Letter from the Editor
Having made great strides in stabilizing their recession-scarred portfolios, banks are now turning their sights to 2011, where the big question is revenue growth. With loan volumes down 40% to 70% from the peaks of a few years ago, is there any relief in sight?
To explore that question, this issue of the Novantas Review takes a look at loan growth strategy in a post-recession environment. As detailed in our cover story, “Gaining the Edge in a Tight Market,” it is shaping up to be a shallow economic recovery, setting the stage for an epic market share battle among growth-hungry banks.
The situation marks a strategic turning point in an industry that had been fixated on high-volume product origination. The new priority is relationship expansion — doing more business with established customers — with major implications for bank performance.
As outlined in “A Cautious Outlook for Household Credit Demand,” many consumers are still dealing with the aftermath of the recession and wary of new mortgage borrowing. In turn, there’s a need for enhanced sales responsiveness in the branch.
Meanwhile in middle market commercial banking, clients increasingly are looking for specialized banking expertise. As shown in “Regional C&I Growth: Focusing to Win,” there are further opportunities to meet this need through so-called “industry verticals.”
Such customer-centric strategies will be essential in a tight market.
— Steve Klinkerman
Editor in Chief
Vol. 1 No. 2 | 2010
Gaining the Edge in a Tight Market
July 2010
As lenders fight for growth through market share gains, the competitive emphasis will tilt from pushing products to cultivating fuller customer relationships.
Growth for Banks in a No Growth Market
August 2010
During this “no-growth economy” banks will increase wallet share through higher quality customer relationships. Banks will grow by transforming customer behavioral knowledge into cross-sell strategies.
Commercial Banking: Growth through Specialization
August 2010
Each bank is looking for an edge — some way to be advantaged. Winning banks will grow by doing a better job of new customer acquisition and retaining their existing customers. It’s time for banks to step back and re-examine their current verticals strategy.
A Cautious Outlook for Household Credit Demand
July 2010
In a languid credit recovery, winning retail banks will need superior skills in targeting, relationship management, risk-adjusted pricing and underwriting.
Smart Growth in Home Equity Lending
August 2010
Bank branch representatives will need to play a leadership role in understanding customers and responding to their needs. Combined with specialized expertise, this type of advocacy will be vital in attracting new business — and to retain valuable customers already with the bank.
Debit Cards: Preparing for a Changing Growth Equation
August 2010
Banks stand to lose roughly $5 billion in annual revenue from the proposed set of changes in credit card and debit card interchange rate. Traditional sources of bank revenue will be drying up and banks will have to completely rethink their checking account and card business models.
Regional C&I Growth: Focusing to Win
July 2010
In a continuing tight market for middle-market commercial banking, a sharper focus on specific industry sectors will provide an edge for progressive regional banks.
Consumer Banking: The Role of the Core Payment Account in Relationship Banking
August 2010
Relationship Advantage is a critical ingredient in the formula for banks to survive and thrive in the years ahead, and winning at that game will demand new insight and new disciplines.
Renewing Home Equity Lending
July 2010
The new competitive dynamic requires a much more analytical understanding of markets and customers, plus a consultative and personalized interaction with each borrower.
The Financial Column
Checking Customer Acquisition: New Banking Relationships or Just New Accounts
July 2010
Banks need to re-evaluate marketing campaigns and promotions. Broad campaigns to acquire customers will likely not drive the volume they have in the past, and certainly won’t drive the value.
Checking Renewal: The Cash Management Account
July 2010
The typical family has double the monthly payment transaction volume from a few decades ago, and scatters resources across multiple accounts. This creates an opportunity for banks to help households better manage their monthly finances.
Strengthening Customer Dialogue in the Shadow Retirement Market
July 2010
A “Shadow Retirement Market” of investors estimated to account for almost $9 trillion, based on recent Novantas and Informa research, saves 60% of funds outside of their formal retirement plans.
Exploding the Myths about Frequent Overdrafters
July 2010
Our studies show that one out of every nine checking customers frequently overdraws his or her account. This 11% slice of the customer base had previously generated roughly 80% of the checking industry’s overdraft fee revenue.
Podcast
Financial Reform in the EU: What it Means for the US
September 2010
Now that Capitol Hill has passed financial reform, all eyes turn towards Europe for the next chapter in the roll out of the new architecture. Cicero Consulting’s Iain Anderson and Novantas’s Kevin Travis discuss the potential impact of these emerging issues.
Feature Report
Debit Legislation: Rethinking Retail Payments Strategy
August 2010
Recent legislation likely will pummel debit interchange fees. Winning banks will develop new strategies and innovations that will improve customer segment responsiveness.
Video
Getting Your Money’s Worth — Retail Banking Sustainability
June 2010
Sherief Meleis and Judith West discuss the importance of integrity for bank sustainability.
ABC News — Banks Eliminating Free Checking
June 2010
“Banks are trying to find ways to continue to offer low-cost, almost free checking products,” says Rick Spitler of Novantas.
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