From concept to reality: How to build a performance banking culture in 7 steps

In today’s dynamic banking environment, the appetite for immediate information, measurable progress and quick decision-making only continues to grow. Every basis point in your net interest margin (NIM) matters, and traditional financial analysis and risk identification functions need to take place on a rolling, continuous basis for an institution to stay a step ahead.

And increasingly, a bank’s CFO must also serve as performance management leader, guiding their organization through the transformation from a traditional banking culture to a performance-driven one.

Wondering how to turn the concept of performance management in banking into reality at your institution? Here are seven concrete steps CFOs can take to be performance banking leaders:

1. Encourage a growth mindset

It's business as usual in many banks that continue to rely on traditional processes and procedures. But as anyone working in financial services knows, technology and heightened consumer preferences are changing everything from deposits to CDs to mortgages and more. The first step in creating a performance banking culture is creating a mindset that says challenges can be opportunities, anything is possible, and change is not a bad thing.

2. Involve all levels of staff

A performance-driven culture needs to have buy-in at every level of the organization. Empower your employees by training and educating them on key performance indicators, what they mean, and what little things employees can do to move the needle. Employees need to understand the value of a one-basis-point change in NIM and how seemingly small steps can make a substantial difference. Your front-line staff can be your best advocates for new deposit accounts when growing deposits is crucial.

3. Focus on employee experience

A crucial component of performance banking is making sure your own house is in order. As CFO, you may be driving the effort toward performance banking, but your people are the ones taking the day-to-day actions necessary to carry it out. Your employees at all levels need to feel supported, appreciated and always respected for their contributions.

4. Ask for (actually honest) feedback

Part of creating a performance banking culture is hearing some truths that might be inconvenient or difficult to digest. It’s important to push through any reservations you may have and listen to the hard truths. You can't build a high-performance culture on shaky ground.

This can be a job for human resources. Ask HR to survey employees about your bank's culture and use that survey as a starting point to change what needs changing. Finding out where you're starting is the first step to create something new, better and more powerful for your bank.

5. Use technology to its fullest

You need the right tools to help your people make better, faster decisions. Performance banking software (like Banker’s Dashboard) puts financial data and key performance indicators at your fingertips daily, helping you spot changes in performance and make fast, informed course corrections to achieve the goals of your bank. These tools visualize information in easily digestible formats, and help you:

• Track key indicators (like asset yields, funding costs and net interest margin)
• Access loan and time deposit pricing and maturity data daily
• Facilitate transparency and accountability across the FI
• Provide leaders with access to actual metrics in order to respond more quickly to changing conditions
• Automate financial reporting and analytics

6. Involve the board

Your board members probably aren’t bankers. They’re often business owners in the markets where you operate and can bring in investment. They can also share new ideas and perspectives from their own diverse experiences.

In times of uncertainty, it's more important than ever to communicate openly and frequently with your board and critical stakeholders. Open communication and exchange of new ideas are the foundation of performance banking.

7. Remain agile

All this work does no good if you aren’t willing to adapt as your situation changes. This might mean adjusting how you manage reporting or how you structure your staff. Also, frequently monitor performance and make necessary portfolio changes quickly. That willingness to change, try new approaches and embrace opportunities will get your institution through tough economic times stronger and more ready to grow in whatever "new normal" comes out of this crisis.