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Seven Actions to Becoming a Revenue-driven Bank
Maria Schuld | division executive, North American Banking Solutions, FIS
August 16, 2019
Many bankers can lose focus on revenue enhancement efforts over time. Here are seven steps banks can take to focus on revenue growth.
Step 1: Take advantage of high-growth markets/communities
High-revenue-generating banks understand they need to apply maximum sales resources to the highest potential sales territories. They identify the “point of maximum effort” and set sales goals and targets there based on market potential, not past performance. Bank sales staff are redeployed in such a way that growth becomes a product of potential, not incremental measures based on last year’s track record.
Revenue-focused banks can quickly expand their product and service offerings, commensurate with value-based pricing. These banks seek to sell billable, revenue-generating offerings in the markets with the greatest opportunity (e.g., greatest number of small businesses).
Step 2: Leverage technology in deposit pricing activities
Banks need value-based offerings more than ever as consumers are increasingly opening (and closing) accounts digitally, without a branch visit. Extremely flexible pricing systems need to support relationship-driven pricing that adjusts based on events or milestones a customer achieves. Fee-generating behavior, such as debit card use, should be driven by rewards or pricing credits. The potential bundled product packages held for increasing non-interest fee income must be tapped. According to a recent Financial Brand article financial institutions can increase revenues per customer by as much as $60/account/year. For small business customers, the amount of fee income can be as high as $250 or more. Smart bankers leverage technology and expertise to provide optimal pricing for deposit and product offerings.
Step 3: Leverage customer and market data with analytics
Insightful analytics is a tool often driving high-revenue producers. Progressive bankers harness the growing power of analytics to evaluate both their existing customer data and market demographic data to maximize marketing expenditures. Revenue-driven banks use data analytics to help them answer questions such as:
- Who are my best customers and prospects?
- What is the potential demand for a product?
- How do I find growing consumer segments and markets?
- Which markets provide my bank with the greatest opportunity?
- How do I reach consumers most effectively?
Step 4: Don’t overlook the simple things
Banks can use uncomplicated technology to please their customers, but often overlook this avenue in favor of complicated pricing and relationship credits. One bank that did not forget this approach used a simple program to increase customers’ savings accounts by rounding up debit card transactions to the nearest dollar. The following is an example of a video one bank used to offer a simple product explanation to their customers at this link.
Step 5: Create a strong sales culture
The hallmark of high-revenue-producing banks is a strong sales culture that harnesses the skills of the entire organization. The bank’s sales goals and objectives must be understood throughout the financial services organization. Each business unit and individual contributor understands how his/her job can impact sales. Every employee with direct customer contact has a basic understanding of the bank’s products and their respective value propositions. Appropriate bank messaging is passed down through line management, across departments, and shared with the board of directors.
Step 6: Focus on all potential customer channels
High-performing banks realize they can’t reward what they can’t measure. Aligned closely with an established sales culture, these banks have clear revenue performance metrics for all client-facing staff and channels. The interchange revenue contributed from e-payments should be compared with interchange from all debit and credit card activities. Banks with clear performance metrics and meaningful revenue growth plans spend little time clarifying the details of their compensation, rather they rigorously monitor results of all channels and staff.
Step 7: Value training
High-performing banks value training as an investment and leverage training programs that create empowered, skilled and knowledgeable employees. Effective training directly impacts individual performance. In turn, an organization’s ability to achieve revenue growth can be related to the efficacy of employee training. This GROW video highlights one example of this type of training.
Given the volatility and unpredictability characteristic of today’s financial services industry, bank management may find itself tempted to practice a reactive approach, to shift gears every time a new set of circumstances presents itself. However, high-revenue-producing banks have demonstrated it is possible to take the aforementioned actions to create an environment conducive to consistent, long-term revenue growth.