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™. 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, … Utilize data analytics to improve fundamental product economics. The first is for a bank to use its internal data more effectively for its own operations by adding new analytics capabilities. Then CARM-Pro™ will execute efficient workflows and sequencing of all required compliance steps. Efficient workflows and automated outreach allow for earlier and more frequent debtor communication. 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. BAI © 2020 All rights reserved. This website uses cookies and third party services. These tools can help identify specific fee, balance and service combinations that customers prefer. There are multiple ways to monetize data. Start at the Top. Customers are already migrating toward self-service channels, but the most expensive channel, the branch system, remains the primary point of contact. 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 … Lack of the right sales process and lack of the right predictive analytics that target the right customer. Change the customer conversation. This proven software’s comprehensive features empower financial institutions to grow their loan portfolio, increase income, and reduce risk. Increasing deposits is essential to sustainable, profitable growth strategies. Every bank or credit union has its own unique banking strategy for growth. Expand relationship depth. Tools exist to predict how customers will value financial products, and what price they are willing to pay, with a high degree of accuracy. Any reduction of credit standards typically raises concern among executive management. You can also raise external … At the same time, encouraging non-branch transactions increases interchange fee income and helps offset declines in OD and other miscellaneous fees. This includes discussion of market penetration, market development, product development and diversification together with evaluation … Five strategies for growing revenue. 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. If bank financing isn’t possible, you’ll need to use your own internal funding. 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. Several community banks are gearing up credit card operations. Most bankers understand that excellence in operational process is best achieved by consistency. The sold, insured, and guaranteed loans that your bank or credit union maintains are under more scrutiny than ever before. The grass isn’t always greener on the other … 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. Companies: Our Global Banking business works with virtually every company in the S&P 500. The road ahead cannot be a matter of, “train them on products and let them figure it out.”. With compliance seemingly always at the forefront, policies … The bank of the future will have specialists who can call on business accounts and regularly pop one million-dollar checking account after another. 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. In addition to reducing process costs, automation tools can help improve staff … Peoples Bancorp of Marietta, Ohio, has thriving wealth management and insurance subsidiaries. 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. It makes them more efficient to operate, but also means they lose the marketing “billboard” impact of a large facility. 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 the contemporary banking environment, state and federal regulators increasingly emphasize collection compliance. Finding topline revenue growth is the core issue facing the industry, and this begs for new pathways to success. But its growth is expected to slow over the next two years, making for a … A framework is presented for thinking about the various avenues through which banks can pursue growth. In order to execute your treasury agenda, gaining senior-level buy-in is crucial. Indiana, Penn.-based First Commonwealth Bank re-entered the mortgage business. Early analysis suggests potential reductions in OD revenue in the range of 25% to 50%, with the impact beginning in late 2016. 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.   Financial institutions who increase their loan portfolio by lending to borrowers with lower credit scores gain a higher interest spread and greater interest income. 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. Combined with focused sales processes and product-bundling strategies, these methods produced an 85% improvement in household when implemented by one of our clients. Highly … Shifting customer activity out of the branch reduces cost-to-serve, improving product profitability. Collector workflows automate customized borrower outreach, to encourage faster payment and ensure that no communication steps are missed. Many banks have recognized that they need a truly differentiated … When collectors leverage CARM-Pro™ technology, key collection steps are automatically completed and documented. But achieving that growth is a difficult challenge. Scalable CARM-Pro™ empowers bank & credit union executives to proactively implement bank branch growth strategies. Most bankers understand that excellence in … The consulting firm encourages banks to better evaluate... 2) Increase productivity using … CARM-Pro frees up time for collectors to work prior charge-offs and recover non-interest income that increases bank profitability. Executive managers and board members are typically uncomfortable with lowering their institution’s credit approval standards. 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. 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. 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. Collection steps that are missed, performed late, and improperly documented can lead to fines, penalties, and litigation losses for your financial institution. This robust debt collection system enables your collection staff to execute your financial institution’s collections strategy. © 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. Historically, banks used direct mail to generate inquiries and branch lobby management to drive sales. However, there is a tendency to think that consistent process in customer conversations somehow indicates a “robotic” interaction. New Bank Strategies Require New Operating Models Disruptions in banking are pushing banks to take more explicit strategy decisions.   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. Banks need to re-establish the branch as a destination, a place where people want to go versus a stop for an infrequent errand. Consumers report a similar willingness. Set Yourself Apart from Competitors (in a Good Way!) Collectors can leverage the power of CARM-Pro™ debt collection software to automate much of the manual labor of collection work. Staging of customer traffic patterns, merchandising placement and teller referrals were keys to a robust sales process. However, as the economy strengthens, these gains may be offset by competitive pricing pressure. The opportunity is compelling. 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 helps banks and credit unions manage credit risk and maintain reliable audit records. Global Banking … Get more work done, with the same staff, deploying comprehensive CARM-Pro™ automation capabilities. The second opportunity is to encourage more profitable customer behaviors, channel usage and transaction activity. It also decreases risk by not compromising the frequency of follow-up communications with delinquent debtors. This boosts productivity so much that it frees collectors to work prior charged-off accounts – thus increasing bank profitability by recovering non-interest income. Yet, in the past, investment in training has not been sufficient to reverse the downward trend in branch sales productivity. 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. Editor Note: David Kerstein has updated this article. However, direct mail is increasingly less efficient as customers communicate by text and email. 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. 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. 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. Furthermore, branches are becoming smaller. For many years, corporate strategy languished in banking circles. BAI is Bank Administration Institute and BAI Center. This proven software’s comprehensive … 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. Sales effectiveness is not just a function of knowledge, but also of discipline and coaching. Sales excellence should focus on consistent, structured conversations at account opening and other significant client discussions. Mr. Kerstein is president of Austin, Tex.-based Peak Performance Consulting Group, which specializes in community and retail banking strategies. 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 … This involve… BAI Banking Strategies Your trusted source for actionable insights and groundbreaking ideas. Here are five suggestions for such a different approach: Change the customer acquisition model. Growth strategies Banks can’t ride fee income gravy train much longer Noninterest income has bolstered profits this year. 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. There are barriers to the development of … Staff productivity. McKinsey recommends that banks: 1) Improve risk management with powerful analytical tools. Another is to create new … Why is penetration so low? Standardized neighborhood marketing programs build on micro-market analytics to focus the right tactics on the right trade areas. Collectors can then efficiently customize and schedule all debtor outreach via automated, tracked and recorded delivery of email, postal mail, SMS and dynamic voicemail. 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. Diversify services. 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. Furthermore, the “no fee zone” is expanding. 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 … The Right (and Necessary) Policies. 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.”. Â. We expect checking account economics to improve with rising interest rates. 100% Committed to Bank and Credit Union Collection and Recovery, Home » Banking Strategies for Growth: How to Grow Income & Reduce Risk. He can be reached at [email protected]. In a rising rate environment that is coupled with strong economic growth achieving deposit goals is the best way to … That translates into fewer natural sales opportunities. Fewer customers are visiting branches as routine monetary and service transactions migrate to other channels. 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. 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. 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 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. CARM-Pro™ automatically records all actions taken by each collector, by date and time. 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. Low interest rates continue to put pressure on margins. Umpqua’s marketing spend, measured as a percent of assets, is only 65% of the industry average because of its adoption of neighboring marketing. 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. PNC Bank took a similar approach, which enabled them to drive more branch traffic and acquire accounts at a lower cost. These prospects are “findable” in that targeting strategies can locate prospects with a high potential for consolidation. Simple presence in the community doesn’t automatically create gravity and attraction – that requires more focused programs. 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.”. 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 … Financial institutions are simply unable to charge for services that were once common sources of profit. 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. 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. 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. 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. … ARM-Pro™ debt collection software enables community banks to increase net income by improving debtor communications. Every bank and credit union develops clearly-defined lending standards. … During the go-go 1990s and most of the 2000s, too many bankers pursued indiscriminate growth, had a broad appetite for risk and … 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. Jeanne Pinder Sep 26, 2019 Digital transformation’s top 10: The impact factors that matter As new fiscal … Although conventional wisdom commonly warns of the death of retail banking, community banking is alive and well… but could be doing much better. We see continued growth in our digital and mobile channels, with 37 million digital banking users; nearly 27 million are active mobile banking customers. We believe community and regional banks have a unique opportunity to leverage a diversified financial services model. Sales effectiveness is not just a function of knowledge, but also of discipline and coaching. Yet, we know that the majority of balances are not consolidated. However, increasing loan volume by lending to borrowers with lower credit scores yields a higher interest spread, thus more interest income.Â. According to the … 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. 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. 1. One powerful tool to enhance value is to identify account “twins” and consolidate them into a single, higher value relationship. Another type of specialist will be masterful at cross sales … The type of growth or expansion options you choose will dictate your potential funding options. In our survey, 78% of respondents reported that improving sales skills was their bank’s primary strategy for growth. Been sufficient to reverse the downward trend in branch sales productivity can not a. 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