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What's Going On In Banking 2018 with Cornerstone Advisors & Baker Hill

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Presented on 4/4/18 by Ron Shevlin and Sam Kilmer of Cornerstone Advisors and David Catalano and John Watts of Baker Hill, this presentation looks at trends and issues currently facing the banking industry.

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What's Going On In Banking 2018 with Cornerstone Advisors & Baker Hill

  1. 1. What’s Going On in Banking 2018 April 4, 2018 1:00 pm EST Ron Shevlin – Cornerstone Advisors Sam Kilmer – Cornerstone Advisors David Catalano – Baker Hill John Watts – Baker Hill
  2. 2. • Introductions • CEO Perspectives and Growth Priorities • Commercial Banking/Lending • Future-Ready Findings • Analytics • Q&A Agenda: What’s Going On in Banking 2018 @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  3. 3. Introductions Ron Shevlin Director of Research Cornerstone Advisors Sam Kilmer Senior Director Cornerstone Advisors David Catalano SVP, Business Development and Strategic Planning Baker Hill John Watts SVP and General Manager, Lending Solutions Baker Hill @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  4. 4. Bank and credit unions CEOs are optimistic about 2018… Source: Cornerstone Advisors survey of 262 community-based financial institution executives, Q4 2017 @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  5. 5. …but fewer bank CEOs are optimistic than last year Source: Cornerstone Advisors survey of community-based financial institution executives, 2013-2017 @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  6. 6. • Banks: Commercial lending According to the Federal Reserve, the average weekly rate of commercial loan growth in 2017 was 2.7%, down from 9.3% in 2016, and double digits in 2015. • Credit Unions: Strong prospects for economic prosperity Despite mortgage and auto lending challenges, the Money Anxiety Index—which measures various economic indicator and factors associated with consumers’ level of financial worry and stress—is at its lowest level in 47 years. Why the changes? @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  7. 7. Banks’ growth priorities What are your institution’s top growth priorities? (select up to three) @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  8. 8. • Diversify funding sources Commercial banking imperatives for 2018 and beyond @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  9. 9. Commercial loans and deposits 62% 14% 66% 22% Commercial Loans % of Total Loans Commercial Deposits % of Total Deposits 2013 2017 2013 2017 Source: Cornerstone Performance Report @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  10. 10. • Diversify funding sources • Build a relationship management infrastructure Commercial banking imperatives for 2018 and beyond @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  11. 11. CRM practices are immature Source: Cornerstone Advisors survey of 262 community-based financial institution executives, Q4 2017 4% 5% 5% 35% 26% 29% 61% 69% 66% Our CRM resources are guided by pre-defined prioritization, and executive sponsors own the success metrics that justify CRM capability investments Describes us completely Inconsistent across the organization Doesn't describe us at all To what extent do these statements describe the state of CRM in your bank? Senior management has established a CRM scorecard with realistic, specific targets that align with our strategic goals We have a documented CRM plan outlining goals and prioritization that was established by the senior management team @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  12. 12. • Diversify funding sources • Build a relationship management infrastructure • Partner to explore emerging technologies Commercial banking imperatives for 2018 and beyond @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  13. 13. Emerging technologies not on bank radars Source: Cornerstone Advisors survey of 262 community-based financial institution executives, Q4 2017 @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  14. 14. Baker Hill observations from well-run banks @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer Policy Process Technology
  15. 15. Credit Quality • 4% of CEOs concerned with credit quality • The Money Index at a 47 year low • 10 years into an expansion • Consumer default rates rising Growth Priorities • Small business market share only a top 3 initiative for 7% of respondents • Expand online presence a low priority Efficiency • Improve lending policies/processes up to 32% • Technology might not be the problem, policy and process might mask future gains Analytics • Not on the radar Observations @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  16. 16. 2017 2018 IT 51% 61% Digital Banking 54% 54% Fraud/Risk Management 43% 47% Payments 42% 44% Commercial Lending NA 38% Marketing 36% 36% Treasury/Cash Management NA 34% Branch Delivery 33% 30% Contact Center 24% 23% Analytics 21% 19% 2017 2018 Digital Banking 61% 51% IT 51% 46% Marketing 55% 43% Fraud/Risk Management 37% 41% Branch Delivery 50% 39% Payments 42% 38% Contact Center 39% 29% Analytics 25% 24% Commercial Lending NA 17% Treasury/Cash Management NA 16% Banks and credit unions not future-ready Banks Credit unions Percent of Executives Rating Function as Somewhat or Very Future-Ready @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  17. 17. DATA USE PROCESS RISK COST REVENUE CULTURE TECH @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  18. 18. CORNER OFFICE CLO: Hunter-Gatherer CEO: Judge & Jury CFO: Reality Checker @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  19. 19. Localized Basic functionalized Aspiring Resourced and broad Analytical Company Enterprise priority Analytical Competitor Enterprise benefits Source: Modified from Thomas Davenport, Competing On Analytics DATA USE @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  20. 20. Planned System Replacements 28% 21% 15% 10% 9% Online Account Opening CRM Online Banking Payment Processing Core 20% Mortgage LOS Revenue Engineering Underway Source: What’s Going On 2018, Cornerstone Advisors; @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  21. 21. Q&A Ron Shevlin Director of Research Cornerstone Advisors Sam Kilmer Senior Director Cornerstone Advisors David Catalano SVP, Business Development and Strategic Planning Baker Hill John Watts SVP and General Manager, Lending Solutions Baker Hill @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer
  22. 22. What’s Going On in Banking 2018 @bakerhill | @CstoneAdvisors | @gonzobanker | @rshevlin | @samkilmer Thank you for joining us.

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