The Financial Services Specialists

2008 and 2009 was a period dominated initially by the credit crisis in Financial Services and latterly global economic downturn with the repercussions of both felt by many. 2010 will be the obvious period of opportunity that follows any economic downturn as day follows night and referenced by the winners as the turning point of their success.

The repercussions of the credit crunch have been felt far and wide, and whilst it will still continue to impact Corporates, Banks and their Customers for some time to come, the winners will be those organisations who are lean and agile but not at the cost of customer service.

The potential for a more competitive landscape has never been so anticipated, with the number of new Banking license applications with the FSA currently reaching double figures. Government support for those Banks who needed assistance in the downturn is and will continue to be withdrawn as will the guarantees associated with being ‘Government backed' as the market returns to stability customers will choose from a larger number of differentiated providers.

The realities that will change the face of the industry:

(a) Reestablishment of the universal-banking model's primacy. Banks are built on trust, strong customer relationships and funded predominantly from their own deposit base. The competition for deposits has already intensified.

(b) Banks will become more focused. Large banks will still exist but they are likely to be multilocal institutions rather than wide-ranging, highly complex global titans.

(c) Banks will move forward by emphasising again "old-fashioned" products and practises. This business model will reflect a more cautious, more highly regulated, and less risk-oriented environment and banks will need to develop prudent business models.

(d) Banks will focus on their customers and not on products. Advice will need to be more meaningful and relevant. Operations will need to be more responsive to customers.

 

Understanding business needs

Cost reduction initiatives have gone as far as they can in the major banks, initiatives around Lean and Six Sigma have pretty much been done, many without the promised benefits realisation. Top line growth from enhanced core services, whilst maintaining operational efficiency and a tight control on cost will require a challenging balance of critical skills and experience, is this skill in house?

Key themes will be:

1. Focusing strategy on front line activities and aligning front, middle and back office to deliver superlative products and service in the 2 feet of space occupied by the customer and the organisation, is where winning strategies will generate revenues.

2. Generating differentiated value for customers and profitability for the bank, by streamlining the delivery of products, services and distribution channels across the entire customer base. Profitability by customer, segment, product and channel is something that is essential to drive the right management decisions.

3. Technology is increasingly providing new ways of interacting with customers, managing people and processes, managing risk, reducing fraud. Getting the most out of investment already made in Technology getting the maximum out of ERP, CRM et al is still to be achieved.

4. Ineffective product life cycle management - speed to development, uplift or retirement of a product or service, avoiding commoditisation of products as price transparency increases. When compared to the very best in FMCG or other non banking markets there are vast opportunities for improvement.

5. Coping with Regulation and Compliance as a result of tougher market conditions renewed vigour and increased focus from the regulator requires human capital beyond the day-to-day resource capability prior to the downturn.

6. Delivering sustainable, value adding and cost effect change across the whole change portfolio is an increasing challenge that will continue to be driven by the market conditions and demands of customers.

7. Managing an ever broader range of product and service providers in a regulated environment through increasingly complex sourcing relationships, whilst maximising cost effectiveness and minimising risk.

 

Through our combination of industry experience and rigorous approach, Bluerock has the skills to assist the banking community to make the most of the changing landscape and create a efficient and profitable business.