The CTSO Report: Volume 1

Welcome to the initial CTSO Report. This volume is the initial publishing of a periodic report on improving efficiency and effectiveness.

You may be wondering about the “CTSO” moniker. Simply, it is an acronym for a phrase Profit Resources, Inc. has used in its internal discussions regarding processes, products, and services for the past 25 years: Cut That Stuff Out.

Today’s report will focus on services targeted at deposit accounts, specifically checking accounts. The categories of services offered to banks by various providers include those focused on account gathering and account profitability. Interestingly enough, all of these approaches (and there are several) share common concepts and approaches. Most importantly, they are all unnecessary outsourced services.

The scope of services we are discussing include mass direct marketing, the promise of high yield interest rates, incentives, club checking, and using account segmentation to improve profitability (including the elimination of unprofitable account relationships). We are not saying CTSO to these concepts. Quite the contrary! We are just saying you do NOT need to pay the premium price to outsource the concept.

The “hooks” used by these service providers include peddling their marketing expertise, consumer buying habits, structured training and/or tools, multiple examples of profitability improvement, user references, and most importantly the reporting they provide to show you how well the product is working for you. These were all things that Bernie Madoff provided in his sales literature!

Today’s takeaway is simply this. If you are considering one of these services, don’t do it or wait. If you have already contracted one of these companies, identify your exit point. These questions may help:

• Does the business case or performance measurement include volume or revenue the bank already has without their services?
• Do you have the proper internal success measurements identified?
• What is the tenure of this provider’s bank customers?
• Can we identify and contact banks that have discontinued the service?

The bottom line is this:  after the expense, will this in fact help your bank’s long-term profitability?  With a focused internal effort, could your bank’s team of professionals accomplish some of these goals at a lesser expense?  Get creative and do your research before signing the contract.

Volume 2 will be distributed in the next week and will include debunking the business case and performance measurement of these outsourced services.

Until next time, keep working to Cut That Stuff Out!