors leverage CARM-Pro⢠technology, key collection steps are automatically completed and documented. CARM-Pro⢠user-friendly software also provides enhanced executive-level tracking and reports that support your bank or credit union leadersâ efforts to develop and enforce banking strategies for growth. This includes discussion of market penetration, market development, product development and diversification together with evaluation … Start at the Top. This scalable, user-friendly software also allows for unlimited collector assignments, and quickly adapts to enforce changes to the ever-changing economic environment, policies and regulations that affect your debt collection and recovery strategy. Local search engine optimization (SEO) ensures prospects will find you online. The few “experience leaders” emerging in retail banking are generating higher growth than their peers by attracting new customers and deepening relationships with their existing customer base. This website uses cookies and third party services. Then CARM-Pro⢠will execute efficient workflows and sequencing of all required compliance steps. Peoples Bancorp of Marietta, Ohio, has thriving wealth management and insurance subsidiaries. We see continued growth in our digital and mobile channels, with 37 million digital banking users; nearly 27 million are active mobile banking customers. San Antonio, Tex.-based Frost Bank has a well-integrated approach to delivering financial services, even dropping the term “Bank” from their branding in favor of “Frost: Banking, Investments, Insurance.”. The second opportunity is to encourage more profitable customer behaviors, channel usage and transaction activity. Shifting customer activity out of the branch reduces cost-to-serve, improving product profitability. Lower credit scores can also lead to high delinquency rates. When financial institutions lower their standard for credit approval in conjunction with enforcing more aggressive collection policies on new loans, they can minimize delinquency risk by leveraging powerful CARM-Pro⢠debt collection technology. CARM-Pro⢠ensures consistent follow-through with frequent, multi-channel debtor communications that lead to faster loan repayment. Growth strategies Banks can’t ride fee income gravy train much longer Noninterest income has bolstered profits this year. They are large enough to acquire the necessary talent pool, but small enough to create a “one-bank” model that avoids the silos that impede larger financial institutions. For example, earlier and more frequent outreach, via the debtorâs preferred method (email, SMS, voice, or USPS) helps increase net income by reducing delinquencies, preventing some loan charge-offs, and lowering operating costs. But achieving that growth is a difficult challenge.  Lending to clients or members with low credit scores can result in greater delinquencies, but financial institutions can minimize this risk by leveraging CARM-Pro⢠to enforce more aggressive debt collection policies. Staging of customer traffic patterns, merchandising placement and teller referrals were keys to a robust sales process. Sean C. Payant, Ph.D., is Chief Consulting Officer at Haberfeld Holdings, a data-driven consulting firm specializing in core relationships, customer, and profitability growth … Staff productivity. To get the most out of growth, banks need to define what growth they want, how much-increased risk they are willing to take and how to allocate resources to accomplish that required growth. © 2020 Intelligent Banking Solutions, Inc. All Rights Reserved, Banking Strategies for Growth: How to Grow Income & Reduce Risk, Increase Bank Profitability with Customizable Debt Collection Technology, Increase Loan Volume and Decrease Delinquency Risk for Your Bank or Credit Union, Execute Your Banking Strategies for Growth with Scalable Collection & Recovery Solutions, How to Mitigate Risk in Banking: Use CARM-Pro⢠Debt Collection Software, Frequently Asked Questions About Banking Strategies for Growth, Pre-alert debtors of reoccurring near term (future) payments due, Initial contact immediately at past due status, Much earlier subsequent debtor communications, More frequent debtor communication during the delinquency, Communicate to debtor via any debtor preferred communication channel: email, SMS, USPS, deliver pre-recorded blended voice messages or simplified dialing, Provides additional communication channels (pre-recorded voicemail, SMS, email), Expands the collection period beyond the daily hours that collectors are typically in the office, Increases the probability of debtor contact and subsequent follow-through with payment, Reminds borrowers of payment deadlines and holds them accountable. 1. ARM-Pro⢠debt collection software enables community banks to increase net income by improving debtor communications. Sales effectiveness is not just a function of knowledge, but also of discipline and coaching. It makes them more efficient to operate, but also means they lose the marketing “billboard” impact of a large facility. For many years, corporate strategy languished in banking circles. … Yet, we know that the majority of balances are not consolidated. The road ahead cannot be a matter of, “train them on products and let them figure it out.”. Yet, in the past, investment in training has not been sufficient to reverse the downward trend in branch sales productivity. BAI © 2020 All rights reserved. Set Yourself Apart from Competitors (in a Good Way!) There has long been a disconnect between the willingness, even preference, of customers to consolidate multiple relationships at their primary financial institution, and banks’ ability to effectively execute strategies that accomplish this. New Bank Strategies Require New Operating Models Disruptions in banking are pushing banks to take more explicit strategy decisions. Collection steps that are missed, performed late, and improperly documented can lead to fines, penalties, and litigation losses for your financial institution. Early analysis suggests potential reductions in OD revenue in the range of 25% to 50%, with the impact beginning in late 2016. Increasing deposits is essential to sustainable, profitable growth strategies. However, direct mail is increasingly less efficient as customers communicate by text and email. Financial institutions have two levers to press in that scenario: improved pricing analytics that build revenue, and improved cost drivers that reduce delivery and service expense. CARM-Pro⢠debt collection and recovery technology by IBS is the sought-after solution for banks and credit unions seeking better banking strategies for growth. This scrutiny necessitates risk mitigation with stringent debt collection processes and consistent follow through, as a single compliance error can expose your bank to the risk of significant loss. The first is for a bank to use its internal data more effectively for its own operations by adding new analytics capabilities. The consulting firm encourages banks to better evaluate... 2) Increase productivity using … The best strategy to increase a bank or credit unionâs loan portfolio is to create clearly defined policies, reduce credit standards, and use CARM-Pro⢠debt collection technology to diligently enforce them. Get more work done, with the same staff, deploying comprehensive CARM-Pro⢠automation capabilities. 100% Committed to Bank and Credit Union Collection and Recovery, Home » Banking Strategies for Growth: How to Grow Income & Reduce Risk. With compliance seemingly always at the forefront, policies … CARM-Pro frees up time for collectors to work prior charge-offs and recover non-interest income that increases bank profitability. Expand relationship depth. Five strategies for growing revenue. Diversify services. With CARM-Pro⢠you can now âsoftenâ your credit standards, open a much larger market, and allow your bank to successfully manage credit risk with high end collection system technology. Scalable CARM-Pro⢠empowers bank & credit union executives to proactively implement bank branch growth strategies. He can be reached at [email protected]. Collectors can leverage the power of CARM-Pro⢠debt collection software to automate much of the manual labor of collection work. As an example, a large regional bank that we know used data analytics and market research to successfully restructure demand deposit account pricing, resulting in a net increase of over $60 million in revenue. As one C-level banker stated in response to our recent industry survey, “What we’re doing now isn’t working anymore; we have to take a different approach.”. However, increasing loan volume by lending to borrowers with lower credit scores yields a higher interest spread, thus more interest income.Â. Collectors can then efficiently customize and schedule all debtor outreach via automated, tracked and recorded delivery of email, postal mail, SMS and dynamic voicemail. Finding topline revenue growth is the core issue facing the industry, and this begs for new pathways to success. Low interest rates continue to put pressure on margins. At the same time, encouraging non-branch transactions increases interchange fee income and helps offset declines in OD and other miscellaneous fees. Financial institutions are simply unable to charge for services that were once common sources of profit. But that tide is changing. Attack is the best form of defence, and growth strategies may help banks to remain competitive in a fast-moving and rapidly-changing financial services landscape. Collectors gain a comprehensive 360-degree view of all borrower accounts, including the status of delinquency and data from their institutionâs primary servicing system, which saves time and ensures compliance. Â. Furthermore, the “no fee zone” is expanding. Sales effectiveness is not just a function of knowledge, but also of discipline and coaching.  Financial institutions who increase their loan portfolio by lending to borrowers with lower credit scores gain a higher interest spread and greater interest income. Income by improving debtor communications analytics that target the right ( and ). Our survey, 78 % of respondents reported that improving sales skills was their bank s! 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