Managing exposure to deposit refinancing

Long-suffering time deposit account holders are hoping for better deals the next time their CDs mature. Bankers anticipate this and model their future interest expense by applying “beta” estimates at the time of deposit maturities in their modeling. “Beta” is the percentage of interest rate changes that must be passed on to the depositors to maintain funding Read More

By |2020-05-27T18:00:16-05:00December 9th, 2015|Comments Off on Managing exposure to deposit refinancing

Three design principles for omnichannel experience

Banks are investing in new technology to create omnichannel experiences for their customer but success has been limited. Why? For one thing, bankers overlook these wise words from Steve Jobs, the founder of Apple: “You’ve got to start with the customer experience and work back toward the technology – not the other way around.” In other words, Read More

By |2020-05-27T18:00:16-05:00December 2nd, 2015|Comments Off on Three design principles for omnichannel experience

Three steps for mobile marketing

Consumers have embraced their mobile devices to check balances, make payments and conduct other financial activities, giving marketers the ability to reach them more easily. But, to take advantage of this access, bank marketers need tools that create a personalized experience and anticipate customers’ needs in real-time. Financial institutions able to deliver a tailored experience with optimal Read More

By |2020-05-27T18:00:30-05:00September 1st, 2015|Comments Off on Three steps for mobile marketing

Serving the underbanked with short term loans

Financial institutions are primarily focused on meeting the needs of Americans that fit into certain demographics. The rest of the population ends up as the underbanked – consumers with needs viewed as too costly, too risky or too difficult to serve. According to the FDIC, the collective population of underbanked Americans is approximately 34.4 million households, more Read More

By |2020-05-27T18:00:31-05:00August 5th, 2015|Comments Off on Serving the underbanked with short term loans

Regulatory expectations for anti money laundering compliance

There have been two significant pieces of recent regulatory guidance that will directly impact the overall administration of your institution’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) compliance program. While these two regulations may seem, at first glance, to be unrelated, a more comprehensive review will reveal that they are very much tied together. As technology has changed, so Read More

By |2020-05-27T18:00:31-05:00July 27th, 2015|Comments Off on Regulatory expectations for anti money laundering compliance

Adding time deposits to the strategic agenda

As the likelihood of the Fed raising interest rates looms ever larger, it’s time for banks to consider the strategic implications of their time deposit funding portfolios, commonly referred to as certificates of deposit (CDs). A typical bank will have between 10% and 40% of their balance sheet in time deposits. The magnitude of dollars spent annually Read More

By |2020-05-27T18:00:31-05:00July 24th, 2015|Comments Off on Adding time deposits to the strategic agenda

Six tactics for developing banking products

In the wake of the popularity of the American Sniper movie, it might be helpful for bankers to think of product development in terms of some key lessons learned from special operations warfare. Consider these key six tactics typically utilized by special operations teams: Purpose. Each mission has a purpose that the entire team understands. Does everyone Read More

By |2020-05-27T18:00:34-05:00May 13th, 2015|Comments Off on Six tactics for developing banking products

Valid forecasting of deposit accounts

Deposit pricing is challenging because it involves making assumptions about tomorrow. If your assumptions about the future behavior of your competitors and consumers are false, you will be making a very costly decision today. To avoid this, you need to ensure that your deposit forecasting model is based on scientific and empirical principles that ensure reliable results. Read More

By |2020-05-27T18:00:34-05:00April 29th, 2015|Comments Off on Valid forecasting of deposit accounts

Results of deposit pricing game theory exercise

In a recent article for BAI Banking Strategies, I broached a theory that deposit rates start rising prior to an anticipated increase in the Fed funds rate because of our tendency to try to outdo the competition. To test the validity of this assumption, I asked readers to participate in an exercise in behavioral finance, requesting that Read More

By |2020-05-27T18:00:36-05:00March 11th, 2015|Comments Off on Results of deposit pricing game theory exercise

Time to raise minimum deposits

Ahead of any rise in interest rates, financial institutions continue to hunt for new revenue sources, first from retail fees and second by increasing minimum deposits on time accounts. It’s time to consider flipping those priorities and focusing on raising deposit minimums to make up for shortfalls in fee revenue. Industry-wide, fee income has been trending down, Read More

By |2020-05-27T18:00:37-05:00February 20th, 2015|Comments Off on Time to raise minimum deposits

Profitability measurement for today’s banks

While bankers historically have been focused on driving growth, the reality is that not all growth creates sustainable value or profits for banks. In fact, some industry estimates suggest that up to 40% of a bank’s customers may be unprofitable to their institutions. This underscores the level of complexity involved in effectively evaluating and managing profitability as Read More

By |2020-05-27T18:00:37-05:00February 17th, 2015|Comments Off on Profitability measurement for today’s banks

Deposit pricing game theory for rising rates

Twice in the past twenty years we experienced a cycle of decrease and increase in the Fed funds rate. And in both cases, institutions started increasing their rates slowly and gradually a few months before the Fed actually started increasing the funds rate. The most recent event occurred in anticipation of the Fed funds rate that took Read More

By |2020-05-27T18:00:37-05:00February 2nd, 2015|Comments Off on Deposit pricing game theory for rising rates

Rewards-based checking for rising rates

The Federal Reserve has signaled that rising interest rates might be on the way, raising the risk that community banks’ margins will be squeezed in the future. Help is available, though, and it comes from a somewhat surprising source: high-yield, reward-based checking accounts. While many banks use certificates of deposit (CDs) to mitigate rate increases, that’s a Read More

By |2020-05-27T18:00:37-05:00January 27th, 2015|Comments Off on Rewards-based checking for rising rates

Improving retail profitability with enhanced profitability data

Bankers continue to see pressure on net income and many are attempting to improve results by reducing expenses and maximizing fee income. In doing so, they are being reminded of just how hard it is to squeeze more net income out of current period revenue. The traditional assumption is that improving profitability means expense reductions. A better Read More

By |2020-05-27T18:00:37-05:00January 26th, 2015|Comments Off on Improving retail profitability with enhanced profitability data

No-Overdraft Fee Accounts, No Overdraft Problem

“Overdraft fees should not be ‘gotchas’ when people use their debit cards,” said Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), after the regulatory agency published its most recent report, “Data Point: Checking Account Overdraft.” The study states that most overdraft fees result from debit card purchases for amounts under $24 and are repaid within Read More

By |2020-05-27T18:00:40-05:00October 7th, 2014|Comments Off on No-Overdraft Fee Accounts, No Overdraft Problem

Serving the Underserved with Prepaid Cards

Half the world’s adults, over 2.5 billion people, do not have a formal bank account, according to the World Bank. In the United States, the segment of financially underserved consumers is substantial, whether they fall into the unbanked or underbanked categories. According to the FDIC, this seemingly high-risk group makes up over 10 million households across America. Read More

By |2020-05-27T18:00:40-05:00September 9th, 2014|Comments Off on Serving the Underserved with Prepaid Cards

Accelerating the Efficiency Engine

A new year is time for new resolutions. And for many banks, that means resolving to make their operations run leaner and better, at less expense. But that’s easier said than done, as many banks this year have struggled with efficiency ratios in the face of slow revenues. Case in point: The efficiency ratio at 230 banks Read More

By |2020-05-27T18:00:45-05:00February 4th, 2014|Comments Off on Accelerating the Efficiency Engine

Using Analytics for New Product Design

As the financial services industry emerges from the great recession and adapts to the new regulatory and slow-growth environments, financial institutions are being pressured to find new ways to generate revenue. The data that financial institutions hold is incredibly valuable and leveraging it to attract and retain business may be one of the best ways for institutions Read More

By |2020-05-27T18:01:04-05:00June 19th, 2013|Comments Off on Using Analytics for New Product Design

Banking’s Big Opportunity with Small Dollar Loans

Financial institutions (FIs) determined a long time ago that it was hard to earn a profit making consumer loans for a few hundred dollars. As Mark Pearce of the FDIC commented in 2012 on reviewing the FDIC’s Small Dollar Loan Pilot started in 2008, “the interest income and fees generated were not always sufficient to achieve short-term Read More

By |2020-05-27T18:01:05-05:00May 7th, 2013|Comments Off on Banking’s Big Opportunity with Small Dollar Loans

Who Owns Cross Selling (and Who Should Own It)?

So, when was the last time you went to a meeting and the subject of cross selling didn’t come up? In all likelihood, the conversation turned to the results of the latest cross-selling campaign, the plan for the next one and the projected return on investment (ROI). While we’re all keenly aware of the opportunities cross selling Read More

By |2020-05-27T18:01:05-05:00May 1st, 2013|Comments Off on Who Owns Cross Selling (and Who Should Own It)?