Where's the Margin?

2010 is the year of the "margin"! As the economy slowly comes out of the recession, financial institutions, must improve their performances at a time when consumers will not be aggressively spending and borrowing as they did in the past.
Therefore, growth in average business volumes will not be robust but restrained.
Still financial contributions must improve which will have all stakeholders focusing on margins like never before. We have seen spreads contract drastically in the heated commodity competition period prior to the recession and through the aggressive involvement of brokers plus the explosive Internet channel choices.
Naturally, it is tempting for a financial institution, especially larger ones with broad consumer bases, to simply increase and add new fees as well as introduce more frequent, incremental rate changes on products like credit cards and lines of credit.
The regulatory and public noise may not stop their initiatives but you can rest assured that consumers antenna will be picking up all the negative signals.
Why not take the time to re-assess your value propositions in consultation with consumers and determine the new revenue generating "add-ons" that will sell?
The retailers everywhere are trying to extend product-lines and create more sales revenue per square foot even with a smaller footprint. Perhaps, this is the thinking that should be adopted in the financial sector and determining how reciprocal partnerships can help you do just that without investing more capital or fixed costs.
The Internet offers a great landscape of opportunities with considerably lower sales and processing costs hence, wider margins. Basically, you are able to have lower variable costs in this universal delivery network versus stores or branches where fixed costs and lower consumer traffic squeeze the margins more. Then again, how do you increase the traffic opportunities in your branches to spread the inherent costs over greater volumes? People have to be attracted into the stores with new strategies, tactics and partnerships wrapped up in customized value propositions.
It is time to really focus on margin improvements with all the creative talent you can muster..........and please, ask the consumers what they want and how they want it delivered. Where's your margin?

Pat Palmer | Thursday, February 25, 2010 | Comments (0) | Trackbacks (0) | Permalink