It is 1942, you are in Air Force command, and you want to keep our flyers safe. Our planes are being shot down at an alarming rate, and your solution is to install armor. But the armor makes the plane heavier, and heavier planes are slower, less maneuverable and use more fuel. Realizing you cannot armor plate the entire plane, the question arises what is the optimal amount of armor and where should it be placed to give our soldiers the best chance to complete their mission alive?
You don’t normally associate communist-oriented banks with innovation, but we need to give credit where credit is due. Russia’s largest, and state-owned bank, Sberbank, has hit on a fantastic idea (originated by the marketing firm GOOD Moscow) that they have been executing for the past year. We wanted to explore this for our market and thought the tactic would be good for more marketing savvy community banks. In this article, we look at this innovative tactic and show what it would take to pull it off.
A bank has limited resources and must proactively allocate according to their priorities. Unfortunately, while banks often know their objectives for the year, they often don’t take the time in their strategic planning sessions to place those objectives in a prioritized context and don’t add a weighting to each. As such, there is often a misallocation of resources and a misalignment over the precedence of initiatives. In this article, we look at top initiatives for CEOs, the priority of each initiative and their relative weights.
What makes a good banker is the ability to think in linear fashion. What makes a bad marketer is the ability to think in linear fashion. For hundreds of years, banks think about acquiring customers in methodical progression – one client at a time. While a commendable and stable process, that thinking is in part why many banks are running in place gaining two customers and losing one. It doesn’t have to be that way and, in fact, it might be time to take a lesson from technology companies because they have been growth hacking for decades.
In our quest to add more value to our customers, one of the ideas we hit upon was to train relationship managers up to handle the complexities of ESOP lending. Instead of lending to a corporate client, it is more profitable and less risky to lend to the ESOP of that client. Further, few bankers take the time to understand how an ESOP works so competition is limited. Banks can go after existing ESOPs and help refinance their current debt, can work with existing clients to establish ESOPs, or can go after perspective commercial customers and help them establish an ESOP.
This week the House passed Senate Bill 2155, and the Bill was signed today by the President. The new, bipartisan legislation rewrites parts of Dodd-Frank and while it isn’t everything community bankers wanted, the legislation is a significant step towards regulatory relief. In this article, we provide a quick summary of the salient points broken down by bank asset size to bring bankers up to speed.
The Impact To Banks By Asset Size
Risk managers get in trouble when they start measuring risk based on the expectation of loss or exposure. Expected loss is just part of the risk story. Be it credit risk, liquidity risk, interest rate risk or operational risk, exposure for a bank must include the unexpected exposure, not solely the expected loss. Expected losses are priced into a contract and banks are typically compensated upfront for these risks. It is the unexpected loss that must be protected by capital and causes the most amount of damage and bank failure.
If the Yanny vs. Laurel controversy reinforces anything, it is we all have our perception of reality and trying to explain that reality takes some effort. Those lessons are the same ones we are learning about the role that clear metrics play in bank performance. State several performance metrics and everyone will not only have a different reality of what success means but will have difficulty explaining their differences. In this article, we highlight some important bank metrics and discuss the construction of what a powerful set of bank benchmarks could look like.
Despite being slower and different, consumers are finally started to accept using EMV-compliant chip cards for their daily transactions. A new study by Fiserv shows that almost a quarter of users perceive them to be faster while 36% of the population prefer them over non-chip cards. Chipped cards, of course, are now mandatory for many banks and merchants. As a result, consumers were forced to the new cards and now have forgotten about their old stripped cards.
The Change In Behavior
While it is all the rage to flatten your organization and take away management layers to improve efficiencies, there is a dark side to that tactic. Having too many reports spreads bankers too thin leaving little time for “white space” or the ability to be creative and look forward. A “span of control” is how many direct and indirect employees a leader has reporting to him or her.
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