7 Startling Signs You’re Losing the NIM Battle

Is net interest margin compression a given?

It is for most banks…but it’s not for all banks. In fact, many banks are bringing up their net interest margin by 40, 50, 60, 100 basis points in a half a year to a year.

And if they can do it, perhaps you can.

So what are the seven telltale signs that you will have continued NIM compression?

Number one: You have people who believe that they have to match rate.

Beliefs drive results. And when people believe something—until you change beliefs, no amount of sales training, ideas, processes—will change that result.

So until you give them a new mountain of evidence that it can be done—and banks across this country are doing it every day—that will not change.

Telltale sign number two: Not having unique selling propositions that justify extreme premium pricing.

So, in a world of commodity banking, where everybody has the same shtick, and everybody says, “We have good people, and they mean really well, and we’ve been around a hundred gazillion years, and we answer the phones, and we remember your name”…those are not the kind of differentiators that people are willing to pay 100 to 150 basis points more for.

So creating those and moving through that is imperative for those who want to get past the net interest margin compression belief system.

Number three: Not knowing the emotional intelligence scores of your sales people.

In fact, emotional intelligence scores are the highest predictor of whether someone can sell and get premium pricing.

If you have an employee that has a higher Intuition-Empathy score, they’re going to have a strong need for approval, which means almost nothing you can do will convince them to go get the premium pricing. It’s a hard thing for them to break through.

The research shows that someone who is low-risk in a sales position on their scores versus someone who is medium-risk—the difference in the production will be 400 percent more for the low-risk. So knowing those scores can be one of the most important things you can do to transform that result.

Telltale sign number four: Your exec team isn’t hell-bent on fixing the problem.

You see, there’s a lot of people who just keep doing what they did the day before and not moving through that to really fix the issue for good.

Now, many CEOs will say to me, “Roxanne, we can’t fix this until everyone on our team believes that it can be fixed.”

In fact, let’s look at the research that was done by the author of Good to Great, Jim Collins.

He found, when he studied the 3,000 best decisions ever made in business today, that 100 percent of the time, there was dissension amongst the executives.

I don’t know where we came up with this idea in community banking that 100 percent of executives have to agree before a decision is made.

And in fact, if you have dissension, it’s important to ask that person, “So, if this is a $12 million-to-the-bottom-line impact every year, to increase our NIM…tell me about your better plan, and how will you get started on that?”

So getting a team engaged to understand how much it costs to not fix it, and then getting them engaged to, “Let’s create a solid plan”—and execute on it, is imperative.

Number five: You have the master of sales prevention running the show.

In every organization, there seems to be at least one or two people who, perhaps it’s because they feel like they’ll be pulled aside and told they are doing it wrong, are unwilling to change what it is that they’re doing. And they are absolutely adamant that it can’t be fixed, or it won’t be fixed, or, “We’ve tried before and it didn’t happen.”

Well, that may be true…but the reality is, for those banks who don’t fix the problem, it doesn’t matter—you’re moving the furniture on top of the Titanic!

The need to get this fixed is imperative, and the need is now.

And number six: Nobody takes a stand.

Somebody’s got to be the puppy dog with the sock in their mouth that says, “Enough already.”

The world is transformed by people who say, “Enough already.”

Whether it’s one person or two on the executive team—preferably two—you can get the job done.

Even if you have dissension amongst the team—but somebody has to be a stand for this and say, “Enough already; it’s time for us to move this ahead and do what we need to do make that happen.”

And number seven: A lack of commitment.

Banks are filled with executives who, when their managers hear their next big idea, begin to say that little chant, that unfortunately is way too loud…this too shall pass.

Unfortunately, for many organizations, “this too shall pass” has happened so many times.

So, just because it’s happened doesn’t mean it can continue to happen. That’s what learning to be a great executive is about: learning to stop the chaotic craziness of starting an initiative here, another one there…

And that means a commitment from everyone on your team, led by the top executives, to say, “Ok, we’ve had some issues in the past, we’re done with that; we’re now moving on into a whole new, evolved way of being.”

So, if you remove these telltale signs, imagine what it would do if you could move your net interest margin up 50, 100, or even 150 basis points.

What would that do for your safety, your security, your profitability, your year-end bonuses…just imagine.

Well, you don’t have to imagine any more: there are systems and processes that banks across this country are using—and it’s working.

So why not get started today?

Leave a Reply

Your email address will not be published.