Post on 21-Jun-2020
Pacific Coast Bankers’ Bancshares
Technology Opportunities ForCommunity Banks
Steve BrownPresident, CEO
Pacific Coast Bankers’ Bancshares
Pacific Coast Bankers’ Bancshares
Let’s Talk Tech
Pacific Coast Bankers’ Bancshares
Goal of This Discussion
1. Understand industry –altering shifts in community banking that will take place over the next 10 years.
2. Look at ways for community banks to capitalize on the trends.
Pacific Coast Bankers’ Bancshares
Innovation and Visualization
1/14
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Banking Innovation (Or Lack Thereof)
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Why 10 Years?
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Visualization
Video Walls
Video Customer Service
More Use of Touch Screens
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Centralized and Remote Tellers
Includes video chat
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Checkless / Digital Cash
2/14
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Checkless and Near-Cashless
Check usage will decline to near extinction in 15Ys
Cash velocity will be greatly diminished as well
Many networks will be bank based, as banks will remerge to play a key role in digital cash.
Pacific Coast Bankers’ Bancshares
Mobile Integrated Commerce
Contactless payments
Location based with lifestyle offers
Data collection for provider
P2P payment through banks
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More Ancillary Services
3/14
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Add On Banking Services - Payments
Need for greater profitability and earnings stability will drive many banks to focus on fee income. Some ideas:
• Alerts and messages (balances, payment clearing, etc.)• Long-term statement archival• Account payable tools (invoicing, shipment monitoring)• Secure & variable credit card numbers generation• Downstream credit monitoring• Prepaid accounts to entry checking• Smart bill payment • Employee expense management
Pacific Coast Bankers’ Bancshares
Add On Banking Services – Credit
• Alerts (loan status, payment due, rates, refi, etc.)• Micro lending platform (Loans < $25,000)• On call consulting (CPA, accounting, tax, planning, etc.)• Automated construction disbursement • Secure financial/tax statement analysis / budgeting and
quick book integration (OFX interface)• Insured payments• Small business credit rating / score consulting
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Add On Banking Services – Other
• Document storage• Tax / insurance assessment• VIP customer service / problem resolution• Fraud protection and insurance• ATM machines now dispensing prepaid cards
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Less Transactions, More Relationship
4/14
Pacific Coast Bankers’ Bancshares
Less Transactions, More Relationship
In 2012, average community bank ROE profitability for:
‐0.31%
Single Product Customer
19.70%
5 Product Customer
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Customer Financial Management
The value of your institution will be derived not from loans, or even deposits, but from your ability to aggregate and manage customer profitability.
Pacific Coast Bankers’ Bancshares
Customer Financial Management
Redefining “Community” Lending important but customer more important More packaged/bundled products Rise of banks as a sales organization More fee lines of business Greater descriptive or needs-based selling Self-aggregating customer clusters Product design to promote profitability
through customer satisfaction
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Subscription-Based Banking
In order to increase fee income and create a stronger brand, banks may elevate a segmented-type annual subscription to include a package of products, services, information, financial leadership and technology.
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Power of the Process
5/14
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The Importance of The Process
In the future, the loans you book will be less important, than how you book them:
Quality of underwriting
Consistency
Turn around time
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The Importance of The Process
• Institutionalize the process
• Innovate along the way
• Drive long term value
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Process Map Example – Deposit Opening
Clear signage, greeting, introduction and offering of
drink
Targeted questions to determine need
Rep presents customized solutions, options and education according
to need
Walked through disclosures and risk without banking
jargon
Confirmed comfort level by validation – go back over
missed points
Once account package is open, taken around to other members of banking team and introduced. Each to give
cards and thanks.
Meeting concluded with a walk to the car and other thanks and encouragement to call with other questions
Handwritten thank you note sent
Follow up within 10 days to see if everything was received and OK
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February• Data Gathering• Financial Goals
• Economic Forecast
March• Data Gathering
• Set Risk Tolerance
• PersonalAccount Focus
December• Year End Thanks
• Goal Update / Congratulations
• Contact Update
July• Mid-year Update
• Tax Planning• Check Goal
Progress• Data Gathering
October• Data Gathering• Long-range /
Strategic Planning
Institute An “Advisory Cycle”
May• Education
• Cash Mgmt • Prep-for Strategic
Planning
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Customer Driven, Customer Focused
6/14
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Customer Satisfaction
What bank financial institution company had the highest satisfaction rating last year?
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Customer Satisfaction
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Changing Customer Habits – 55+
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Where Do You Want To Invest?
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PNC’s Virtual Wallet Account Bundle
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Customer Benchmarking
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More Customer Intimacy
Banks will make better use of technology to generate fee income and customer intimacy. You already know the basics, but the next generation is:
1. Stand alone appsA. Real estateB. Car purchasesC. CRE valuation
2. Integrated customer-to-customer web applicationsA. Accounts / payable receivableB. Credit / risk managementC. Virtual lockbox
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Integrated Payments / Cash Management
7/14
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More Integrated Payments
The modern cash register costs approximately $2,000 per terminal. Apple’s new point-of-sale system runs on an iPad, has more capabilities (customer database integration) and costs $50. Retailers large and small will quickly convert.
Payments will soon be integrated directly to merchant’s bank.
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PFM Applications Will Go Business
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More Integrated Payments
More robust cash management suites of product and services
1. Balance and cash movement alerts
2. Cash forecasting and benchmarking tools
3. Subaccount management 4. Cash sweep to investments
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Integrated Financial and Tax Data
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Social Media
8/14
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Trend Toward More Social Products
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LinkedIn• Networking
• Bank Customer Communities
Google• Search
Optimization• Adwords
Facebook• Build customer
community• Real time updates• Cross‐build traffic
YouTube• Viral marketing
• Customer acquisition
Wordpress• Blog
• Customer acquisition• Thought leadership• Build cross‐traffic• Search engine
optimization
Yelp• Generate word
local word of mouth
• Customer acquisition
Twitter• Real time updates
• Micro blog• Cross‐build traffic
Foursquare• Location‐based
marketing
Social Media For Banks (In Order)
Pintrest• Marketing
• Thought leadership
Google+• Build customer
community• Real time updates• Cross‐build traffic
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Fansourcing
Efficiently connect potential customers with existing customers for instant recommendations.
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The Google Strategy
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A Shift In Human Resources
9/14
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The Rise of the Knowledge Worker
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The Knowledge Worker
• Hyperconnectivity
• Greater than 40% of employees will telecommute or work remotely
• Technology will relieve some of the service burden and thus technology and analytics experience will be in demand at banks
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Truely Mobile Sales Teams
• Armed with iPads
• Personalized and connection in the customer’s own business office
• Properly trained sales teams that understand needs-based selling and push to close
• RCC, a process of Remote Customer Capture
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Partnerships & Platforms
10/14
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Tying Partnerships Together
Helping information overload, one relationship at a time:
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Bringing Many To the Bank
Turnkey applications suitable for bank partnerships to increase PPC. Examples:1)Insurance2)Wealth management3)Cash management4)Gift / prepaid cards5)Credit management
There is no limit…
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A Progressive ING?
Someone will move to play a role in helping customers execute the best strategy (even if it is not with them).
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Multiple Electronic Channels
11/14
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Future Customer Interaction
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1-800 Social Media Commerce
• Several merchants such as Delta Airlines, JC Penny’s and others have begun selling directly through social media.
• Bank of America and JP Morgan routinely handle customer issues and sales through social media channels.
• Look for banks to have more direct customer integration with sales platforms within social media applications.
Pacific Coast Bankers’ Bancshares
Now-Based Banking (Location Enabled)
Banks will take not only more of a financial leadership position, but will evolve into instant communication to inform and drive behavior.
• Special promotions, events and self-segmentation strategies• Enhanced access into financial thought leadership
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Data Assimilation / Predictive Analytics
12/14
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Predictive Analytics For Banks
Polling information from multiple sources, including past history, in order to help banks optimize operations.
The capture and analysis of customer information about product/service use, needs, wants, desires and behavior will be mission-critical.
Examples:
• Better cross sell• More fee income through data aggregation and benchmarking• More accurate credit scoring for wider selection of lending• Reduced probability of customer defection • Prospective probability of default and loss given default• Deposit forecasting
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Can U Predict Performance By Loan Type?
Predicted ROEPredicted ROE
16% of bank performance can be explained by loan mix / type
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High Correlation Example
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Real Estate
Textiles R2 = ‐0.32
Electronics , Mfg & Internet Services R2 = ‐0.28
Machinery Mfg & Telecom R2 = ‐0.25
Electronic Equipment R2 = ‐0.15
Negative Correlation Examples
Engineering R2 = -0.10
Insurance R2 = -0.09
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Predictive Allocation Performance Modeling
Giving banks a framework for asset allocation
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Information Assimilation
The combination of social media, webification and database access will result in an unparalleled knowledge synthesis for banks. This will impact customer management, marketing and credit.
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Information Assimilation
Examples:• Customer profitability management
• Customer prospecting
• Credit analysis
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Choosing Customers Proactively
Nursing Facilities28% ROE
Architects5% ROE
Men’s Clothing 2% ROE
Men’s Clothing 2% ROE
Men’s Clothing 2% ROE
Roofers-3% ROE
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Profitability By Industry
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A Closer Look By IndustryR
etai
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rofe
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Targeted Niches
Vet clinics / Dentists
High profit margins
Low default rates
Institutionalized succession process
Property Management / Multifamily
Strong rental market
Prop. Management = stable deposits
Non‐Profits
Low cost / large deposits
Identifiable
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More Intelligent Marketing
Customer Profitability
System Data & Analytics
Credit Report
D&B Report
Business Database
Property Records
Social Media
Customized calling list of profitable accounts in
descending order according to bank
objectives
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Mass Customization of Pricing + Products
13/14
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More Personalized Products
Banks will create products such as credit cards, checking and cash management bundles that can be customized to fit the needs of the individual or business.
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Customized Pricing
Similar to capacity/airline/credit card models, banks will move away from pricing by product and move to pricing the customer based on attributes and behavior.
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Experimentation
14/14
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Experimentation
Applications that play into the trend:
Personal financial management (PFM) that integrates seamlessly into online and mobile
Shared bill payment that allows parents to pay kids bills and bank to keep the kids as customers
Credit tools that help customers maintain or build their credit profile and automatically receive new offers as credit increases
Pacific Coast Bankers’ Bancshares
Questions?
THANK YOU !!
Pacific Coast Bankers’ Bancshares
Contact Information
Steve BrownPresident, CEO
Pacific Coast Bankers' Bancshares 340 Pine Street, Suite 401 San Francisco, CA 94104
www.pcbb.com1-888-399-1930