Running a successful retail banking business is arguably the most difficult job in financial services. The reason is simple: retail banking is a very complex and diverse business.
No other line of business deals with the number and type of management challenges than retail – strategic, analytical, financial, operational, technological, risk management, regulatory compliance, facilities, marketing and, most importantly, people. Therefore, management efficiency and excellence have always been essential elements in determining the best performing retail banking business.
The importance of management excellence has never been more important than it is today. The pace of change within the industry is accelerating, driven by significant changes in consumer behavior and preferences, the continuing education of technology-based competitors and the need to adapt to a new post-reality reality. pandemic.
While an effective business model has many elements, in our opinion, the most effective approaches are:
Highly targeted planning: A comprehensive strategy for creating an effective business model includes defining the role of retailing, identifying where and how it will be competitive, focusing limited resources on high value-added opportunities and l ‘Establishment of clear performance measures.
Clear definitions of success: Clearly defined criteria for success are essential elements of all management systems. However, they are particularly important to the retail organization due to the need to align a large, diverse and often geographically dispersed group of employees with a common set of principles and goals.
Significant performance indicators: Effective performance management requires that defined success criteria are translated into metrics that can be measured, tracked and reported. The key is to ensure that the metrics used are meaningful to the area being measured and that they are aligned across the organization to minimize the risk of inciting the wrong types of behavior.
Accessible and usable data: Most banks have a lot of data, but much less can convert that data into meaningful and actionable information. From a management perspective, the best data is data that can be used across the organization in a wide range of functions, at different organizational levels, and for various purposes.
Rigorous talent management: Despite significant technological investments over the past decade, retail banking remains above all a people business. Attracting and retaining top performing talent, developing skill sets, and creating meaningful and well-paid career paths are essential to building effective management practices across the organization.
Fast and interactive feedback: In retail banking, the best and most timely source of information on what works and what doesn’t are the people who deal with processes, practices and customers on a daily basis. Successful business models develop the mechanisms and culture that solicit, accept and act on feedback provided by frontline employees and managers.
Team building that celebrates success: Running a retail banking organization is tough, but that doesn’t mean it can’t be fun. There are many creative ways to create and develop an enthusiastic, supportive culture that reinforces positive behaviors and encourages cooperation. Retail is the âfaceâ of the franchise and the brand more often than not – it can’t hurt if that face is smiling.
The creation and implementation of an effective management system is perhaps the most important factor in determining the success or failure of most retail banking lines of business.
As many banks now face competitive and economic headwinds, it is essential that banks act to optimize the performance of their retail businesses. This means carefully reviewing current management practices, identifying specific improvement opportunities, and quickly implementing program improvements.
We suggest that you focus on four key activities:
Evaluate current practices in a clear and objective manner: Use a detailed checklist incorporating the elements described above or others to help document and assess the effectiveness of key components of the current management system.
Identify specific improvement opportunities Focus development initiatives on a few key things that aren’t working and strengthen those that are.
Develop training programs for management: Educate management staff across the organization on basic management processes and practices.
Install rigorous surveillance systems: Measure, monitor and report performance objectively, reliably and quickly.
There are many elements that contribute to a high performing retail banking business, including highly focused strategic and business planning, distinctive value propositions, and consistent and differentiated customer experience processes. And while all of these are important, they are not enough. Ultimately, execution drives excellence and, most importantly, management drives execution.
Rolland D. Johannsen is a senior consultant partner at Capital Performance Group.