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How to Benchmark Profit & Loss in Banking

Building strategic plans is complex. You need to lay out the most effective combination of revenue drivers, loss reduction measures and cost cuts to deliver higher portfolio profits and lower losses. With fast-moving financial services markets allowing less time for planning and no room for error, analytics, balanced with business expertise, are playing a greater role in the process. Analytics help strategic planners cut through massive data and cut across organizational silos to identify, prioritize and coordinate actions that move the profitability needle. Understanding industry performance is a critical component in moving the profitability needle.  This is why we’re adding strategic and risk benchmarks to the Fair Isaac® Advisors P&L Insight Service. To benchmark profit and loss we see three steps:

  1. Financial management - take a due diligence approach to evaluating credit product portfolio opportunities, by looking for ways to detect challenges and uncover growth opportunities across your card product portfolio including in marketing, collections and risk management. Ensure you are practicing sound strategic planning with a thorough ongoing analysis of portfolio performance data. Use data-driven insights to take specific business actions.
  2. Risk Benchmarking - determine targeted actions through portfolio and vintage segmentation. Monitor the Industry (looking at similar sized banks and portfolio) and act quickly to close performance gaps. Validate initiative results using an Industry perspective. Respond to internal and external Regulatory/Compliance concerns using your industry position. Inform executive management of underlying market conditions. Collaborate with partners to develop next generation decisioning.
  3. Strategic Benchmarking - Attain a view of future industry performance for strategy development. Discover upcoming profit driver gaps compared to the industry. Evaluate impending industry trends allow for prioritization and targeted planning. Gain insight to future market trends across the lifecycle

With our expanded P&L Insight Service, we are delivering benchmarks that give financial institutions tactical and strategic recommendations for capitalizing on opportunities and mitigating risks revealed in the analysis, creating a clear roadmap of actions for improved profitability and decreased risk. More information on the benchmarks is available here.

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