Pub. 2 2021 Issue 3

23 ISSUE 3 | 2021 Mary Ellen Biery, senior writer and content specialist at Abrigo. Abrigo is a leading technology provider of compliance, credit risk, lending, and asset/liability management solutions that community financial institutions use to manage risk and drive growth. Visit abrigo.com to learn more. settled down in the multifamily space, too, especially in the secondary and tertiary markets where garden apartments, in particular, have survived well.” Other loan programs provided by the Small Business Administration (SBA) could also generate some activity for lenders that have not historically pursued SBA loans. “This is a great time with low interest rates for small businesses that are renting to buy their building,” said Tom Bennett Jr., Chairman and Co-CEO of First Oklahoma Bank, in a recent interview with TulsaWorld.com. “Or if they’ve thought about expanding because they can get long-term SBA loans at fixed rates.” In addition, businesses with current SBA loans may find help from the SBA programs to structure their balance sheets and debt for growth as the economy recovers. Capture efficiencies, opportunities with tech Lenders with streamlined, digital applications and underwriting will have the upper hand on those opportunities to increase lending. Financial institutions can also leverage technology to address the challenge of growing profits — especially if they optimize tech investments they’ve already made. One challenge with adopting technology during the pandemic is that the staff have been working almost in a fire-drill mode for more than a year. As a result, some old, inefficient processes may remain despite technology adoption simply because no one had time to review them and propose changes or because there was insufficient time to train staff on all the technology’s capabilities. Now is a good time to examine these issues and adjust to make the most of tech investments. Take steps to course- correct on any technology purchases that aren’t delivering the expected efficiencies or opportunities for scaled growth. Some ideas include: • Reach out to the technology provider for suggestions on features unused so far • Ask about bolt-on technologies that can help further transform time-consuming processes and improve customer or member experiences • Examine user adoption and, if necessary, arrange for additional training for staff Reevaluate how existing resources can blend digital innovations with the community financial institution’s hallmark relationship-banking practices. Some of these resources help develop banking relationships more fully and keep down expenses that can pinch net interest margin (NIM). A customer relationship manager (CRM), for example, can organize and manage customer/member/prospect relationships. A CRM that connects with the lending platform and other systems eliminates time-consuming tasks that aggravate borrowers and underutilize bankers’ talents, such as inputting basic account data when filling out a loan or new account application. It also enables marketing targeted at a specific industry or type of customer or member, such as PPP borrowers who might need equipment loans. Offering cross-sells and up-selling options at the right time will yield optimal success. Using technology to expand relationships can be as simple as making use of some of the learnings during the pandemic, even after the crisis ends. Centric Bank President and CEO Patricia Husic said her financial institution has practiced flexibility in its efforts to continue conducting business safely. Centric has replaced some out-of-office business lunches by sending a meal via DoorDash and then holding the meeting “over lunch” via Zoom, Husic said during the Fintech Talents North America conference. Using the DoorDash- Zoom model, lenders may find busy business owners more willing to meet to discuss needs if offered this convenient option rather than requiring a face-to-face meeting. Use pricing models to retain the best customers/members Various types of technology can make banking relationships more profitable. Pricing models for loans and deposits can combat margin pressure and help retain the best customers or members. One example: a financial institution can leverage the low interest rate environment to offer some of their best clients the opportunity to refinance. Abrigo Senior Advisor Rob Newberry has noted that by adding product features like six months interest only and adding that interest back into the principal balance, lenders can provide the best customers or members with cash flow relief and more security of a lower interest rate. Clients “have something longer term they’re locked in that they’re happy with, and you have a customer for life,” Newberry says. Deposit pricing models can also help institutions manage deposit accounts more profitably or use benefits to drive more loan growth by, for example, closing a loan deal with an offer of 25 basis points on a deposit account. The path to earnings growth in 2021 won’t look like it has in recent years for most financial institutions. But by leveraging recent technology investments and ensuring deposits are put to use wisely, banks and credit unions can spur growth and increase profitability despite the uncertain economic environment.  Using technology to expand relationships can be as simple as making use of some of the learnings during the pandemic, even after the crisis ends.