Monday, February 1, 2016

Strategies for Success

As we move into the new year, I wanted to offer you some ideas for improving your bank that don’t necessarily require new investment in hardware or software.  I trust you will find some of them applicable. 

Innovation 
It’s hard to read any of the banking trade publications these days without seeing this word. It is in my top 5 overused words for 2015.  For most community banks, innovation can be a challenging word.  You won’t typically develop your own mobile applications, or write software to improve loan operations.  Let me interpret innovation differently then: think of it as improving the way you already use your information technology, like parsing data for a marketing campaign, or creating a new checking account product that appeals to a section of your current (or desired) customer base.  For example, use your report writing capabilities to parse your customers' payment habits, and learn where they shop most often in your community.  If the businesses you identify aren’t currently customers of your bank, perhaps there is an opportunity to engage them regarding the value of doing business with you.  Again, looking at payment habits, can you identify a group of customers who almost exclusively use their debit card rather than writing checks?  If so, they may be candidates for a streamlined checking account that better reflects their payment habits, and lifestyle.  

Finally, when thinking about innovation, be sure that you are pushing your software vendors for new products and services in a timely fashion, and for operating parameters (later cut off times for remote deposit or longer operating hours for your non-traditional branches) that allow you to compete effectively in your markets.  Allowing vendors to dictate your operating hours is not an ideal situation. 


Fee Income Opportunities 
One failing in our industry has been our consistent approach of giving away virtually everything, to the point that our customers have come to expect it.  As I told one banker a few years ago, “you already have free business checking . . . you just call it ‘we don’t charge for that’”  There are two areas to consider here.  First, improved collection of fees you are already due . . . NSF, OD, loan late charges, research charges.  There’s no reason not to impose such fees unless the bank is at fault for the problem.  Typically you are not.  For fees that are already published, start with your employees.  Help them to understand why we need to collect these fees, and give them training on how to approach customers.  In my experience, employees are often reluctant to impose such fees because of customer reaction.  These employees need guidance, and to be reminded that fee income is part of the bank’s revenue, driving salaries and helping offset overhead costs.  New services present a tremendous opportunity for educating customers that they should expect to pay for value when it is delivered.  “app stores” from Apple and Google have taught consumers to expect to pay in small increments for products that they want.  Leverage this mindset, and impose such fees when you begin to offer new products, including mobile capture, person to person payments, or other enhancements to your electronic delivery channels.  


Staffing 
Like many of you, I’ve been doing this banking thing for a while.  I’m in my fourth decade.  I always try to look for common concerns and considerations.  One of those remains staffing issues.  I know that I’ve written about this fairly recently, but I believe it is valuable to talk about it again.    Many community banks are overstaffed. (the numbers back me up - banks under 1 billion in assets tend to have 2 times the employees per million in assets that banks over 1 billion have)  At best, they aren’t staffed with the right people.  

A good bit of this issue is a result of poor HR practices that contribute to a tolerance of mediocre performance.  While I am not an HR expert, I know this for sure: it is impossible to fairly evaluate an employee’s performance if you have not established clear expectations for them.   

Most managers dread annual performance reviews.  As a result, such reviews are often late, done poorly, and contribute to an employee morale issue.  But if the manager builds a good job description, clearly communicates it to each employee, and uses that document as a means of continually evaluating employee performance, the task becomes easier.  Coaching events - positive and negative - are dealt with in a timely fashion, properly documented, and when annual review times comes around, both the manager and the employee will have a good idea of what to expect.  A much better situation than a hastily done performance review that leaves both parties with a bad taste in their mouth. 

Improving your managers engagement with their employees as it relates to performance reviews is a key first step in better management.  I believe just implementing these basic steps will go a long way toward improving both employee productivity and morale.  

As always, I stand ready to assist you with these or other matters.  Please reach out to me anytime. 

Upcoming and Recent Speaking Engagements
January 
19-20: Kentucky Bankers Association Payments Symposium, Louisville
21: Private Event: Industry Update
April
8: Ohio Bankers League: Technology Conference, Columbus
18: Graduate School of Banking: IT Management School, UW-Madison, 
May
3: Ohio Bankers League: CEO Conference, Columbus
4: Southern Financial Exchange: Annual Conference, Memphis
11 Maine Bankers Association: Directors Forum Augusta
June
22 Florida Bankers Association: CyberSecurity Conference, Orlando
Trent’s Comments is published six times each year and provides insight into strategic topics facing financial institution executives. Please feel free to share this with your staff and colleagues. 
Should you not wish to receive this newsletter, simply send me an email and I will remove you. 

Thursday, December 10, 2015

Four Ways Executives Can Take Control of Technology


For many executives, technology is an increasingly complex and frustrating part of running a business.  Two things are certain, though: 

> Customers increasingly desire to interact via electronic channels

> There are significant impacts on your productivity and profitability if technology is properly managed.  

Here are some thoughts to help non-technical executives manage technology well.

First, manage your people well.  Clear job descriptions and regular performance reviews are the key to setting expectations and monitoring performance.  Remember: it is impossible to fairly evaluate someone’s performance if you haven’t clearly set out your expectations.  While “tekkies” are a bit different to manage, starting with the fundamentals will build a great foundation.  All staff must clearly understand the business you are in, and what is needed from technology in order to achieve your goals.  Solid HR fundamentals will help you communicate that.

Second, incorporate technology into your enterprise strategic plan.  For many CEOs, strategic planning for technology is an afterthought or a dreaded task.  Moving discussions of technology into your enterprise strategic planning will help you to leverage technology, by embracing its value and clearly defining how technology will support your business lines, both customer facing and internal.  Transparency about the strategic goals of your organization will help your technology managers to support those goals.

Third, demand a business focus from your staff.  Work to help them understand that technology without a clearly defined business purpose is of little value.  A simple business case document can be a great teaching tool to help your staff communicate the benefits of technology they propose to invest in.  Tying these efforts back to the clearly communicated strategic plan will pay great benefits in terms of having your team focused on the things that are important to you.  Keep it simple.  Insist that your IT staff communicate in plain language.  Challenge them to explain the workings and impacts of their systems in practical terms, rather than relying on buzzwords.

Finally, keep it safe.  Insist on a security and business continuity focus.  Efforts by criminals to gain access to your company’s data (and that of your customers) are never-ending.  Your security efforts must keep pace.  Place an emphasis on contingency planning and disaster recovery.  Your ability to preserve and/or recover internal operations and customer facing systems is critical to the success of your business.  Insist on written and tested plans that address the three main components of such planning:  prevention, impact minimization, and expedited recovery.  Businesses that suffer technology outages of three days or more are at risk of failure.  It is that important.

Instead of shirking from technology, embrace it, and seek to actively manage it for the benefit of your employees, customers, and stakeholders.

Trent Fleming advises executives on management and strategy issues.  He can be reached at trent@trentfleming.com or on Twitter @techadvisor

Monday, November 16, 2015

Fall 2015 Banking Newsletter: Planning for the Future of Your Bank

Building Your Next Customer Base

What are you doing to develop your next customer base?
Recently, I saw a statistic that for the first time in our 239-year history, more Americans live in cities of 100,000 and over than do not. This trend, a long time in the making, caused me to begin thinking about the impact on community banks, especially those in rural areas. My question to you is: what are you doing to develop your next customer base?

Complacently serving your current customers, without regard to what the next 5, or 10 years might bring, is a formula for disaster. 

Here are three things that you can do today to proactively build your next customer base:

            First, take steps to understand the demographic changes in your communities – city, county, region – so that you have data. It’s difficult to see change when you are in the middle of it, so step back and assess. Years ago, Al Stewart sang, “In the islands where I grew up, nothing seems the same, still you never see the change from day to day.1” Think about your current customers and evaluate the “age” of your deposits in terms of the age of deposit holders. Start early to convince the next generation that you can be their bank, as well as “mom and dad’s” bank.

Next, take steps to ensure the viability of your community.  In recent years, I have written and spoken extensively on Generational Transfer and its impact on community banks and the communities they serve.  Read more at www.arkansawriverwriter.blogspot.com.  
Civic and business leaders can influence the viability of a community. Supporting and encouraging local businesses, seeking to attract new business, tourism, and educational opportunities are all ways that you can seek to maintain and improve the health of your communities. If your mayor and alderman are more focused on beautification than economic development, seek to change that by striking a balance with commerce. I’m all in favor of beauty, but it takes commerce to make a community thrive.

These are just a few thoughts for you on this important issue. As always, I stand ready to advise you in these and other matters. Please call on me anytime.
Finally, for your bank, seek to enter new markets with similarities to those that you already successfully serve, and look for new products and services that can enhance your presence in all markets.  Wealth Management, for example, is often overlooked, but can be a powerful way to strengthen and enhance existing customer relationships, forge new ones, and preserve them over time.



 (1) Al Stewart, On the Border from the 1976 album Year of the Cat
Upcoming and Recent Speaking Engagements
October 16
Missouri Bankers Association:
Young Bankers Leadership Conference, St. Louis
October 21
Nebraska Bankers Association:
Marketing Conference, Lincoln
October 29
West Virginia Bankers Association:
Operations and CyberSecurity Conference, Charleston 
My speaking schedule for 2016 is filling up -
Updates and booking at trentfleming.com
Trent Fleming is an industry expert on banking strategy. He travels around the country, conducting seminars on a variety of strategic, management, and technology topics. He also serves numerous financial institutions as a trusted adviser in managing today’s regulatory and technology environment.

As a consultant, he has worked with hundreds of financial institutions to create strategic plans that are blueprints for success, manage the selection and implementation of new technologies, and provide insight to streamline operations and improve productivity. operations and reduce costs.
 







Trents Comments is published six times each year and provides insight into strategic topics facing financial institution executives.
Please feel free to share this with your staff and colleagues.
Should you not wish to receive this newsletter, simply send me an email and I will remove you.
trent@trentfleming.com

Tuesday, October 27, 2015

Growing Commercial Business for the Community Bank

Growing Commercial Business
Trent Fleming, CEO, Trent Fleming Consulting

The battle in financial services is for the profitable small business.  Business customers are important for three primary reasons, in my estimation:

                            1)     They provide a dependable, low cost source of funds
                            2)     They are willing to pay fees when you can demonstrate value
                            3)     Many are closely or privately held, and provide access to other businesses with common ownership, as well as wealth management opportunities.

Banking options for businesses are often labeled as Treasury Management or Corporate Cash Management. The name is not important, but the concept is: acquire, promote, and support the banking products and services that your businesses need.

In order to to compete for business banking with regional and national banks,  community banks have to be effective on two fronts: products and perceptions. 

Products are easy.  Virtually any of the core vendor solutions available today support the commercial cash management solutions that your business customers will need.  You may have to acquire some ancillary solutions to address particular needs, but my point is this: you have access to these technologies.  Offering these products and services as bundled solutions for customers of various size and industry specialization is a key to building stronger relationships. 

Perceptions are hard.  Unless you are aggressively meeting with current and prospective business accounts, to promote your offerings, you are falling victim to other banks' marketing efforts that seek to discredit you.  Larger banks have traditionally done a better job of promoting services to business as a comprehensive set of products and services designed to help businesses get their banking done efficiently.  While there are some exceptions, in very large or highly specialized situations, for the most part, community banks have access to all the business account services that larger banks do, and are simply out-marketed.  Build your story and tell it regularly.

My presentation Packaging and Promoting Bank Services has been very popular with audiences recently.  I believe I strike a nerve around the importance of formalizing bundles of services for businesses of different sizes or in different industries, and presenting these bundles as solutions for the business.  Doing this says a lot to customers and prospects about the bank's interest in providing viable solutions.

So, how do you get started?  First, decide that business customers are important to your bank.  While you may maintain a retail or mortgage lending focus, you still need business customers, for the reasons outlined above.  Second, assess the extent to which your business customers are using your services now.  The list is virtually endless, but here's a start:

                            1)     Business Internet Banking                                         
                            2)     Bill Pay
                            3)     ACH Origination
                            4)     Remote Deposit Capture
                            5)     Sweep Accounting
                            6)     Interest Bearing Options
                            7)     Lending Products
                            8)     Merchant Services
                            9)     Business Debit and Credit Card solutions

Third, look for gaps: both in under-utilization of things you already offer, and in your failure to offer products and services required to compete in your market.  Fourth, begin assembling these products into categories.  A very small business, with limited needs, may only need basic business Internet to manage their accounts, transfer funds, and pay bills.  Business with a larger staff may have a need for ACH origination for payroll, and billing, and perhaps RDC if they receive a high volume of checks.  You get the idea.  The intent is to develop suggested bundles of solutions that you can then present to businesses in order to suggest solutions.  Don't over-think this.  The important thing is to get started. 

Once you have basic info about what customers are using today, and have assessed the gaps mentioned above, it's time to get moving.  Meeting with your officers with commercial account responsibility and discussing these findings is a good start. 

You'll also want to meet with your business customers:

Hold meetings with customers, in groups, or at their offices, to introduce the current state of banking technology, and get their feedback. Listening is critical . . . such a meeting should only be 25-30% presentation, the rest should be discussion and listening. In a relaxed environment, customers will open up and discuss pain points (which may not be directly related to the topics you introduced)

This is how you will learn what your customers really need and how you can best help them.

As you begin to execute your plan, there's no doubt that you will have relatively immediate success with some of your existing accounts strengthening those relationships by better promoting your products and services.  Leverage that into testimonial ads, and continue mining your own customer base, while aggressively looking for new business accounts that seem to fit the profile of businesses you are effectively serving.


What I want to do is help you to change the way you approach business banking.  For the better, and for the long run.  Perhaps these thoughts will get you moving in that direction.  As always, I'm available to assist should you have questions or need some outside guidance. 

Trent Fleming advises executives on management and strategy issues.  He can be reached at trent@trentfleming.com or on twitter @techadvisor