How to Navigate the Turbulent Waters of a Financial Systems Meltdown

Considering the recent collapse of the housing market and subsequent implosion of a few major financial services institutions, it would be a remarkable understatement to say the near- and mid-term future is uncertain. As the global markets adjust and government programmes, both domestic and foreign, are implemented, predicting an appropriate course for the interim will be challenging. However, only those who anticipate, through an end-to-end self-examination, client analysis and the development of a flexible plan designed to take advantage of opportunities offered, will survive and flourish in the changed terrain that is certain to manifest.

Many have concluded that ‘sleight-of-hand magic’ investment devices motivated by bottom-line focus and unreasonable optimism were the major contributors to the crisis. In other words, massive departures from the fundamentals of good business practices were prevalent for some time and in particular the past five years. While the entire litany of contributors may never be known, the majority of them will probably fall into the above categories. Therefore, as is always the case after such an event, it is time to roll up our sleeves and get back to the basics that address long-term business objectives and seize victory from the jaws of defeat.

Focused efforts toward increasing low-cost deposits and fee income, while reducing attrition and managing costs, represent areas where the financial community has immediate opportunities to add to its bottom line. While other pressing issues will create distractions, we believe immediate attention to methods available for executing an organisation-wide plan must be the focus of executive management.

10 Steps to Advance Your Business

1. Immediately initiate a mission clarification and re-alignment process: develop ‘plan-on-a-page’ presentation and disseminate to key personnel (review frequently, make adjustments and track progress). Elements may include:
   • Mission statement (distilling key elements of the more detailed document).
   • Market objectives (key elements).
   • Enumerate primary strategies.
   • Major strengths/core competencies.
   • Major weaknesses.
   • Market opportunities.
   • Key competitors.
   • Key initiatives required in order to achieve the plan.
   • Key targets/deals.
   • Potential new correspondent channels to expand market reach and depth.
   • Blend marketing focus to include: image of financial soundness and acquisition of low-cost deposits.
   • Develop strategies for increasing fee income.
   • Focus on what you do well (don’t attempt to be all things to all people).
   • Implement a world-class service.
   • Develop internal sales campaign to sell mission, thereby solidifying employee buy-in.
2. Perform existing client assessment and prioritise based on:
   • Client segment definitions (developed and/or refined).
   • Account profitability.
   • Cross-sell opportunities.
   • Potential client deposits resident in other institutions.
   • Research results of the financial viability of major clients.
   • Segments that provide the best value.
3. Conduct client satisfaction and needs surveys. Needs may include adding:
   • Cash forecasting tools.
   • Cash pooling opportunities.
   • Creative short-term investment vehicles.
   • Publish periodic reports.
4. Examine product line-up for:
   • Profitability.
   • Relevance of loss leaders.
   • Utilisation levels compared to account activity requirements.
   • New technology opportunities: cash flow forecasting tools are the focus of many corporations (most are currently using spreadsheets and seeking an alternative); standardisation and open architecture/straight-through processing (STP); and Internet-based host-to-host services. Need to explore client awareness of functionality and applicability to their operations and the potential for bundling of services based on account diversity and activity levels.
   • Third party product/service lines for low-risk market expansion.
   • Potential for international product line.
   • Comparison of product line-up to client needs surveys.
5. Review pricing policies and procedures. Examine validity of reasons for concession pricing such as:
   • Competitive pressure.
   • Products are commoditised.
   • No value proposition for sales personnel.
   • Do not know how to differentiate.
   • No metrics around performance and pricing policies.
   • Pressure from other areas to keep business.
   • Fee waiver policies: are review and approval procedures adequate and being followed? Examine tracking methods and potential system issues.
   • Analyse costing methodologies for best fit (implications for bank and client). Some of the more effective are: cost-plus, marginal, full absorption, capacity-based, and activity-based. Considerations may be: relationship pricing, product bundle pricing, or value pricing.
6. Evaluate your sales, bidding and implementation processes:
   • Focus on products, not on credit.
   • Use a team approach to win business.
   • Employ ‘fast tracking’ and beat every deadline.
   • Measure the timeframe between booked business and first revenue.
   • Set up tracking to ensure post contract services meet and exceed client expectations.
   • Build an innovative, mission-committed, engaged sales culture.
7. Review competitor market positioning and product mix:
   • Conduct strengths, weaknesses, opportunities and threats (SWOT) analysis.
   • Compare product mix.
   • Summarise pricing for comparison analysis.
   • Look for new technology offerings.
   • Review marketing and advertising plans and update: define image for dealing with latest developments; focus on products/services that meet current client needs; promote public image for stability and innovation; and tap into community need for relationship-directed operation.
8. Conduct staff assessment and adjustments:
   • Eliminate marginal performers.
   • Establish metrics to measure performance against the best performers.
   • Insist on engagement with the mission and offer rewards for innovative thinking.
   • Hire top-notch people and pay them well to maintain consistency.
9. Design a world-class service operation:
   • Create a quality control board.
   • Establish one point of contact.
   • Adopt ‘consultative selling’ methods (constantly look for ways to serve).
   • Strengthen advisory skills to bring clients closer (know their industry, anticipate needs and offer innovative solutions).
   • ‘Mind map’ solutions for how to differentiate your service operation in the new environment.
   • Build an innovative, mission-committed, engaged service culture.
   • Create consulting teams around industry segments.
10. Create sales reward and tracking systems designed to meet mission objectives:
    • Establish short-, mid- and long-term goals aligned with the mission. Track and review progress monthly.
    • Develop a tangible rewards programme to achieve mission goals: easily understood rewards programme aligned with stated goals and clarity in tracking methods; publish results; formalise and conduct periodic commendations and honours programmes; and create passion for the mission.

Conclusion

The overall objective is to get your team on the same page, keep the goals on the radar screen, monitor progress and make adjustments for changing circumstances. World-class sales and services will ensure success in tight economic conditions, so a call for ‘all hands on deck’ must be the battle plan for the foreseeable future.