Banks today must create and embrace a new model for strategic planning to reflect and cope with the uncertainty precipitated by rapid change and volatility. This is a key finding in a strategic research report from the Wharton Financial Institutions Center at the University of Pennsylvania, sponsored by banking services provider Unisys and the Bank Administration Institute (BAI).
In the most unpredictable market ever, driven largely by the pressures of the Internet, banks must be able to anticipate change and be structured in line with best practices so as to react rapidly and adapt to it says Wharton. The report, "Competition, Innovation, and Strategy in the Financial Services Industry", offers key actions to promote strategic decision-making.
Specific actions recommended by Wharton include:
. Deploy flexible organisational resources specifically linked to customer relationships, product innovation and processing - all critical for financial services firms.
. Implement an activities-based approach toward achieving competitive advantage through effective hiring and promotion practices, project evaluation and assessment, and even organisational structure.
. Create a new model for strategic planning in the retail financial services industry - one that recognises that coping with uncertainty must become a part of the strategic planning process and stresses rapid resource deployment to capture emerging opportunities.
The study highlights results of extensive field interviewing, involving executives from organisations drawn in several financial services industries including banking, brokerage and technology provision. The study reflects the bankers` perspective with a focus on how they should interpret the forces driving the evolution of the banking industry and how they should respond. They should focus on system and human resources, flexibility in software and institutions, and procedures and culture.
"The core of the Wharton vision is to help banks cope with markets and technology that are evolving rapidly," says Daniel Raff, associate professor, The Wharton School. "The day-to-day aspects of the banking business are fundamentally about routine transactions such as lending, interest payment and cheque cashing. However, even the routine - especially the routine - must change in fundamental ways to ensure future success."
"Success in banking requires that the institutions be masters of every-day issues and operations," says Paul Wilde, banking business unit director at Unisys Africa. "Banks must continually revisit the routine, customer-facing business transactions. With world markets changing so rapidly, a financial institution can stand still brilliantly - but still fail!"
Chicago-based BAI (www.bai.org) is the industry`s leading professional organisation devoted exclusively to improving the performance of financial services companies through strategic research and information, education and training.
The Wharton Financial Institutions Center (FIC) is a research centre of The Wharton School of the University of Pennsylvania and the Sloan Industry Center for Financial Institutions. The FIC sponsors and directs primary research on financial institutions, in collaboration with industry participants.
To obtain a copy of the complete research report, "Competition, Innovation, and Strategy in the Financial Services Industry", download it from www.unisysfinancial.com or www.bai.org/competition.
Share
Editorial contacts