Not sure where 2018 will lead us? You’re not alone. If 2017 taught us anything, it’s that the political, social and technical environments in which we operate are more dynamic (or is that unsettled?) than at any time. So where do we focus? Here are our thoughts on the year ahead:
Opportunity in Disloyalty. A recent Bankrate survey indicates that more than a quarter of consumers have had their checking account for over 20 years. At the same time, over a third pay anywhere from $1 to $50 monthly in service fees. And 14% of consumers would make a change if it didn’t seem so complicated. We’ve seen some creative switch kits created over the past several years in an effort to lure consumers to make a change. Do you have the messaging and processes to seize them?
The Battle for Payments Relevance. The myriad of competitors in various forms are all trying to get themselves between you and your consumer relationships. As new requirements have evolved, many vendors’ “integrating payment capabilities” have become diffuse applications stitched together. If your goal is simply to minimize the damage by new competitors, that can be enough. If not, time to think about alternatives.
Digital Diligence. “Digital engagement” has flourished as a buzz-phrase over the past couple of years. We can all agree that the effectiveness of your digital channels will only become more important to your success over time. To be successful, digital banking vendor selection is not a one-size-fits-all, RPF scoring process. Do you have the right partner to help you tie your digital banking strategy, evaluation and selection to your market demands?
The Forecast is for Clouds. What creates more value for your business – managing your technology infrastructure or extracting more value out of your applications and data? That sums up why the move of business line applications to the cloud is accelerating. The key to your success in a unified plan that identifies when and how you plan to migrate elements to the cloud and, just as important, how you’ll then use at least some of the increased staff capacity to create market success.
Simple Wins. Cost pressures and market demands are driving all of us to one central idea: we need efficient internal processes that support market responsiveness. Continuous improvement is not an academic idea; it’s a requirement to sustain business success. Do you have a program in place to constantly challenge and improve internal processes? An external partner can help you see the changes hidden in plain sight.
Managing Risk. Do you have the tools and processes to mitigate risk in a demanding, hyper-connected world? Digitalization creates opportunities, but it also heightens risk. For many, risk management has fit into the “best-of-suite” category – buy what the core provider is offering, even if it doesn’t have all the capabilities they’d like. Market demands and reputation risk now require this to be a “best-of-breed” buying decision. If you haven’t reviewed your risk management suite lately, it’s time.
Commercial Lending. New private office construction was valued at $6.6 billion in the first half of 2017, the highest since 2007 and 2.5 times higher than 2010’s bottom of the market. Across the U.S., vacancies were at 12%. The numbers say that the CRE market is moving to the end of its cycle. But opportunities do still exist.
Power in Partnership. While the Fintech mania phase has ended, the market dynamics that make creating interesting financial applications remain. The presence of small, nimble competitors will not end. Individually, these competitors are difficult for traditional financial institutions to track and counteract. In response, some FIs are creating partnerships and cooperatives. Creating the right governance structure is key to the success of these new entities over the long term.
Rising Rates and Mortgage Opportunity. The refinance boom has run its course. The next few years will challenge all of us to compete for home buyers, especially the emerging Millennial market. Speed and convenience? Those are table stakes. If your technology doesn’t position you to win, you need a review.
Big Analytics? Customer Relationship Management and Business Intelligence are terms that have been thrown around in our market for almost 20 years. More recently, we’ve heard about analytics and Big Data. Regardless of the terms, two decades in there are few examples of how data creates real business results. The problem isn’t the software; the problem is in the planning and execution. But where these capabilities used to be nice-to-have, they are increasingly must-have.
Is there more? Absolutely. For example, we haven’t addressed cryptocurrencies, which we think are interesting but not actionable. Instead, we have listed the high-impact, high-value ideas that we believe can create meaningful results for your financial institution this year. There’s a lot there and it’s likely you don’t have the expertise or perspective to successfully address them. That’s where Edge’s roster of consultants with real-world experience operating institutions like yours can be a help. Contact us today!
Edge Consultancy, LLC