Correspondent Blog

The reality is that most banks only design less than half a product. Sure, bankers are great at getting the basics right, but there is rarely much thought around 66% of the product’s design after that. In this article, we look at the elements of excellent bank product design and provide some hacks on how…

Community banks refine their products and services to compete for better borrowing relationships – the better borrowing relationships are associated with better credit quality, meaningful cross-sell opportunities, acceptable margins and fee income, and higher return on equity (ROE).  Unfortunately, current market dynamics are making it hard for community banks to outcompete for these better borrowing…

Scoff at the NFT’s all you want, but they are your bank’s future. Not every bank, just those that will survive. All the crypto ads during the Super Bowl are another sign of this. Sure, in part, it’s a hype-driven Pets.com moment. However, like the changes that took place around Web 1.0, Web 3.0 is…

In a recent blog [Here], we argued that banks are almost always in an inferior position by not re-quoting the loan rate with market movement until the loan closes. We think that when banks book a fixed-rate loan, the fixed-rate must be finalized at the closing table; otherwise, banks give borrowers a free option that…

How many “How to Market to Millennials” sessions or “How to Attract Gen-Z” have you sat through? Chances are you were wasting your time focusing on demographic segmentation. Every generation is indeed influenced by different environmental forces such as – war, protests, smartphones, social media, or crypto — but there is little evidence that shows…

In the last 30 years, the total number of bank charters has declined by 65% (as shown in the graph below). There are many reasons for this industry consolidation.  We believe that the most significant factor driving consolidation is that banks tend to underperform using a risk-for-pay bank business model, and banks that have properly…

Most banks are concerned with their credit portfolio. As credit risk increases with rising rates, the following question arises – is it better to diversify by geography, property type, or business type? Do you focus your marketing dollars and pricing on particular counties, commuter zones, types of commercial real estate loans, or specific C&I industries?…

Community banks have structured fixed-rate loans for many years with an adjustable repricing feature where a loan is fixed for a number of years and then resets based on a stated spread and an index. However, adjustable term loans have several drawbacks for banks, especially in a rising interest rate environment.  One of the most…

Get your process right, and all else will follow. Most banks do not have an evolved process when it comes to bank product growth through product development, marketing, and sales. Growing a product is a quantitative effort that takes capital, planning, math, and a laser focus. In this article, we provide banks with a proven…

Bankers can be forgiven for not anticipating the start of the pandemic.  However, bankers must now be planning their business to capitalize on the transition from a pandemic to an endemic environment.  There is convincing evidence that the global economy will transition to an endemic phase after the omicron variant subsides – but caveats abound. …

If you want to know how you can improve your bank’s profitability, one place that you can start is better loan pricing. While chances are your bank prices most of its loans correctly, it is the fringe cases that, in aggregate, end up having a large impact on bank profitability. In this article, we look…

We see three expected developments in 2022 that will make a loan hedging program an essential competitive advantage for community banks. Increasing short-term rates, higher expected inflation, and increased need for fee income will significantly benefit those community banks that can offer a seamless and document-friendly loan hedging program.  While we have our ARC Program…