All posts by Guest Contributor
By: Maria Moynihan Mobile devices are everywhere, and landlines and computer desktops are becoming things of the past. A recent American Marketing Association post mentioned that there already are more than 1 billion smartphones and more than 150 million tablets worldwide. As growth in mobile devices continues, so do expectations around convenience, access to mobile-friendly sites and apps, and security. What is your agency doing to get ahead of this trend? Allocating resources toward mobile device access and improved customer service is inevitable, and, arguably, investment and shifts in one of these areas ultimately will affect the other. As ease of information and services improves online or via mobile app, secure logons, identity theft safeguards and authentication measures must all follow suit. Industry best practices in network security call for advancements in: Authenticating users and their devices at the point of entry Detecting new and emerging fraud schemes in processes Developing seamless cross-checks of individuals across channels Click here to see what leading information service providers like Experian are doing to help address fraud across devices. There is a way to confidently authenticate individuals without affecting their overall user experience. Embrace the change.
I have heard from a few creditors that when it comes to allocating accounts to collection agencies for recoveries creating a rule based strategy isn’t always in the cards. When clients use multiple collection agencies their ability to allocate accounts to the different agencies based on rule based strategies isn’t always available. Some have a single setting on a billing or assignment system that indicates the account is to be assigned to Collection Agency X versus Collection Agency Y, and there is no easy method to make that assignment based on a true strategy. Worse yet, it is often difficult to impossible to reassign that account from Collection Agency X to Collection Agency Y if the account status or risk level changes. This means that their use of multiple collection agencies is not as “optimized” as it could be if a scripting or rule based tool was available to the business user. Optimizing assignments means that the account is initially as well as subsequently assigned to the right agency at the right time based on its type, risk, history, balance, status and other circumstances to maximum recoveries. This approach can make a significant difference in the recovery of bad debt. Furthermore, test results or allocations should be displayed after a script has been entered. This usually provides a “what if” on collection agency assignments displaying the number or dollar value assigned if the rule was implemented. That way you know if the script is correct (ballpark allocation seems reasonable), and if the allocation to any particular agency is within policy limits by dollar amount or number of accounts. Do you believe that you are optimizating your allocations to the agencies you use? Do you have the tools you need to effectively assign each account to the right agency? Experian can help with its agency allocation and management solutions through Tallyman Agency Allocation. Learn more about our Tallyman Agency Allocation software.
This is the first of a two part blog about the state of auto lending in the U.S. In 2014, auto lending has received increased media attention. Unlike other forms of consumer lending, auto lending has been booming. This lending has powered spending and has been an important driver of the economic recovery. However, as auto lending has increased, subprime lending has advanced as well. Many analysts now are predicting as a result of the increased volumes, auto delinquencies will eventually rise. Some have even drawn a corollary to the increase in subprime mortgage lending and its resulting impact on the Great Recession. Regulators and rating agencies have weighed in on the subject too. The principal banking regulator, Office of the Comptroller of the Currency (OCC) noted recently, “The OCC sees signs that credit risk is now building after a period of improving credit quality and problem loan clean-up.” In particular, the OCC pointed out how its examiners have observed a “loosening of standards and increased layering of risk in the indirect auto market.” (Semiannual Risk Perspective, Spring 2014) The OCC’s primary points regarding auto lending risk are: Longer loan terms, Increasing advance rates with resulting higher LTVs, Originating loans to borrowers with lower credit scores, A larger average loss per vehicle. Nevertheless, the OCC notes, “The results have yet to show large-scale deterioration at the portfolio level, but signs of increasing risk are evident.” Standard and Poor issued a report regarding Finance companies (and bonds created by securitized auto lending) called Subprime Auto Loan Performance: The Best is Behind Us. In that, S&P states that, “In our opinion, we’re at a turning point with respect to subprime auto loan performance, similar to where we were in 2006.” In order to examine auto lease and loan trends, Experian IntelliView data was reviewed which provides a quarterly update of U.S. lending trends based on credit bureau data including originations, outstanding loans and lines, credit performance trends, segmented by product and other characteristics. Auto Loans and Lease Originations Auto lending originations versus other consumer credit products were studied to highlight trends, before and after the recession, by looking at metrics beginning with the first quarter of 2006. The Experian IntelliView data on slide 2 shows quarterly acquisition volumes for auto, bankcards, mortgages, home equity loans, HELOCs and personal loans using an index based on originations during this time. (Student loans were not examined because much of this lending is made by government backed organizations.) Auto lending volume reached its low point much earlier than the other products (at the end of 2008-Q4) and returned to pre-recession levels by the second quarter of 2011. In the 2nd quarter of 2014, auto originations continued to grow, and are now more than 60% over 2006 levels. Home lending volume has dipped. First mortgages have a volatile origination pattern based on periods of refinance activity, but volume in the most recent quarters has been down at least 40% off the 2006 volumes. Meanwhile, second mortgage (home equity loans and HELOCs) have practically collapsed since 2009, although HELOCs have shown some rebound in the last year. Of the other credit product originations, only bankcards have reached its pre-recession quantity. Auto lending naysayers are neglecting key facts from Experian Decision Analytics The end of 2008 was a critical juncture because auto originations were at their lowest level as seen in slide 3 showing the growth in auto loan and lease acquisition volumes by type of financial institution. All loans and lease volumes have now increased by 140%. Additionally, the end of 2008 saw GMAC- a large Captive Auto finance company form Ally Bank. The data shows that only at Q1 2009 can this shift be reflected confidently. Furthermore, examinations of developments from this time period ensure a consistent position when considering type of financial institution. Finance companies actually have seen the largest increase in volume at 289% since this time, while Banks (135%), Credit Unions (121%) and Captive Auto finance (99%) volumes have also at least doubled. Near-prime and subprime lending have witnessed substantial origination growth since 2006 as reflected in slide 5 shows the volume trends by credit grade. However, prime and super-prime lending has grown faster. Deep-subprime lending is still at about the same level as 2006. Therefore, originations today have a lower proportion of non-Prime commitments than the period prior to the recession. Examining volumes since the trough of the recession presents a different (but logical) perspective. For example, subprime lending volumes have increased almost 193% since the end of 2008, and near-prime volumes have grown 175%, a rate higher than the total overall growth (140%). In the recession, auto lending volume slowed, specifically for non-prime credit grades. Lenders restricted access to riskier customers (but not super-prime, which actually held steady). It is logical that the volume of riskier credit grades would grow faster as the economy recovers, and lending returns to normal conditions. The proportion of volume by lending type for each financial institution in the second quarter of 2014 is represented in slide 6 and finance companies are now writing about 58% of the deep- subprime paper and 37% of near-prime (up from 33% and 23% respectively in 2006-2008). However, at the other end of the credit spectrum, advances were also made. Finance companies now account for 9.5% of super-prime and 8.6% of prime volume whereas they typically accounted for about 3% of either grade prior to the recession. From 2006 to today, average size of an auto loan or lease is up 8.7%, less than half of the compound rate of inflation. The Captive Auto finance companies had long held the highest average loan amount as seen on slide 7, but Bank averages have grown recently to match them at approximately $21,674 per origination. Finance company origination size is the lowest of all financial institution types ($17,820). Meanwhile, the average size has progressed 18% since 2006. Since 2006, average loan/line commitments for all types of lending except deep-subprime have grown between 6% and 9%. Deep-subprime paper saw a large decline in average size during the recession and is still about 3% below the 2006 level. Average terms for new loans and leases also have recently returned to pre-recession levels. Banks have the highest current average term at 62 months. Finance companies and Captive Auto finance companies have the lowest average term (56 and 55 months respectively). The interest rate trends by type of lending as seen on slide 8 show that rates on super-prime (now 2.89%), prime (now 3.91%) and near-prime (6.92%) have declined significantly since 2009. Subprime (now 12.88%) and particularly deep-subprime (16.74%) have declined less. Consequently, spreads between super-prime and deep-subprime are currently 13.85%. This is because of a long-term widening of spreads between near-prime and subprime paper, and especially subprime and deep-subprime. Banks generally have higher interest rates, even across similar credit grades. Still, the differences in rates in these categories between Banks and Captive Auto have declined significantly. Where this spread may have been 150 bp or higher in rates five years ago, Bank APRs are currently 35 bp for super-prime and 62 bp for prime over rates for Captive Auto finance companies. Finance companies show much higher rates (at least 600 bp over) than other financial institutions for subprime and deep-subprime paper. On slide 9 we examine the acquisition volumes by state and you can see that in 2011, Texas bypassed California in quarterly auto volume and is now the leading state in the nation. Together, Texas and California account for 23% of national volume. Florida and New York make up almost 12%. Ten other states account for between 2% (Maryland) and 3.8% (Pennsylvania). The remaining states (and D.C.) account for 36% of volume. Volume has grown fastest in North Dakota (up 319% since 2008) and slowest in Connecticut and New Jersey (110% and 100% respectively). In the second part of this blog, we will look at trends in auto lending outstandings and performance. Learn more about what Experian Intelliview can do for you.
By: Maria Moynihan As consumers, we expect service, don’t we? When service or convenience lessens or is taken away from us altogether, we struggle to comprehend it. As a recent example, I went to the pharmacy the other day and learned that I couldn’t pick up my prescription since the pharmacists were out to lunch. “Who takes lunch anymore?” I thought, but then I realized that too often organizations limit their much needed services as a cost-saving measure. Government is no different. City governments, for instance, may reduce operating hours or slash services to balance budgets better, especially when collectables are maxed out, with little movement. For many agencies, reducing services is the easiest way to offset costs. Often, municipalities offset revenue deficits by optimizing their current collections processes and engaging in new methods of revenue generation. Why then isn’t revenue optimization and modernization being considered more often as a means to offset costs? Some may simply be unsure of how to approach it or unaware of the tools that exist to help. For agencies challenged with collections, there is an option for revenue assurance. With the right data, analytics and technologies, agencies can maximize collection efforts and take advantage of their past-due fines and fees to: Turn stale debt into a new source of revenue by determining the value of their entire debt portfolio and evaluating options for a stale assets sale Reduce delinquencies by better assessing constituents and businesses at the point of transaction and collecting outstanding debt before new services are rendered Minimize current debt by segmenting and prioritizing collection efforts through finding and contacting debtors and gauging their capacity to pay Improve future accounts receivable streams by identifying the best collectable debt for outsourcing What is your agency doing to offset costs and balance budgets better? See what industry experts suggest as best practices for collections, and generate more revenue to keep services fully in place for your constituents.
Collection agencies provide reports with respect to their performance and collection activities. Depending on which system the agencies are using and the extent it has been modified, the reports may look similar, but then again the data and format may be completely different. Finding the common data and comparing the performance of two or more agencies may become a daunting, manual task. Agency management systems have solved that problem by bringing back performance, activity and other data from the agencies back into a common reporting database. This allows for easy comparison through tables and calculations via common data elements. The ability to truly compare data in this way allows for a more analytical “champion/challenger” approach to managing collection agencies. The key to champion/challenger is the ability to easily compare the performance of one or more agencies using like accounts placed at the same time. Tracking allocations of accounts which fall into the same placement strata, split between agencies on the same allocation, makes it easy to compare recoveries of discrete, similar “sample data sets” over time for a more true comparison. These results should lead to the allocation of more accounts of similar types to the champion, less to the challenger. Do you have the systems you need for a champion/challenger approach with respect to your collection agencies? Experian can help with its agency allocation and management solutions through Tallyman Agency Allocation. Learn more about our Tallyman Agency Allocationsoftware.
By: Mike Horrocks A recent industry survey was published that called out the number one reason that lenders were dissatisfied or willing to go to another financial institution (and take their book of business with them) was not compensation. While, compensation is often thought of as the number one driver for this kind of change in your bench of lenders, it had much more to do with being able to serve customers efficiently. One of the key reasons that lenders were unhappy was that they were in a workflow and decisioning process where the lender could not close loans on time, putting stress on the loan officer\'s relationships and destroying borrower confidence. Thinking of my own experiences as a commercial lender, my interactions with the private bankers, branch managers, and lenders that served every kind of customer, I would absolutely have to agree with this study. Nothing is more disheartening then working on bringing in a client, and then having the process not give me a response in the time that my clients are expecting or that the completion is achieving. Automation in the process is the key. While lenders still will need to be engaged in the process and paying attention to the relationship, it can be significantly refocused to other parts of the business. This leads to benefits such as: Protecting the back office and the consistence of booking and servicing loans. Ensuring that the risk appetite is consistent for the institution for every deal. Growing a portfolio of loans that can and will adhere to sound portfolio management techniques. So how is your process supporting lenders? Are you automating to help in areas that give you a competitive advantage with robust credit scores, decision strategies or risk management solutions that are helping close deals quickly or are you requiring a process that is keeping them from bringing more customers (and profits) in the door? Henry Ford is credited to say, “Coming together is a beginning. Keeping together is progress. Working together is success.” Take a closer look at your lending process. Do you have the tools that help bring your lenders, your customers, and your organization together? If you don’t you may be losing some of your best talent for loan production at a time when you can least afford it.
By: Maria Moynihan At a time when people are accessing information when, where and how they want to, why aren’t voter rolls more up to date? Too often, voter lists aren’t scrubbed for use in mailing, and information included is inaccurate at the time of outreach. Though addresses and other contact information becomes outdated, new address identification and verification has not typically been a resource focus. Costs associated with mandated election-related communications between government and citizens can add up, especially if messages never get to their intended recipients and, in turn, Registrar Offices never get a response. To date, the most common pitfalls with poorly maintained lists have been: Deceased records — where contact information for deceased voters has not been removed or flagged for mailing Email and address errors — where those who have moved or recently changed information failed to update their records, or where errors in the information on file make it unlikely for the United States Postal Service® to reach individuals effectively Duplicate records — where repeat records exist due to update errors or lack of information standardization With resources being tighter than ever, Registrar Offices now are placing emphasis on mailing accuracy and reach. Through third-party-verified data and advanced approaches to managing contact information, Registrar Offices can benefit from truly connecting with their citizens while saving on communication outreach efforts. Experian Public Sector recently helped the Orange County Registrar of Voters increase the quality of its voter registration process. Click here to view the write-up, or stay tuned as I share more on progress being made in this area across states.
One of the challenges that we hear from many of our clients is managing multiple collection agencies in order to recover bad debts. Collection managers who use multiple collection agencies recognize the potential upside to utilizing multiple agencies. Assigning allocate accounts to different agencies based on geography, type of account, status of account (such as a skip), first, second or third placement, and other factors may lead to greater recoveries than just using a single agency. Also, collection managers recognize the advantage of pitting agencies against each other in a positive manner to achieve significantly better results. However this can present a challenge in that the more agencies collection managers use, the greater the risk of losing operational control. Here are some questions to ask before engaging in a multiple collection agency strategy: Do you know which agency has which accounts? Were some accounts accidently assigned to more than one agency? Is it easy to locate an account with an agency if it needs to be withdrawn from it? Is information flowing from one agency to another if agencies are used for second and third placements? Managing multiple agencies can get complex pretty quickly, but rather than just using one agency to avoid these complexities, there is an alternative to consider: Loss of control can be overcome with effective systems that allocate and manage accounts assigned to multiple agencies. These systems allow for the allocation, recall, activity tracking, performance reporting, and commission calculations or vendor audits. No more spreadsheets or other time consuming, error prone manual processes. Experian can help with its agency allocation and management solutions through Tallyman Agency Allocation. Learn more about our Tallyman Agency Allocation software.
By: Mike Horrocks Note: As we wrap our 3-part blog coverage of the American Banker webinar, “What’s next for mobile banking?”, we focus on the comments from Cherian Abraham and a great question on wearable devices. Experian - What\'s Next for Mobile Banking from Experian Decision Analytics It is amazing to me as you look at the world, science, families, etc., how often there are polar opposites that just never seem to come together. Cats and dogs and little brothers and sisters are just a few that I see on a daily basis it seems like. But I have hope for unity at last and that comes from mobile banking. Let me explain… Thanks to mobile devices, banks are in a golden era where they can have access 24/7 to their clients and prospects. Sitting on a couch, watching the latest hit show, a consumer can now have a banking experience - couch potatoes that need banking rejoice! And by partnering with the right team you can ensure that in every transaction: The offer is relevant and that the onboarding is frictionless, while maintain the risk appetite of the bank. The consumer and the device are authenticated and that all KYC issues are addressed. That the relationship and the value proposition of the bank are tied together meaningfully to help influence the future of additional transactions. Also thanks to mobile, wearable and fitness devices have a place in this process as well. While really appealing to the tech leader, we do need pause to find the use case – with payments often coming to the top. So how long will it be until we are at the point that while out jogging you can also pick up your morning coffee with a bump and pay from the fitness device? So while we are still looking for the use case to make sure value is right, I can see where the fitness device wearer gets their banking needs fulfilled as well in the near future. So back to my first point: of hope for unity and cats living with dogs. Thanks to mobile we have an ecosystem that allows us to have the person on the couch and the person on the run all being serviced – unity via mobile banking.
By: Mike Horrocks Last week I had a friend of mine (who would be a self-declared geek) go to GenCon in Indianapolis. For those that don’t know anything about GenCon, it is one of the largest gaming conventions in the world and it is the only time that you can expect to see everyday folks dressed up as superheroes or gaming icons walking the streets. I noticed however as he was sharing his photos that among the hundreds of Batmen, Supermen, and Wonder Women there were not many sidekicks. Now imagine what would Batman be like without Alfred, his trusty butler, friend, and guy who keeps the Bat-mobile running? So hold that thought and now think about your customers. They are your superhero. They help you hit your goals…but are you more than just a bank to them? So as part 2 of our follow up on the American Banker webinar, “What’s next for mobile banking”, I want to talk about some of the key points that Dominic Venturo, the chief innovation officer for US Bank covered, specifically about the role your financial institution can have in the life of your bank customers. Your customers are consumers. In the normal process of all things consumer they are constantly: Becoming aware of products in the market place Searching and evaluating offers Deciding and purchasing Experiencing moments that will create loyalty (or not) Triggering or receiving offers to start the process again So ask yourself, are you more than just a banker? Have you helped your customers in the process of picking the best value for them up to the point of spending that savings or needing credit? Or once the transaction is complete, have you been able to create a memorable experience or help that kind of transaction happen again? US Bank is doing a great job, as Dominic showed with its Peri app in being a part of that process and extending the role of the bank with the consumer. Just like Alfred was always tinkering or helping with the next Bat-gadget, great bankers will be working with, adapting to, and creating the next mobile experience. There are great organizations out there already that are helping remove the friction of the mobile space in actions like account acquisition, with Mitek and their driver license scanning to account opening apps. Is there an opportunity for you to add that function (or maybe something else) to the utility belt for your bank? So again consider what your role is for your customers. Can you be more than a banker to them? Where can you help them in the consumer process to add more value to their life? What kind of sidekick are you to your customer/your superhero? Or maybe even more important, does your customer feel like you are their superhero?? Next week we wrap up the mobile webinar series…until then.
by John P. Robertson, Senior Business Process Specialist As a Senior Business Process Specialist for the Experian Decision Analytics, John provides guidance to clients in the areas of profitability strategies for risk based pricing and relationship profitability. He assists banks in developing and implementing successful transitions for commercial lending that improve both the financial efficiency of the lending process and the productivity of the lending officers. John has 26 years of experience in the banking industry, with prior background in cash, treasury, and asset /liability management. For quite some time now, the banking industry has experienced a flat funding curve. Very small spreads have existed between the short and long term rates. Slowly, we have begun to see the onset of a normalized curve. At this writing, the five year FHLB Advance rate is about 2.00%. A simplistic view of loan pricing looks something like this: + Interest Income + Non-Interest Income - Cost of Funds - Non-Interest Expense - Risk Expense = Income before Tax The example is pretty simple and straight forward, “back of the napkin” kind of stuff. We back into a spread needed to reach breakeven on a five year fixed rate loan by using the UBPR (Uniform Bank Performance Report) national peer average for Non-Interest Expense of approximately 3.00%. You would need a pre-tax rate requirement of 5.00% before you consider the risk and before you make any money. If you tack on 1.00% for risk and some kind of return expectation, the rate requirement would put you around a 6.00% offering level. From a lender’s perspective, a 6.00% rate on a minimal risk five year fixed rate loan doesn’t exist. They might as well go home. CFO’s have been asking themselves, “What do we do with this excess cash? We get such a paltry spread. How can we put higher yielding loans on our books at today’s competitive rates? We’ve got plenty of capital even with the new regulation requirements so can we repo the securities and use the net spread for our cost of funds?” Leveraging the excess cash and securities in order to meet the pressing rate demands may be a way banks have been funding selective loans at such low rates on highly competitive, quality loan originations of size. But you have to wonder, what about that old adage, “You don’t short fund long term loans.” Won’t you eventually have to deal with compression and “margin squeeze”? Oh and by the way, aren’t you creating a mismatch in the balance sheet which requires explanation. Are they buying a swap to extend the maturity? If so, are they really making their targeted return? If this is what they are doing, why not just accept a lower return but one that is better than the securities? Share your thoughts with me.
By: Mike Horrocks Last week, I spoke to you about an American Banker webinar that Experian hosted on “What is next for mobile banking”. Hopefully you were able to attend, but for those that could not, I promised we would cover a few of the key points. So here we go. I just sent my youngest off to Kindergarten this week and along with the excitement about a new teacher, new friends, and of course recess comes the anxiety of a new building, a new routine and all that comes with change. As I saw my little guy getting nervous, his big 4th grade brother came over and reminded him that he would be his buddy and help him around the school that first day. This made me think about the mobile space. I am sure that there are a lot of readers that are excited to have an app on a smartphone that they can show their friends over drinks, but along with that excitement comes the fear of maybe not knowing all they don’t know in the mobile space and the risks that could come from that. They need a buddy. They need a trusted business partner. In the American Banker webinar, Gordon Baird of nD bancgroup called out just how important the right collaboration and partnership is for a financial institution looking to go into or expand their mobile banking footprint. Mutually beneficial partnerships that provide value beyond the typical mobile experience is what will retain mobile banking clients. Baird said it best as he explained, \"Cooperation is a competitive advantage.\" So when you are looking at your mobile banking strategies ask yourself: Is my approach an individual effort? If it is a solo effort, who can I bring to the table? What are the points in my customer’s mobile experience that I cannot optimize? Who can I partner with that can optimize the customer’s mobile experience? Do I have the right partners on my team or do I need to make some changes? It is a great time to be working on mobile banking strategies. There is so much innovation that the excitement and engagement has never been better - so take advantage of collaboration and partner up for success.
By: Mike Horrocks As summer comes to end, so does the summer reading list but if you are still trying to get one in, I just finished reading “Isaac\'s Storm: A Man, a Time, and the Deadliest Hurricane in History”, which is about Isaac Cline the resident meteorologist for U.S. Weather Bureau and the 1900 Hurricane that devastated Galveston, Texas. It is a great read, using actual telegraphs, letters, and reports to show the flaws of an outdated system and how not looking to new sources of information and not seeing the values of nontraditional views, etc., lead to unfathomable destruction for the people of Galveston. As I read the book, I was challenged to think of what is right in front of me that I am not seeing for what it is, just like Mr. Cline ignored reports that would have clearly saved lives and helped predict the storm. So, how can this historical storm teach us a thing or two in the financial industry? Clearly one of the most rapidly changing aspects in banking today is the mobile channel. Many institutions have already adjusted to using it as a service channel, with remote deposit capture, balance, inquiry etc., but what are they doing to take it to the next step? On August 7, 2014, Experian is hosting a webinar by American Banker titled, “What is next for mobile banking?” The webinar will have a powerful panel with thought leaders such as Dominic Venturo, the Chief Innovation Officer at U.S. Bank, Gordon Baird, the Chief Executive Officer at Independence Bancshares, and Cherian Abraham, Senior Business Consultant with Experian’s Global Consulting Practice. If you are already using mobile or maybe trying to look at what you could change, this is a great session to attend. Over the next couple of weeks, we are going to go into some of the key topics from this webinar and explore them some more. Hope to see you at this American Banker webinar.
By: Teri Tassara “Do more with less” is a pervasive and familiar mantra nowadays as lenders seek to make smarter and more precise lending decisions while expertly balancing growth objectives and tightened budgets. And lest we forget, banks must also consider the latest regulations and increased regulatory scrutiny from the industry’s governing bodies - such as OCC and CFPB. Nowadays, with the extensive application of predictive analytics in everyday lending practices, it makes sense to look to analytics to fine tune decision-making and achieve a greater return on investment in three common growth objectives for bankcard acquisitions: Profitable growth - How do I find the most profitable acquisition targets? How do I know the borrowing characteristic of each consumer? Are they high spend or high income? Do they carry a balance but always make timely payments? Universe expansion - How many more consumers are there that meet my lending criteria? How can I effectively reach them? Customer experience - How do I offer the right product to the right customer? How do I communicate to my customers that I understand their lending needs? To that end, growth objectives vary by lender; as such, so should their bankcard acquisitions analytical toolkit. The analytical toolkit arsenal should enable lenders to develop refined bankcard campaign strategies based on their specific objectives. Look for upcoming posts on the essential components of the bankcard acquisitions analytical toolkit.
By: Mike Horrocks The Wall Street Journal just recently posted an article that mentioned the cost of the financial regulations for some of the largest banks. Within the article it is staggering to see the cost of the financial crisis and also to see how so much of this could have been minimized by sound banking practices, adoption to technology, etc. As a former commercial banker and as I talk with associates in the banking industry, I know that there are more causes to point at for the crisis then there are fingers…but that is not the purpose of my blog today. My point is the same thing I ask my teenage boys when they get in trouble, “Now, what are you going to do to fix it?” Here are a couple of ideas that I want to share with the banking industry. Each bank and market you are going after is a bit unique; however think about these this week and what you could do. It is about the customer – the channel is just how you touch that customer. Every day you hear the branch office is dead and that mobile is the next wave. And yes, if I was a betting man, I would clearly say mobile is the way to go. But if you don’t do it right, you will drive customers away just as fast (check out the stats from a Google mobile banking study). At the end of the day, make sure you are where your customers want to be (and yes for some that could even be a branch). Trust is king. The Beatles may have said that “All You Need Is Love”, but in banking it is all about trust. Will my transaction go thru? Will my account be safe? Will I be able to do all that I need to do on this mobile phone and still be safe since it also has Angry Birds on it? If your customer cannot trust you to do what they feel are simple things, then they will walk. You have to protect your customers, as they try to do business with you and others. Regulations are here to stay. It pains me to say it, but this is going to be a truth for a long while. Banks need to make sure they check the box, stay safe, and then get on to doing what they do best – identify and manage risk. No bank will win the war for shareholder attention because they internally can answer the regulators better than the competition. When you are dealing with complicated issues like CCAR, Basel II or III, or any other item, working with professionals can help you stay on track. This last point represents a huge challenge for banks as the number of regulations imposed on financial institutions has grown significantly over the past five years. On top that the level of complexity behind each regulation is high, requiring in-depth knowledge to implement and comply. Lenders have to understand all the complexity of these regulations so they can find the balance to meet compliance obligations. At the same time they need to identify profitable business opportunities. Make sure to read our Comply whitepaper to gain more insight on regulations affecting financial institutions and how you can prepare your business. A little brainstorming and a single action toward each of these in the next 90 days will make a difference. So now, what are you going to do to fix it?
Learn More Image
