Answer:
During these turbulent times, banks are having great difficulty just keeping their doors open. Staffs work hard to reduce expenses or streamline processes. Compliance teams scramble to address processes and procedures while Federal regulators apply more and more pressure.
All the turmoil has forced management teams to take a holistic view of their entire bank. From improving credit quality to assuring healthy margins to growing core business to minimizing expenses, banks are addressing the key aspects of their business which are essential to their survival. We refer to this as the “banking equation.” Banks want to (a) lower their risk plus (b) generate revenue to (c) build a stronger business. Often, risk management and revenue generation are viewed as separate and different business functions.
Lowering risk addresses back office proficiency and productivity issues such as in-depth credit analysis, consistent loan evaluation, underwriting consistency and compliance preparedness. Generating revenue addresses front office, customer facing issues such as proactive customer retention, relationship management and upselling, and new business development.
First published on BankersOnline.com 3/09/09
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