Nymbus Insights Report - Flipbook - Page 2
EFFICIENCY
INSIGHTS
K EY M ET R I CS
28%
28% of bank executives listed
efficiency as a top concern in 2023
Source: Cornerstone Advisors survey of
bank executives, “What’s Going On In
Banking 2023”
32%
Driving efficiency is difficult for banks in an environment characterized by
economic uncertainty and high interest rates. Financial institutions should look
beyond cutting costs to understand how to drive the right strategic outcomes,
enhancing the customer experience and making the most of employees’ time and
skills.
KEY TAK E AWAYS
• Growth constraints will likely challenge
banks due to persistent high interest
rates and economic uncertainty — leading
organizations to seek out efficiencies.
• Technology can drive down client
acquisition costs while enhancing the
customer experience.
• Automation can help banks better serve
customers while reallocating staff to
higher growth opportunities.
• Digital account opening and lending
processes are key areas where banks are
automating today. Cloud and APIs give
banks more flexibility in using various
technology solutions.
• Every dollar invested — whether it’s in
people or technology — should aim to
drive efficient growth at the bank.
2
32% of bank leaders reported
that their bank uses robotic
process automation to generate
efficiencies
Source: Bank Director’s 2022
Technology Survey
For years, banks could rely on growing income to improve efficiency. This
has helped banks such as $8.3 billion 1st Source Corp. become more efficient,
according to Andrea Short, CEO of the company’s bank subsidiary in South
Bend, Indiana. But she’s also looking to reduce expenses, including seeking
out improvements enabled by technology.
For financial institutions, efficiency is most often measured as a function of
two variables: net operating income divided by noninterest expense. The lower the ratio, the better the efficiency. Many bank leaders approach this metric
from a growth mindset — by earning more revenue while simultaneously
keeping a handle on costs, a bank can maintain or even improve efficiency. But
with a potential recession cutting into net interest margins and constraining
loan growth, more banks could consider how investments in technology could
help lower costs, too.
For community banks that often lack in-house resources, leveraging
technology and services from external providers can drive innovation and efficiency, notes Jeffery Kendall, CEO of the bank technology provider Nymbus.
“Where are the opportunities for scale? What makes sense to bring in-house,
and what makes sense to partner on?” He recommends that banks focus on
what they do best — building relationships and offering financial services to
their clients.
Engaging Customers
1st Source’s Short recalls that it wasn’t so long ago that banks could offer inbranch freebies to bring in an account. “Being able to open accounts electronically helps,” she says, but attracting customers is proving more expensive than
it used to be. “There’s no quick fix for customer acquisition.”
