Every Decision Must Hit One of Three Targets: Revenue, Margin, or Customer Lifetime Value

By Matt Slonaker

I’ve spent enough years in banking and financial services to know that running a tight ship isn’t about chasing every shiny new fintech trend or regulatory checkbox. It’s about making decisions that move the needle in one of three ways: driving top-line revenue growth, improving margins and efficiency, or reducing churn and boosting the lifetime value of your customers. Every choice you make as an executive—every hire, every process, every investment—needs to tie back to one of these three. If it doesn’t, you’re not running a bank; you’re running a distraction. Let’s break this down with real numbers and no fluff.

1. Drive Top-Line Revenue Growth

In banking, revenue comes from lending, fees, wealth management, and cross-selling services that customers actually want. Whether you’re rolling out a new loan product, expanding digital banking, or pushing into small business lending, every move has to answer one question: does this bring in more dollars?

The numbers don’t lie. According to Deloitte, banks that prioritize revenue growth through digital transformation and customer-centric product offerings see 10-15% higher revenue growth annually compared to their peers (Deloitte, 2024). Look at JPMorgan Chase: their focus on digital banking and wealth management drove $158 billion in revenue in 2023, with their consumer banking segment alone growing 11% year-over-year (JPMorgan Chase Annual Report, 2023). That’s what happens when you align every decision to the top line.

When you hire a relationship manager, are they bringing in new high-net-worth clients or growing loan portfolios? When you invest in a new mobile app, is it driving deposit growth or cross-selling opportunities? Even long-term plays like brand-building in wealth management should have a clear path to revenue. If you can’t see the dollars, you’re just burning cash.

2. Improve Margin and Efficiency

Banking is a low-margin game—net interest margins (NIMs) for U.S. banks averaged just 3.28% in 2023 (FDIC, 2024). That means efficiency isn’t optional; it’s survival. Every dollar you spend has to work harder than the last, whether it’s streamlining loan processing, cutting compliance costs, or automating back-office operations.

McKinsey’s research shows that banks implementing end-to-end process digitization can reduce operating costs by 20-30% within two years (McKinsey & Company, 2023). Take Bank of America: their investment in AI-driven fraud detection and automated loan underwriting helped them boost their efficiency ratio to 60.9% in 2023, down from 63.1% in 2022 (Bank of America Annual Report, 2023). That’s real margin improvement in a world where every basis point counts.

Every process you greenlight—say, a new loan origination system—better cut processing times or reduce errors. Every hire, like a compliance officer, better streamline regulatory reporting to save costs. If you’re sinking money into tech, like robotic process automation (RPA), it needs to free up your team to focus on high-value work like client advisory services. If it’s not making you leaner, it’s dead weight.

3. Reduce Churn and Increase Customer Lifetime Value

In financial services, your customers are your goldmine. Losing them to a competitor—or worse, to a fintech upstart—kills your profitability. Reducing churn and maximizing LTV is about building sticky relationships, whether it’s through better service, tailored products, or seamless digital experiences. Bain & Company found that a 5% reduction in customer churn can boost profits by 25-85% in banking, depending on the segment (Bain & Company, 2022).

Look at Ally Bank. Their customer-centric approach—high-yield savings, no-fee accounts, and 24/7 support—kept their churn rate below 3% in 2023, compared to the industry average of 8-12% for retail banking (Statista, 2024). That’s why their average customer LTV is estimated at over $10,000, driven by cross-selling auto loans and investment products (Forbes, 2024).

Every decision you make should answer: does this keep customers with us longer and spending more? If you’re hiring a customer service rep, they better be solving problems fast to boost Net Promoter Scores. If you’re rolling out a new digital wallet, it better make banking so easy customers don’t dream of leaving. If you’re investing in financial planning tools, they better drive deeper engagement with wealth management services. No impact on churn or LTV? No deal.

The Litmus Test: If It Doesn’t Fit, Kill It

Here’s the cold reality: not every idea is worth pursuing. That new blockchain pilot? That fancy CRM your IT team loves? That “innovative” partnership with a fintech? If you can’t tie it to revenue, margin, or LTV, it’s a distraction. I’m not saying every decision has to pay off by EOD—some investments, like building a trusted brand or upgrading core banking systems, take 6-12 months to deliver. But you better have a clear line of sight to one of those three outcomes.

Take Goldman Sachs’ Marcus platform. They poured $1 billion into building a consumer banking arm, targeting revenue and LTV through high-yield savings and personal loans. By 2023, Marcus had $100 billion in deposits, proving the bet paid off (Goldman Sachs Annual Report, 2023). Compare that to banks chasing “strategic initiatives” with no measurable impact—those are the ones getting eaten by fintechs.

How to Make It Stick in Banking

As an executive in financial services, your job is to be the gatekeeper. Every hire, every process, every dollar spent—run it through this three-part test. If it doesn’t drive revenue, improve margins, or boost LTV, hit the brakes and demand answers. This isn’t about being a buzzkill; it’s about keeping your bank competitive in a world where margins are tight and customers have options.

Here’s my playbook:

• Hiring: Every new hire—whether a loan officer or a data scientist—gets a 90-day plan with KPIs tied to revenue, efficiency, or customer retention. No free rides.
• Processes: Every new process, like automating KYC compliance, gets vetted with one question: does this save us money, make us money, or keep customers longer?
• Investments: Whether it’s AI, cloud migration, or a new lending product, I want an ROI model. For long-term plays, I demand milestones to track progress.

The Bottom Line

Banking isn’t about chasing the next big fintech buzzword or piling on features nobody uses. It’s about making disciplined decisions that deliver. Revenue, margin, LTV—that’s the trifecta. If you’re spending time, money, or brainpower on something that doesn’t hit one of those, you’re not building a bank; you’re building a house of cards.

Next time you’re about to approve that big project, ask: which of these three does it serve? If you can’t answer, walk away. Your regulators, your shareholders, and your customers will thank you.

Sources:

• Deloitte. (2024). Banking and Capital Markets Outlook.
• JPMorgan Chase. (2023). Annual Report 2023.
• FDIC. (2024). Quarterly Banking Profile, Q4 2023.
• McKinsey & Company. (2023). The Future of Banking: Digitization and Efficiency.
• Bank of America. (2023). Annual Report 2023.
• Bain & Company. (2022). Customer Loyalty in Financial Services.
• Statista. (2024). Retail Banking Churn Rates.
• Forbes. (2024). Ally Bank’s Customer Lifetime Value Strategy.
• Goldman Sachs. (2023). Annual Report 2023.