Q2 and BCG Join Forces to Tackle Major Commercial Banking Challenge

Rhea-AI Summary

Q2 Holdings has launched YieldBuilder, a loan pricing solution in collaboration with Boston Consulting Group, aimed at enhancing commercial loan pricing for banks in North America. This initiative responds to a significant drop in net interest margins, which have declined nearly 14% recently. YieldBuilder incorporates advanced analytics and artificial intelligence to help banks optimize pricing strategies. It aims to improve returns while maintaining win rates, ensuring relationship manager engagement, and integrating seamlessly with existing bank systems.

Positive

• YieldBuilder addresses critical loan pricing challenges faced by commercial banks.
• The solution utilizes advanced analytics and AI to enhance pricing strategies.
• Designed for high adoption among relationship managers, ensuring effective deployment.
• Integrates with existing banking systems, offering customizable features.

Negative

• Net interest margins have dropped nearly 14%, impacting lending profitability.
• The overall decline in net interest income indicates a challenging environment for banks.

YieldBuilder, a new loan pricing solution, combines BCG’s industry-leading pricing strategy and change management expertise with Q2’s one-of-a-kind advanced analytics and pricing software

AUSTIN, Texas--(BUSINESS WIRE)-- Q2 Holdings, Inc. (NYSE:QTWO), a leading provider of digital transformation solutions for banking and lending, and Boston Consulting Group (BCG) today announced the launch of YieldBuilder to help solve one of the top challenges for commercial banks in North America: effective loan pricing.

Announcing the launch of YieldBuilder, a new loan pricing solution, which combines BCG’s industry-leading pricing strategy and change management expertise with Q2’s one-of-a-kind advanced analytics and pricing software. (Graphic: Business Wire)

According to research from S&P Global Market Intelligence, net interest margins have recently dropped nearly 14% for most lending institutions, and per the Federal Deposit Insurance Corporation (FDIC), in the second quarter of 2021 net interest margins declined 31 basis points from a year ago to 2.5 percent, their lowest level on record. The largest financial institutions in the US drove the aggregate decline in net interest income.

“Effective commercial loan pricing is a major industry problem and it’s one that we’ve worked to mitigate over the years with Q2’s PrecisionLender solution,” said Tim Shanahan, vice president of Client Strategy and Partnerships, Q2 PrecisionLender. “We are excited to team up with BCG to deliver YieldBuilder, a new comprehensive solution that will help commercial bankers better address the loan pricing issue and deliver better services for their clients. This partnership represents the best of both worlds—best-in-class digital banking technology and the industry’s leading expertise—to help commercial banks address their most difficult challenge.”

The YieldBuilder solution focuses on creating long-lasting value for commercial banks, enabling them to deploy value-based pricing, with a robust intuitive platform that helps relationship managers price effectively. The solution can be used for all commercial loan products across segments and has several unique propositions, including the following:

• Improving returns without impacting win rate
• Delivering artificial intelligence and machine learning solutions to bring science to “relationship” pricing, using bank proprietary data to estimate clients’ lifetime value
• Relationship manager buy-in from day one, ensuring high adoption and upskilling of relationship and sales managers on value-based pricing
• Best-in-class market benchmarks on loan spreads
• Providing a robust platform that integrates seamlessly with commercial bank tech systems, with customizable features, user-friendly interface, and real-time coaching for relationship managers

“While record levels of deposits have focused banks’ attention on driving loan volume, we strongly believe that it does not have to be at the cost of lower margin spreads,” said Sumitra Karthikeyan, a partner and managing director at BCG who leads the firm’s North American Marketing, Sales, & Pricing practice for financial institutions. “In our work to help banks develop new pricing strategies in commercial lending, enduring results are achieved when those strategies are built on top of a robust platform like the Q2 PrecisionLender solution. We are delighted to bring YieldBuilder to the market with them.”

The YieldBuilder solution is currently available in North America, with plans to expand globally.

To learn more about the YieldBuilder solution:

• Contact:
  • BCG: Sumitra Karthikeyan at Karthikeyan.Sumitra@bcg.com
  • Q2: Tim Shanahan Tim.Shanahan@q2.com
• Webinar – Session Title: “YieldBuilder – Driving Yield Improvements at Your Commercial Bank” https://precisionlender.com/webinar/yieldbuilder-driving-yield-improvements-at-your-commercial-bank

About Boston Consulting Group

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders—empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact.

Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fueled by the goal of helping our clients thrive and enabling them to make the world a better place.

About Q2 Holdings, Inc.

Q2 is a financial experience company dedicated to providing digital banking and lending solutions to banks, credit unions, alternative finance, and fintech companies in the U.S. and internationally. With comprehensive end-to-end solution sets, Q2 enables its partners to provide cohesive, secure, data-driven experiences to every account holder–from consumer to small business and corporate. Headquartered in Austin, Texas, Q2 has offices worldwide and is publicly traded on the NYSE under the stock symbol QTWO. To learn more, please visit Q2.com.

Q2 PrecisionLender, an advanced analytics and pricing software that is used by over 15,000 commercial bankers globally and was used to price more than $3.7 trillion in loans in 2020, empowers bankers to improve loan yields by optimizing credit spreads, loan origination fees, and unused loan fees. Q2 PrecisionLender helps bankers save time, provide faster client service, and structure better deals by providing on-the-spot “virtual coaching” by suggesting options for such aspects as amortization, loan-to-value, non-credit products or collateral.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005329/en/

MEDIA CONTACT

Jean Kondo

Q2 Holdings, Inc.

+1 510-823-4728

jean.kondo@Q2.com

Marcus Liem

Boston Consulting Group

+1 917-705-2844

Liem.Marcus@bcg.com

Source: Q2 Holdings, Inc.

FAQ

What is YieldBuilder and how does it relate to QTWO?

YieldBuilder is a new loan pricing solution launched by Q2 Holdings in partnership with BCG, designed to improve commercial loan pricing challenges for banks.

How has QTWO addressed declining net interest margins?

Q2 Holdings introduced YieldBuilder to help banks combat nearly 14% declines in net interest margins by optimizing loan pricing strategies.

What benefits does YieldBuilder offer to commercial banks?

YieldBuilder provides advanced analytics, AI integration, improved returns, and seamless compatibility with existing banking systems.

When and where is YieldBuilder available?

The YieldBuilder solution is currently available in North America, with plans for global expansion.

Who developed YieldBuilder?

YieldBuilder was developed through a collaboration between Q2 Holdings and Boston Consulting Group.