Why a popular branch strategy will likely make your branches even less profitable…
…And what you should do instead. Even if it flies in the face of conventional wisdom.
We’ve all heard the pitch to increase the utilization of our branches. On the surface it’s an appealing argument.
Your branches are underutilized so you should add new accounts to more fully utilize them. I mean who doesn’t want a more fully utilized branch? There’s just one problem.
Efficiency doesn’t equal profitability.
Nowhere in any of these discussions do we address the root cause of your branch profitability problem…
…Your deposit accounts just aren’t as profitable as they should be. Many of them aren’t profitable at all. They run a loss. Month after unprofitable month.
Adding more unprofitable accounts just makes your branch loss bigger and bigger. Here’s some advice…If you’re in a hole, stop digging.
That means stop new account campaigns until you address #DepositProfitability
We take account and transaction data from your core system, apply rate and cost data, and calculate actual individual P&Ls for each and every deposit relationship.
Then apply “Four Ds” segmentation to identify your best customers and use those specific characteristics to find new accounts. You can do this.