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Trends to Expect and Focus on in 2014

By Kim Edwards, Vice President of Client Services at FMSI

When I was growing up, a trend was what was hip or popular at a certain point in time. Today, whether the latest fashion, recipes, hairstyles, entertainment, the stock market, or political trends, you can be sure there will always be a new trend coming along to replace the old.  Emerging economic and industry trends play a key role in driving the strategic planning for banks and credit unions.
 
2014 holds many similar trends and areas of important focus for both banks and credit unions.   As planning sessions wrap up and despite numerous uncertainties with a marginally better and more stable economy than last year, the general outlook is good for the first part of 2014.  Banks and credit unions are faced with issues around high operating expenses, new competition, compressed margins, and challenges with “keeping up” with the latest and more advanced technology trends, which account holders continue to expect. A successful and well executed strategic plan becomes even more important.



2014 Key Financial Trends for Banks and Credit Unions

With a changing mortgage environment, financial institutions should have a mortgage strategy in place in order to move with the changes. As rates rise, refinances will shrink and purchase mortgages will be on the rise.  Home equities will remain stagnant as many homeowners remain upside down in equity, or battled a foreclosure situation during the down swing of the economy.

In credit unions, consumers have picked up the bat and are ready to “play ball” and get back in the swing of borrowing.  Consumer lending is growing and the question to ask—is your organization positioned to handle what is on trend for a record year in consumer loan growth? Consumer lending will be the real driver of loan originations and what is happening on the balance sheet.

In both banks and credit unions, following the reality of the regulatory burdens and the ever changing Federal Regulatory Mandates and analyzing their potential financial and strategic impacts will remain a challenging trend.
 
Managing and reducing costs in all financial institutions is important as revenues have decreased and margins still remain low.  One of the key players in cutting cost is having a clear picture of customer/member traffic patterns as they relate to hours of operation.  Leveraging this type of meaningful business intelligence can ultimately result in providing more accurate and efficient schedules, better use of teller idle time, and assist in making key staffing decisions that will actively reduce your organization’s personnel expenses. 
Proactive management to the continued reduction in teller transaction volumes and utilizing workforce management software to optimize the efficient use of staff to promote cost reduction remains important in 2014.  Moving away from the “lose an employee, hire an employee” because we’ve always done it that way, creates excess waiting for work and excess labor costs.
  
FMSI’s Annual Teller Line study provides insight regarding the trends and the 2013 study revealed the following:
  • 45.3% decline in teller transaction volume since 1992
  • 84.2% increase in salary/benefits since 1992
  • 123.6% increase in Labor Cost Per Transaction
  • 17.0% decline in productivity
What Continues to Remain a Focus in 2014?

In a blog post in July 2013, by Jim Marous, on Bank Marketing Strategy, Marous interviewed over 30 industry leaders in bank and credit union management.  He states, “Improving the customer experience was the foundation of almost all the responses I received around 2014 strategic priorities. Whether we are talking about branch reconfiguration, mobile banking applications, back office operations, etc. banking industry leaders believe an improved customer experience is the key to growth.”
 
Improving the account holder experience forces us to answer many difficult questions when determining what is most important, including:  What outdated processes can be removed to streamline the experience?  What will a differentiation plan look like in a market where so many financial institutions look the same and offer similar products and services?  How to best leverage technology strategies in order to provide an account holder focused experience?

Technology will continue to change and drive the way people bank.  If IT is a problem, IT should also become the solution.  Focus to simplify processes and increase automation through use of technology.

Advancements in social media, mobile banking, and cloud information continue to play a large role in driving change.  Social media ranges from account holder care to new marketing and selling opportunities.

More focused data management can assist in providing a more favorable experience through measuring and managing to trends, such as analyzing where employee coaching may be needed.

Big Data continues to be a trend on the rise….

Just three short years ago, the topic of “big data” was just hitting the horizon in the data analysts’ world of massive data.  But starting in January 2012, the topic started to weave its way into business vernacular. Now it’s a full-blown trend and many executives are exploring the term “big data”, as everyone struggles to clearly define “what it is” and how to best identify what is most meaningful and how best to retrieve the data in order to produce optimal business intelligence.

Partnering with a third party vendor in order to extract valuable information contained within your core system, and processing it into meaningful business intelligence, provides an opportunity to analyze the information and use it to support critical staffing and service decisions.
 
Managing account holder complaints properly creates an opportunity to truly understand and address their issues and develop meaningful solutions.   Owning the areas of dissatisfaction, building meaningful account holder experiences that translate into reasons for account holders to stay instead of moving their banking business to the “next best place’ is an important strategic focus for 2014.
  • Complaints = opportunity to implement improvement and change
  • Listen and learn!
Continue to introduce new or strengthen existing sales approaches for revenue growth opportunities with all frontline staff. Develop tellers as trusted salespersons who understand account holder needs and proactively recommend new products and services.  The key is driving culture change to include developing relationship builders vs. tolerating order takers.
 
Banks and Credit Unions should encapsulate the trends, culture changes, and key performance metrics that will be important in 2014.