February 2013 - Banking Newsletter
Determining the right strategies and solutions to address market conditions is a key factor to future success.
Date : February 27, 2013
Institutions continue to focus on growing and increasing bottom line profitability, and are looking outside of traditional lending to generate this growth.

Welcome to the February 2013 West Monroe Partners Banking Newsletter

The initial outlook for 2013 doesn’t appear much different from what we’ve been experiencing the past two years: increasing interest rate pressure, lending volume stagnation and rising costs remain constant factors, and roadblocks, for future success.  Institutions continue to focus on growing and increasing bottom line profitability, and are looking outside of traditional lending to generate this growth.

Three major themes have emerged that are shaping the banking landscape early in 2013.  Merger and strategic acquisition activity has gained momentum in the early part of this year, as evidenced by the volume of deal announcements and general activity in the market.  Additionally, many executive teams and directors are continuing to focus on strategic capital expenditures to control costs and increase efficiency.  At the same time, achieving revenue diversification by addressing fee income revenue streams across multiple lines of business is top of mind for middle market and community banks.

These themes are complex business opportunities, and no solution is one size fits all.  Determining the right strategies and solutions to address these market conditions is a key factor to future success.

From differentiating the on-boarding process for Treasury Management to conducting a comprehensive due diligence program for strategic acquisitions, West Monroe helps our clients achieve their business objectives.  In this newsletter, we share our insights on tackling the current industry trends that financial institutions and banking clients are facing around the globe.

We hope that you find these articles of interest, and would be happy to provide any additional information or assistance that you may need.

Additionally, as a strategic partner helping financial institutions solve their most pressing and complex business challenges, we at West Monroe invite you to participate in a short survey. This will help us to identify early trends in the market and provide relevant and timely information and services to our clients. This survey is completely anonymous and should take less than 5 minutes to complete. Please use the following link to participate in the survey: http://www.surveymonkey.com/s/WJVX2W3 

While acquiring institutions typically conduct high-level financial due diligence, such as discounted cash flow analysis, multiple analysis, or portfolio-level credit due diligence, many elect not to conduct comprehensive due diligence that provides a broader and deeper analysis of a target.
Financial institutions seek a higher level of process automation as they try to achieve increased efficiency and scalability.  Many institutions have successfully moved toward technologically-driven loan origination systems and even automated credit-decision engines for their consumer loan products. This begs the question: Can the commercial credit function be automated in a similar fashion?
Banks often make changes to their business or technology to achieve singular product, business, or platform goals. This is completely understandable; in most cases, it is the only way to exploit business opportunities that will not wait for the complex and time-consuming process. 
Treasury management continues to be a source of diversified revenue for banks and, given the focus on non-interest income with falling interest rates, much more of a commodity business. As banks look to innovate new products and services targeted towards corporate treasury functions of all sizes, one area of opportunity is differentiating the implementation and onboarding process.
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