Obviously, sub-prime mortgage exposure is the hot-topic these days. And Jamie Dimon is probably delighted that Citigroup’s Charles Prince quit. Mr. Dimon (no relation that I know of), could swoop in to his former company and buy up the troubled parts.
Across the industry, one of the key concerns for banks is risk and uncertainty. Looming in the background is the on-going cost-cutting imperative and tougher competition (including hedge funds that are now directly originating loans). This is true for retail as well as commercial, private, and investment banking.
I wonder if Citigroup had had more visibility into the lending pipeline, correlated with FICO scores (or other measures of credit risk) and connected with assumptions in the forecast, would they be in this spot.
Focusing on retail banking, some of the major KPIs around branch performance include Non Interest Income & Non Interest Margin, Customer Satisfaction, cross-selling, and associate productivity. Adding key risk indicators (such as transactions not settled after five business days) could help prevent negative trends and surprises in the pipeline.
There are a variety of management systems that support branch performance reporting and analysis as well as operational efficiency initiatives that intelligently support margin expansion. They include pricing models, portfolio risk analysis, customer segment & house holding analysis, channel forecasts and cross-sell plans.
You want to ensure that the assumptions and drivers built-in to your models and plans are captured, communicated and managed - now more than ever. Every business unit – as well as corporate - should have a well integrated management operating system that supports better visibility into the business, better accountability to results (through plans & forecasts), and better insight to enable smart decisions.
For a logical model look at drivers and initiatives, please see: http://www.business-foundation.com/banking.html
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