Banking Profitability Drivers

  • ID: 2200889
  • Report
  • 26 Pages
  • Mercator Advisory Group
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  • FIS
  • Fiserv
  • Harte-Hanks Trillium
  • IBM
  • Jack Henry & Associates
  • JPMorgan Chase
  • MORE
In new research, Banking Profitability Drivers, Mercator Advisory Group reviews how retail financial institutions (FIs) are driven to improve their efficiency, productivity, and overall financial performance, and are poised to make their organizations stronger and more profitable.

"After a half-decade of macroeconomic and microeconomic malaise, the financial performance of banks and other financial institutions (FIs) is largely improving and is poised for further improvements. For many of these FIs, however, customer profitability remains tepid, particularly when compared to pre-financial-crisis levels," comments Ed O'Brien, director of Mercator Advisory Group's Banking Channels Advisory Service and author of the report.

Highlights of this report include:

- Discussion of the need for financial institutions to improve their performance in the wake of the Durbin Amendment to compensate for reduction in revenues formerly provided by fees

- Evidence that customers value strong, well-managed institutions with sufficient resources to deliver superior products and services

- Description of different approaches, including the use of software products and consulting services to help FIs improve profitability

- Review of leading tools and techniques that provide comprehensive and relevant views into profitability potential at the customer, household, and branch levels
Note: Product cover images may vary from those shown
2 of 5


  • FIS
  • Fiserv
  • Harte-Hanks Trillium
  • IBM
  • Jack Henry & Associates
  • JPMorgan Chase
  • MORE
Executive Summary


Financial Institution Profitability Is Slowly Improving
On the Road to Recovery
Post-Durbin Effects on Bank Profitability
Pareto's Law No Longer Applies
Customers Value Financial Strength When Evaluating a Financial Institution
Mixed Messages

FIs Seek to Intelligently Expand Their Retail Banking Footprint
Management Challenges
Crafting a Multifaceted Approach to Profitability
Expanding the Products and Services Portfolio
Leaving No Stone Unturned
Small Business Banking
Wealth Management
Efficiency Improvements Are Key Drivers of Profitability Increases

Solutions Frameworks
Profitability Modeling
Profitability Solutions
Global Standards and Industry Frameworks
Commercial Solutions to Help Maximize Profitability
Use of Outsourcing and Managed Services on the Rise
Many Commercial Solutions Available
SAS Banking Analytics
Fiserv Bank Intelligence Solution
Harte-Hanks Trillium
IBM Business Analytics for Banking
Jack Henry & Associates
SAP for Banking and Bank Profitability Analysis
Classifying the Key FI Profitability Approaches
Looking Ahead

Conclusions and Strategic Implications

Copyright Notice
End Notes


Figure 1: Financial Strength Is an Important Factor to Customers Selecting a Financial Institution
Figure 2: FDIC-Insured Deposits: Commercial Banks and Savings Institutions, 2002–2011
Figure 3: Areas to Target to Improve Customer Experience and Overall Profitability
Figure 4: Tiered Approach to Value Creation in Banking
Figure 5: Small Business Segment Distribution and Receipts, 2012E
Figure 6: FI Profitability Solution Infrastructure
Figure 7: SAS Activity-Based Management Multistage Cost Contribution View for Retail Banking Products
Figure 8: SAS “Profit Cliff” Model
Figure 9: Fiserv BancAnalyst Profit Highlights Areas for Potential Profit Improvement
Figure 10: Trillium Software Banking Solutions Process
Figure 11: IBM Customer Profitability Continuum
Figure 12: Jack Henry ProfitStars Relationship Profitability Management (RPM), Showing Customer-Level ROE, ROA, and Profitability Results
Figure 13: Jack Henry Margin Maximizer Displaying Product Information and Net Income by Product
Figure 14: SAP Bank Profitability Analysis Framework
Figure 15: Perspectives and Inputs to FI Profitability Systems
Note: Product cover images may vary from those shown
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Organizations mentioned in this report include:

- Bank Industry Architecture Network (BIAN)
- Fiserv
- Harte-Hanks Trillium
- JPMorgan Chase
- Jack Henry & Associates
- Temenos
- U.S. Small Business Administration
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown