Enterprise Profitability Solutions-building solid customer relationships and enhancing profitability

A financial institution’s profitability revolves around their customers. Building the right relationship with customers increases profitability. Relationship Profitability Management is part of ProfitStars’ solution for building solid relationships. It can provide valuable insight into the profitability of one customer versus another. Relationship officers will be able to look at customer profitability and determine how they can improve it by cross selling products. Relationship Profitability Management provides tools to determine if a particular loan pricing policy is adding to or taking away from value. Credit costs and risk ratings are laid out on the screen, which also enables managers to price more accurately. Relationship Profitability Management’s drill-down capability provides the insight needed to make strategic decisions. ProfitStars® also offers the PROFITability® module as a solution to track and analyze profitability based on branches, officers, products, and other factors that affect the customer’s relationship. PROFITability is designed to help manage risks properly – creating the most favorable conditions for success. A financial institution manager commented that one of the most helpful management disciplines enabled by PROFITability is that the true contribution of each branch to profit and loss can be accurately measured.

Here is just one example of how ProfitStars has partnered with a client to help them compete:

 “Given the competitiveness in our marketplace, we realized we had a heightened need to know and understand the relative profitability and performance of our officers,” explains one CFO. “Beyond that, we needed to know which customers and what types of transactions and products were actually driving the profitability within each relationship manager’s portfolio. We could no longer afford to risk guessing on loan and deposit structure and pricing.”

“With Relationship Profitability Management, we are no longer guessing and giving away profitability,” he continues. Simulations, whether performed on a potential new relationship or by adding a transaction to an existing customer, measure the projected impact on the bank’s return on assets or return on equity. Gill deems the tool so valuable that simulation is required of every new customer credit package evaluation. He notes, “The simulation capability is very, very powerful and unique to ProfitStars. It allows us to concentrate our efforts. Concentrated efforts equal enhanced profitability.”