Partnering with Experts Improves Performance

As we discussed in our last blog, How Every Bank Can Benefit from Hiring a Consultant, financial institutions are uniquely positioned to serve their customers and often benefit from a fresh perspective and the best-practice experiences across the banking industry that a banking consultant brings to the table. In this blog, Bill Zumvorde, PRI Director of Business Development, dives deeper into two case studies where the banking consultants were able to help their clients improve profitability and customer experience.   

Thinking Outside the Box: Processes and Procedures

One of the positive attributes of community banks is they can be great places to work. Many times, executive teams have been in place for decades, and they are highly engaged in the community. While they have led the FI to considerable growth, they can also become set in their ways. Processes and procedures the team implemented 15 years ago when the bank was $200M in assets may not be as effective as the bank experiences considerable growth. 

Recently, PRI was engaged by a $1B bank that had grown both organically and by a recent acquisition. The management team recognized that they could benefit from an outside perspective on comprehensive efficiency and profit initiatives from an experienced bank consulting firm. 

PRI worked collaboratively with the FI team to redesign their product set, including deposit, loan, card and treasury management. PRI conducted a vendor review, branch study and staffing analysis within specific functional areas and developed more than 250 detailed recommendations to generate more than $1.2M in annual NII improvement, $300K in interest increase and $725K in expense savings. Process improvements helped expand capacity and reduce staffing expenses by more than $1M annually.

“As much as the financial impact, the bank valued the discussion and recommendations on organizational structuring, making sure the right people were in the right places,” Zumvorde said. “They also benefited from discussions on effective loan and overall growth strategies, including advancing a digital transformation while also shifting responsibilities of certain branch personnel.”

Considering the heavy day-to-day responsibilities of the executive team’s role, development of these initiatives would have been difficult and time consuming without the laser focus of the PRI consultants. The collaborative approach, which encouraged the FI team’s buy-in, helped ensure the recommendations were effective and fit the organization’s culture. The experience of the consulting team ensured the recommendations prescribed not only what to do but how to effectively implement the changes.   

Leveraging Expertise in Payments

Hiring an experienced banking consultant also offers the FI an increased expertise in payments, a cloudy and constantly evolving space that most FIs do not fully understand. Many FIs do not have a payments expert on staff devoted to putting the right pieces in place, managing vendors and monitoring performance, which makes the space a good fit for an experienced banking consultant.

PRI recently conducted a debit card performance analysis of a high performing, $900M financial institution. While the FI was receiving significant incentives from its debit card brand and it had competitive EFT processing terms, PRI identified that it did not have an optimal network for its debit card PIN processing transactions. 

“Using the FI’s debit card data, PRI identified several PIN networks that would be more profitable and then conducted negotiations and further analysis to determine the optimal network,” Zumvorde said. “After modeling the comparison, PRI and the bank moved forward with a multi-year agreement with the better network.”

Expense savings and interchange improvement with the new PIN network is on track to produce an approximate average annual improvement of more than $325K during the multi-year agreement, even after the buyout of the contract with the old network.

In addition to the financial improvement, the bank tapped into PRI’s expertise during discussions on card limits, fraud and new debit card BIN requirements to help it manage a high performing card program going forward.

Leveraging the expertise of an experienced banking consultant allows the FI to dig into previously unseen places and mine the hidden profits there. Having a laser-focused team, whose only aim is to improve the FI’s profitability, allows the improvement areas to be uncovered more quickly and thoroughly.

Profit Resources specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.