Tim Shanahan, PrecisionLender's Head of Client Strategy, comes on The Purposeful Banker to introduce PrecisionLender's newest product: Market Insights. What's the problem Market Insights was built to solve? And how does it solve it? Tim provides the answers in this episode!
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It's Time to Change How Your Bank Defines Its Market
Transcript:
Jim Young: Hi and welcome to The Purposeful Banker, the podcast brought to you by PrecisionLender where we discuss big topics on the minds of today's best bankers. I'm Jim Young, director of content at PrecisionLender. And I'm joined today by Tim Shanahan, our head of client strategy. Tim's here to preview his upcoming webinar, the one Ashley just mentioned in the promo, in which he'll unveil PrecisionLender's newest product, Market Insights. We'll have a registration link for that February 13th webinar in the show notes and you can also sign up for the webinar by going to precisionlender.com and clicking on the banner ad at the very top of the screen. But first, enjoy this preview.
Tim, welcome back to The Purposeful Banker podcast.
Tim Shanahan: Thanks, Jim. It's great to be here.
Jim Young: All right. Before we get into Market Insights, a little bit of what it is and what it does, I want to first back up to the initial step in product development, which is what is the problem that we saw out there that needed solving?
Tim Shanahan: It's certainly a good question. You've got to root yourself specifically in the problem. And at PrecisionLender, that is what we do. We fall in love with the problem. A lot of the listeners out there are coffee drinkers and you can walk into any Starbucks anywhere, you can look up at that menu board and you can find out how much your grande soy skim latte is going to cost. It's completely transparent to the customer. The bankers out there know in the world of commercial banking that transparency for loan pricing doesn't exist.
It's absolutely an opaque market. It's very difficult to find out what other banks are charging for a given credit product. And frankly, what banks are able to learn is really completely hearsay. For years, banks have been asking us to really help them secure better transparency, better intelligence on credit pricing, and that's Market Insights.
Jim Young: So basically they're saying, "Look, I'm pricing a deal here. I've got an idea. The customer's telling me sort of what they want. I've got an idea of what ... The bank is telling me or what we're shooting for. But what I don't know is sort of where any of that falls within the context of the competition." Is that basically it in a nutshell?
Tim Shanahan: That's right.
Jim Young: Okay. All right. So, I'm a banker and I want to know what the rest of that market's doing, but I guess ... And I'm thinking on this, you're basically saying, "Give me that data of what basically other banks are doing in my region." I was thinking, you mentioned Starbucks. I was thinking almost like car dealerships and you know what the competition's offering because it's all out there. So I would think it would be bankers saying, "Give me the data on the other banks in my region or my local geography." Is that really the right question to be asking though?
Tim Shanahan: It isn't. There was a time when geographic proximity was really the primary driver and was something to kind of hang your hat on. But those times have absolutely changed. There are a number of factors that determine credit pricing. Things like the risk profile, the deal side, the loan tenor, the industry that's involved, the product type. It takes a lot, I mean, a lot of data to put together the right insights for a bank.
Jim Young: So then really, Tim, if I'm understanding this correctly, we're just talking about a more modern world version of what a market truly is, not just geography. Do I have that right?
Tim Shanahan: That's exactly right.
Jim Young: All right. And so, this market data that we're drawing from here, where does that come from exactly?
Tim Shanahan: It comes from PrecisionLender. So on an annualized basis, we are structuring to the tune of roughly $1.9 trillion of transactions via the PrecisionLender platform and that helps drive a massive loan book. Each week we see and assess the profitability of a loan book of actuals of roughly $660 billion. That's 1/7th of the commercial assets in the United States. And that data can be used to simulate, really, countless versions of different market conditions for our customers.
Jim Young: Yeah. So you got a data set that big, you can do a whole lot with it and feel very confident in what that data is telling you, and that's going to give you a more true sense of the market you're competing against. Again, as we mentioned, geography a factor, but no longer the factor. When do bankers get this data? And I guess more specifically, why does that matter? Why does the timing matter?
Tim Shanahan: Timing frankly is everything. And I've seen attempts at different banks in my years as a banker, et cetera. I've seen attempts at delivering insights before, whether it's Excel spreadsheets, or PDF files, or PowerPoint decks, or SharePoint dashboards. It's manual, it's delivered too late. It's information that is suspect in quality and is not delivered to the right people at the right time with a connection to make a difference. With our Market Insights capability, that information is provided to the banker right when they need it, when they're in the middle, early on in the sales process, structuring and pricing a deal.
Jim Young: Okay. So then, now we've discussed the why, the how, the when of Market Insights. Can you give us a use case? What happens when a bank and a banker puts Market Insights to use?
Tim Shanahan: Absolutely. Great things happen when they put it to use. And we're going to cover that, Jim, the methodology as well as a good number of use cases on the webinar on February 13th. Listeners are just ... They're not going to want to miss it.
Jim Young: And actually, Tim, I know when I sent you the script and the questions here, I told you there were a certain amount of questions, but I'm going to hit you with one extra one here that's not on the list, so apologies in advance for putting you on the hot seat here. But you've had a long career in banking before you came to PrecisionLender. I'm wondering if you can put that banker hat back on and think back to sort of when you were doing this sort of stuff, what would it have been like or what difference would it have made for you to have a product like Market Insights?
Tim Shanahan: Fantastic question. And I guess I'll answer it two ways, Jim. One would be at the individual deal level, obviously incredibly helpful, right? As you're structuring a deal, trying to find out where the competition may be in certain spaces and how can I optimize the revenue and returns for the institution based upon the pricing of this specific deal. Having that type of information would just be incredibly, hugely helpful. From there, taking a look at the aggregate level as well.
So I think to my strategy days and product days and so on as we're trying to drive the performance of the broader commercial bank, having that access to that portfolio level detail, being able to compare my bank's pricing performance against a broader market in different ways would have been an absolute game changer. And I know every bank out there is doing whatever they can, especially in these tight interest rate environments to optimize return on tangible common equity. And this is just a fantastic way to be able to do that. So it would be a game changer in both spots.
Jim Young: All right. Well, thanks Tim. First off, thanks for coming on the show.
Tim Shanahan: My pleasure. I'm happy to be here anytime.
Jim Young: And to our listeners, thanks for indulging us a little bit on this. And I know we don't normally talk about PrecisionLender directly quite as much on this podcast but we wanted to make an exception here because we wanted to make sure that you're aware of this webinar coming up and don't miss it. And this isn't a product that we think will be of interest and of use to you.
And once again, as Ashley mentioned at the start of the show, you can learn more about it, about Market Insights during that webinar. It's called Pricing Competitively with Market Insights on February 13th, 1:00 PM Eastern Standard time. We'll have a registration link for it in the show notes and you can also sign up for the webinar by going to precisionlender.com, clicking on the banner ad at the top of the screen.
Maria Abbe: And that'll do it for this week's show. Thanks so much for listening. Now, for a few friendly reminders. If you want to listen to more podcasts or check out more of our content, you can visit our resource page at precisionlender.com, or you can just head over to our homepage to learn more about the company behind this content. Finally, if you like what you've been hearing, make sure to subscribe to the feed in iTunes, Google Play or Stitcher, and we would love to get ratings and feedback on any of those platforms. Until next time, this is Maria Abbe for Jim Young and Tim Shanahan, and you've been listening to The Purposeful Banker.
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