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How to measure the success of your customer swap program

  • Ben Lewis headshot


    Ben Lewis

    Managing Director
    Head of Sales

    Financial Institutions | Denver, CO


You launched a customer swap program for your financial institution. You may have one swap, or many swaps, under your belt and you want to understand just how successful your program has been.

Client and lender engagement

Are your bankers actively talking to customers and prospects regarding the flexibility that comes with a hedged structure? If so, has that led to deeper conversations regarding their specific financing needs? For many banks, simply landing a swapped deal is not the goal. Instead, the product provides a new avenue, and an opportunity for additional dimensionality, as your bankers talk to customers about their individual financing needs and goals. If you do not know the answer to the questions “What are our engagement levels on the product?” and “What are our customers’ feedback on this product?” then taking steps to track lender and customer engagement with the product may be helpful to dig deeper into the true impact of the program.

Better insight into competitors’ strategies

Are you gaining insight into how competitors are pricing and structuring deals as you have deeper and more nuanced conversations with your potential and existing customers? Being able to get into the details of how competitive deals are structured is an often-overlooked benefit of having the swap product ready to go for engaging a client on their financing goals and funding needs. Secondly, pairing a swap with a floating-rate loan helps the bank and customer better understand the bifurcation of the costs of managing interest rate risk (AKA market risk) and credit worthiness. The well-informed customer is likely to share more details on competitive structures if you position the conversation around their needs and goals versus solely trying to sell them a product and land them as a client.

Sophistication of bank and employees

It is no secret that larger banks have specialists on their staff with extensive knowledge that they can offer to their colleagues and their customers. As a community or regional bank, you employ more generalists, and keeping up with the larger institutions’ sophistication levels (and that of their regular clients) can be a challenge. An interest rate hedging program can help provide a boost of confidence and acumen to your banking team, which can instill a sense of trustworthiness in your bank from your customers. How has knowledge of interest rate swaps helped you become more confident and competitive?

Loan business won/lost

One of the key motivators for your bank implementing a customer swap program was to be more competitive in the marketplace. To help measure success, have you run an analysis of long-term, fixed-rate loans won as a result of offering swaps to your customers in the period since your program began? How does your win rate compare with the previous period? If you are bringing in new business to the bank as a result of your customer swap program, that is a good sign of early-stage traction and indicators of long-term success.

Of course, interest rate swaps are not a suitable fit for every borrower. However, some banks observe an increase in variable-rate loan originations as a result of offering fixed-rates as an option. Offering options to borrowers that your competition cannot makes your bank easier to do business with. How many more variable-rate loans have you secured in the period since your swap program started?

Fee income generated

Another attractive component of a customer swap program is the additional fee income that you can earn by helping to solve your customers’ financing needs. How much fee income have you been able to contribute to the bank’s bottom line because of your swaps business? Would that revenue exist without your swap program?

Sense of growing operational friction and risk

Does this sound counterintuitive? Possibly. Whether you have launched the program yourself or had help from a third-party provider, you now find that the front office success with the product is leading to back office stress and friction. This yin/yang reality is often the sign of a successful program with customers and the opportunity to invest and optimize in the program for continued growth by taking into account the needs of all stakeholders.

Cost/benefit analysis

The best tactical way to understand how successful you have been is to conduct a cost/benefit analysis. What is your ongoing cost to maintain a swap program, and does it correlate positively with the benefit that you are seeing as a result? If it does, then on paper, your program is considered successful. If not, you may consider optimizing your program to get to a more efficient state.

Strategic alignment

Stepping back from the details, the final dimension to evaluate is how well the product is performing based on the bank’s initial strategy. For example, was the product intended to specifically drive new business and generate fee income? Or was it simply intended to be a tool on the shelf to be used only in very specific targeted or competitive situations?


There are multiple ways to measure the success of your customer interest rate hedging program. Using multiple review tactics can help you see a clear picture of how the program is impacting your bank’s business.

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About the author

  • Ben Lewis

    Managing Director
    Head of Sales

    Financial Institutions | Denver, CO

    Ben Lewis is a Managing Director and Global Head of Sales for our Financial Institutions team. He leads business development efforts in the Western U.S. and works with depositories helping them manage interest rate risk.


Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit

Transactions in over-the-counter derivatives (or “swaps”) have significant risks, including, but not limited to, substantial risk of loss. You should consult your own business, legal, tax and accounting advisers with respect to proposed swap transaction and you should refrain from entering into any swap transaction unless you have fully understood the terms and risks of the transaction, including the extent of your potential risk of loss. This material has been prepared by a sales or trading employee or agent of Chatham Hedging Advisors and could be deemed a solicitation for entering into a derivatives transaction. This material is not a research report prepared by Chatham Hedging Advisors. If you are not an experienced user of the derivatives markets, capable of making independent trading decisions, then you should not rely solely on this communication in making trading decisions. All rights reserved.