3. Disciplined management and metrics
You can’t manage what you don’t know.
One of the most powerful tools your team can wield is knowing how to use your current data more effectively. Consumer needs are very apparent in the data you already manage for your accountholders.
To build wallet share, for instance, start by looking at checking account and card activity, and noting who your accountholders are doing business with beyond your institution. These payments are often going to competitors. This analysis can inform you of a significant risk, but also of a significant opportunity.
For example, if you know which of your accountholders are making credit card or mortgage payments to other institutions, you can promote your own credit card programs and competitive loan rates to them. Mining the data you already have enables you to target accountholders very specifically. That can build wallet share for you.
4. Identify and manage emerging risks
Economic, demographic and competitive risks all need to be addressed, including the following, into the foreseeable future:
- Margins – Even with rising interest rates, margins will face continued pressure due to loan demand, competition and consumer demands
- Non-interest income – As NSF declines, you have to develop new competencies for non-interest income; wealth management is the greatest untapped opportunity, with a lot of non-interest income potential
- Operating expense – Expenses will continue to grow with investments in technology and branch optimization. Getting the best ROI will require learning to use tools like mobile banking to build relationships, not simply facilitate a transaction
- Loan loss – Deploying sophisticated pricing mechanisms will be required to manage risk and optimize margins as loan losses likely escalate
5. Market with strategic focus for brand development
Marketing and brand are your critical differentiators. Among financial institutions, marketing has often had a very tactical focus – PR and direct mail, and maybe some type of media advertising. But there’s so much marketing communication going out today that it’s easy for consumers to tune out.
Marketing needs to be much more strategic. It may be better to communicate with accountholders less frequently but use your knowledge about them to do so on a much more targeted basis. Every time you reach out, your message should be specifically relevant to them.
The importance of knowledge management
In all of these five imperatives, data analysis is essential to identifying risks and opportunities, and better understanding your current and potential customers and members, so you can be sure you’re targeting the right segments of the market. That means your organization should have “one source of truth.” You need a reliable, comprehensive data source that lends itself to good knowledge management – knowledge that is accurate, timely, efficient, insightful, transparent and distributed throughout the organization.