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Banking:
Across the world, banking is gearing up for massive shifts in the basics of business. While the Internet is part of the momentum, it goes much deeper than technology. There's an entirely new style of banking emerging. Its main components are:
- direct interaction with customers rather than passively waiting for them to come into the branch
- relationships as the basis to build success rather than products
- "narrowcast" targeting of both customers and offers, instead of relying on broad marketing programs and such promotions as mass mailings
- shifting many administrative processes from the bank's back office to make them the customer's valued front office for self-management of their account
- rewarding staff for their contribution to the customer relationship, instead of for their achievement of localised or functional goals.
This amounts to a transformation of both the revenue and cost side of a bank's business. It replaces the established product transaction business model of banking with a customer conversation business model.
Not business as usual
That replacement is now urgent. The old banking model works less and less well everywhere across the world. Even in the healthiest economic climates, banking can't continue with business as usual. In the US, banks' market share of core transactions - deposits and loans - has halved in the past two decades, from around 60% to under 30%. Margins have dropped even more: margins for loans made by regional banks have fallen from 6% to 4% this decade. For large money centre banks, the erosion is from 3% to just over 1%.
Non-bank competition squeezes revenues, and margins are eroded. Customers now seek the best deals regardless of whether or not they are offered by a company with the word "bank" in it. Banks everywhere have been cutting costs. In the US, overall efficiency ratios have improved by around 15% in the past ten years. The number of banks has dropped by over a third - from 14,500 to 9,000.
To grow their revenues, banks have had to increase their risks. In 1993, the percentage of syndicated loans made to borrowers with financial ratings below investment grade was 35%. Now, it's well over 60%. 'Sub-prime lending' - loans to consumers with poor credit and payment records - has tripled for cars and mortgages since 1994. The figures go on and on.
Leading change
VISION has led rather than followed change in banking, with projects that have delivered:
- one of Europe's fastest growing 'telenet' banks, spawned by an established financial institution, in nine months from a standing start
- doubled the business capacity of a UK mortgage provider within an eight month period
- Ireland's first direct bank in seven months
- an innovative joint venture for credit card payment processing
- processes and technologies to allow a top five US bank to launch a new retail system
Our experience
Our portfolio of clients in the US and Europe is benefiting from VISION's expertise and competence:
- a pragmatic understanding of the business challenges which dictates an approach skewed heavily towards what will win the customer over and compel them to stay
- unique methodologies, intellectual property, skills and expertise allow us to produce radically better business results with our clients and fast
- change management - integrated management of the design of new processes, development of new capabilities and behaviours, and implementation of appropriate technologies
- business design philosophies that promote world class customer service based on impeccable coordination and the elimination of waste.
- technology design and implementation in support of the tracking and fulfilment of commitments, and effective resolution of miscoordinations.
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