How community banks can leverage data to measure profitability and create new revenue streams

community banks

Today’s customer has more options than ever before when it comes to banking their hard-earned money, including community banks, commercial banks, online banks and credit unions.

As such, community bank leaders need to work hard to differentiate themselves from the competition. One way to do that is by getting to know the bank’s customers in order to reward their loyalty and offer products and services that match their needs.

Banks collect a massive amount of raw data about their customers that can be used to inform their marketing approach and product offerings. The challenge, however, is knowing whether or not a bank is collecting the right type of data that can be turned into valuable information.

For example, community banks often have the opportunity to interact with personal banking customers during important stages of their lives, such as getting married, having children, purchasing a home and getting ready to retire. On the commercial side, bankers often know about their clients’ desires to expand geographically, move offices or make a significant change to their operations. With this knowledge, the bank can develop products tailored to certain life stages or business events, knowing they have existing clients that would benefit from the new offerings.

Where to begin
To get started, community bank leaders need to make sure their core systems, including deposits, loans, cash management, and credit processing capabilities, are integrated and able to work together. In addition, strong business processes are required to support the core systems. This sounds simple, but is more challenging in practice. It’s no small task for a bank to replace or update legacy core systems. Yet, knowing when it’s time to undertake this task is critical to keeping up with modern customer expectations and competing in today’s banking landscape.

An IT assessment of the bank’s people, processes and current systems is the first step to determine whether or not a replacement is needed and to establish a timeline that incorporates supportive business processes.

The next step is to determine the type of data that will be most valuable to your organization. Start with questions you want answered, and then think about how you can uncover that data. Some questions worth considering:

  • Who are my most profitable customers, and how are we evaluating this? Don’t just think about loan and deposit balances; be sure to consider interchange, fee revenue, and payment services as well to determine the overall value.
  • Which of our clients process credit card payments but don’t use the bank’s service?
  • How many clients activate debit cards but rarely use them to make a purchase?
  • Who closed their account but forgot to tell the bank? How do we manage this without creating adverse relationships?

Once you have a set of questions, you can work with your team to figure out if the data already exists within your systems or whether it needs to be collected to find the answers.

It’s time for bank leaders need to look at their data like the asset that it is, and strategize on how to affordably and reliably capitalize on that asset for long-term success. Contact Hartman today if you’re a bank leader looking for deeper insights into your customer’s banking preferences.

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