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How to make money out of deposit-only strategies

So that’s the end of a week in Orlando in a Mickey Mouse

Lots of great stories about the banks that are surviving
who all seem to have one thing in common: put the customer at the core of the
business, give them a great service experience and focus upon deposits over loans.

The last bit is counter-intuitive and has a great comment
response on yesterday’s blog
from Steve Audino.

However, I would resist the view that you have to focus
upon getting loans over deposits as that’s been the reason for the demise of
Northern Rock, Bradford & Bingley, WaMu, Wachovia, National City,
IndyMac Bank … or was it selling their souls to the
wholesale lending markets that did that?

For example, in 2000, the total lending from the
wholesale markets to the UK banks was nothing.

By 2007, the UK Banks had borrowed £625 billion from Wall
Street and the City through CDO, SIV, ABS and other junk shop derivatives.

That's why the UK Government has pumped over £600 billion into the UK banks this year.


And it leaves many other Americans, Britons and more in hock to the
banks for a house that’s worth less their mortgages.

But 'nuff said as I want to come back to the focus on the customer, guest, participant or whatever else you call the guys who spend money with you these days.

The focus on the customer is good thing, as demonstrated by a conversation I had today during with the head of training and employee engagement at the Hard Rock Café, Jim Knight.

Jim explained how
it all works.

I’ll write this up over the weekend, but here’s a challenging

The Hard Rock Café is a restaurant right?

It’s a place to go eat and drink.

Yet the Hard Rock Café makes no money out of
food and beverage sales.


No profit from that stuff right?

But it is profitable.

So here’s the thing: if banks focus upon deposit-only strategies, they can make money out of it, in the same way as the Hard Rock Café focuses
upon food and drink and makes  money out of it.

I’ll tell you more next time.<

Right now, I’m going to bed to dream nice dreams about the characters that inhabit the wonderful
worlds of Disney and Universal in Orlando.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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