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...]
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...]
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...]
Financial Institutions – particularly Community Banks and Credit Unions – continue to face significant margin pressure, especially post Reg E and Durbin. Boston Consulting Group (BCG) analysis predicts that Banks can expect a 2% decrease in annual revenues while transaction volumes will increase 9% annually over the next 10 years. McKinsey & Co predicts that Durbin will result in as much as 50% margin erosion, and Oliver Wyman’s 2011 study shows that Reg E has already resulted in a 45% reduction in income, even for Banks not subject to Durbin. Louis Blatt, SVP of ACI Worldwide, in a BankNews article notes that explosion in demand for payments from Consumers and Small Businesses can be a boom for Community Banks and Credit Unions. Digital payments offer Financial Institutions (FIs) the opportunity to compete against new entrants (such as PayPal, Square, Isis and others) who are already causing significant market disruption and applying [Read More...]
Do consumers really value Bank Branches? Is the Branch traffic of value to Banks? An honest appraisal of the data clearly suggests that the answer to both questions is a resounding ‘NO’! Instead of looking for ways to justify sunk cost, Community Bankers would be well advices to redirect their limited resources (financial & human resources) to growing profitable customer base and wallet-share.