Western Independent Banker - May/June 2013 - (Page 22)

Analyzing Customer Performance to Increase Bank Profitability YOU NEVER GET a second chance to make a first impression – or re-price a fixed-rate loan. When making decisions in today’s competitive environment, bank leaders must make informed decisions, using as much information as possible. If the bank makes a poor decision, the fallout lasts as long as the loan maintains its current price. This can have a lasting impact on the bank’s profitability, which means bankers need to fully understand the bottom-line implications of any loan-pricing decisions. In an industry where managing customer relationships is becoming more and more crucial to the survival of banks, financial institutions need to employ profitability systems to maintain and build profitable relationships. In today’s typical bank, approximately 20 percent of the customer base generates roughly 150 percent of the organization’s profits. Using profitability analysis is an effortless, cost-effective way to determine the impact the bank’s best and worst customers have on their bottom line. This process results in enhanced loan decision-making and performance, which can ultimately optimize a bank-pricing strategy and maximize profitability. Tackling Profitability Analysis Banks offer many excuses for why they do not embrace profitability analysis. Some believe that the systems needed are too expensive or require too many months of invested time to gather information, analyze it and explain its significance to employees. Other banks worry they do not In today’s typical bank, approximately 20 percent of the customer base generates roughly 150 percent of the organization’s profits. 22 www.wib.org Western Independent Banker http://www.wib.org

Table of Contents for the Digital Edition of Western Independent Banker - May/June 2013

A Message from the Chair
Data Mining for Profits in 2013
Banks Must Face Their Own Fiscal Cliff
Boost Your Bottom Line with Lending Process Enhancements
Managing Interest Rate Risk to Achieve Strategic Profitability
Moving Mobile Banking Toward Acceptance – and Profitability
Alternative Revenue Strategies to Improve Bank Profitability
Analyzing Customer Performance to Increase Bank Profitability
WIB Service Corporation Report: Secrets to Success in 2013
Professional Development Resources
Welcome New Members
Index of Advertisers/ Advertiser.com

Western Independent Banker - May/June 2013

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