TrakPointe, a Division of TSG, Inc.

Looking for a Small Business Health Indicator for Your Region?

noreply@blogger.com (TSG, Inc.) — Wed, 16 Mar 2011 13:09:00 +0000

Useful Small Business Scorecard
There are numerous macro economic forecasting tools, but we are always on the lookout for indicators that provide a more local and granular view of the health of small business.

We recently found a small business scorecard published by SurePayroll. This scorecard displays two simple metrics: 1) changes in employees numbers and the change in average salary per paycheck.

Data is provided by four general regions, West, Midwest, Northeast, and South, and by selected states.

February 2011 Summary Mixed
According to the February report, “2011 is becoming a rerun of 2010’s small business economy storyline. February marked the fifth consecutive month of flat or shrinking hiring numbers across the nation. The average paycheck size, however, continued to grow.”

Comment
A decline in hiring numbers indicates a continued lack of economic growth, but the increase in paycheck size seems to indicate that hourly employees are working more shifts, implying some degree of uptick.

Next Steps
Visit the SurePayroll website and review the tool. If you find value, you can signup for their RSS feed.

Why Every Organization Needs a Process Inventory

noreply@blogger.com (TSG, Inc.) — Tue, 08 Mar 2011 22:38:00 +0000

Why Every Organization Needs a Process Inventory

We’ve all been there. The telephone rings and it’s one of our best customers on the line letting us know that something has gone wrong - for the second time. These are telephone calls we hope we never receive. Once the call is ended, our first inclination is to find the person responsible and maybe raise a bit of cain.

Finding that person is one option, but a better course of action is to take a few minutes and think about the process that generated that call. That’s right, the culprit very likely is the process that produced that product or service, not the person that heads the department.

Effective and Efficient Customer-facing Processes Yield Positive Financial Returns
Every organization has processes - lots of them. Some of them are purely internal to the organization, but some of some touch the customer. These are the processes that actually deliver the goods and services that clients and customer pay money for. And that money, of course, represents our bottom line.

The need is to focus on the performance of those tasks that customers are willing to pay for, and the best way to do that is to develop a list, an inventory if you will, of all of your processes.

How to Identify a Process
Many of us don’t think in terms of processes, so that word can be a bit foreign. Instead of process, just focus on your organization’s “outputs,” the things (be it services or products) that your customers buy.

If you are a bank, for example, a client makes a loan - in essence they are buying the use of money from your bank. The steps that your loan officers, underwriters, and credit approval team go through to get the loan package ready for approval is a process. And it’s an important one because it touches the customer and has a direct impact on your bank’s performance.

How to Develop Your Process Inventory
Developing your process list is really straight forward. Simply spend five minutes and jot down a list of all of the things your organization delivers to the market place. Those things could involve painting a building, providing a working capital loan, or building jet engines.

Once you begin, you will quickly find yourself developing into a process detective. For a little more fun, have your managers come in and do the same thing. Within half an hour you will have a very good process list to work with.

Which Ones are Critical?
With the list in your hands, the next step is to reflect on which ones connect most directly to your customer through your products or services. As you go through this exercise, see if any of them float to the top. That is, they just seem to be more important than the others. This is your business intuition beginning to prioritize your processes.

Where Should You Apply Your Limited Resources?
All organizations have limited resources, mostly staff time and capital, and you want to deploy those resources where they will do the most good.

With your process inventory in hand, it’s a simple task to determine which processes have priority and where those resources should go.

In Summary
Creating a basic process inventory is a quick, first step in significantly improving the performance of your organization. The half an hour you spend on this exercise may be the most valuable 30 minutes you every spend.

Next Step
Pour that cup of coffee, set the timer for 5 minutes, and begin jotting down your organization’s outputs. You’ll be glad you spent the time.

Do You Know The Secret Weapon in Commercial Lending?

noreply@blogger.com (TSG, Inc.) — Thu, 17 Feb 2011 17:14:00 +0000

Moody’s | Tower Group Presentation
I spent an hour this yesterday listening to a Moody’s | Tower Group webinar presentation on how commercial banks can gain a competitive advantage in commercial lending. The webinar was sponsored by American Banking, US Banker, and Bank Technology News.

The full webinar title was “Analytics as a Weapon for Competitive Advantage in Commercial Loan Origination.” With a topic title like that, I was expecting a technology presentation and I wasn’t disappointed. However, I also got some information I wasn’t expecting.

First, Some Interesting Information Bites
The first presenter from the Tower Group (a major banking research organization) showed a chart pointing to an small increase in C&I lending. This is the good news for community commercial bankers.

Good news always seems to be accompanied by bad news, and this webinar was no exception. The presenter noted that increasing regulatory burden in retail banking is causing some of the larger banks to move into commercial lending and, more worrying, down into the smaller commercial loan market.

The arrival of big banks in the community bank commercial lending sector is expected to increase competition and put further pressure on slim margins. Moreover, the presenter noted that the big banks are relaxing their lending criteria more quickly than smaller banks.

Some Interesting Information on Commercial Borrower “Wants”
The presentation included information from a recent Tower Group poll of 1,400 small to medium business owners ($50 million or less in annual turnover) about the most important elements in the banking relationship from their perspective. As you might expect, those interests differed according to business size.

For the smaller businesses, their prime interest was dealing with a bank that would give them a reliable line of credit to help them keep their business running. Many of those surveyed were surviving on operating capital but would prefer to be borrowing.

The key factors for larger businesses were ease of doing business and consistency in service quality, and those are important issues.

Technology to the Rescue?
At this point, the Moody’s Analytics presenter took over from the Tower Group team and gave a very good summary of the technology tools Moody’s has available for making lending decisions. The presenter made a point of the importance of calculating the effect of each new credit on overall portfolio profitability prior to approving the loan and how well the technology does those calculations.

In fact, Moody’s RiskOrigins product calculates net cash flows from loan to maturity, allowing the bank to view the expected impact on shareholder value of each loan.

The solution looked great in the presentation and it certainly makes sense to be able to calculate profitability for each loan before it is booked. The questions to ask, however, are how applicable is this technology from a cost and complexity perspective to community banks?

Can Simple Process Trump Complex Technology?
A key aspect of deploying the various elements of the Moody’s technology suite was to drive operational efficiency and quality of service into a bank’s lending process. This is a great idea, but it often is the case that organizations deploy technology in hopes that the inherent process in the software will solve internal process issues, only to find that it doesn’t.

Complex technology solutions can be difficult for small organizations to deploy and learn to use effective. And, these systems can easily cost $250,000 or more over their contract life.

Process Needs to Drive Technology
Before you sign that contract, walk all of your “doers,” the people that actually touch the credit lifecycle at some point or another, through the entire workflow of your lending process, tossing out things that don’t need to be done as they go.

When your team is finished with their “process walk,” you’ll have a clear, simplified process flow that fits your bank’s culture. It will be effective and efficient, and the technology requirements you need to enable the process will be there in plain sight.

As odd as it may seem, your processes are the horse; technology is the cart. We all know which needs to come first.

Simple Process Improvement Goes a Long Way
If you take this simple process improvement step, you will be responding to two of the three commercial borrower needs the Tower Group identified in their business owner survey: 1) your will make your bank easier to deal with and 2) your processes will deliver a consistent quality of service.

Differentiate on Local Knowledge, Not Technology
Smaller community banks differentiate themselves on the personal relationships with their borrowers and their unique knowledge of local business conditions.

Sophisticated software packages can spread financials and give overall probabilities of default, but they can never replace local knowledge and experience. What we used to call in the Army, “boots on the ground.”

Effective Processes Are a Community Bank’s Competitive Bedrock
A continual process improvement program (which is not that difficult or time consuming) will allow your bank to be as effective and efficient as possible and will enable you to compete on service quality and ensure that you are making loans that increase shareholder value.

The right technology can deliver a strong competitive advantage. The wrong technology can be a Lorelei, luring you to shore.

Community Bank Boards Still in the FDIC Spotlight

noreply@blogger.com (TSG, Inc.) — Mon, 29 Nov 2010 22:37:00 +0000

What Caused Centennial Bank to Fail?
FDIC Report Lists Board and Management Oversight Procedures as Cause of Centennial Bank Failure (1)
“Centennial failed because its Board and management did not effectively manage the risks associated with the institution’s significant concentration in ADC loans. The institution’s ADC loan portfolio consisted primarily of single-family residential real estate, much of which was concentrated in pre-sold construction loans, large residential loans over $500,000, and stated income loans.

Limited loan underwriting on a substantial portion of Centennial’s loan portfolio and deficient credit administration and related monitoring practices also contributed to Centennial’s failure. Some of these practices and their apparent significant impact on the failure of Centennial are the subject of ongoing investigative activities. Although not a primary cause of failure, Centennial relied heavily on brokered deposits to fund its ADC lending activities and maintain adequate liquidity. When the institution’s financial condition deteriorated, access to this funding source was restricted, placing a strain on the bank’s liquidity.” (1) Read the full report at this link.

TSG | TrakPointe™ Reflections
Community bank boards and senior management teams do really well at tracking and monitoring the traditional FDIC-mandated risk categories. These types of risks and the required stress-testing and reporting are well known.

What seem to be happening, though, is that the FDIC now is zeroing in on a new category of risk that exists in many organizations but rarely is tracked and managed. If you have been reading our Quick Insight articles and blog posts over the past year or so, you will recognize this as what we at TSG call “process risk.”

How Army Tank Gunnery Qualification Can Help You With Your Process Risk
I learned about process risk as a young Army lieutenant training my tank crews to make it through tank gunnery qualification. That was way back during the Vietnam period, and if your crews didn’t qualify, you didn’t get promoted. Pretty draconian; but also very effective.

Being a good tank crew isn’t rocket science, but it takes a simple, foolproof process, good communication skills, lots of practice, and a constant review of how each member of the crew - driver, gunner, loader, and tank commander - are doing their jobs. In actual combat, crews have only a few seconds to identify an enemy target and go through their firing sequence - the ultimate in lean process engineering. (Click here for a description by tank crews).

So, Just What’s the Connection Between Tank Gunnery and Process Risk?
Process risk is nothing more than people not following stated policies and procedures. In community banking, virtually everything is a process, from opening new accounts, to underwriting credit files, to tracking loan portfolio composition, to. . . Well, you get the picture.

The FDIC is finding that bank’s are not following their stated policies and that bank boards and senior management are not providing adequate oversight. November of this year witnessed the first FDIC lawsuit against a failed bank board for failing to provide this oversight.

Is There a Solution?
Yes, there is an easy way to provide the oversight the FDIC is demanding.

First, make a short list of the processes associated with your critical processes, such as credit underwriting, annual credit review, loan portfolio concentration; your list likely will have five to ten processes.

Second, determine if you have written policies for each of these processes.

Third, and most important, assess if you have a method for evaluating staff compliance with these policies and if you actually are using them. By easy, we at TSG mean being able to open the web browser on your computer and, within no more than four clicks, being able to know if there is a compliance failure with any of these critical policies.

It’s fine to have a written policy on the bookshelf, but that won’t help when the FDIC finds those compliance lapses.

How to “Get Squared Away” in 30 Days or Less
“Squared away” is one of those phrases I learned early in my Army career. Loosely translated it means “get organized.”

If you have areas that need improvement , we here at TSG can apply those hard-learned tank gunnery qualification lessons at your bank, and get you on the road to being FDIC-quality “squared away” in less than 30 days.

Visit us at TSG.LA or TrakPointe.com. We’ll be happy to explore your concerns. No obligation.

Directors Now Directly in the FDIC's Crosshairs

noreply@blogger.com (TSG, Inc.) — Wed, 10 Nov 2010 20:17:00 +0000

FDIC Sues Failed Heritage Community Bank Directors
On November 1, 2010, the FDIC filed a lawsuit against eleven former directors and officers of Heritage Community Bank, based in Glenwood, Illinois.

The complaint states that the directors and officers made imprudent or improper commercial loans while “...the defendants depleted the bank’s capital by making millions of dollars in dividend payments to Heritage’s holding company and paying generous incentive awards to senior management.”

The suit notes that Heritage executives and directors financed projects “without any meaningful analysis of their economic viability” and states that the defendants made loans to large-scale commercial real estate and speculative single-family housing projects, areas where they had “virtually no experience.”

More Suits on the Way?
With 304 banks failed since January 1, 2008, the Heritage suit could be the beginning of an FDIC program to hold boards and senior management directly accountable. In these cases, unless directors can clearly prove they followed appropriate and approved policies, they can be held personally liable for financial losses.

How Can Directors Mitigate Their Risk?
Current Loan Policy
Banking is a risk based business and taking no risks means making no loans. Everyone, including the FDIC, understands this.

The question, however, is how to minimize risk and to ensure that a bank makes no loans that fall outside the bank’s approved risk profile. The FDIC Manual of Examinations Policies lists the areas that need to be addressed in a bank’s lending policy:

General fields of lending
Normal trade area
Lending authority of loan officers and committees
Responsibility of the board of directors in approving loans
Guidelines for portfolio mix, risk diversification, appraisals, unsecured loans, and rates of interest
Limitations on loan-to-value, aggregate loans, and overdrafts
Credit and collateral documentation standards
Collection procedures
Guidelines addressing loan review/grading systems and the allowance for loan and lease losses
Safeguards to minimize the potential of environment liability

The Manual of Examinations goes on to state that a bank’s loan policy should not be a static document, but needs to be updated as economic conditions change over time. One could imagine that this means at least annually.

The Loan Review System
Getting the loan on the books is only the first step in the process, however. Section 3.2 of the Risk Management Manual of Examination Policies goes on to talk in detail about a banks “loan review system,” and what it expects banks to monitor.

To promptly identify loans with well-defined credit weakness so that timely action can be taken to minimize credit loss
To provide essential information for determining the adequacy of the ALLL
To identify relevant trends affecting the collectability of the loan portfolio and isolate potential problem areas
To evaluate the activities of lending personnel
To assess the adequacy of, and adherence to, loan policies and procedures, and to monitor compliance with relevant laws and regulations
To provide the board of directors and senior management with an objective assessment of the overall portfolio quality, and
To provide management with information related to credit quality that can be used for financial and regulatory reporting purposes.

Depth of Reviews
The Manual notes the following critical elements of a loan review:

Credit quality
Sufficiency of credit and collateral documentation
Proper lien perfection
Proper loan approval
Adherence to loan covenants
Compliance with internal policies and procedures, and applicable laws and regulations, and
The accuracy and timeliness of credit grades assigned by loan officer.

How a Board Effectively Track These Requirements?
The FDIC’s requirements essentially outline three critical bank processes; underwriting the loan, approving the loan, and monitoring the loan from funding through sale or payoff.

The simplest way to manage these requirements is to visualize the key risk elements in these processes in what we at TSG call a “Loan Portfolio Risk Dashboard.”

This risk dashboard would show the following information in visual form - additional information could be added:

Percentage of portfolio value by geographical area
Percentage of portfolio value by NAIC code
Percentage of portfolio value outside of trade area
Percentage of portfolio value to one borrower
Date of last loan policy review and approval by board
Percentage of loans reviewed over past 12 months (or in accordance with loan policy)
Percentage of loans not in compliance with loan covenants (financials received, compensating balances, on hand, etc.)
Percentage of loan portfolio value with exceptions to loan policy
Number of loans with loan officer onsite visit during past 12 months
Average profitability of loan portfolio against year-prior

Human Risk Management and Mitigation
All of the risk factors that a bank faces are, in some fashion, connected to human nature. This includes market risk, which generally is considered beyond a bank’s control.

While boards and senior management cannot control or manage external risk, they can, however, ensure that staff comply with the critical process requirements embedded in the bank’s loan policy. We can do this by instituting simple control mechanisms that require people to certify that they have accomplished critical tasks as required by policy.

While the possibility of false certification certainly exists, a tracking system brings accountability to individuals and to the system as a whole, and clearly demonstrates to examiners that the board and senior management are serious about policy compliance.

Summary

The FDIC’s Heritage Bank suit signals a much more active FDIC, with serious personal financial implication for board members and senior management.

Creating a Process Risk Dashboard is a simple, affordable, and highly effective method of ensuring compliance with lending policies.

Making the dashboard visible to the board, senior management, and loan officers will drive compliance with policies and provide a highly useful tool for demonstrating effective loan policy oversight to FDIC examiners.

The TrakPointe™ solution from TSG, Inc., can deliver a fully functional Loan System Review dashboard within 45 days. TrakPointe™ is deployed with no annual contract or service fee and can be canceled with a simple 30 day notice.

Got Facebook? Social Media - How to Test the Waters Without Drowning

noreply@blogger.com (TSG, Inc.) — Tue, 19 Oct 2010 21:23:00 +0000

43 Percent of Internet Users Visited Social Media Sites in 2009
The PEW Internet and American Life Project reported in 2010 that fully 43% of Americans that accessed the Internet in 2009 visited a social media site, up from 8% in 2005. Other sources indicate this trend is increasing, and Facebook was the Bloomberg Businessweek cover story for September 27, 2010.

Check Your Mobile Phone at the Door?
Many financial institutions are busily writing policies that forbid the use of social media at the workplace. Unfortunately, everyone with a smart phone has the Internet, and access to social media websites, right in their pocket.

Train - Don’t Forbid
Just like the telephone and fax machine before it, the Internet and its related social media technologies are a trend that simply cannot be controlled.

Instead of swimming against the tide, develop short, simple social media policies and proactively teach them to your staff. Many community banks already are using social media and we’re certain many would share their policies. If you don’t have one, send us an email and we’ll help you find one.

What About That Pesky Compliance Issue?
If you intend to use social media to “communicate with the public,” those communications fall under SEC retention requirements.

But, don’t quit yet, there are a number of firms that can easily solve this issue for you without requiring another in-house software system. These are Internet-based solutions, and you’ll be on “Cloud 9” before you know it:

Backupify (Louisville, KY) (Backupify.com)
Dexrex Gear (Cambridge, Mass) (dexrexgear.com)
Eternos (Seattle, WA) (eternos.com)
Iron Mountain (Boston, Mass) (ironmountain.com)
LiveOffice (Torrance, CA) (liveoffice.com)
Mimecast (London, England) (mimecst.com)
Smarsh (Portland, Oregon) (smarsh.com)
Sonian (Needham, Mass) (sonian.com)

You are Over 50. Think You are Too Old for Facebook? Read On.

noreply@blogger.com (TSG, Inc.) — Sun, 18 Jul 2010 02:27:00 +0000

Three Simple Questions Will Point Your in the Right Direction
We’ve been asked many times about social media’s value to community banking. We got asked so many time, in fact, that we held our first community banking social media workshop at the Annenberg School’s Center for the Digital Future on July 7th.

The answer to the question about the value of social media to any organization is based on a few basic factors: 1) are the people you are trying to reach or your stakeholders using social media?, 2) would you like to have a two-way conversation with your target market, and 3) are you willing to dedicate some time to understanding social media and the role it could play in your customer communications plan?

The Sixty Plus Crowd is Pretty Hip After All
I just read a piece in the New York Time by Jenna Wortham stating that the fastest growing segment of Facebook users is people over 65, with 6.5 million of them creating an account in May of this year alone. Facebook now has 500,000,000 members. Those are pretty staggering numbers.

Would Your Business Like to Interact with Any of Those Half Billion People?
Half a billion people in one place on the Internet is a pretty lucrative target and businesses are flocking to Facebook. Businesses can create Facebook page, post information, receive customer feedback (or choose not to), all with a minimum of effort and the technology platform is absolutely free!

Read Groundswell by Charlene Li and Josh Bernoff
Summer’s here and its time to kick back a little and do some reading in the back yard or by the pool. After you’ve finished reading The Girl with the Dragoon Tattoo, get Groundswell. If you are at all interested in this thing called social media, you’ll be fascinated with what Charlene and Josh have to say, and you’ll be checking the boxes to see where you fall.

State of the Internet - Where are We and What does it Mean for Your Business?
As a Senior Fellow at the Center for Digital Future, I’m available as a lunch or evening speaker to talk about the current results of the Center’s ongoing research into how people are using the Internet and how it has changed their lives.

You can reach me at Robert.Hess@tsg.la or rhess@digitalcenter.org .

Pacific Coast Bankers Bank Annual Conference

noreply@blogger.com (TSG, Inc.) — Thu, 06 May 2010 16:47:00 +0000

PCBB Does it Again
I just returned from another great Pacific Coast Bankers Bank conference in San Francisco. Being in “The City” was great but, as always, it was Steve Brown, Chris Nichols and their team that really made the trip special.

Key Conference Take Aways
You never leave a PCBB conference without something a community banker could implement immediately (assuming time and resources) and improve their business. Here are some of the key points that caught my attention (in conference order, not necessarily order of importance):

Mobile banking has arrived. The major banks have implemented it and community banks need to get on the train or be left at the station. (35% of US households no longer have a landline telephone. There are 28 million mobile banking users and the number is growing).
Mobile deposit capture is here - USAA is using it to great effect.
Social media. Again, the big banks (Wells, BofA, Citi) have mastered what social media is about in banking and they will use these tools to become more “community” than community banks. Every community bank needs to spend some time understanding social media and what it means - or does not mean - for their business model.
The regulators are putting restrictions of the amount of brokered deposits. The more risk you have in your portfolio, the more capital they are going to demand you have.
ROA is critical.
You need to “desensitize” your deposit base.
Figure out who the bottom 20% of you customers are - they actually destroy 45% of your profits - and move them along to the bank across the street.
The future will place a premium on operating efficiency.
Regulators are going to be asking for more data and information.
Regulators will be looking at the number of loans approved “with exceptions.”
Focus will be on asset quality, liquidity, and capital.
IRR is a focus. Guidance is in FDIC 2010 Advisory on IRR Management.
Boards need to understand the risk profile of the bank.
What is the banks customized business metrics that the bank is managing to?

Social Media Workshop
TrakPointe/TSG will be holding a half-day workshop on social media for community banking July 7, 2010 in West Los Angeles. Attendance at this initial workshop is free, but is limited to ten participants. The session will be held at the Center for Digital Future, 11444 W.Olympic Drive, Los Angeles. To reserve one of these slots are to be added to the waiting list, contact Robert Hess, robert.hess@tsg.la, 424.245.5382.

Is Social Media for Your Bank?

noreply@blogger.com (TSG, Inc.) — Fri, 26 Mar 2010 16:36:00 +0000

Our firm became deeply involved in the concept social media through my role as a Senior Fellow at the Center for the Digital Future, Annenberg School, USC, and through several social media-related projects for the Department of Defense.

Blogs, Facebook, YouTube, Twitter, we've all heard about them and wonder if they make sense for community banks. If you are older than 50, it's probably a challenge to get your head around these tools. If you are younger, it's a lot easier.

We have created a hands-on, two-week mentored familiarization program for social media evaluation and we will be talking about social media in this column from now on. As a first step, though, spend a few minutes at First Atlantic bank's blog and think about what value it would bring to you if you were a First Atlantic client. Notice that First Atlantic has Twitter, Facebook, and LinkedIn accounts.

California DFI Quarterly Report - Quarter 4 2009

noreply@blogger.com (TSG, Inc.) — Fri, 12 Mar 2010 00:58:00 +0000

“At the close of the fourth quarter 2009, the number of state-chartered banks decreased by ten to 208 from December 31 one year ago. Assets went from $242.5 billion to $227.6 billion, down $15.0 billion or 6.2% over the same period. Total equity capital decreased at a slower rate, down 3.0%, going from $28.1 billion to $27.2 billion at the close of the fourth quarter, causing the equity capital to total asset ratio to increase from 11.58% to 11.97%. Loans were down 8.6%, going from $171.7 billion to $157.0 billion, while deposits increased 3.6% from $167.1 to $173.2 billion. This caused the loan to deposit ratio to decrease to 90.64% from 102.75% a year previous.

For the fourth quarter of 2009, state-chartered banks reported $1.0 billion in net losses, off $131.4 million or 14.5% from the $906.7 million net loss reported in the fourth quarter 2008. Loan loss provisions were up $1.7 billion from $3.2 billion to $4.8 billion, an increase of 53.2%.

The net interest margin was down from 3.23% one year ago to 3.21%. Loan loss reserves in the fourth quarter 2009 were up 31.0% to $4.0 billion from $3.1 billion one year ago; however, noncurrent loans went from $4.6 billion to $7.3 billion in the same period, which caused reserve coverage of noncurrent loans to decrease from 66.61% to 55.37%. Other real estate owned increased 87.5%, going from $625.0 million to $1.2 billion.”

Do you Listen and Learn?

noreply@blogger.com (TSG, Inc.) — Tue, 09 Mar 2010 20:08:00 +0000

There are an estimated 3.2 billion word-of-mouth conversations on the Internet each day! Are any of them about your bank? Probably not, since commercial banking is pretty much a niche market. But there are plenty of conversations on the Internet that are of interest to your existing and potential borrowing clients. Are you listening to those conversations and learning what’s top of mind for your potential customers? Can you provide any valuable information to potential clients about those topics?

Do you want to understand this social media ‘thing’ but don’t know how to begin? Well, you can have the answer in just two short weeks at 30 minutes a day. TSG, Inc. has created a two-week guided program that mentors you through understanding the framework of this thing called Web 2.0 and Social Media. It provides simple hands on exercises that take you no more than 30 minutes each day, and includes a discussion of that particular tool with a TSG principal. On the last day of the program, we meet with you to review the entire program and help you make an evaluation of Web 2.0/Social Media to your bank. To see the program outline or to talk with us about, just contact prem.sundaram@tsg.la or robert.hess@tsg.la. You’ll be glad you did.

What does Harley Davidson have that your marketing Strategy Doesn't?

noreply@blogger.com (TSG, Inc.) — Thu, 04 Mar 2010 16:39:00 +0000

TSG Comment
We’ve recently been receiving many questions about value of Internet-based technologies like Facebook, LinkedIn, and others (termed social media) to community banking. At the center of these technologies is the simple concept of ‘community,’ people interacting with each other, not only about social events, but about business issues as well. The following article provides some very interesting insights into how Harley-Davidson resurrected itself and became a modern day American icon. As you read, think about how you could create a “BIG”* group for your bank’s clients. We can help you along that path.

(*BIG - Business Improvement Group)

Can Harley Davidson's Secret Weapon Revitalise Your Marketing?
Sean D’Souza, Psychotactics

Imagine yourself in a helicopter over Milwaukee, USA, on the
shiny morning of June 13, 1998.

You look down casually on the crisscrossing tangle of roads on Interstate 94, and then do a double take. You can't believe your eyes.

It seems like there are hundreds of moving objects on the highway below. Maybe even thousands. You watch in horror as a veritable sea of black advances like warrior ants into downtown Milwaukee.

You hastily reach for your binoculars and your heart goes thump, thump, thump. Thousands upon thousands of Harley bikers, swathed in trademark leather and shining chrome bikes seem to be almost invading the city.

What should you do? Maybe you should call the newspaper. The police perhaps. Surely Milwaukee needs some sort of warning.

But it's too late. The bikers are already in the city.

Then you see the fluttering flags

The roads of Milwaukee seem to be lined with cheering people. Flags flutter in the sunshine. The roar of the crowd seems to drown the chucka, chucka, chucka sound of the helicopter you're in.

Down at street level, 50,000 proud Harleys roar through the city. You don't know it yet, but among those riders are senior executives, CEOs, employees and long-time owners of Harleys. It's a heck of a parade and over 125,000 owners turn up for Harley's big 95th Come Home' birthday.

Wouldn't it surprise you, even appall you, to know that in the spring of 1984, just 14 years earlier, only twenty eight bikers showed up?

28 to 365,000 members: What changed in 14 years?

It's called HOG. Short for Harley Owners Group.

Harley had dug a deep financial hole for themselves in 1983. Money for advertising was kinda non-existent. Saddled with this Catch 22 situation, Harley Davidson set about creating the first HOG chapter.

Using newsletters and club magazines they built their subscriber base one member at a time. From one solitary chapter, the HOG has mushroomed to an astounding 940 chapters around the world.

Working on an advertising budget of 10 cents or less

In 1997, Harley Davidson spent just $1 million on advertising. Before you say "Oh, I don't have a million," -- look at Harley's
advertising budget for 1996, 1995, 1994, 1993, 1992...all the way to 1984.

Zero.

A big fat zero.

All their money, squillions of dollars, went into creating an absolutely top-notch product. And then creating a community that would buy into the brand.

You were expecting some big secret, weren't you?

It's called community. Yeah, that's the big secret. Creating community among your clients. Harley does it. Sting does it. Apple does it. So why don't you do it?

It's way too much trouble, huh?

Well let's jump back to Harley Davidson's profit line. Think jackets, boots, gloves, t-shirts, bike accessories, baseball caps. Then do the math. Don't you think each HOG member is going to spend at least $10 to keep up his/her Harley image?

What's $10 profit x 350,000 members? You got it. $3.5 million.

Now let's look at actual figures In 1996, Harley took home $100 million. Up from $20 million, just eight years before in 1988. Mind boggling, huh?

And we're not even counting the profits from the sales of the
Harley bikes!

So how can you do a Harley?

Let's face it. You work too damn hard in your business

Yes, you know you've got to sell time and again to a customer.
And yes you know the real profit lies in your existing customer
coming back time and again. And that customers talk to customers and it helps to build sales.

But where the heck are you going to get the time to do all of this
community business?

If Katrina can do it, you can

Katrina runs a little dress store in a town that boasts of less than
15,000 residents. Business can be cut-throat, specially with the
big megastores within 'small business gobbling distance.'

Yet Katrina's done a 'Harley.'

Every month, Katrina heads out for coffee. And she's not alone.
In the quaint little cafe down the road, there's a hubbub of excitement. Katrina's customers are having a whale of a time. They're laughing, chatting and tucking into cheesecake -- while Katrina picks up the tab month after month.

Do you see the word advertising anywhere?

Printing of glossy brochures? Hundreds of dollars of publicity?

All it costs is $2.50 for a coffee. Per customer. Per month.

That's all it takes. And Katrina's community builds one customer at a time. Customers bring friends, friends bring friends and the dresses fly out of Katrina's dress store.

Why community is the most powerful secret of all

1) The competition doesn't have a clue While conventional advertising and publicity is great, it costs serious moolah. And everyone, including competitors, can see exactly what you're doing. Once they get their grubby hands on your plans, they can outspend you, outsmart you and send your business into outer Mongolia.

With community, you can see who's coming through the door. And you're the doorkeeper. It gives you the chance to create Super Glue loyalty, long before your competition wises up.

2) Communities give specific and vital feedback Ja, ja. They may complain good-naturedly at times. But mostly they'll be giving you valuable feedback. They'll tell you what they
want and what is passe. They'll bond with you. Trust you and your judgement with each meeting.

You will no longer have to guess what your customers want. They'll tell you even without your asking. What more could you ask for?

3) No man is an island. You've heard that phrase before. No man or woman likes to be an isolated case. Psychologically, we all like to be part of a group, a society, a country or a community of some sort. Give your clients something to cling to and watch how leaders and volunteers form within the community, dramatically lessening your workload.

Bankers call it compound interest

Invest in an account now and put away a little bit every day Suddenly before you know it, you've got gazillions in the bank. Building community is no different. You'll have to put the pieces together, one evangelist at a time.

Ladies and gentlemen, rev up your engines. Hit the road and start building your community. And you'll find as Harley has found with HOG.

That yes, communities do bring home the 'bacon.' ;)

Click here to read the original article.

As a Banker, Are You Interested in Gen Y? Then Go Social!

noreply@blogger.com (TSG, Inc.) — Tue, 23 Feb 2010 17:39:00 +0000

TSG Comment
We, the “leading generation,” are still having difficulties coming to grips with Web 2.0, the Social Media trend. But the recent study by Cisco cited below shows that social media is very important for retail bankers in connecting with Gen Y (1974 - 1980). We would expect that the same interest would apply for commercial bankers dealing with Gen Y business owners. As any sort of banker, you should be asking yourself how you can leverage Web 2.0 to better communicate and collaborate with your current and potential clients.

Cisco Study Finds Social Media is Key to Winning Over Gen Y

Banks can expect to achieve revenue gains of up to 10 percent over the long term by catering to the online and social media tastes of Generation Y, according to a survey report released today by Cisco's Internet Business Solutions Group.

These younger consumers, over half of whom have Webcams and log on to YouTube five times a day, say they are eager to use banks' online tools for budgeting and savings. Though not yet high earners, Gen Y'ers are professing high levels of trust in financial institutions that deliver professional advice in areas like debt reduction and long-term savings, and do so through interactive or social media.

"They are interested in and are coordinating quite frequently with friends, family, and peers using different types of social media," said Jorgen Ericsson, global lead for Cisco IBSG's financial services practice that provides technology consulting to executives of global Fortune 500 companies.

"For the specific question — how do I shape my financial future — they really want to get professional advice" through social media. But other than pilot projects in online personal financial management, most banks are still not adequately speaking to Gen Y'ers through the channels they use. More than 33 percent of younger consumers, for example, would be willing to have a "completely" virtual relationship with their bank by interacting with advisors through online video, according to the Cisco survey, which polled 1,055 consumers across all age groups in the fall. That trend is at odds with "the general perception of many established bankers who believe that video is unappealing to customers and not mature technology," said Philip Farah, the director of the financial services practice at Cisco IBSG. Prior to the survey, Cisco IBSG officials were skeptical that banks, particularly large national institutions, would score well with younger consumers.

"We assumed they would be very distrustful of banks," for two reasons, Farah said: banks are not well connected with Gen Y's communication outlets, "and because of everything that has happened with banks in the role of the current economic crisis." But instead, 85 percent of consumers under 30 gave large financial institutions high marks as trustworthy outlets for offering financial advice, guidance and planning tools to manage debt and build savings. Cisco IBSG found that more than one-third of Gen Y'ers polled last fall feels a greater need for financial advice, compared to less than one-fifth of boomers and seniors. Farah noted that brand recognition played a strong role in favorable views. While young consumers want more financial guidance in a relationship, they aren't likely to wait around for a slow-moving bank to provide it. Twenty-six percent of Gen Y'ers said they'd be willing to switch banks to get these tools.

The survey also found that: 40 percent of younger consumers use personal financial management tools, ones primarily offered by their banks, to manage expenses, reduce debt and maximize savings; and Gen Y consumers are four times more likely than boomers to post a question about financial matters to a blog or online forum.

Click Here for Original Article at USBanker

How do You Communicate with Your Best Customers?

noreply@blogger.com (TSG, Inc.) — Sat, 06 Feb 2010 20:12:00 +0000

It’s always a challenge to generate a meaningful dialogue with your customers. Most often, the customer “touch” happens with your most junior staff; for banks, think teller or receptionist. A recent blog post at BankInnovation notes that young consumers are expecting to interact with their financial institution through these tools, and many banks - and more every day - are using simple tools such as FaceBook fan pages to establish that connection.

If you haven’t already done so, set aside some time to match your business strategy over the next 12 to 18 months against both your key client target list and the social media tools most used by their respective psychographic profile. You may find that it’s time to develop and implement a “starter” social media strategy.

TSG are working on our second social media project for the US Government and we would be happy to share with you our thoughts and experiences about this important issue. Absolutely free. Robert.Hess@TSG.LA or Prem.Sundaram@TSG.LA.

Prostate Cancer Survivor Documentary Movie

noreply@blogger.com (TSG, Inc.) — Sun, 31 Jan 2010 01:54:00 +0000

I’m going to be making a documentary about prostate cancer survivors and their families during this summer’s Tour de USA. The city schedule (46 cities) is posted on the event site. If you would like to be interviewed and tell your story, just visit the website, join the mailing list and send us email. This is a story that really needs to be told.

Should We Care About Social Media?

noreply@blogger.com (TSG, Inc.) — Thu, 21 Jan 2010 02:53:00 +0000

Social Media was all the rage in 2009, and it appears the 2010 will see it really come of age. But, does it matter to your bank?

We think it does. While TSG and the TrakPointe team do not claim to be Social Media gurus, we are extremely good at Information Technology, and that skill set has landed us our second Department of Defense contract to develop Social Media IT architectures to help mitigate extremism around the world. Needlessly to say, we are very happy and excited to be part of these projects.

Developing the IT backend for this initiative, of course, means that we are developing quite a good understanding of Social Media and why it matters - and to whom.

So, here are a few reasons we believe Social Media matters to our banking clients:

Your Brand Value and Differentiation
Most community banks base their differentiation on personal service to clients and this works if you are delivering great service and your clients are talking positively about you. Monitoring Social Media will allow you to understand the overall sentiment associated with your bank’s reputation, your brand. If you have an issue and you work to correct it, sentiment analysis will show the improvement.

Do You Have Any “Influencers” Engaged with Your Bank?
Influencers within a certain space can wield an immense amount of weight. They generally post frequently, have a large number of followers, and their posts can appear on the first page of a Google search. Knowing who these people are and the issues that concern them can help companies improve service where it really matters. To see how dicey things can get, just visit http://www.bankofamericasucks.com/.

The Expressed Need
On the positive side, Social Media can help you identify new products and product improvements. The best way to identify these needs is to look for keywords that describe these needs, and then evaluate your product and service portfolio. If your bank has made the investment to engage your client base through Social Media, be certain to include the results in your annual strategic planning process.

TrakPointe and Social Media
You already know that our TrakPointe solution can be used to track and manage your marketing program. TrakPointe can easily be adapted to monitor and manage your Social Media program. We would be happy to talk with you for a few minutes about how TrakPointe can help with your Social Media program, or just about Social Media in general. If you contact us, there will be no hard sell. We promise!

A Taste of the Best of the Web

noreply@blogger.com (TSG, Inc.) — Mon, 07 Dec 2009 23:29:00 +0000

We often are asked about the Internet, particularly about social media and the practical value of the Internet. Time Magazine recently published their list of the 50 Best Websites of 2009. Take 10 minutes while you drink your morning coffee - or tea - and do a quick visit to these sites. There’s a wealth of information out there. One of my favorites is Academic Earth, which makes lectures from top professors at our best universities available for free. Once you’ve made this foray, grab a twenty or thirty something and ask them about their favorite Internet tools. I promise you it will be interesting and fun.

Reducing and Eliminating Human Process or Gray Matter Risk

noreply@blogger.com (TSG, Inc.) — Tue, 10 Nov 2009 23:50:00 +0000

I recently ran across an article in BusinessFinance Magazine that referenced the term “Human Process Management (HPM),” which is very much a topic TSG has been working on and writing about for the past three years. In fact, TSG’s TrakPointe™ solution is a direct result of our effort to reduce human process risk within community bank operations.

The article noted that ‘in today’s business environment most internal processes of any complexity are essentially “tacit,” or human-to-human, interactions that take place using standard office technology, such as email and various sorts of documents - Excel, Word. This cluttered exchange of information, using overloaded email systems and hit-and-miss personal interactions, leads to friction (slowness) in the system, quality issues, and missed opportunities for improvement.’

Employing human process management provides companies a system of record of the current status of any process. It collects and aggregates all of the data needed so that its human processes can be analyzed and improved.

TSG’s TrakPointe™ provides a robust but simple to use human process management system tailored to the business culture and technology skill level of each using organization. TrakPointe™ enables banks to create and implement process descriptions, benchmarks, measurements, follow-up, and reminders with complete self-activating management visibility. Bank managers are able to implement their own best practices in a simple, flexible solution that can be easily modified. Managers and staff have the ability to know the status of any process at anytime and the ability to retrieve historical information about process execution and outcomes.

We would happy to talk with you informally about this innovative solution. Contact robert.hess@tsg.la or prem.sundaram@tsg.la to arrange for a 10 minute Quick Insight.

How Gen Y, Apprenticeship, and TrakPointe Can Solve Your Staffing Problems

noreply@blogger.com (TSG, Inc.) — Tue, 10 Nov 2009 17:07:00 +0000

Two years ago TSG implemented a survey for the Community Bankers of California dealing with the never ending community bank challenge of finding qualified staff. The survey results can be summed up as follows:

Finding qualified staff is always an issue

It used to be possible to hire people trained by larger banks, but those training programs no longer exist

We don’t have time to train people, so we try and poach staff from other banks, even though this inflates our personnel costs

We don’t use personality testing prior to hiring to ensure the new hire fits our culture and the position they will fill

Recent research by the Center for Work-Life Policy indicates that Gen Y, people born between 1982 and 1995, are less focused on actual salary and more interested in having a somewhat flexible work schedule, such as telecommuting one afternoon per week, or working longer days in order to leave work at 3 p.m. on a Friday afternoon. They also are more interested in giving back to the community (they still are in the idealistic period that we all went through) and are very technologically savvy.

I learned about the value of apprenticeship programs during the 10 years I spent in Germany and France as part of my Army career. In Europe, university attendance is much more restricted than in the US, so young people go into trades and learn their skills directly in the workplace. They receive a lower salary during their training and qualification period, moving to full salary once they “graduate.”

The current economic situation provides community banks with an ideal opportunity to reach out to Gen Y’ers and find, train, and hire talented young people with the technological skills community banks need to leverage Web 2.0 tools.

Training time and costs for these new “apprentices” can be reduced significantly by starting them on processes that have been implemented in the TrakPointe solution from TSG. TrakPointe provides a guide on what to do for each process, while providing managers an easy tool to monitor performance and provide additional training and guidance where needed.

There are simple personality assessments that can (and should) be used to ensure your new apprentice will fit the position.

We would happy to talk with you informally about this innovative idea. Contact robert.hess@tsg.la to arrange for a 10 minute Quick Insight.

Meet a Bioscience Business Owner and Learn About Social Media

noreply@blogger.com (TSG, Inc.) — Thu, 22 Oct 2009 15:54:00 +0000

I'm speaking on a panel on social media next Thursday (October 29th) at the Luxe Hotel Sunset Boulevard (http://www.socalbio.org/)

It promises to be a great panel and a great networking opportunity. If connecting with bioscience companies is part of your business plan, you should attend this event.

For details, contact SoCalBio.

Western Union Developing Mobile Remittance System

noreply@blogger.com (TSG, Inc.) — Mon, 19 Oct 2009 17:31:00 +0000

American Banker | Thursday, October 18, 2007, by Daniel Wolfe.

Western Union Co. is adapting its international remittance system to let people send and receive money through mobile devices, further advancing the role phones are expected to play in supporting electronic payments. In this case as a way to reach the unbanked.

The Englewood, Colo., remittance company said Thursday that it is working with the GSM Association, a Dublin trade group for 700 mobile phone manufacturers, to define a standard that carriers could use to develop payment applications linked to the Western Union network on the back end.

Matt Dill, Western Union's general manager of mobile, said in an interview Thursday that it expects carriers to develop applications for both receiving remittances and using their phones as "mobile wallets" for making purchases.

"The key thing to look at is not just the sender's experience, but also the receiver's experience," he said.

Many people who receive remittances lack bank accounts, and in many developing countries it may be difficult or inconvenient to travel to a place where they can receive cash, Mr. Dill said.

A mobile wallet function built into a phone would let people receive, and use, funds more easily, he said. By envisioning the cell phone as a spending tool and not just an end point, Western Union is "taking a much more global perspective on mobile remittances."

http://www.americanbanker.com/article.html?id=20071018RGS3N3G5&email=y

So, Just what is Lean Six Sigma?

noreply@blogger.com (TSG, Inc.) — Wed, 14 Oct 2009 18:05:00 +0000

In short, Lean Six Sigma is the application of these two methodologies in concert to business processes with the objective of improving shareholder value.

The Lean methodology does this by:

improving process speed
analyzing process flows for delays
separates “valued added” from “non value added” activities and their costs
provides an easy mechanism for quantifying and eliminating complexity and its associated cost

Six Sigma:

focuses on eliminating defects from the customer perspective
shows variations that degrade service quality
is based on data and incorporates a comprehensive set of quality tools
creates a cultural infrastructure for sustained improvements

Both of these methodologies provide measurable and significant ROIC (return on invested capital) returns to implementing organizations.

Although originally developed to drive improvements in manufacturing, service organizations, have realized that what they really do is “manufacture” solutions for clients. A community commercial bank, for example, “manufactures” customized loans for customers. For community banks, each loan is in some respect a “one off” transaction. How quickly it can be completed and with what terms are important to the client. Making certain the loan is profitable is critical to the bank. This really is “service manufacturing.”

Community banks and credit unions can easily implement a Lean Six Sigma program. Here at TSG/TrakPointe, we suggest beginning with one critical process and applying the Lean methodology to it. This will remove unnecessary steps, which equate to time and cost, and reveal the key control points to monitor speed and quality. Then, put the revised process into TrakPointe™ and monitor performance. This process captures the cost savings, the proverbial low handing fruit, for one important, customer-facing process and provides staff and management with an understanding of how straightforward it is to implement Lean. At this point, you will be able to make very good estimate of the near and long-term financial benefit of a Lean Six Sigma program in your bank.

This is at most a 30 - 60 day process and very affordable, with a 90 - 120 payback period. If you are a commercial bank and you really want to compete on personalized service while ensuring your loans are profitable, you need to implement a TrakPointe™ loan pipeline module at your bank.

"Lean Forward" with Lean Six Sigma

noreply@blogger.com (TSG, Inc.) — Tue, 13 Oct 2009 21:51:00 +0000

The “Lean Forward” in the subject line comes from a phrase I learned during my US Army career, “leaning forward in the foxhole,” which translates into “being ready.”

The term “Lean Six Sigma” refers to the management tools by those names. We wrote about applying the principles of Lean Manufacturing (think Toyota) to banking two years ago as part of our Quick Insight™ management series. This is the first in a series of posts that will explore how these Lean and Six Sigma tools can be applied to community banking.

The current economic slowdown provides an ideal opportunity for community banks and credit unions to review their key internal processes.

Applying Lean Manufacturing tools to your key processes will have several important benefits (among others): 1) you will take complexity and cost out of your processes, 2) you will focus on what really is important to your customers, which will have a positive impact on your bottom line, and 3) you will demonstrate to regulators that what you is directly linked to your business plan and that your staff actually do comply with your policies and procedures.

We have received a number of queries about social media and banking, so we will alternate social media with Lean Six Sigma posts.

If you have something specific you would like us to cover, just send an email to Robert.Hess@TSG.LA.

Department of Defense Approves Social Media Use

noreply@blogger.com (TSG, Inc.) — Mon, 05 Oct 2009 13:44:00 +0000

TSG Comment
The issue of employee access to social media such as Twitter, LinkedIn, Facebook, and others remains an issue at most organizations. The Department of Defense, arguably an organization with top level security concerns, decided last week to allow it’s members, troops and family members, to use social network sites from its non-secure NIPERNET. The directive provides simple, straightforward guidelines for use of what the DoD terms “Internet Capabilities, ” which include Wikis, image and video hosting Web sites, blogs, and data mashups. From TSG’s perspective, the appropriate use of social media provides many organizational benefits. If you are interested in learning more about social media and developing a social media strategy and guidelines for your company, simply send us an email (robert.hess@tsg.la) and we will notify you when we begin our Social Media University (SocialU) Webex series in November.

DoD Social Networking Draft Directive
Click this link to read the entire article and draft directive.

YouTube and Community Banking - They Do Go Together!

noreply@blogger.com (TSG, Inc.) — Wed, 16 Sep 2009 22:52:00 +0000

We’ve been talking quite a bit lately about using social media to develop a brand for community banks. Take just a few seconds and review just one clever little piece the ICBA placed on YouTube. http://www.youtube.com/v/3YYcM3D5YFU&hl=en&fs=1&

We would be happy to spend a few minutes with you talking about how to leverage social media for your bank.