Hoosier Banker 39 #BetterInBanking Flyer Available evaluating already-efficient processes and selling more to current customers. Given the excess capacity at the manufacturing company, wouldn’t it make sense to evaluate if more widgets could be run through the facility? Would the market support providing more products to more people in order to increase net income without substantially increasing expenses? The manufacturing company analogy is similar to the situation being faced by community financial institutions. Banks have branches that currently attract only 30% to 50% of the new customers they were built to serve each year. This situation is getting worse as transaction volume continues to decline in branches. When a community financial institution starts welcoming significantly more new customers per year, fixed costs do not substantially change – no new branches have been built, no additional employees have been hired. Data from hundreds of community financial institutions illustrates the impact on actual expenses is only the marginal costs – generally an additional $30 to $50 per account per year, even if mailing paper statements. Conversely, the same data base shows the average annual contribution of each new account per year is in the range of $250 to $350. When comparing clients that have embraced this strategy to the overall industry over a three-year period of time, 2014 to 2017, their improvement in efficiency ratio was 63% better. This has been accomplished by significantly increasing the number of new customers coming in the front doors of existing branches. There is only so much blood to be squeezed from a turnip. Controlling costs, embracing technology to reduce process costs and evaluating staffing are all steps financial institutions should be taking. If they have already become very efficient in these areas, however, the focus must shift to driving revenue. Most financial institutions have tremendous excess capacity in their existing branches today. The solution is to start filling them up. HB EXHIBIT 1 EXHIBIT 2 IN MEMORY OF Roger D. Cummings, 73, retired president and CEO of Alliance Bank, Francesville, died Dec. 16. He additionally served the Community Bankers Association of Indiana as 2005 chairman. Cummings began his banking career in 1971, and in 1992 he was named president of Peoples State Bank of Francesville, which later became Alliance Bank. He retired in 2010. Cummings was active in a variety of boards and community organization, including the Humanitarian Distribution Center. He was a graduate of International Business College, earned a Distinguished Hoosier Award and served in the U.S. Navy from 1967 to 1971. HB To help promote banking as a career, the Indiana Bankers Association has created a shareable #BetterInBanking flyer. It features information about bank functional areas and matching skillsets, the benefits of a career in banking, and how being part of the banking industry can make a difference in the communities banks serve. To download the #BetterInBanking flyer, go to indianabankers.org/betterinbanking-flyer, or click on the green arrow above in HB Digital. Additionally, visit indianabankers.org/ next-gen for details about the IBA Next-Gen Bankers Video Series, Indiana BankLEAD internship program, BankTalentHQ and IBA Future Leadership Division. HB
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