One of the highest performing regional banks in the country was recognized as the Best Overall Bank in the Northeast in 2019 by RankingBanking, which designates the top public retail and commercial banks between $10 billion and $250 billion.
Today, the Best Overall Bank in the Northeast deploys a customer-centric sales and service model. Both are supported by banker incentive programs to reward those that best address customer needs with financial solutions.
The bank directly attributes its industry-leading incentive program design, centralization, and administrative efficiency to an initiative that the bank first prioritized in 2014. At the time, the bank embraced incentive compensation as central to advancing the business’ revenue by focusing performance and emphasizing strategic investments.
This blog outlines the challenges, solutions, and successes that the bank encountered throughout their incentive compensation management (ICM) journey. It also offers action-oriented insights for other financial services institutions looking to improve revenue performance.
The Financial Services Challenge: Administration and Tactical Errors Cloud The Larger Revenue Picture
The bank’s compensation was primarily manual and, as a result of the decentralized model, error rates and data quality varied across programs. High dependency on Excel and other basic tools was also resource intensive and left administrators struggling to keep up with requests for reporting to further motivate activity.
“It was our first comprehensive evaluation of the ineffectiveness of incentive administration,” recalls the Senior Vice President of HR Analytics & Incentive Compensation. “Resource demand, opportunity cost, the ability to identify design gaps, and both known and estimated unknown error rates combined to paint the picture of a clear opportunity for optimization.”
As the near-term business impact became clear, so did its longer-term limitation on growth. Says the Vice President of Incentive Compensation, “Excel has an administrative cap that inhibits scaling solutions across business units.”
By reimagining incentive compensation and aggregating sales performance data in one place, the bank hoped to speed revenue optimization.
Insight for Financial Services Institutions: Automation’s tighter controls fuel efficiency, centralize intelligence across business units, and replace administration with strategic activity.
The Financial Services Opportunity: Orchestrating Revenue with ICM
While Human Resources unified incentive compensation into one group, they also partnered with IT to evaluate Incentive Compensation Management (ICM) solutions. The regional bank decided Varicent was the right enterprise solution for its needs.
That said, they knew the software on its own wouldn’t meet their needs. There was a high dependency on thoughtful implementation to ensure software investments realize the benefits originally sought. The bank selected Intangent because of Intangent’s demonstrated ability to understand the business, their goals through the project, and flexibility in ensuring they were met.
“All parties, including Varicent, agreed a partnership with Intangent was the best case scenario,” remembers the SVP of HR.
Insight for Financial Services Institutions: Revenue leaders prioritize implementation and engagement to recoup business value from technology.
The Financial Services Solution: A Scalable Revenue Operations Strategy & Technology Roadmap
Implementation involved two build phases to deliver early wins and incrementally develop the bank team’s expertise. In the first phase, Intangent built one incentive program from learnings gleaned in discovery and rolled it out to one of the financial institution’s national businesses. The bank’s team completed testing and loaded the data, while also having the opportunity to observe the design approach of Intangent’s experts.
“We would have been hard-pressed to implement plans as quickly or efficiently without Intangent,” says the VP of Incentive Compensation.
In the second phase, the bank built self-sufficiency and expertise. Their team ran discovery and crafted compensation plans for 850 sales professionals across three regions, while Intangent offered guidance.
“Having an incredibly knowledgeable partner flattened our learning curve. Intensive hands-on training and bootcamps aided knowledge transfer as well,” says the VP of Incentive Compensation.
The partners ensured automation didn’t just operationalize traditional ways of doing things. As the financial firm continues to grow, the team can now adjust their solution alongside the bank’s evolving business strategy.
Insight for Financial Services Institutions: Technology solutions must be able to grow alongside evolving business strategy.
The Financial Services Impact: Revenue Performance and Optimization
After centralizing and redesigning programs to tie incentives to customer need fulfillment and related economic profit, they are now poised to maintain that connection with the agility made possible through Varicent and the right implementation partnership.
Comments the SVP of HR, “a winning alignment of value pull-through with our customers, bankers, and shareholders as our stakeholders has always been at the core of this initiative. Given the pace of change, we are now confident we can keep pace efficiently.”
Insight for Financial Services Institutions: Delivering revenue optimization is priority above all business outcomes.
Productivity is more than a financial metric for banks, with the right sales integrity controls in place it can signify purpose fulfillment – that the financial needs of their communities are being met. Increased productivity improves performance without increasing headcount expense. The bank looks forward to rolling out the Varicent SPM to other lines of business to extend as the final step in a journey that has seen over 20% productivity lift in some business lines. Success will be measured in productivity gains, cost savings, and direct control to administer more plans to increase revenue.
The VP of Incentive Compensation also anticipates the elimination of several weeks’ work to understand prior year’s data when updating year-ahead plans. Next year, the point of reference will be ready automatically—powering solid business decisions with reliable information and insights.
“Establishing and growing a team from scratch, and transforming a manual process that accelerates revenue,” says the VP of Incentive Compensation. “That’s a legacy.”