How can financial institutions improve their performance?

A financial institution, such as a bank, acts as a crucial gateway for the economy. Thus, if such an institution were to fail, the entire economy would be at risk of collapse. It is imperative for financial institutions to maintain constant liquidity to uphold economic stability. To maintain liquidity, financial institution should focus on efficiency to reduce undue cost. Undue cost will create illiquidity. Some manual works can be replaced by digital works to avoid undue costs.

By identifying, analyzing, and prioritizing potential risks, including credit, market, operational, and compliance risks, these institutions can develop tailored risk management policies and procedures. This involves setting appropriate risk limits, continuously monitoring risk exposure, and employing robust financial and operational controls. Additionally, investing in advanced analytics and technology for real-time risk assessment can further bolster resilience. Effectively managing risk not only safeguards against potential losses but also supports sustainable growth and enhances stakeholder confidence.

Efficiency in Banking operations is how well the bank controls non-interest expenses. A cost-to-income ratio is the key metric. A cost-income of 50% or lower is considered to be optimal but getting there is a major challenge for many financial institutions. The age-old practices are to cut waste, cut non-essential and underperforming staff, as well as incorporating technology to improve internal processes. But efficiency measures should also focus on growing the revenue line as well.

Según mi experiencia, las instituciones financieras tenemos un rol muy importante, porque a través de las plataformas le das herramientas al cliente para optimizar el tiempo, y por otro lado recopilando toda la información para desglosarle al cliente, haciendo más sencillo el proceso de toma de decisiones.

Por experiência, o foco no conhecimento de seu cliente, suas necessidades e demandas s?o essenciais, para que a Institui??o Financeira siga no foco de atender os clientes de forma justa e n?o as metas, conhecer as demandas do cliente permite alcan?ar um relacionamento de parceria e n?o explora??o.

Esto es sumamente importante, dentro del mismo negocio, tener diferentes lineas de ingresos. En mi caso referidas a lo mismo, que hacen que el asesoramiento financiero sea integral y completo y especialmente que agregue valor.

Financial institutions must proactively generate additional revenue streams to bolster liquidity. Given their pivotal role as economic gateways, they must adapt to modern trends such as digitalization, embracing technologies like mobile banking to secure supplementary income and enhance liquidity levels.

Engage in business directly. If financial institutions manage Funds then managing businesses industries real estate could add better returns or income for them.

The "income diversification" is almost identical to the "portfolio diversification". Financial institutions know that if they expand their economic activity and distribute the "weights" in a certain way, they will maximize their profits. Apart from that, the use of digital platforms is a quite common way to expand their economic activity, without any significant barriers.

Diversification is not just a portfolio management principle we preach in the financial services sector but also an income-generating strategy that we use to extract value from the markets we operate in. Larger financial services companies can earn from interest, fees, and commission as three broad areas and can specialize in insurance, wealth management, advisory services, securities, and investment banking.

Risk management in finance isn't just avoiding loss; it's a strategic asset that boosts agility and competitiveness. Frameworks like COSO and ISO 31000 guide risk assessment and management, aligning with strategic goals. Tools like stress testing and scenario analysis anticipate challenges, turning risks into opportunities. Effective risk management enhances decision-making, resilience, and performance, marking institutions as industry leaders in an evolving landscape.

Given that financial institutions serve as custodians for deposited funds, effective risk management is essential to safeguard the money entrusted to them by third parties. This ensures proper management and security of funds, thereby maintaining trust and stability within the institution.

Implementar práticas sólidas de gest?o de riscos é crucial para proteger os interesses dos clientes e da institui??o financeira. Isso inclui avalia??o e mitiga??o de riscos financeiros, operacionais, regulatórios e de reputa??o.

Effective risk management does not mean risk elimination or decreased risk. Effective risk management entails understanding your total risk and assessing your threshold for loss, then implementing a plan to maximize returns while staying within that loss threshold. Effective risk management maximizes returns when accounting for a known/acceptable amounts of loss. Businesses and people alike should assess if they are risk averse or risk neutral, hopefully not risk seekers, and align goals to fit their risk profile.

In the digital age, financial institutions must innovate and swiftly adapt to digital platforms. Failure to do so will result in lagging behind and could even lead to collapse in the future. Embracing digital transformation is crucial for staying relevant and ensuring long-term viability in the evolving financial landscape.

In Pakistani perspective, the financial institutions need to extend their outreach to public. At present, the financial institutions, especially banks are dealing with single big client i.e government. They are investing most of capital in government securities and earning huge profit on it. In presence of such a big client, they actually don't need to go to the public, and this trend is hurting economy very badly. For better functioning of economy, financial institutions need to focus on people instead of government and the government needs to reduce the interest rate so that people can borrow to start business and the culture of entrepreneurship is promoted

Nowadays we cannot deny the power of technology involved in payments getaway system. Technology aggregation works as both accumulator and accelerator between customers, partners and company itself. The numbers of traffic can be a valid indicator of position the company plays in the market.

Estar aberto à inova??o e adapta??o às mudan?as do mercado é essencial para o sucesso a longo prazo. As institui??es financeiras podem buscar constantemente novas oportunidades de negócios, explorar novas tecnologias e métodos de entrega de servi?os e colaborar com parceiros estratégicos para impulsionar a inova??o.

Incorporating artificial intelligence (AI) and machine learning (ML) into financial institutions' operations represents a transformative opportunity. AI and ML technologies enable institutions to enhance decision-making processes, optimize operations, and personalize services. By leveraging these tools, financial institutions can improve credit risk assessment, fraud detection, customer segmentation, and predictive analytics. Overall, embracing AI and ML empowers financial institutions to stay competitive, deliver superior customer experiences, and drive innovation in an increasingly digitalized landscape.

Your CRM should tell you what topics of content your customers are engaging with the most. You then, in turn, can amplify those topics in your conversations to ensure your asking the relevant questions and providing the data that's most important to them. Customers are not a monolith, and each wants to be seen and heard individually, so cultivating this information to use in building stronger client relationships ensures open communication and more consistent engagement.

susciter l'intérêt des clients en proposant des services plus en adéquation avec leurs besoins. Procéder également à des évaluations périodiques sur le niveau de satisfaction des clients est un point intéressant pour une meilleure prise en compte des attentes des ces derniers.

Collect customer satisfaction data and conduct customer satisfaction research regularly. Don't operate blindly. "Customer is the king and must be served". Research shows that "Existing Customer Retention" is more affordable than "New customer Acquisition". Thus, find out what your customers like or detest, then provide services based on a data-driven insight and decision. Use different tools and platforms, including surveys, focus groups, social media, and others mentioned above. Finally, financial institutions should expand their services to SMEs, the informal sector, and people in underserved areas. Provide services that are accessible, affordable, available, and applicable to this segment based on their distinct characteristics.

Loyal customers are really the driving force behind any financial services business. So how do we keep customers depositing their savings that we use to unlend to other customers? How do we get customers to choose our bank to take out mortgages, car loans, and personal loans? How do we get customers to invest in our wealth management arm and utilize our insurance products? and most importantly how do we get customers to evangelize on our behalf?

No momento atual, as Institui??es financeiras est?o em campanhas de marketing gritando que os clientes s?o o centro da aten??o. Hoje, cobra se uma taxa de 40 a 90 reais por mês, e n?o entregam relacionamento humano. Está tudo digital. A falta de humaniza??o no atendimento tem gerado desconforto para um grande percentual de clientes. O modelo atual de relacionamento e giro de carteira, onde concentra se em 20 a 30% dos clientes é fator preponderante para falta de fidelidade bancária. Eu estou a 120 dias sem receber contato do meu gerente. Como vou dizer sim para ele quando me ligar ofertando segurou? A impessoalidade é um custo absurdo que campanha, tecnologia e inova??o n?o v?o conseguir resolver.

Financial institutions with goals that are properly aligned between departments tend to maximize the output of their assets. This maximization tends to improve overall performance because proper asset utilization and goal alignment allows for high quality performance and output, making the most with what you have. Understanding your goals allows you to set proper incentive programs and to follow KPI’s that drive business growth, ultimately improving performance.

Everything is data. Every piece of information can play a crucial role to decision-making. This includes the market and performance analysis (SWOT, etc.). After making the proper analysis, the goals are set and the performance can be evaluated. So, good performance, according to goals set, is determined by the way data is used.

It is essential to keep track of results; the best way is through carefully selected performance indicators— A) Cost Management: Efficiency Ratio, Cost per Account, and Employee Productivity. B) Process Optimization: Average Processing Time, Straight-Through Processing (STP) Rate, First Call Resolution Rate. C) Resource Utilization: Branch Productivity: What revenue is generated per branch, and how can resource allocation be optimized?; Capacity Utilization: How effective are equipment, technology, and staff used to avoid underutilization and identify opportunities for streamlining? Tracking these top KPIs will enable financial firms to align their objectives and improve efficiency.

Es fundamental alinear los objetivos estratégicos con las expectativas de los stakeholders, incluidos los accionistas, los empleados y la comunidad en general. Esto implica establecer metas claras y medibles que reflejen los valores y la misión de la institución, así como comunicar de manera efectiva estos objetivos a todas las partes interesadas. Al alinear los objetivos, se pueden mejorar la cohesión interna, aumentar la motivación de los empleados y generar confianza y credibilidad en el mercado. Donde en este sentido, en mi opinión, la comunicación es crucial y que todos formen parte de este proceso.

I will be very interested in finding out more info on this topic!!!!! Thanks ! When can we talk next week ? I have more ideas that I would like to share with you .

A few other strategies that could prove beneficial are: Strategic Partnerships: Collaborating with other institutions, fintech companies, or industry stakeholders to leverage complementary strengths, expand market reach, and access new technologies or markets. Capital Management: Maintaining adequate capital reserves to absorb potential losses and support business growth. This involves optimizing capital structure, managing liquidity effectively, and adhering to capital adequacy ratios. Talent Development: Investing in talent acquisition, training, and retention to cultivate a skilled workforce capable of driving innovation, managing risks, and delivering exceptional customer service.

In my experience, on top of all other means to improve FI performance (cost reduction, capital absorption optimization, innovation, etc) one should also consider analyzing instruments such as coaching, re-skilling and up-skilling based on neuroscience techniques. This may prove decisive in improving the engagement and involvement of staff throughout the evolution process that the entire sector is going through.

The financial sector is increasingly intertwined with technology, not just complementing traditional services; it's revolutionizing them. We're witnessing disruption across the board – from payments and international transfers to asset management, where technology-driven solutions are exerting significant fee pressure. Yet, amidst this digital transformation, the value of human interaction remains paramount. High-quality, personalized services, both B2B and B2C, continue to depend on the nuanced, irreplaceable expertise of well-trained advisors. Whether it's navigating the complexities of mortgage advisory or tailoring wealth management solutions, the human touch can make the difference, both for clients and employers.

It really depends on what does it means to increase efficiency AND for which exactly institution. To earn more? Or to loss less? To increase revenue because of optimization and reducing costs or by improving level of services and increasing number of sales. On my opinion there are no chances to select one or couple options for everybody. We have to do deeper individual search and analyze full picture, maybe not for every company but perhaps for an industry. Everybody knows that “we need to earn money”, but final goals for hedge fund and for Venture Capital fund are different