Another (cooler) Friday is upon us, and we have news for all of you community banking pros as you wind up the week. First up is the sour results of Goldman’s credit issuance partnership with Apple, JP Morgan Chase and the role data has played in their performance, and an ode to the role of personal discipline in one’s life.
1. Goldman Sachs’ Apple Card Pain
Tom Merritt of Daily Tech News writes on the less than stellar performance of their credit card issuance business with Apple and their Apple Card offering.
Goldman had a charge-off rate of 2.93% in Q2. That’s in the subprime range, and Goldman is not targeting subprime customers…. Bank of America had a record low charge-off rate of 1.60% and JP Morgan’s is 1.47%. Capital One, which intentionally targets riskier customers, is also lower than Goldman at 2.26%. So it’s not as simple as “the economy.”
Even though Apple doesn’t target risky customers like Capital One, Apple does go after a wider section of the public than most card issuers. 28%% of Goldman’s card loans go to people with credit scores below 660. That’s close to 30% for Capital One. By comparison, JP Morgan is at 12% and Bank of America at 3.7%.
This may be a case of Apple being savvy about which parts of their growing financial services businessto outsource and which to build out themselves. But with over $48B of cash on their balance sheet, this isn’t a make or break risk for them. It may be more indicative of the parts of the consumer finance ecosystem they’re interested in, not by margin or volume, but by control and leverage.
2. JPMorgan’s Data Revolution
Randy Bean of Forbes writes on JPMorgan Chase’s success in leveraging data for performance in their Consumer and Community Banking business unit. JPMorgan’s data and analytics effort is being led by Mark Birkhead, having previously served in similar roles at Citi and Santander. Aside from the technology, the biggest lift in this situation is cultural change in a 200+ year old institution and using their data to serve their customers better.
Elements of the Chase’ data and analytics strategy and game plan, include:
- Know the Customer Better in Real Time– Using data and analytics to react in real-time to customer needs, while delivering personalization at scale to craft offers for tailored and precisely defined customer segments.
- Extended Intelligence – Helping make employees and customers smarter by using Natural Language Processing (NLP), artificial intelligence and machine learnings to deliver answer and value in real-time.
Investments in these areas have helped the giant achieve 45% of consumer banking account opening to be self-serviced, 70% of all servicing via digital channels, and 90% of money movement done via self-service digital channels.
With that in mind, it’s worth examining your own plans for incorporating your data into your own customer experience. Some helpful benchmarks and thoughts here on what you might achieve.
3. The Virtue of Discipline and Self-Control
Noted author on stoic philosophy Ryan Holiday has a new book coming out on discipline. He shares insights from writing it in Discipline is Destiny: 25 Habits That Will Guarantee You Success. Among the snippets:
16. Be a little deaf. We have to develop the ability to ignore, to endure, to forget. Not just cruel provocations from jerks, but also unintentional slights and mistakes from people we love or respect. “It helps to be a little deaf,” was the advice that Ruth Bader Ginsburg was given by her mother-in-law. It helped guide her through not just 56 years of marriage, but also a 27-year career on the court with colleagues she adored–but surely disagreed with on a regular basis.