Strategic Planning That Gets Results
Most financial institutions invest significant energy conducting business unit and corporate strategy reviews in preparation for their annual budget, but many senior executives believe this process does not deliver sufficient pay-off for the time invested. The most frequent complaint; lots of business updates on past progress, but too few implementable new initiatives that will really drive the business forward.
How do the best performing organizations do it?
- Avoid incrementalism, the “last year plus 10%” syndrome. Start with the goal you aspire to achieve, and work backwards to determine the strategies required to accomplish it. The most effective organizations don’t just identify and fix known problems — they identify the future results they desire and create solutions to achieve them.
- Once you have made the commitment to change, be realistic. You can’t make the changes necessary, or assign the resources required, without an objective assessment of the market opportunity, financial potential, internal capabilities and resources required.
- Remember that focus is the essence of strategy. It’s not just what you decide to do, but also what you decide not to do. In most organizations, the greater problem is usually deciding which good ideas are of lesser value and should not be implemented, or which current activities should be stopped to re-direct resources to ensure that higher value opportunities have appropriate resources.
- It’s all about execution. The best performing organizations implement rapidly and effectively. They recognize that a good plan effectively implemented is far superior to a great planning document which is not a living part of your business. Identify accountabilities for key objectives and make sure they are on track. Update your plan regularly to insure it is relevant and effective — after all, your business is not static but dynamic and changing.
- Identify risks. Do a “pre-mortem” – step into the future and write the obituary, the reasons why the plan failed. Then establish strict controls over the risk factors you identified.
- Communicate, communicate, communicate. Everyone needs to know what the goal is, what their part is in accomplishing the objective, and how effective the organization is in achieving results.
What’s in Your Branch Plans For 2018?
A good deal of our work involves retail banking strategy and most of that entails brick and mortar locations. There are still nearly 90,000 financial institution branches in the US and while the demise of these offices is often predicted, the fact is that for every 100 branches close, 200 new ones open. Granted, many of these are configured differently and office size has consistently been scaled back. The fact is that people are still visiting their banker at the branch both on the business and consumer side.
Branch, and overall distribution transformation, remains The Hot Topic in retail banking this year, and we see financial institutions taking a more pragmatic approach as they plan for the coming 12 months. Instead of radical change, they are making evolutionary refinements that improve efficiency and the customer experience. What can you plan for 2018?
- More focus on the Universal Banker. With the majority of branches staffed at the minimum required for security (in other words, more than required by customer traffic), there is a greater need to create a branch team that can handle any sales, service or operational task rather than limiting their role. Effective implementation requires re-thinking the choreography of how the branch operates and the way branch managers coach their staff. It’s not just about cross-training, but operating the branch with a team approach.
- Greater emphasis on the branch experience. Customers have smartphones, and use ATMs, and know that they could do most monetary or service transactions on their own. When they visit branches, they want to talk to a person, not a machine.
- 2018 will be the year of small business banking. Lending has been strong, pushing loan to deposit ratios to about 100% at many community banks. The average size of small business deposits over 5X that of consumer accounts, and businesses are greater users of fee based services. Banks and credit unions will invest in technology, or partner with FinTechs, to simplify business processes so they can give more responsibility to branch staff, freeing up dedicated small business specialists to focus more on larger relationships.
We met David Kerstein when he was an EVP of Retail Banking at a great Michigan franchise, Old Kent Bank. After 21 years in banking, he launched Peak Performance Consulting, an internationally recognized firm focused on business strategy and change management. David speaks often at conferences throughout the United States and in Europe, South America and Asia on topics such as distribution strategy, customer acquisition strategies, and sales management. He has been quoted in The American Banker, US Banker, US News and World Report and other business publications and newsletters.
Peak Performance Consulting helps banks figure out distribution, site selection, call center process, customer service improvement, workforce productivity/process improvement for bank branches and call centers and new product development. You can reach David at 512-607-6332 or via email at dkerstein@ppcgroup.com.
