To borrow a line from Jim Cramer, if we are going to “Get Back to Even,” we’ll need to reduce non-interest expense at the same rate that non-interest income is getting walloped by NSF/OD fee declines and Sen. Dick Durbin’s behind-closed-door grab of interchange fees. Much has been written about how we are not going to replace diminishing non-interest income with new, yet-to-be-identified fees. So that leaves good ol’ sweat equity to take a McGruff-sized bite out of the expense statement. Here are a few ideas that won’t lead you down any rabbit trails.
1. Exploit mission critical, strategic applications.
As part of the IT Risk Assessment and Business Continuity Plan, these applications have already been identified as important. If they are so important that we are going to sink a lot of money into them when they catch on fire, doesn’t it make sense that we spend a little effort on them while they are up and running? Too many times we have seen a system being underutilized resulting in wasted productivity.
2. Get cracking on some paperless workflow.
Most institutions have everything they need except the vision and creativity to make it happen. Granted, not the two easiest skills to unleash, but this shortage can’t be used as an excuse again this year. Leverage the Enterprise Content Management (ECM) system’s workflow feature and resolve to make three processes paperless before the Year of the Rabbit winds up on the spit.
3. Eliminate all couriers to all locations by leveraging the ECM system.
Once the paperless workflow has been mastered, go ahead and shoot the messenger – literally. With branch capture of items we have eliminated the need for daily courier runs to get over-the-counter items into cash letters. Shame on the bank that still has couriers schlepping interoffice mail and loan documents back and forth.
4. Evaluate core and other systems for cost and complexity versus benefit.
If the bank’s core has been in place 10 years or longer, then the spaghetti-junction of system connections has bred like rabbits and is resulting in overhead. Only benchmarking the bank’s spending versus peers will prove (or disprove) this and answer these questions:
Taking these four steps will add basis points to your ROA and shave some off your efficiency ratio. So what are you waiting for, New Year’s?
P.S. I would be remiss to send you something without a Payments idea so, as lagniappe, look at all of your POS transactions for Merchant Category Code (MCC) 5968. These would be all your customers paying money to credit score, credit counseling, and credit repair merchants. Don’t you think that is something you could/should be doing for them? If you can’t do it better, shame on you, silly wabbit.
Cornerstone Advisors has fresh I.T. spend and bank productivity data to help you evaluate the cost and complexity versus benefit of your core and ancillary systems.
Contact us to learn more.