Raddon Report

This is the first in a series of articles describing the latest trends and key questions that often arise during the planning sessions we conduct with community FI boards and executive teams.

When I help executive teams and boards of directors plan their medium- and long-term strategy, I often hear their concerns about changes to the operating environment.

The first concern I hear is the swirl of demographic change. I was with a leadership team earlier this month and the CEO told me this: 

“Alexa, what can financial institutions learn from Amazon’s brand strength?”

Alexa: “Sorry, I don’t know that one.”

Oh well, it was worth a shot. If she had answered, I could have cleared my afternoon. But alas, we have some research to help answer this question.

In June, Raddon hosted its quarterly workshops for participants in the Performance Analytics program.  These workshops provide a forum for financial services executives, senior leadership, managers and department personnel to discuss the latest industry issues and assess their organization’s performance through the program’s peer benchmarks, trend analysis and customer segmentation schemes. 

When considering innovations in financial technology and “big data,” one often thinks of personal financial management tools (PFM).  You might have heard of names like Mint, Quicken, and WalletHub; essentially, these are financial dashboards.  They are meant to provide the consumer functionality to seamlessly manage and monitor personal finances, regardless where their accounts are located.

Financial experts on morning television – and American consumers in general – acknowledge that financial education is a valuable and important part of their economic health.  They admit that understanding personal financial concepts directly impacts their financial achievement.   Our latest research, however, finds American consumers barely participate in financial literacy programs.  Couple that low participation rate with the consumers’ inflated sense of their own financial literateness: any institution would question whether or not it’s worth the investment to offer a financial education

Free checking is dying.  Banks are reducing their branch networks, with 93% of the closures occurring in zip codes with below-average incomes.  Transitioning to digital channels is leaving those Americans without access to technology behind.  As we noted last year,

I once heard someone say, big goals get big results, no goals get no results.  I’m paraphrasing, but the essence of the statement has always stuck with me, especially when researching Raddon’s recent publication, Effectively Serving the Hispanic Market. 

In a changing and growing world of data, can your MCIF system keep up?  To arm you in making better, more informed decisions, your need for more information about your customers increases every day.

Your organization needs the right tools to ensure you continue to connect with your customers as quickly and effectively as possible. Having data in too many places causes confusion, inaccessibility, and worst of all, inconsistent data. A powerful business intelligence tool becomes your one place to store, organize and access all your institution’s data. 

Interchange makes up nearly half of all non-interest income for institutions in Raddon analyses, but P2P and other payments disruptors threaten that revenue stream.  Andrew Vahrenkamp, Senior Research Analyst at Raddon, asks why most banks do not have a strategy to meet this threat.