Nolan Perspectives
The transformation of customer needs has largely outpaced the systems banks have in place to support them. Those customer shifts have been driven by innovations in connectivity, social media, and devices such as smartphones and tablets.
For banks, the imperative of sustaining new business growth in both the retail and commercial sectors has more variables to manage than ever before.
A recent BAI report indicates that the future in branching favors banks with a dense footprint and large market share. There are also studies suggesting that branch profitability is more strategic when achieving density in markets with a growing population and increasing household income.
As the consolidation trend continues among larger financial institutions, smaller local and regional banks are finding it harder and harder to remain profitable. Here’s how community bankers can win clients over with a simpler, more personal style of banking.
Efficient, effective, and productive are terms that are often used to define banks that manage their customer experience at the right cost. Reactions vary when those terms are mentioned in regard to high-performing banks or in describing a performance improvement effort.
The downward trend in the number of U.S. banks—now down to 6,805—has continued in 2014. There has been a steady decline over the past 11 years from a total of 8,108 in 2003.
We have yet to work with a bank or credit union client who has mastered the art and science of establishing clear, accurate, multidimensional views of cost and profitability. Most organizations strive for it but never fully achieve it.
“JPMorgan Chase plans 8,000 layoffs”
“Bank of America announces another round of layoffs”
“Barclays to cut up to 12,000 jobs”
“Wells Fargo announces 6,400 layoffs”
Retail counter traffic in banks is already in steep decline. Changing customer behaviors, including the increasing use of mobile banking, electronic payments, direct deposit and ATMs are altering the way banking is done in the today’s world.
Nolan’s Bank Performance Study provides insight into the business of banking and changes over recent years that can have potential impacts on the future. We look for significant upward and downward trends in Key Ratios at the line-of-business or functional level.
The Nolan Company’s Bank Performance Study analyzes the business of banking, how things have changed over the past years and what changes may be looming on the horizon. As the results of the latest study are compiled, some compelling trends are emerging from the raw numbers.
The Nolan Company recently completed an analysis of a six-year trend in bank productivity and personnel cost.
Knowing the cost to produce, deliver and service a product and its relative profitability is critical for every business.
It’s all but impossible to find a bank that doesn’t claim to deliver high-quality customer service. Take just a few minutes to check the websites of every community, regional and national bank in your marketplace and see what each of them says about their commitment to customer service.
When bankers search for ways to improve operating efficiency, often those efforts are directed at increasing revenue or redesigning the major new business and servicing processes that generate revenue.
One of the key trends in banking in recent years is the steady decline of branch transaction levels. As more customers have begun to take advantage of the convenience afforded them by such simple things as direct deposit and online banking, fewer customers make their way to their local branch.
Ben Bernanke is on record as saying that the Federal Reserve will keep rates low until mid-2013, and there is speculation from large money managers that it will likely last until the end of 2014. This will continue to fuel retail mortgage refinancing churn.
The last few years of uncertainty in the economy, both nationally and globally, have led to the creation of new, far-reaching reforms that carry with them additional burdens for the banking industry.
Our recent work with banking clients and Nolan Bank Performance Study (BPS) participants is revealing a recurring theme: Optimism has increased relative to the financial crisis finally on its way to being behind us.
My daughter is 33, and her husband 34. My son is 27, as is his wife. All are using mobile banking and can’t imagine why they would travel to a branch to transact business.
The banking industry is experiencing dramatic technological change and disruptive innovation. The questions are: how many executive teams have recognized it; what is their strategy; and what will it take to manage in the new environment?
As technology continues to evolve at the speed of light, mobile technology is an incredibly hot topic.
Community bankers are dealing with the immediate issues presented by the new financial reform act and are anticipating what the impact will be as other provisions are ironed out over the next two years.
Retail banking customers are changing the way they use and obtain banking services. Mounting evidence has reinforced a need to think carefully about redesigning delivery systems to make the continuing shift seamless.
On the question of how to react to the most recent regulatory changes with regard to the Dodd-Frank Act and the Durbin Amendment, it is interesting that a wait-and-see attitude prevails in the banking industry.
In our previous article, “Survive,” we laid out the case that when a financial organization’s survival is at stake, surgical cost-cutting is the best of the least-desirable approaches. This article highlights seven critical areas for surviving organizations to focus on in order to thrive.
Customer preferences and behaviors are changing at an increasing rate, and it will impact banks’ service delivery significantly over the next two years. New research from Nielson (third quarter of 2010) finds that 53.4 million U.S.
As we learned in graduate school, the primary goal of any organization—above profitability and customer satisfaction—is survival. Over the past three years, 304 banks have failed. This number is especially stunning when compared to the previous eight years, when only 27 banks failed.
We are emerging from a period where consumer confidence in the banking sector reached new lows.
In his book The Age of the Unthinkable, Joshua Cooper Ramo notes an observation by a Nobel Prize winner that “big science”—multibillion-dollar science programs—almost never produce meaningful discoveries.
Recently, a friend gave my family a debut CD of a local singer, and our enjoyment of the music prompted us to attend her performance. I offered to buy the CD for our children in advance of the concert—our daughter accepted but our son said he wanted to experience the music “fresh.”
Thirty years ago, when I joined the Nolan Company, we were known as an organization that measured performance. As the saying goes, “If you cannot measure it, you cannot manage it”—and, certainly, you cannot evaluate the need for improvement.
Do you remember, not too many years ago, that a hot topic in the industry was the high failure rate of major projects? Blown budgets and timelines, missed requirements and functionality, and failure to deliver the expected results had become the norm.
The current economic conditions have made many banks and credit unions pause to make sure they do not misstep, but the truly innovative organizations are finding an environment to focus more clearly on their goals.
The findings of the recently completed Nolan Annual Efficiency Ratio Performance Study reveal what we have been seeing in the industry. The pressure on revenue is making itself felt in both the bank operating ratios and in the stock market. The Dow Jones U.S.
This past month, my wife Nancy and I saw a play, A. R. Gurney’s The Dining Room, which uses the vehicle of the dining room in a series of vignettes to depict changes in upper-class family culture during the 20th century.
Operating costs are higher in some banks that are growing both organically and by merger, but when are the ongoing costs too high?
Two major studies are being conducted to examine overdraft practices in the banking industry—one by the FDIC and one by the General Accountability Office, Congress’ investigative arm. Federal legislation (H.R.946) introduced by Rep.
There is debate over imitation. Is it in fact flattery or thievery?
Why are the “too busy” not seeing the waterfalls ahead? Just this past month I witnessed an auto lease transaction that required the lessee to sign or initial 14 documents in a total of 23 places.
Quarterly headlines tell part of what’s happening in banking today: “Wells Fargo Bank reports continued strong growth in core deposits and checking accounts in 2006” (10% deposit growth); “Deposits were up 9% from a year ago” (Webster Bank); “Frost National Bank records asset and deposit growth”
