Efficient workflows and automated outreach allow for earlier and more frequent debtor communication. Furthermore, branches are becoming smaller.   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. But that tide is changing. The lower acquisition cost is not just an end in itself, but it also allows for re-allocation of investment to future digital growth strategies. He can be reached at [email protected]. But achieving that growth is a difficult challenge. Five strategies for growing revenue. In our survey, 78% of respondents reported that improving sales skills was their bank’s primary strategy for growth. 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. Â. However, increasing loan volume by lending to borrowers with lower credit scores yields a higher interest spread, thus more interest income.Â. That translates into fewer natural sales opportunities. 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. Collectors can then efficiently customize and schedule all debtor outreach via automated, tracked and recorded delivery of email, postal mail, SMS and dynamic voicemail. 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. 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, … 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. These prospects are “findable” in that targeting strategies can locate prospects with a high potential for consolidation. Collectors can leverage the power of CARM-Pro™ debt collection software to automate much of the manual labor of collection work. 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. 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. The sold, insured, and guaranteed loans that your bank or credit union maintains are under more scrutiny than ever before. This proven software’s comprehensive features empower financial institutions to grow their loan portfolio, increase income, and reduce risk. 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. The opportunity is compelling. Local search engine optimization (SEO) ensures prospects will find you online. Peoples Bancorp of Marietta, Ohio, has thriving wealth management and insurance subsidiaries. Sales effectiveness is not just a function of knowledge, but also of discipline and coaching. Global Banking … Full automation of collector actions and borrower outreach allows banks and credit unions to increase loan volume and process required collections steps faster, with the same or fewer staff members. This boosts productivity so much that it frees collectors to work prior charged-off accounts – thus increasing bank profitability by recovering non-interest income. A framework is presented for thinking about the various avenues through which banks can pursue growth. Financial institutions are simply unable to charge for services that were once common sources of profit. CARM-Pro frees up time for collectors to work prior charge-offs and recover non-interest income that increases bank profitability. Highly … 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. 1. Indiana, Penn.-based First Commonwealth Bank re-entered the mortgage business. Lack of the right sales process and lack of the right predictive analytics that target the right customer. According to the most recent FDIC Quarterly Banking Profile, “revenue growth has been modest and net interest margins continued to decline.” Although interest rates will inevitably start to rise when the Federal Reserve raises rates and this will help loan yields, it will also trigger competitive pressure on deposit rates, limiting improvement in the margin. Historically, banks used direct mail to generate inquiries and branch lobby management to drive sales. 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 … 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 … Simple presence in the community doesn’t automatically create gravity and attraction – that requires more focused programs. Sales excellence should focus on consistent, structured conversations at account opening and other significant client discussions. Set Yourself Apart from Competitors (in a Good Way!) With CARM-Pro™ you can now “soften” your credit standards, open a much larger market, and allow your bank to successfully manage credit risk with high end collection system technology. Integrate your current banking policies, compliance strategy definitions and requisite collector actions to CARM-Pro’s unlimited database, and leverage full or collector action initiated work flows. In the contemporary banking environment, state and federal regulators increasingly emphasize collection compliance. CARM-Pro™ diligently enforces your financial institution’s strategy by enabling your collectors to store and leverage the data you require into unlimited inclusion and exclusion debtor selection parameters (for any action – communication, work list, etcetera) within CARM-Pro™. Banks and credit unions can easily and accurately manage credit risk with CARM-Pro™ debt collection software.  This is because CARM-Pro™ efficiently streamlines and automates all the collection tasks defined by your internal policies and external entities (investors, insurers, and guarantors).  Without CARM-Pro™, even the most experienced collectors do not perform and fully document every single required action at the required time. 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. Scalable CARM-Pro™ empowers bank & credit union executives to proactively implement bank branch growth strategies. We believe community and regional banks have a unique opportunity to leverage a diversified financial services model. Any reduction of credit standards typically raises concern among executive management. There are multiple ways to monetize data. Furthermore, the “no fee zone” is expanding. These tools can help identify specific fee, balance and service combinations that customers prefer. Many banks have recognized that they need a truly differentiated … The road ahead cannot be a matter of, “train them on products and let them figure it out.”. However, there is a tendency to think that consistent process in customer conversations somehow indicates a “robotic” interaction. The type of growth or expansion options you choose will dictate your potential funding options. Fewer customers are visiting branches as routine monetary and service transactions migrate to other channels. Yet, in the past, investment in training has not been sufficient to reverse the downward trend in branch sales productivity. This empowers collection agents to fully comply with your institution’s policies, as well as state and federal regulations, to minimize the risk of non-compliance. In addition to reducing process costs, automation tools can help improve staff … The second opportunity is to encourage more profitable customer behaviors, channel usage and transaction activity. This includes discussion of market penetration, market development, product development and diversification together with evaluation … Get more work done, with the same staff, deploying comprehensive CARM-Pro™ automation capabilities. But its growth is expected to slow over the next two years, making for a …   Financial institutions who increase their loan portfolio by lending to borrowers with lower credit scores gain a higher interest spread and greater interest income. … We see continued growth in our digital and mobile channels, with 37 million digital banking users; nearly 27 million are active mobile banking customers. If bank financing isn’t possible, you’ll need to use your own internal funding. Growth strategies Banks can’t ride fee income gravy train much longer Noninterest income has bolstered profits this year. For example, earlier and more frequent outreach, via the debtor’s preferred method (email, SMS, voice, or USPS) helps increase net income by reducing delinquencies, preventing some loan charge-offs, and lowering operating costs. 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. For many years, corporate strategy languished in banking circles. When collectors leverage CARM-Pro™ technology, key collection steps are automatically completed and documented. Jeanne Pinder Sep 26, 2019 Digital transformation’s top 10: The impact factors that matter As new fiscal … CARM-Pro™ user-friendly software also provides enhanced executive-level tracking and reports that support your bank or credit union leaders’ efforts to develop and enforce banking strategies for growth. 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. Collection steps that are missed, performed late, and improperly documented can lead to fines, penalties, and litigation losses for your financial institution. McKinsey recommends that banks: 1) Improve risk management with powerful analytical tools. Staging of customer traffic patterns, merchandising placement and teller referrals were keys to a robust sales process. This website uses cookies and third party services. Collector workflows automate customized borrower outreach, to encourage faster payment and ensure that no communication steps are missed. The Right (and Necessary) Policies. 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. This helps banks and credit unions manage credit risk and maintain reliable audit records. Expand relationship depth. In a rising rate environment that is coupled with strong economic growth achieving deposit goals is the best way to … Another type of specialist will be masterful at cross sales … At the same time, encouraging non-branch transactions increases interchange fee income and helps offset declines in OD and other miscellaneous fees. It also decreases risk by not compromising the frequency of follow-up communications with delinquent debtors. The best strategy to increase a bank or credit union’s loan portfolio is to create clearly defined policies, reduce credit standards, and use CARM-Pro™ debt collection technology to diligently enforce them. There are barriers to the development of … Executive managers and board members are typically uncomfortable with lowering their institution’s credit approval standards. 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. Yet, we know that the majority of balances are not consolidated. However, as the economy strengthens, these gains may be offset by competitive pricing pressure. Collectors gain a comprehensive 360-degree view of all borrower accounts, including the status of delinquency and data from their institution’s primary servicing system, which saves time and ensures compliance. New Bank Strategies Require New Operating Models Disruptions in banking are pushing banks to take more explicit strategy decisions. 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. The consulting firm encourages banks to better evaluate... 2) Increase productivity using … You can also raise external … It makes them more efficient to operate, but also means they lose the marketing “billboard” impact of a large facility. Companies: Our Global Banking business works with virtually every company in the S&P 500. CARM-Pro™ automatically records all actions taken by each collector, by date and time. The bank of the future will have specialists who can call on business accounts and regularly pop one million-dollar checking account after another. Shifting customer activity out of the branch reduces cost-to-serve, improving product profitability. Why is penetration so low? This proven software’s comprehensive … BAI Banking Strategies Your trusted source for actionable insights and groundbreaking ideas. Mr. Kerstein is president of Austin, Tex.-based Peak Performance Consulting Group, which specializes in community and retail banking strategies. This robust debt collection system enables your collection staff to execute your financial institution’s collections strategy. This involve… 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.”. Staff productivity. Here are five suggestions for such a different approach: Change the customer acquisition model. Diversify services. In order to execute your treasury agenda, gaining senior-level buy-in is crucial. 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. 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. 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. 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. However, direct mail is increasingly less efficient as customers communicate by text and email. Every bank or credit union has its own unique banking strategy for growth. Standardized neighborhood marketing programs build on micro-market analytics to focus the right tactics on the right trade areas. The best way to mitigate risk in banking is to leverage CARM-Pro™ to enforce your financial institution’s policies and protect the integrity of your banking process using automated debt collection software. The first is for a bank to use its internal data more effectively for its own operations by adding new analytics capabilities. Customers are already migrating toward self-service channels, but the most expensive channel, the branch system, remains the primary point of contact. CARM-Pro™ Collection and Recovery Manager – Professional™ is a dynamic debt collection system that maximizes your collections team’s productivity, enabling them to work more past due accounts than ever before. We expect checking account economics to improve with rising interest rates. … BAI © 2020 All rights reserved. Tools exist to predict how customers will value financial products, and what price they are willing to pay, with a high degree of accuracy. 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. According to the … Utilize data analytics to improve fundamental product economics. PNC Bank took a similar approach, which enabled them to drive more branch traffic and acquire accounts at a lower cost. Change the customer conversation. Although conventional wisdom commonly warns of the death of retail banking, community banking is alive and well… but could be doing much better. Most bankers understand that excellence in operational process is best achieved by consistency. 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 … The grass isn’t always greener on the other … 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. Umpqua’s marketing spend, measured as a percent of assets, is only 65% of the industry average because of its adoption of neighboring marketing. One powerful tool to enhance value is to identify account “twins” and consolidate them into a single, higher value relationship. Increasing deposits is essential to sustainable, profitable growth strategies. Start at the Top. © 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. ” is expanding approach, which specializes in community and retail banking strategies for.... 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