- Generate more properly-priced income-producing assets
- Embrace new technologies to
- Deliver more value to clients
- Lower operating costs
- Achieve economies of scale
- Attract good people to the team and align the team's efforts
These are certainly all good initiatives for bank executives because these things will always be important for success. Strategy is about anticipation and action. So to be strategic we need to consider what is changing.
We observe five basic drivers of bank performance:
- Interest income
- Interest expense
- Non-interest income
- Non-interest expense
- Provision for losses
Each category is important. However, the driver that has most consistently facilitated high-performance over the long term has been interest income. So, it is not surprising that we observe sustained executive emphasis on the generation of income producing assets. The magnitude of the other elements of success will get more or less executive attention based on the existing environment. The key challenge of strategic leadership is to anticipate the evolution of the environment and put more emphasis on what will be important than on what has been recently important to success.
In 2006, managing credit risk would not likely have shown up as a key factor on surveys, but two years later it was "the key" to success.
Interest expense has had modest relative impact. It could easily be not top of mind for bank executives when completing these surveys. I am not surprised by your current industry-wide survey results. However, I would be surprised if you run the survey two years from now and the ranking of "increasing deposits" is not higher then.
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Neil Stanley
President of Community Banking
TS Banking Group
Treynor, Iowa
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Original Message:
Sent: 04-02-2018 16:12
From: Steve Kinner
Subject: Positive impact on your bottom line
What's the one thing you're going to do in the next 12 months that will have the biggest, positive impact on your bottom line? ~400 CEOs, Presidents, and CFOs answered that question. Although the top two responses may not be surprising, it may shock some to see just how low "increasing deposits" fared on the list. Only 4% identified deposit growth as a primary focus. Six other areas scored more highly. See complete results – not published elsewhere – by clicking the below image. Then let me know if they match your thinking.
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Steve Kinner
Promontory Interfinancial Network
Arlington VA
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