The Year of the Rabbit

February 3 marks the start of the Chinese New Year. According to Chinese culture, 2011 is the Year of the Rabbit. Should we interpret this as a sign to start hopping around like crazy? Alternatively, we can move slow and steady like Aesop’s tortoise – but we’ve tried that for the last three years, and it’s gotten us nowhere.

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.

• Send an energetic and creative business person to training. This small expense will pay for itself in months with the new ideas that come back. Typically 80% of the users use 20% of the features. Resolve to be that other 20% that use all of the features.
• Finish up those outstanding interface projects. As my hero Einstein seemed to suggest, expecting users to key data from one system to another when a known solution exists is the definition of insanity. If one doesn’t exist, build it.
• Manage your vendor. Software developers do not operate a bank in our regulatory and competitive environment day-in and day-out. They are looking for ideas to make their solutions better. Tell them what you need and demand it be put on the roadmap. Be sure to distinguish “need” from “want.”

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.

• Try it out first with something small between two departments;
• Get over the “we have to have an officer’s signature on paper” mindset; and
• Be careful not to reinvent the wheel.

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.

• Scan all inbound mail the second it hits the mail room and let the system notify the intended recipient that there is an image of information they might be interested in;
• Figure out what really needs to be kept and shred the rest; and
• Branches can use a weekly FedEx to send in anything that was signed and for which we really require the original.

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:

• Is the bank getting a productivity return for all this money?
• Are the bank’s systems right-priced compared to peers?
• Is the overhead to maintain this hodgepodge of technology worth it?

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?

-Croal Dude

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.
 

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