In the early 1970’s a brilliant engineer/inventor/music lover designed a credit card sized electronic music player. Early prototypes and models of this small music player received the accolades of “the most radical music system ever” from the audio industry. Many of you may think I am talking about Steve Jobs – well I am not. This inventor however was distracted, did not pay attention to the business and saw the technology get away from him. And that is why today, Jobs and Apple’s 1.75 billion iPods are a household name and Kane Kramer is not.
So the question for you today is…are you keeping your eye on the technology, trends, and market place that will make your commercial lending efforts successful and sustainable?
In a CEB TowerGroup survey, bank executives clearly called out that maximizing credit applications with quality growth is the top priority for 2014. To be successful in achieving that growth commercial bankers will be focused in 2014 and beyond on these five key areas: (1) Rationalizing infrastructure, (2) Optimizing sourcing, (3) Centralizing risk management, (4) Enhancing liquidity management, and (5) Implementing commercial loan management solutions. To back that claim, in the 2013 Sales Readiness Assessment, CEB TowerGroup found that banks that are taking these steps to lead in technology changes were seeing an increase of 8% in their top performing relationship managers, and a 13% increase overall.
And while growth is critical, we cannot take our eye off the existing portfolio. Best practices suggest that to make the most impact in 2014, institutions should in the next 90 days to take steps to look at their individual loans, but with multiple factors, e.g. duration, convexity, and yield. But even more important banks should aggregate these views to a portfolio level to make sure that can optimize returns overall.
So while we see that in commercial lending the 3-year CAGR is now 10.5% and looking stronger, banks need to focus and not be distracted and capitalize on these opportunities. Invest and stay focused on the future!
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