Stop Rate Matching, Increase Your Net Interest Margin

I bet your strategic plan does not have anything in it that says, “We want to match rates. We want to shrink our net interest margin. Oh, what can we do to match the rates of our desperate competitors?”

Of course, those words aren’t in your strategic plan. And yet have you noticed that the way your plan is being executed demonstrates a reliably predictable pattern? One which basically means your people are still matching rates? Your strategic plan may as well have “We want to match rates” in it for all the good it’s doing.

So we need to address rate matching not only from a de-commoditization standpoint but how to handle this strategically at the same time.  I’ll tell you what—that’s hard to do because it’s really easy to do the norm in banking: to sit behind the desks, wait for the request and match rates, or on the clients that you call on, to take them through a typical sales process, but then end up rate matching anyway. 

What is it about your strategy that’s wrong?

Well, if you knew that, you’d say, “Roxanne, I’d have this fixed by now.” Of course, but how long can you live with not fixing this strategy that doesn’t allow for you to increase pricing and affects your net interest margin?

There are plenty of false attempts, false starts—in fact, many bankers try very hard to command premium pricing for their banks. And yet the job doesn’t get done. There’s always an excuse:

  • It’s an interest rate environment. 
  • It’s the competitors.
  • It’s that nobody is loyal anymore. 

There are lots of excuses 

So what are the strategies that are going to take you out of that? How are you going to approach things? 

Strategy, by definition, is what you need to do to make sure you hit an outcome, even with limited resources. Most people only talk about the “limited resources” part of it. The “doing” part of it has everything to do with: 

  • Do you have the right sales system?
  • Do you have the right differentiation?
  • Do you have the right attentiveness to the right sales system?
  • Does everyone know how to follow it?

The proof is in the pudding as my grandfather used to say. If you’re commanding a great premium pricing, your people are doing all of those things, right? If they’re not, first go back to the strategy, fix it, and then go back to the execution once you have the right strategy in place. 

By the way, I think you deserve an even higher net interest margin. I hope you believe that, too.  So, join me for my upcoming masterclass on never having to match rates again. And I’ll share with you a lot of the ideas that the Best Banks in AmericaTM are using to make sure that they command premium pricing. – Roxanne Emmerich

Please watch the video above and share it with your exec team and board.

Make rate matching a thing of the past. Register for the “Never Match Rate Again” Masterclass with Roxanne Emmerich on March 16, 2022 | 11 a.m. CT/12 p.m. ET.

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