How to Improve Profitability
Assuming your financial institution is not weighed down by non-performing assets – when it comes time for bankers to respond to the prolonged squeeze on interest rate margins, most bankers follow a similar and well-chartered course. If they are not willing to sell their bank, major components of their business or they are not in a position to or they do not want to buy another bank
- Grow Revenues;
- Transition the Mix of Balance Sheet Composition;
- Lower the Cost of Deposits;
- Restructure/Lower the Cost of other Funding; and/or
- Reduce Expenses.
Performance differences among banks
for those that do not have any merger/acquisition excuses, during the middle to later stages of a prolonged interest rate squeeze, stem from the ability to execute the right tactics in a manner that supports and sustains desired strategies without negatively impacting the bank’s core profit engines.
Having the right blend of tactics will lead your bank back to sustainable competitive performance. The overall tactics typically employed by bankers in such tough times can generally be grouped as:
- Adequately supporting revenue and service area projects that noticeably enhance performance in the short and medium term;
- Holding down or reducing costs and initiatives that do not add value or enhance performance in the short term;
- Adjust deposit rates and loan and deposit fees, where possible;
- Renegotiating with, and/or, replacing vendors, contracts and benefit programs in a meaningful manner;
- Changing the compensation structures for management and key personnel to a Pay-For-Performance type program; and/or
- Discontinuing, selling or exiting certain aspects of the business.
The key differentiator in performance is execution, prioritization and managing change in a manner that is not detrimental to the on-going performance of the bank.
Hoe NEBSG Can Help
NEBSG professionals are unbiased industry specialists that assist your bank in developing, prioritizing and implementing meaningful tactics. Banks are heavily dependent on accurate and meaningful management information that typically is not available from normal reports. NEBSG employs effective change agents that are responsive, adaptive and quick to execute when the facts match your Vision, overall strategy and business plans.
NEBSG supports a number of bank CEO’s as they respond to market realities with these services:
- Strategic Planning
- Gain Consensus, Prioritize, Assign and Define Action Plan
- Set Realistic Goals and Define Financial Plans
- Monitor, Track and Advise Officers/Directors
- Set Realistic Goals and Define Financial Plans
- Assessment of Sales Capabilities
- Sales Planning and Establishing Synergistic Sales Goals
- Sales Incentive Planning & Program Management
- Training, Coaching and Monitoring Programs
- Service Process Effectiveness
- Branches, Call Center and back-office functions
- Residential mortgage origination and servicing
- Consumer vs. commercial account servicing
- Business Process Improvement – A Balanced Approach
- Analyzing Existing Work Practices
- Identifying and Assessing Areas to Streamline/Improve
- Introducing Best Practices and Training
- Benchmarking Productivity and Staffing
- All Areas, all Departments
- Set Realistic Goals and Define Financial Plans
- Staffing Assessment – Over, Under or Right Sizing
- Measurement Setting, Monitoring and Reporting
- Cost and profitability Studies
- Line of Business, customer, channel and other profit studies
- True full cost studies – fully loaded, or just identifiable direct costs
- Core Vendor Services
- Contract Review
- Vendor Pricing, Cost Assessment and Negotiation
- System Change Management and Implementation
- Risk Management Programs
- Review and assessment of the cost effectiveness of such programs
- Vendor Pricing, Cost Assessment and Negotiation
- System Change Management and Implementation
What differentiates NEBSG is our ability to prioritize, execute and manage change that is advantageous to the on-going performance of your bank.