Why? Let’s dig into the details for a minute and research the causes and solutions for each of these.
1. Bankers spend 75% of their time during the new customer/account process on the computer versus building relationships.
| CAUSE | SOLUTION |
|---|---|
| The biggest reason is related to lack of system integration. Systems like ChexSystems, Check Order, Credit Reports, Debit Card, Online Banking Enrollment require re-entry. Most vendors promise integration and most do if you use their products and want to spend the money. The reality is that many banks don't do either of these. | Before selecting systems, make sure the vendors you have in place work with the new system. This seems like common sense but it happens all the time that they don't. If they don't, make sure you're comfortable using the systems that do. |
| Lack of capable workflow functionality creates manual processes and affects processing times. Vendors tout "integrated workflow" in their systems. While that sounds like a great idea, most don't have system capabilities that allow for dynamic workflows to be customized by product. The lack of integrated sales tools also adds to the frustration. | Pick vendors that walk employees through processes and make processes "idiot proof." |
| The risk pendulum has swung too far. This oftentimes causes requirements like signatures for every transaction, which creates paper ... which then creates manual processes and QC. Other examples include CIP requirements that go overboard like requiring a paper social security card or risk rating of consumer accounts in the branches. It could stem from an overreaction to a regulator or an overzealous compliance employee with too much power. | Manage regulatory concerns accordingly and don't over-react. Take a strategic approach to risk by challenging processes that don't seem efficient. Rules are often subject to interpretation and as long as senior management clearly understands the risks, alternative, more efficient options may exist and should be explored. |
2. Over 50% of commercial banks still manually originate commercial loans via point solutions that are typically not integrated.
| CAUSE | SOLUTION |
|---|---|
| Loan officers are typically sales versus process driven individuals and because their pay is typically tied to production, they do whatever it takes to get deals done. Automation directly conflicts with their "scream the loudest" technique that has worked for years. | Executive ownership that drives behavior is critical. From pipeline to close, everyone needs to be marching to the same drum, and oftentimes the CEO's active involvement is necessary to bring the bank out of the Stone Age. |
| Many banks have allowed loan officers a creative license to reinvent the wheel for every deal so terms can get very complicated. | Product standardization is needed (with some variations for those customers that are different as required). There are always exceptions that won't fit into the system. Designing processes that work the majority of the time and not focusing on the one-offs that occur a few times a year will help. |
| Vendors continue to build capabilities but no one vendor has great sales tools (nCino) while also having strong customizable workflow (CCS) and credit analysis tools (Moodys) that integrate well. | Sell older, less sophisticated loan officers on the fact that they will be able to focus more on sales and customers will have a quicker, less error-prone experience as long as they play in the sandbox. |
3. 60% of financial institutions still print, sign, index and manually scan new accounts documents, receipts and loan documents.
| CAUSE | SOLUTION |
|---|---|
| Technology and lack of understanding is to blame most of the time. Many platform applications haven't been upgraded or financial institutions aren't aware of functionality that's available to them. Many vendors have punted here and rely on third parties that make the process so cumbersome it's not worth the hassle. | Check in with your vendor to find out how others have implemented signature pads at both the teller line for cash back and at the new accounts desk for customer documents, maintenance, wires, etc. In many cases, it's just a matter of buying some relatively cheap hardware and a module to make it happen. Be careful that you really understand where your vendor is when it comes to the user experience of the process. There should be no need to go into multiple systems, manually search/select documents or, worst case, re-type information to create electronic forms. |
4. Over 70% of statements are still printed and sent via mail.
| CAUSE | SOLUTION |
|---|---|
| While the trend continues to rise, many financial institutions don't create products or fees around mailing statements. | Charging for traditional paper statements is a no-brainer even if it's $2. Typical costs are in the $2-$5 range across the county. For those that want to differentiate and send the paper statement, make sure to tie profitability to the overall account costs as this can be a significant driver. |
| Vendors want a piece of the pie and charge much more than they should for sending customer notifications and housing the statements. Oftentimes, e-statements can be almost as expensive as traditional statements as vendors charge per page, per statement, etc. | Leverage your imaging system. Most of the time statements live in the archive so really the only missing link is the integration to online banking. Statement notifications can also create some challenges, but given the proper account disclosures, I'm not sold that notifications need to even go out. That being said, there are alternatives to high-priced vendor solutions that should be explored via technology where investments have already been made. |
Bankers, crank up some Eye of the Tiger and let’s get our teams humming by executing some of these solutions. There are several more examples of similar mind-blowing statistics in each of your financial institutions. I challenge bankers to come up with a Top 5 list and feel free to share it with us here at Gonzo. The only non-admissible items: pie-in-the-sky type projects like card-less ATMs or digital wallets that seem sexy but don’t pay the bills. Let’s get the low hanging fruit fixed first.
“I tried so many times
And that’s no lie
It seems to make you laugh
Each time I cry”
“Didn’t I blow your mind this time” –Delfonics
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Cornerstone Advisors can help your institution identify hidden financial opportunities – not only for the short-term but for long-term strategic growth. Contact us today to learn more.