January 2015

What Your Loan Pipeline Data Is Telling Your Bank

Loan Pipeline Data

If you’re a bank that keeps a loan pipeline report, chances are you have some excellent data that will form the basis of making your bank more efficient. The column chart below is one bank’s data where we looked at all the loans that made the pipeline report and then looked at the percentage approved and compared it to those loans that fell out either due to losing the loan to another institution (40% of the fallout), withdrawn/tabled by the borrower (32%), declination (14%), insufficient information (10%) or other (4%).

 

Use These Tactics To Position Your Bank For Changes In The Yield Curve

Using swaps and hedging to drive bank profits

While some banks are challenged to expand or even maintain loan balances, the industry has experienced impressive loan growth over the last four and one-half years. The below graph shows the Federal Reserve data for loan balances for all banks excluding the top 25 largest banks (the top 25 largest banks follow a similar path). This data covers from 2007 to the present and shows how loan growth, particularly over the past year, has been strong.

How To Better Resonate With Your Customer To Increase Bank Product Sales

Bank Sales

If your bank has ever tried to introduce an environmentally-friendly checking account, then this will resonate with you – Ask a customer in a survey would they sacrifice interest to support the environment and more than 70% of your respondents will say “yes.” At a different time, ask potential customers in a branch to actually open a green checking account, and less than 5% will do so.

Here Is What Your Banking Counterparts In India Are Doing

Banking in India

As our community banking delegation finishes off our second week in India, and before we head to the Middle East, we wanted to recap what we learned from meeting with some of the top bankers and government officials in order to give a taste to our readership of what banking is like in this most amazing country. American bankers would feel right at home as banking isn’t all that different save for the fact that the Indian culture and economy throws in a few obstacles.

The Impact Of Interest Rates on 2015 Credit Spreads

Credit Spread Predictions

When rates rise there are two main offsetting effects on the value of bank’s loans. On one hand, rising rates usually mean an improvement of both the general economy and of a particular sector. Not only is demand improving, but some sectors, consumer products for example, are more sensitive to improving economic conditions. On the other hand, rising interest rates is also is a result of a rise in the price level of inputs such as labor, raw materials and rents. Taxes are another area that, depending on industry, can be positively correlated to a rise in interest rates.

Banks Need To Buy Their Way Into Technology

Bank Innovation

If your bank is looking for a road map to the future, follow Capital One. Like BBVA, TD Bank and a number of others, banks should be thinking about a technology acquisition before their next bank acquisition. At a minimum, bank boards should weigh other investment alternatives to whole bank purchases and see which investment alternative can provide the highest risk-adjusted return. Oftentimes, acquiring equity in a technology company where a product can be immediately leveraged can often result in a faster and more fulfilling accretion to earnings.

Adjusting Your Bank’s Branch Marketing Model

Bank Marketing with Data

Many banks talk about delivering a targeted local approach, but end up spending their marketing budget to garner a mass appeal. Nine times out of ten, this is a mistake and by utilizing a different approach, banks can be more efficient in their marketing dollars. As usual, solving this marketing problem is a function of asking the right questions. The question is not “How does the bank acquire more customers,” but “How does the bank acquire the right customers.” This means that first you have to understand who the right customer is.

Is Your Bank Ready For The Aging of America?

Banking the Baby Boomers

There are three things that are not really welcoming to an adult over 50 years old – starting a rock band, learning to snow ski and banking. While the rock band and skiing are self-explanatory it is rare that you hear issues with banks. This isn’t because the issues don’t exist. It is because Americans over 50 are reluctant to complain for a variety of reasons - most notably not wanting to admit to themselves that they need help. Having just passed the half-way point of this decade, aging has been on our mind and it seems our industry could do better.