Can someone explain what the backbook migration means? And which teams are expected to be impacted once this happens? Will it be primarily BT? I’m also hearing that Houston Pulse people were laid off recently? True?
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My bad. I misread this as bareback migration. That's when I move my older ladies to a strict no co---m policy.
@e0 - the stable Capital One roles would have one working on a legacy Capital One team. IMO, an unstable role would be a legacy Discover role working on migrating customers off Discover digital properties to Capital One properties.
How do you see it?
@d5 What would you consider a stable part of the organization. I am asking for a friend.
Backbook (existing customers) being migrated from Discover platforms to Capital One platforms. The rumors in other threads is if you are working on a Wave migrating Discover customers your role may be eliminated soon.
So, If you are worried your legacy Discover role will be impacted, apply internally for a Capital One role on a stable team.
In banking, front book and back book are terms used to separate a bank’s portfolio of loans or deposits based on when the customer was acquired. The primary difference lies in the pricing strategy and interest rates applied to each group. [1] (https://www.youtube.com/shorts/VAH9q1gN230), [2] (https://www.westernweekender.com.au/2019/11/front-book-or-back-book-what-type-of-home-loan-do-you-have/), [3] (https://www.flux.finance/post/nab-front-book-vs-back-book-loans)
📘 The Front Book (New Business)
The front book represents the future of the bank. It consists of newly acquired customers or loans that have been generated recently (e.g., within the last few months to a year). [1] (https://www.netinteresexample.com/p/front-book-back-book-a-framework), [2] (https://www.reddit.com/r/AusFinance/comments/w91zu5/at_what_point_does_front_book_become_back_book/), [3] (https://www.westernweekender.com.au/2019/11/front-book-or-back-book-what-type-of-home-loan-do-you-have/)
• Pricing Strategy: Highly competitive. To attract new business in a crowded market, banks offer their lowest possible interest rates on mortgages and loans, or highest promotional rates on savings accounts. [1] (https://www.curinos.com/insights/curinos-review-q323-deposits-key-to-profitability), [2] (https://www.youtube.com/shorts/VAH9q1gN230)
• Financial Profile: High acquisition costs but low capital intensity. It is expensive to win new customers due to marketing and broker fees, but it dictates where the bank’s growth is heading. [1] (https://www.reddit.com/r/AusFinance/comments/w91zu5/at_what_point_does_front_book_become_back_book/)
📙 The Back Book (Existing Business)
The back book represents the past. It is the cumulative legacy portfolio of all existing loans, mortgages, and deposits that the bank already holds on its balance sheet. [1] (https://www.flux.finance/post/nab-front-book-vs-back-book-loans), [2] (https://www.netinteresexample.com/p/front-book-back-book-a-framework), [3] (https://www.lawinsider.com/dictionary/backbook)
• Pricing Strategy: Often significantly higher for borrowers (or lower for savers) compared to the front book. Banks rely on the fact that existing customers are sticky and rarely switch lenders. [1] (https://www.comparethemarket.com.au/news/kochie-explains-back-book-prices-and-why-your-current-lender-may-not-have-the-best-deals/), [2] (https://www.youtube.com/shorts/VAH9q1gN230), [3] (https://www.flux.finance/post/nab-front-book-vs-back-book-loans)
• Financial Profile: High operating margins. Because the customers are already acquired, the cost to maintain them is low, making the back book the bank's primary engine for generating profit. [1] (https://www.netinteresexample.com/p/front-book-back-book-a-framework)
The Dynamic: The "Loyalty Tax" & Churn
The gap between front book and back book pricing is frequently referred to as a loyalty tax. [1] (https://www.youtube.com/shorts/VAH9q1gN230), [2] (https://www.flux.finance/post/nab-front-book-vs-back-book-loans)
For example, a bank might offer a new mortgage customer a promotional front-book rate of 6.5%, while an existing customer on the back book who has been with the bank for five years is quietly charged a back-book rate of 8.5% for the exact same type of loan. [1] (https://www.comparethemarket.com.au/news/kochie-explains-back-book-prices-and-why-your-current-lender-may-not-have-the-best-deals/)
Banks constantly manage the "rotation" or churn between these two books. If they raise back-book rates too high, customers will notice and refinance (either moving to another bank's front book or demanding to be matched to their own bank's front-book pricing). [1] (https://www.curinos.com/insights/curinos-review-q323-deposits-key-to-profitability)
If you'd like to dive deeper, let me know:
• Are you evaluating this from a consumer perspective (trying to lower your own interest rate)?
• Or are you analyzing this from a corporate banking perspective (looking at how it impacts a bank's Net Interest Margin)? [1] (https://www.comparethemarket.com.au/news/kochie-explains-back-book-prices-and-why-your-current-lender-may-not-have-the-best-deals/)
I can tailor the details to what you need next.