Where does the data we supply to our partners come from?
Kohl Analytics is a boutique management consulting firm with a unique approach to understanding performance. We are a performance consulting service with our own software which enables us to accumulate a broad range of operational and financial data from our clients and use that as the basis for Industry Statistics.
The strength of our process is the ability to identify the appropriate assignment of a financial institution’s largest cost quickly and accurately. Employees make up close to 50% of all costs, yet most organizations do a very poor job of analyzing and understanding exactly what employees really do. Kohl’s approach is to survey all the operational employees to understand how much time they spend on their specific job activities from a set of close to 100 of the most common loan and deposit operational activities.
This enables us to assign employee and other costs to product categories in a highly accurate and detailed manner. Our studies have proven that assigning people costs using other drivers like loan balances or counts lead to very large inaccuracies. If the people costs for one product are wrong then they are wrong for all products because every products received the wrong portion of the people cost pie. The bottom line is that if 1/2 of costs are assigned incorrectly then the entire profitability solution results are highly questionable.
Kohl also assigns other direct revenues and costs in a highly precise manner. When possible, Kohl extracts transaction data directly from the core and other systems, maps those individual transactions to the product categories and then aggregates the number of transactions and amounts to the appropriate category. This approach greatly improves on the time consuming and less accurate process of creating allocations rules to dis-aggregate the GL into the proper product categories.
The end-result is a unique data set which is detailed, accurate, and traceable back to its source. In addition, it enables the comparison of how well employees are performing against other financial institutions in our database.
The information contained in the Kohl Industry Statistics is a derived from our client database which uses the above methodologies. We then use standard statistical processes to determine the 25th, 50th, and 75th percentile for the categories presented. We also have over 100 other performance statistics available for each loan and deposit category listed in the publication.
One note, it can be argued that our percentiles are somewhat stronger than industry averages. This is because our average client enjoys more than a 15 basis point stronger Return on Assets (ROA). As such, it is reasonable to assume our client’s other financial statistics are also better, but lacking industry wide information for comparison this has yet to be definitively proven.