Serge Milman

Serge Milman is the Principal Partner of San Francisco, CA based SFO Consultants which provides Strategy, Finance and Operations Management Consulting services. He also the Principal of Optirate – a blog dedicated to growth and profitability strategies for Banks and Credit Unions. Serge can be reached at info@SFOconsultants.com.

E-Signatures in your Credit Union: a Win-Win

Channel, Customer Service, Marketing No Responses »

May 012013

E-Signatures in your Credit Union: a Win-Win

As technology advanced over the years, more businesses and industries have begun adopting innovative solutions – document management, mobile aps, workflow automation, etc. – to their unique challenges, and electronic signatures are just one of these technologies. Although e-signatures aren’t new – telegraph signatures date back to the mid-1800s – Electronic Signatures in Global and National Commerce, which made electronic signatures as legal as physical signatures, played a big part in increasing the comfort level in adopting these solutions. And since credit unions are certainly not lacking in their own unique challenges, it is not surprising that the most forward thinking of these organizations have adopted e-signature solutions. Meeting regulation and compliance requirements becomes much easier with e-signatures. Electronic signature technology actually enhances security, not degrades it; confidential information is better protected and electronic signatures typically involve passwords, tokens and audit trails for an added level of protection. Printing, shipping [Read More...]

Knowing Your Customer Is Essential for Loyalty and Profitability

Competition, Cross-Sale, Customer Acquisition, Gen Y, Marketing, Profitability, Strategy No Responses »

Jan 142013

Many Community Banks and Credit Unions provide a great service to the community in the form of free checking accounts. And many in the Community Bank and Credit Union sector are rightfully proud of their contribution and support of the community. Unfortunately, the big win for consumers results in a huge loss for Banks and Credit Unions which jeopardizes the viability of the very institutions providing the service. The reality is that most consumers do no need or want anything more than a checking account (accompanied by a debit card and perhaps direct deposit & bill pay). These limited set of products require substantial scale before a provider can generate economies of scale to produce a profit; and by definition, this excludes Community Banks and Credit Unions. Because of this, most Community Bank and Credit Union customer relationships result in recurring, non-recoverable annual operating losses. Understanding this, Community Banks and Credit Unions [Read More...]

The Big Shift by Brett King

Branding, Competition, Cross-Sale, Customer Acquisition, Customer Service, Data / Statistics, Demographics, Gen Y, Marketing, Pricing / Rates, Profitability, Strategy, Uncategorized No Responses »

Jan 102013

Brett King discusses how customer behavior and technology are changing the future of financial services. The reality will challenge the thinking of traditional Bankers through a discussion of topics including: · Why customer behavior is so rapidly changing, including the four phases of disruptive change; · How community financial institutions and their branches must evolve; · Why checks are rapidly disappearing and cash is next; · Why your mobile phone will replace your wallet in the next 2-3 years; and · How financial institutions must reinvent themselves or become irrelevant

Revenue Growth & Customer Loyalty Depend on Strategy

Competition, Cross-Sale, Customer Acquisition, Marketing, Profitability, Strategy No Responses »

Jan 022013

Net Interest Margin (NIM) woes facing Banks and Credit Unions will continue following the trend established in 2012, especially given that the FED announced that the period of ultra-low rates will continue until unemployment rate falls below 6.5%. An optimist will tell you that is at least 3 years away; a realist will set your expectations closer to 2018. The challenges facing Banks and Credit Unions will remain similar (hopefully not worse) than what we experienced in 2012 until the economy recovers, until rates climb again, and until the loan demand returns. Shrinking Revenues, including NIM, is driven by lackluster loan demand and ever greater competition for the business resulting in lower rates, and lower loan fees (and less restrictive loan covenants). Like never before, Bankers are forced to find alternative revenue generating sources and many are struggling… resulting in weaker Community Bank and Credit Union brand values, less attractive value [Read More...]

To TAG or not to TAG

Competition, Data / Statistics, Regulations, Strategy 1 Response »

Dec 102012

Should Community Bankers care about TAG!? Do they need it? Do they use it? Some would have you believe that TAG, and its renewal are central to the survival of Community Banks… without it, deposits would evaporate… Luckily, that isn’t the case. Not at all. Just take a look at FDIC Quarterly Banking Profile report for 3rd Quarter 2012. Data shows that Community Banks use TAG to insure just $50 billion of deposits (~3% of the total TAG deposits), with a typical Community Bank insuring an average of just 17 accounts. Not surprisingly, the primary users of TAG are a small number of very large banks… just 108 banks to be precise that cumulatively hold more than 90% of the TAG insured deposits. Should Community Bankers care about TAG? Is it important to their business? The numbers very clearly demonstrate that TAG is only important to 108 large banks. Community [Read More...]

Why Community Banks are Ill-Positioned to Serve the Cash-Less

Competition, Cross-Sale, Customer Acquisition, Data / Statistics, Marketing, Pricing / Rates, Profitability, Strategy 2 Responses »

Dec 072012

Why Community Banks are Ill-Positioned to Serve the Cash-Less

Most Americans have little or no cash. Most, it appears live paycheck to paycheck. Schwab’s OnInvesting magazine published a story summarizing the findings of a Bankrate survey conducted in June 2012 which shows that just 25% of Americans have enough cash to support at least 6 months of living expenses. Why is this relevant to Banks and Credit Unions? Well, for one, it validates other findings that suggest that most consumers hold less than $1,000 in deposits. But perhaps more importantly, it suggests that the vast majority of consumers are unlikely to be interested or approvable for the vast majority of products and services that Banks and Credit Unions wish to sell. For example, we all recognize that Banks and Credit Unions typically have a good track record in lending to individuals with high credit scores, ample income, and high net worth — the traditional ‘A paper’ credit. On the [Read More...]

FMCG’s Branch Consolidation Advice: Handle With Care

Channel, Competition, Marketing, Profitability, Strategy No Responses »

Oct 032012

FMCG's Branch Consolidation Advice: Handle With Care

Cost rationalization and efforts to improve efficiency ratios are important themes in 2012 and likely for the next few years. Much of this effort is likely to focus on the Branch, given that branches and associated branch expenses constitute 60% – 70% (and in some instances much more) of the total cost base for Community Banks and Credit Unions. For this reason, the article published in the BAI Bank Strategies authored by James McCormick, Founder and President of First Manhattan Consulting Group, entitled Branch Consolidations: Handle With Care troubles us. We agree with Mr. McCormick that it is essential for Bankers to understand the challenges and benefits of branch network rationalization, especially in the current environment of weak loan demand, intense competitive threats, transition of sales & service activities into online & mobile channels, and ever growing regulatory burden. There is no doubt that any reorganization, streamlining, and rationalization efforts requires [Read More...]

Growth And Profitability Require Competitive Differentiation

Branding, Channel, Competition, Cross-Sale, Customer Acquisition, Marketing, Profitability, Social Media, Strategy No Responses »

Sep 282012

Growth And Profitability Require Competitive Differentiation

How does a Bank remake itself so as to attain the prestige, the following of the likes of Apple, Disney, Harley Davidson, and Starbucks? This is the question Ken Olan, EVP / CFO of a $2 billion assets Victoria, TX based First Victoria Bank asks in his opinion post entitled Mission Possible: Creating a Category-of-One-Bank published on BAI’s Banking Strategies website. There is no doubt that retail banking is highly commoditized and without breaking out of the sameness, retail banking will continue to be plagued by cannibalization from non-traditional competitors and will eventually evolve into what Brett King refers to as ‘Utility’ services. In the article, Mr. Olan posits that “…banks need to start thinking more like category-of-one retailers and less like banks. The great companies of the world innovate more than products and services. They consistently challenge the status quo to create brands of ever greater relevance. Sometimes that [Read More...]

Community Banks and Small Business – a marriage made in heaven?

Customer Service, Lending, Marketing, Strategy No Responses »

Aug 092012

Community Banks and Small Business. A marriage made in heaven… or so many Community Bankers would have you believe. This may have been the case in the past, but does it still hold true in today’s environment? A recent BAI Banking Strategies article - Small Business Still the Charm - attempted to make the case that, Small Business is just waiting for Community Banks to come calling. The article is an interview with Richard Dailey, CEO of the 3-branch, $215 million-asset Apollo Bank in Miami, who asserts that Community Banks focused on small business customers can still do well. While we don’t doubt that Mr. Daily, Apollo Bank and a handful of others may find success, Small Business banking is not as simple as some may believe; and may require significant planning before most of the 6,500 Community Banks deploy additional resources to pursue this segment. We suggest that there are at least [Read More...]

Some Bank Customers Are Better Than Others

Competition, Cross-Sale, Customer Acquisition, Data / Statistics, Demographics, Gen Y, Marketing, Profitability, Strategy 2 Responses »

Jun 042012

Some Bank Customers Are Better Than Others

As with everything in life, some things are better than others. To some consumers, Coke tastes better than a generic cola. To some car buyers, a Mercedes is preferred to a Honda. To some print store owners, a customer placing a large order is preferred to a customer placing a small order. To some financial advisors, a client with a large portfolio is preferred to a client with a very small portfolio. We ought not be surprised that the preference likewise should hold for customers and members of Community Banks and Credit Unions. That is, a Bank or Credit Union executive, assuming a rationale individual, should prefer a customer / member that is capable, willing and interested in purchasing numerous banking products & services over a customer / member who is interested in just one or two basic products. To help us understand customer segmentation, FIS Global recently published an [Read More...]

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