Predictive Modeling
Data Science to Drive Optimal Site Placement.
Revenue Maximization
Every customer and every potential customer generate some level of revenue for their financial services providers. Under “revenue maximization” modeling TerraStrat determines those values and uses them as inputs into modeling a branch and branch network strategy, answering the question “How can we maximize the revenue opportunity for each branch?”
In existing markets, your firm’s existing revenue base and customer transactions patterns are used to calibrate the model’s outputs. The goal is to identify the top set of locations in the market that will yield the highest revenue.
Gravity Modeling
Gravity modeling in retail has been around for years. The concept takes off from Newton’s Laws of Gravity’s two basic concepts:
The greater the mass of an object (i.e., local retail concentration) the greater the location’s attractiveness or draw.
Attractiveness levels decline as the distance between a consumer and that location increases.
In cases with multiple retail location choices, consumers may be attracted to a lower-rated retail location (i.e., less gravitational pull) if it is closer to the consumer’s location. Gravity modeling can be used to define trade areas for retail locations, as it defines the point between two retail locations where the distance-adjusted retail draw is equal.
The goal is to identify the minimal number of locations that achieve maximum coverage of the desired target segment. We have seen this model applied often to X-for-1 relocation scenarios, where multiple locations (X) are consolidated into a new site that better serves those customers.
Format Optimization
All local markets are not equal. Not only is overall demand different, but the mix of that demand varies too. Some markets have greater demand for mortgages, and another auto lending. Understanding those local market differences allows you to customize each site within the market, thus better aligning resources with opportunity.
This analytical modeling helps determine which branch or ATM format is ideal for each site, such as an anchor branch or hub, versus satellite sites. This can help you understand how many Drive-Thru, ATMs, or even private offices a given site requires to maximize its potential.
M&A Assessment
One option to drive corporate growth is through a merger or outright acquisition of another bank or credit union. Some of the largest banks today were constructed though 100s of mergers over time.
However, mergers raise numerous questions, such as “which branches do I keep when I have two or more near each other?’. Our M&A assessments help identify the right end-state of combined branches and ATMs.
We can also help you identify the optimal candidate to acquire based on your strategic needs.
Ready To Get Started?
Have questions? Want to speak with a member of our team? Get in touch with us now to get started on your next project.