DATA-DRIVEN STRATEGIES FOR BANKS: START HERE BY PAULA S. KING, CPA, ABRIGO Practical advice for using data to develop and support institution goals. Answering three questions ahead of strategic development discussions can ensure data drives your financial institution’s efforts. How To Develop Banking Strategies Using Your Data Everywhere bank leaders look, it seems, someone is talking about how financial institutions should leverage their data and analytics to develop strategies for leapfrogging competition and reducing risk. So why aren’t more financial institutions already using their abundant data about customers and products to drive new offerings or deals, influence pricing and serve customers better? Three areas that are vital for using data to inform and execute winning business strategies often become roadblocks to success: • First, clearly identifying what information is needed to support and achieve the institution’s goals is essential. • Second, efficiently generating those insights from your data is a requirement for a sustainable process. • Finally, periodically assessing performance against institutional strategies creates a method for measuring success so leaders can pivot or seek more insight before plans get off track. Financial institution leaders can use their answers to the following three questions to clear potential barriers and ensure a data-driven approach to strategic planning. 3 Questions To Foster Data-Driven Strategies (1) What are your short- and long-term strategies, and what questions must you answer to support and achieve those strategic goals? Creating data analytics and reports alone are not the strategies; rather, they are the critical inputs to assist decision-makers in developing and executing those strategies. Staff producing the reports must communicate with management and inquire about what management wants to glean or achieve from the data insights. A pertinent question could be, “What critical questions do you need to answer?” Then, determine which reports/insights can answer those questions and better inform decisions. The goal isn’t the production of reports but producing insights and information that are critical to developing and executing strategy. It’s providing the decision-makers with meaningful insights so they can execute appropriately. For example, say your management and board’s strategy for the upcoming year is to grow the CRE loan portfolio by 10%, and the institution needs to consider expanding into new markets to achieve this goal. Before finalizing this goal, management should consider the following: • Historical trends • Current CRE concentrations • Market analysis • Loan pricing considerations • Real estate industry performance • Peer comparisons. 12 In Touch
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