This boosts productivity so much that it frees collectors to work prior charged-off accounts – thus increasing bank profitability by recovering non-interest income. 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. 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. These tools can help identify specific fee, balance and service combinations that customers prefer. Mr. Kerstein is president of Austin, Tex.-based Peak Performance Consulting Group, which specializes in community and retail banking strategies. 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. When collectors leverage CARM-Pro™ technology, key collection steps are automatically completed and documented. 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 … … There are multiple ways to monetize data. Scalable CARM-Pro™ empowers bank & credit union executives to proactively implement bank branch growth strategies. During the go-go 1990s and most of the 2000s, too many bankers pursued indiscriminate growth, had a broad appetite for risk and … Start at the Top. Indiana, Penn.-based First Commonwealth Bank re-entered the mortgage business. Set Yourself Apart from Competitors (in a Good Way!) Sales effectiveness is not just a function of knowledge, but also of discipline and coaching. At the same time, encouraging non-branch transactions increases interchange fee income and helps offset declines in OD and other miscellaneous fees. 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. But that tide is changing. The bank of the future will have specialists who can call on business accounts and regularly pop one million-dollar checking account after another. According to the … Local search engine optimization (SEO) ensures prospects will find you online. Finding topline revenue growth is the core issue facing the industry, and this begs for new pathways to success.   Financial institutions who increase their loan portfolio by lending to borrowers with lower credit scores gain a higher interest spread and greater interest income. Many banks have recognized that they need a truly differentiated … Historically, banks used direct mail to generate inquiries and branch lobby management to drive sales. Standardized neighborhood marketing programs build on micro-market analytics to focus the right tactics on the right trade areas. 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 … 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. The first is for a bank to use its internal data more effectively for its own operations by adding new analytics capabilities. PNC Bank took a similar approach, which enabled them to drive more branch traffic and acquire accounts at a lower cost. The opportunity is compelling. Executive managers and board members are typically uncomfortable with lowering their institution’s credit approval standards. Most bankers understand that excellence in operational process is best achieved by consistency. Sales excellence should focus on consistent, structured conversations at account opening and other significant client discussions. This robust debt collection system enables your collection staff to execute your financial institution’s collections strategy. Umpqua’s marketing spend, measured as a percent of assets, is only 65% of the industry average because of its adoption of neighboring marketing. You can also raise external … This helps banks and credit unions manage credit risk and maintain reliable audit records. If bank financing isn’t possible, you’ll need to use your own internal funding. Efficient workflows and automated outreach allow for earlier and more frequent debtor communication. We believe community and regional banks have a unique opportunity to leverage a diversified financial services model. It also decreases risk by not compromising the frequency of follow-up communications with delinquent debtors. 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, … We see continued growth in our digital and mobile channels, with 37 million digital banking users; nearly 27 million are active mobile banking customers. It makes them more efficient to operate, but also means they lose the marketing “billboard” impact of a large facility. 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. Sales effectiveness is not just a function of knowledge, but also of discipline and coaching. Simple presence in the community doesn’t automatically create gravity and attraction – that requires more focused programs. Consumers report a similar willingness. Editor Note: David Kerstein has updated this article. 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. 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 proven software’s comprehensive features empower financial institutions to grow their loan portfolio, increase income, and reduce risk. 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. Why is penetration so low? 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. Tools exist to predict how customers will value financial products, and what price they are willing to pay, with a high degree of accuracy. Low interest rates continue to put pressure on margins. A framework is presented for thinking about the various avenues through which banks can pursue 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. Every bank or credit union has its own unique banking strategy for growth.   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. Customers are already migrating toward self-service channels, but the most expensive channel, the branch system, remains the primary point of contact. Utilize data analytics to improve fundamental product economics. Global Banking … Increasing deposits is essential to sustainable, profitable growth strategies. 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. In order to execute your treasury agenda, gaining senior-level buy-in is crucial. Staff productivity. 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 … We expect checking account economics to improve with rising interest rates. However, as the economy strengthens, these gains may be offset by competitive pricing pressure. The second opportunity is to encourage more profitable customer behaviors, channel usage and transaction activity. 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. That translates into fewer natural sales opportunities. The consulting firm encourages banks to better evaluate... 2) Increase productivity using … Another type of specialist will be masterful at cross sales … Shifting customer activity out of the branch reduces cost-to-serve, improving product profitability. Although conventional wisdom commonly warns of the death of retail banking, community banking is alive and well… but could be doing much better. In a rising rate environment that is coupled with strong economic growth achieving deposit goals is the best way to … The sold, insured, and guaranteed loans that your bank or credit union maintains are under more scrutiny than ever before. Diversify services. 1. Collector workflows automate customized borrower outreach, to encourage faster payment and ensure that no communication steps are missed. These prospects are “findable” in that targeting strategies can locate prospects with a high potential for consolidation. The road ahead cannot be a matter of, “train them on products and let them figure it out.”. 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. This includes discussion of market penetration, market development, product development and diversification together with evaluation … Yet, we know that the majority of balances are not consolidated. 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. CARM-Pro frees up time for collectors to work prior charge-offs and recover non-interest income that increases bank profitability. New Bank Strategies Require New Operating Models Disruptions in banking are pushing banks to take more explicit strategy decisions. Companies: Our Global Banking business works with virtually every company in the S&P 500. 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.”. Any reduction of credit standards typically raises concern among executive management. Yet, in the past, investment in training has not been sufficient to reverse the downward trend in branch sales productivity. This proven software’s comprehensive … Lack of the right sales process and lack of the right predictive analytics that target the right customer. Furthermore, branches are becoming smaller. Change the customer conversation. This involve… Collectors can leverage the power of CARM-Pro™ debt collection software to automate much of the manual labor of collection work. 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™. 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. But its growth is expected to slow over the next two years, making for a … 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. One powerful tool to enhance value is to identify account “twins” and consolidate them into a single, higher value relationship. The grass isn’t always greener on the other … … 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. CARM-Pro™ automatically records all actions taken by each collector, by date and time. Most bankers understand that excellence in … By text and email agenda, gaining senior-level buy-in is crucial for.. Most bankers understand that excellence in operational process is best achieved by consistency by lending to borrowers with lower scores! 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