BankForward Consulting, LLC - Advancing A New Model for Community Banking
"The future isn't what it used to be"  --Yogi Berra
  Listed below are paths that we believe have merit for  community banks.  Not all banks will follow the same path and not all pursue the same destination:
  • Strategic balance sheet expertise:  hedging, balance and flexibility will be key managing elements
  • A premier on-line banking platform: E-commerce is the preferred businesss mode for both retail and commercial clients.  How does your service provider stack up vs. competitive technology?
  • Profitable application of remote deposit technology: minimum balances vs. fees.  Is your remote capture business truly profitable?
  • A robust and client-friendly suite of treasury services:  Client-initiated transfers, sweeps and ACH initiation are a must for commercial-oriented community banks.  Excellent, cost-effective technology is available.  What is your service offering...and do you deploy it profitably?
  • Contingency funding diversification and flexible liquidity sources: what do your policies say?  What sources have you found?
  • Strategic deposit products and pricing:  Why do you offer CDs to your depositing clients?  Does your bank utilize term funding profitably?  Does your bank employ profit-focused loyalty programs and preferential pricing for core clients?  How can you target your deposit products if you haven't seriously targeted your clients?
  • Pricing discipline:What percent of transaction fees do you actually collect?  What employees can waive fees and what are the parameters? What are you paying your vendors for those "fee-free services?
  • A structured portfolio of agency, municipal and corporate securities Bankers are turning to securities markets for earning assets...and it's making the regulators nervous.  Many fixed-to-floating corporate bonds have better risk-adjusted returns than your prime+ loans...with no associated ALLL.   Lending is the foundation of a bank's earning asset portfolio, but diversification is being be re-defined.  A bond, afterall, is a loan.  Do you have the in-house skills to manage a diversified bond portfolio? 
  • Fee-based wealth management services: investors are more optimistic about stability in their financial situation, but conservative in their outlook to retirement.  Most clients don’t need sophistication…but they want competence.  What is your key service offering?
  • Pre-paid cards: access vs. ownership should be evaluated.  You want the balances and the fees--not necessarily the compliance headaches!
  • Money Service Businesses: profitable in select markets using disciplined and time-honored controls.  Clients willingly pay a premium. 
  • Mobile banking: it makes sense for a few...but it's day is coming. 
  • Strategic review of vendor relationships: Outsourcing is fundamental to community banking—but it's expensive.  Service providers are profit-oriented.  Auditors, attorneys and technology partners all realize their customer base is shrinking.  What are you doing to negotiate pricing and/or upgrade service with key vendors?
  • Mortgage origination partnerships: it’s all about the fees.
  • A capital plan that will allow you to grow and stay in the game:  Size will matter.  Regulatory and risk management expenses will require scale in order to compete.  Core processor service offerings and pricing will evolve to the new model, but it will take time.
  • A controls environment to monitor it all: Regulators are people, too.  While belligerent behavior is never acceptable (and neither are belligerent exam reports), be honest; some banks seriously skirted responsible controls, and it's resulted in headaches for the rest of us.  
Both competence and confidence are vital in order to support, defend and execute business plans in this heightened regulatory   environment. We can help you get there. 
In the marketplace of ideas, community bankers realize that the service model of our industry is evolving.  There are paths to pursue...others to avoid.  (See our 12/26/10 blog entry titled "Paths to Pursue, Paths to Avoid"). 
The ability for a bank to maneuver can change dramatically in a surprisingly short period of time.  Those not thinking and planning pro-actively are at risk of getting "lost in the woods".