The new bureau is being built from the ground up, and it is nothing like other agencies that oversee banks. Their new mission focuses completely on the consumer, not the bank, and it is shaping itself to be the single place to go for all financial services complaints. Mandated by the Dodd-Frank Act, a center for complaints is no lie; visit their website to see for yourself… you won’t miss the area to submit complaints!

Raji Date, an assistant to President Obama and special advisor to the Treasury Secretary has been running the CFPB as Richard Cordray was awaiting appointment as director. During this time and now, they are hiring ex bankers with specialties to head up specific regulatory activities. Date stated, “’We’re going to take this job seriously. And when people are doing the wrong thing, we’re going to hold them to account.’”

Accompanying these strong values, key duties and concepts the CFPB will embrace include:

1.) Spring-cleaning. ABA Banking Journal stated CFPB will “deeply examine candidates for regulatory streamlining.” This includes endeavors including blending the Truth in Lending Act and the Real Estate Settlement Procedures Act to focusing on customers and industry workers alike. They began digging first into credit products and are moving quickly to mortgages. You must ensure your products meet regulatory requirements to a “t”. If there is any room for misinterpretation, consumer complaints will increase.

2.)   Consistency. CFPB will work openly with agencies to develop a unified voice regarding regulatory standards such as the definition of fair lending. This is critical during a time when compliance deadlines must be made quickly. How your institution has done things in the past may not resemble how you will do things going forward, and it is your responsibility to alter your processes to meet the needs of your customers.

3.)   Consumer-focused. As noted above, the bureau is working to ensure consumers understand all products and service terms and conditions. Bankers must monitor your records of complaints very carefully, adjusting processes as needed. Complaints are the perfect window for potential issues with the CFPB.

While the CFPB may only conduct examinations of large banks with over $10 billion in assets, community banks must keep a close eye on what the CFPB is doing. New interpretations of the consumer laws and “best practices” will be applied to all banks, regardless of size. For example, new regulatory standards will mean more compliance costs. You will need to evaluate and adjust accordingly with each change.

So as you continue the climb back to prosperity, keep a close watch on all regulatory standards and ensure your bank is consumer-focused.

Chris Munzo comes to Vitex as an executive with over 28 years of experience in banking and banking technology.

Chris began his career as a commercial lender, spending eleven productive years with banks in Philadelphia, PA and Tampa, FL.  His responsibilities included new business development and client management.  Following, the strong housing market in Florida brought Chris into residential mortgage lending, where he spent the next seven years.  During his time in Florida, Chris was presented with the unique opportunity to start and grow the mortgage lending department for The Terrace Bank, a community bank based in Tampa, FL.

From there, Chris moved to Fiserv, a global leader of technology solutions in the financial world, and was responsible for selling loan origination, servicing technology, and outsourcing services to financial institutions.  During his more than eleven years there, Chris was named corporate-wide sales executive of the year and was later awarded the top sales executive in the category of payments and lending.  His efforts centered on a consultative process including the documentation of business processes, the introduction of “best practices,” and detailed software selection projects.

The current regulatory climate facing community banks is extraordinarily challenging. With the potential to lose a significant amount of fee income while also being subject to more stringent regulations, the need to improve in the areas of sales, service, operations and risk strategies is becoming increasingly important. You cannot afford to leave any stone unturned in today’s demanding environment. But how can you do everything at once, when your resources are already stretched?

In an effort to help you achieve your resolutions, we are finding that many Vitex clients are considering our Bank Profit Optimization to quickly, efficiently and objectively look across all functional areas or your bank to identify initiatives that can bring the most rapid return on investment.

Bank Profit Optimization is an all-encompassing program providing clients with a top-to-bottom review of the revenue and expense activities that contribute to profitability, including such things as revenue enhancements, workflow efficiencies and process improvements. Our optimization program will provide your bank a prioritized roadmap, and bring the project management capabilities to bear, that will allow you to phase in the highest value initiatives first, establishing a rapid competitive advantage.

We encourage you to relax and let Vitex be your objective eye and an extra set of hands. This year, like every year, our resolution is to help banks work better every day.  And we guarantee that the cost of our involvement will bring the possibility of at least a three-fold return. Now that is a Happy New Year.

Surveys show an overall dissatisfaction with CRM “systems”; many senior managers are tired of trying to deal with the systems and turning to old school, manual ways to circumvent various issues.

When you look at the root of why many bank managers are so unhappy, it looks as if the initial process of understanding their CRM system and what they really wanted to get out of it was overlooked and therefore the incorrect systems were put into place.  Those institutions who responded that they are satisfied spent a good bit of time understanding CRM – what it is and what it can do. Using that knowledge, they found the right vendors and ultimately got the results they were looking for.

There are 3 things banks need to know/do when looking at the CRM world:

1. You have to define it

2. Everybody sells it

3. You’ll know it when you see it

1. You have to define it

A great way to start is to look at the job classifications affected and sit down with the employees to uncover viewpoints, needs, and differences.

Customer Service may want a concise summary of current accounts, backed up with some drill-down capacity to help leverage their time trying to get accounts open quickly. A Consumer Lender may have similar needs but also want to add credit summarization and maybe even some quick ratio analysis.

The Marketing Department will be focused on demographic and household information to be able to accomplish useful segmentation and product/sales tracking. The Financial Analysis Team will want executable “slice and dice” capabilities to augment profitability analysis and even Asset Liability Management decisions.

Get to the bottom of this early to ensure the system you choose is compatible with your institution and user needs.

2. Everybody sells it

There are a lot of vendors and options out there…which is great for competition, but not so great if you don’t know how to pick the right vendor and option. Use this to your advantage and have vendors explore your needs and ensure you are choosing the correct system for your institution. If they try to get in the door with empty promises and “it’ll work” then move on to the next vendor who is willing to put in the time to get you set up properly from the start. Also, look for systems with open architecture, existing interfaces to your core IT system, wide data handling capabilities, at least some user programmability, and a track record of investing in upgrades and updates.  If you can’t get your arms around everything needed in this analysis, Vitex can help.

3. You’ll know it when you see it

Once you’ve implemented at least a modicum of CRM capability, if you can quantify some time savings, sales efficiencies, and maybe even have a list of things your staff likes about the “new way of understanding customers” you’re going in the right direction. Just know that it is a process that will never end.  You don’t “do” CRM, you “become” it. As your bank changes from inside and outside factors, you’ll need to continue managing your system and adjust accordingly.

Vitex  consultants have been assessing, recommending and negotiating CRM strategies and the systems that support them since the 1990’s.

“Our continued progress serves to confirm that Vitex is bringing relevant and important insights to our community bank clients,” said Randy Roth, CEO of Vitex.  “We are focusing on our strengths and helping our clients re-ignite profitability after facing so many daunting changes in the market.”  Roth was featured in the November issue of The ABA Banking Journal commenting on “The Hunt for Revenue” and how banks are finding innovative ways to generate additional income.

Among those new second half client engagements, Vitex welcomed Atlantic Coast Bank, Stephens Federal Bank, Signature Bank, Central Bank of Kansas City, Bangor Bank, The Commercial & Savings Bank, Asheville Savings Bank, Security Service FCU, and Bangor Savings Bank, among others.

About Vitex, Inc.

Vitex has helped over 600 community banks and large financial institutions optimize resources and maximize opportunities through unbiased strategic planning and effective project support.  The firm combines experienced, senior consultants with efficient, action-oriented processes, to help clients balance expense management, risk, operational efficiency, and revenue generation in a way that achieves high performance.  Vitex operates independent of vendor partnerships, allowing its consultants to identify opportunities for improvement based solely on client needs.  At Vitex, clients work directly with proven banking and business experts who approach every day excited to help banks work better.

Vitex CEO, Randall Roth, was interviewed for the piece as an expert in bank consulting and revenue generation.

The article can be found here: Hunt for Revenue Article

I was recently interviewed by Melanie Scarborough, contributing editor for ABA Banking Journal, who wrote a great piece on this very subject.

The article presents several interesting and successful ideas for banks to consider in creating revenue-generating opportunities while staying competitive.

Something to consider when trying to introduce fees for previously free services or increase current fees is to focus on the perceived value or penalty associated with the fee. Do customers view these fees as a fair expense for a useful product or service? Or do they view these fees as penalties?

Here at Vitex, this type of service and fee evaluation and successful initiatives is what we do everyday. We want to see the community banking system thrive in this economy. That’s what we’re here to do – to make people more profitable and grow.

Click to read the article: Hunt for Revenue Article

First, I love music.  Second I love banking (Yeah I know – Really?).  Third, because of one and two I titled this article with an admittedly cheesy play on the country song “Beer is good, God is great and People are crazy” by the country recording artist Billy Currington.  But wait, upon reflection, the title is worth noting.  Unless you have literally been under a rock for the past five years, you know the economy is in the tank, the short to medium term prospects for economic growth are at best uninspiring and at worst dismal, and finally the government is indeed crazy.

So what is a banker to do in the face of the following daunting challenges:

• limited asset growth potential
• continued flat revenues
• ever increasing governmental attacks on non-interest income sources
• ever increasing compliance and risk management expenses
• no organic growth- not any time soon!
• organic changes- now is the time!
• Increasing competition from non-traditional institutions such as credit unions

For one thing, industry consolidation will continue as shareholders and boards grow weary of mediocre returns on invested capital and as weakened institutions continue to falter under the weight of capital issues ensuing from the hefty credit losses.

But what about the institutions that have been socked in the mouth or maybe even knocked to the canvas by the economy, but have somehow gotten back up to fight another day? They continue to survive either through fortuitous capital injections, by shrinking their balance sheets and purging the worst credits, or more likely a combination of the two.

Well, take a look at the chart below and see if anything jumps off the page at you.

What jumps out at me is that personnel expenses are the single largest expense category as a percent of average assets for commercial banks for the six month period ended June 30, 2011.  Only at the $1 billion and above level does this indicator change, and then not materially.  To test whether there is a trend at work, I also took a look at the average for all insured banks in the country for the six month periods ended June 30^th for the years 2009, 2007, and 2005.  The data supports this as a trend dating back to at least 2005 (and certainly before that, but I only looked at the data from the FFIEC’s Uniform Bank Performance Report averages to illustrate the point).  Although the data shows some very modest improvement in this key ratio over the last several years, personnel expenses it appears have always been the largest expense category for banking institutions.

In past “normal” times, when the industry experienced reasonable asset growth, shareholder returns were relatively healthy, and banks produced stable/growing net income, bank management and boards simply didn’t pay as much attention to this stat and only cursory attention to the overall efficiency ratio.  Institution execs were happy to go about their business and produce what they perceived to be acceptable returns to shareholders.  They puffed their chests because they provided good jobs and valuable services to their communities.  They were more than happy to take their nice bonuses and do it again the next year.

But alas, what are “normal” times now?  Many forecasters are calling for very moderate economic growth (an average of just over 2% through 2012 with some acceleration in 2013) over the next several years.  Combine that with an unemployment rate that is expected to remain significantly above the normalized equilibrium rate of 5.4% through 2013, and the possibilities of European and Chinese recessions, well things just are not looking good for a lot of industry growth.

So if you believe like I do that the economic recovery is going to be slow and uneven over the next several years, you need to “get your minds on it” and “wrap your heads around” some basic blocking and tackling you need to improve your bottom line.  You simply must reduce costs, especially in the area of personnel.

Banks are inundated with outdated, manual processes that lead to tremendous inefficiencies, excess employees and needless expense.  There is NO better time than now to take a very hard look at all of your workflow processes and set into motion a comprehensive and focused business management process improvement initiative that will streamline, re-engineer and optimize your workflows and overall operations.

While I hate to see anyone lose their job, the simple fact is the industry cannot continue to employee people to perform the same manual, inefficient processes when growth prospects are this weak over the medium turn.  Oh, and don’t fall victim to the same ole tired method of putting a little duct tape here, and a little chewing gum there to patch some of the clunky procedures.  If you do that, you will probably reduce your FTEs now either through forced displacement or attrition.  However, when the economy improves you will end up hiring back and re-training staff that you let go during the bad times because you didn’t really address the problem.

The success of such an undertaking can only be measured by deploying workflows and systems that will minimize additional man power needed and result in significant economies of scale when the economy improves and the banking industry begins to prosper again (which inevitably it will, or we have bigger things to worry about.)

More than ever, our clients are reaching out to us for help in this area.  We hear so much frustration and despair in their voices.  They do not really know where to turn in this new world of banking.  “What do I do?” “So much to do with fewer resources.” “How can I let staff go when I really need more people to get the job done?”

Unfortunately, the new reality of banking is tough.  Bankers are just beginning to grasp the concept that things are not going to bounce back any time soon, maybe 3-5 years.  Only the strong and efficient will survive.  Get back to basics:  People, Processes, Reengineering and Streamlining.  Take advantage of what you have, not what you do not have.  Efficiency is and will remain the name of the game.

“Retail banking is making the move to mobile. Mobile Banking isn’t just for GenY, it is a cross-generational solution to banking on the go.“ said managing director April Beckman. “This is a great opportunity for community banks to see how they could benefit from becoming mobile-enabled for their clients as the move away from brick and mortar progresses.“

The Webinar, to be held November 17, 2011 at 11:00 a.m. EST, will cover the importance of the mobile channel in banking, infrastructure and platform choices, functionality, security and risk management, as well as direction in choosing the right vendor.

Senior consultant, Harry Carnarvon, whose expertise includes Core and Ancillary Technology Decisions and IT will lead the presentation.  “This will be one of many Webinars in a series of best practice programs that Vitex delivers,” said Beckman.

Those interested can register for the Webinar by visiting http://www.vitex.com/insight-forum-1/events.

About Vitex, Inc.

Vitex has helped over 600 community banks and large financial institutions optimize resources and maximize opportunities through unbiased strategic planning and effective project support.  The firm combines deeply experienced, high-level consultants with efficient, action-oriented processes, to help clients balance expense management, risk, operational efficiency, and revenue generation in a way that achieves high performance.  Vitex operates independent of vendor partnerships, allowing its consultants to identify opportunities for improvement based solely on client needs.  At Vitex, clients work directly with proven banking and business experts who approach every day excited to help banks work better.

Here’s how it works:  Scanners are located at each teller station, and customer transactions are scanned and validated as part of the teller transaction.  This eliminates the backroom scanning process currently done in a branch capture environment, or (heaven forbid) sending the paper items by courier to a central processing site in a bag-and-drag environment.  Even more significant, however, is the potential elimination of all of the internal paper documents that tellers currently use.  Teller capture allows any document to be virtualized and inserted as part of the transaction without the need for a paper document.

Imagine these two scenarios:

Scenario A:  Mr. Customer walks in to the teller line with $200 to deposit.  Of course, he doesn’t have a deposit ticket, so the teller fills out a generic deposit slip with the customer’s information.  This is run through the teller system for validation, along with a cash-in ticket.  These two pieces of paper are then sent on to a second process, where the information from the MICR line is captured and posted to the customer’s account, and the documents are imaged.

Scenario B:  Mr. Customer walks in to the teller line with $200 to deposit.  Of course, he doesn’t have a deposit ticket, so the teller clicks the box for the system to generate a virtual deposit slip.  There is no need for a paper cash-in ticket – the system generates an image of a cash document to pair with the deposit slip for archival and research purposes.  The transaction is now complete – information has been posted to the customer’s account, and the documents are imaged.

While the initial concern with teller capture was that it would slow down the teller line, most banks that have implemented this technology have found just the opposite.  Teller capture has some serious potential efficiency gains, particularly for banks that are still moving paper documents between locations.  This technology is definitely worth a look and every community bank today needs all the efficiencies they can find to stay competitive.