Why efficiency is crucial for your bank’s success!
Are you wondering if your bank efficiency is the best that it can be? After all, financial services is a fast-moving industry that has seen many changes, especially over the last 10 years. For example, there have been significant technological advances like mobile banking apps that have greatly streamlined your customers’ experience.
Besides this, your customers have more options than ever, which is another reason why your bank must be running like a well-oiled machine. Also, efficiency is crucial since costs including paid social media ad spend are increasing each year.
This guide will show you 5 strategies to improve bank operating efficiency including focusing on cost-effective channels and increasing employee productivity.
1. Business Realignment
The first step to having optimal bank efficiency is to start with a high-level picture of your bank’s products, services, and profits per channel. From there, see which ones are providing the most return on investment (ROI) and those that are draining resources.
One way to improve business operating efficiency is by using Pareto’s law or the 80/20 rule. This rule states that 80% of your outputs come from 20% of your inputs. So, 80% of your revenue could be coming from 20% of your products or clientele. You could use this law to place more focus on the channels that are providing the best results.
On the other hand, it could make sense to pivot from different products or services. For example, covid19 has decimated in-person classes and workshops. Your business could realign itself to offer online classes and webinars to transition to a changing marketplace. It’s also important to analyze the resources needed to do this.
Be sure to assess the competition that offers online banking courses and find ways to differentiate your brand. Keep in mind that you might spend more money and resources initially, meaning that it could take more time to see a positive ROI. Having a long term approach and conducting thorough cost-benefit analyses will ensure that your resources are being used effectively.
Another example of business realignment includes adding services that you don’t offer, but your competition does. Some firms, like Charles Schwab, are both FDIC insured banks and stock brokerages. Adding a wealth management department or Robo advisor could help your brand compete with those companies.
2. Channel Optimization
After reassessing your business for any realignment opportunities, consider how your bank interacts with your clients through each channel. For example, you might have more demand for customer chat support as more clients are banking exclusively online.
Also, Millennials and Gen Z are averse to the phone and are more accustomed to email/chat services. 75% of millennials avoid phone calls and even make excuses to avoid answering them. Incorporating these customer service mediums will help you attract and retain different types of clients, increasing your bank operating efficiency.
Besides optimizing channels based on generation, consider other key differences between clients. For instance, a retail client with a checking account will have different needs compared to large commercial accounts.
The retail client will likely need less tailored service, especially if they have online account opening, mobile check deposit, and peer to peer (P2P) payments. Conversely, large corporations will have more complex demands that require more customized service. So, you might assign designated account managers to work with XYZ corporation’s student loan payoff plan.
Speaking of which, many corporations like Fidelity are offering services to help their employees pay off student loans quicker. Accommodating this new employee benefit could be a great way to improve bank operating efficiency by gaining new younger clients.
3. Process Costs
Unfortunately, costs like ad spend, postage, salaries, and rents (market dependent) are increasing quicker each year. Therefore, cutting costs without sacrificing quality will greatly help your bank efficiency. It’s also important to consider that there are many types of costs, like opportunity cost.
Opportunity cost refers to the alternative that you sacrifice when you decide to keep the status quo. If you have lengthy loan applications with mounds of paperwork, you have the opportunity cost of time. Using electronic paperwork would not only save you money via eliminating postal/paper expenses, but the saved time could be reinvested into the business.
Lowering costs also reduce your bank efficiency ratio. The bank efficiency ratio is simply expenses/revenue and it’s ideal to have this figure less than 50%.
The loan account opening paperwork example mentioned earlier is relevant to this since eliminating paper/postal fees decreases the cost of each application. These figures might seem small, but they accumulate over time.
Another example of improving the bank efficiency ratio is to automate manual tasks. If you find your employees answering the same questions constantly, consider directing your clients to a FAQ page or automated chat sequence.
This would also give your employees more time to focus on more crucial priorities. Giving back your employees’ time would also make them happier, which improves working culture and reduces turnover. Staff productivity is imperative for enhancing your bank efficiency and this will be discussed in more detail below.
4. Technology And Automation
As stated earlier, having the right technology and using automation is vital for having optimal operational efficiency in banks. Society is used to having instant information and streamlined processes. For instance, Uber makes it much easier and safer to get a ride compared to hailing a cab.
One of the best ways to upgrade bank efficiency is to go paperless. You can offer online account opening for checking accounts, savings accounts, loans, and mortgage applications. Some tools to consider using include DocuSign (electronic signatures) and PrintMail’s eStatement services.
You can improve the layout, design, and readability of your electronic statements with the latter option. Simultaneously, this can help you market your products and services more effectively. The top-performing banks use statement designs and statement ad inserts in their marketing strategy.
Having a paperless bank also reduces errors and secures data. Many companies, especially banks, use the cloud to store important client data. This will make it easier to find past data, which streamlines operational efficiency in banks.
Technology can also make internal communication among different departments seamless. For example, you could implement Slack, an online messaging tool, which greatly reduces the number of endless email chains. Like Slack, Microsoft Teams is another online messaging tool but it can also have various folders for employee topics, like training on specific procedures.
5. Staff Productivity- Build A Culture That Values Efficiency
Banking efficiency and productivity go hand and hand. Unfortunately, many employees, especially in financial services, can work long hours and seem “busy.” However, there is a difference between being busy and productive.
One way to increase bank operating efficiency is to train your employees to use cutting edge technology to automate and streamline processes. Some other ways to improve employee productivity include offering flexible work arrangements and remote working.
Stanford University found that remote workers are 13% more productive compared to office-bound workers. This is also crucial for employee health, especially considering the covid19 pandemic.
Outsourcing tasks is another way to enhance banking efficiency and productivity. Sometimes, you might not be able to automate certain functions like logo design. At the same time, it wouldn’t make sense to hire an in-house employee. In this case, you could consider outsourcing logo or even customer statement design services to a capable third party.
Lastly, incentivizing employees who hit certain goals with additional bonuses or other perks (like additional PTO days, point-based exchange systems, profit-sharing, etc.) can do wonders. This will also make your employees much happier, which is especially important as unhappy employees cost US employers $550 billion per year!
Bottom Line
The financial services industry has greatly changed especially since more than 80% of clients prefer remote banking. Even before 2020, banks have needed to be innovative and efficient to compete with the ever-increasing amount of financial vendors.
It’s also important to work with a third party that is extremely well versed in financial marketing. This will ensure that your hard-earned dollars will generate new clients and referrals, not go to waste!
How PrintMail Can Help!
At PrintMail, we can audit your online marketing strategies like SEO and PPC advertising so that you see a positive ROI. We can also help skyrocket your bank efficiency with integrated eStatements, tax form processing, compliance communications, and much more.
