The Game Has Changed:
15 New Rules for the Future of BankingNo two ways about it—it’s been ugly. Since 2008, the banking industry has been racked by instability, volatility and unpredictability, like one long episode of Game of Thrones. And just when community bankers thought things were getting sane again, they found that the rules have changed—for good. The future of banking will belong to those banks that understand that the whole game of banking is fundamentally different now.
The future will belong to those institutions that understand the new rules of that game—and are the best at executing them. In fact, 90 percent of the problems that most banks are struggling with right now stem from the fact that they are simply playing the wrong game. Their people are busy running a Mongolian goat rodeo of activity instead of understanding that mere activity is NOT a result. In fact, activity is rarely even the MEANS to a result. If you don’t have a rock-solid, crystal-clear definition of your bank’s intended results, busywork and activity will produce a downward spiral that only ends when you are acquired or taken out of the game altogether.
What are the new rules for winning in the months and years ahead?
New Game Rule #1: Focus on getting massive core deposits.Gone are the days of measuring to see how many new accounts you have. When 87 percent of your customers are causing you to actually lose money, WHO CARES how many of those money losers you have? Instead, part of the new game is understanding that core deposits help you maintain safety and avoid vulnerability—regardless of interest rate changes. Just a few short years ago, banks were screaming for deposits. How soon we forget. Now that they’re sitting on lots of them, most banks have gotten cocky. Most think they’ve figured out some secret, when in fact they’ve actually gotten weaker in their ability to secure a tremendous amount of low-cost core deposits— sustainable over time—without matching rates or order-taking.
New Game Rule #2: Clean up your loan portfolio immediately.Yeah, you made some mistakes—and we all know how you made them. The formula for making bad loans is simple:
No funnel filled with good quality A+ credits that you’ve identified through psychographics +
No warming campaigns to get into legitimate conversations with these prospects +
No system of sales to pull in these quality customers = Bad loans!So, while you’ve made some mistakes in the past, you can now make a change by identifying, warming and closing. But as long as your bank is sitting on a time bomb of bad loans, the bad juju from those mistakes will sap your energy. So decide to clean up the portfolio immediately. Get it behind you, then build your system so you won’t be going through another portfolio clean-up three years from now due to lack of wisdom and failure to execute.