| A Solution
Too Far
 By
Thomas P. Johnson Jr.
Bankers need to recognize
and deal with strategic issues, but hasty remedies can
create more problems than they solve.
There's a time to look for solutions,
and a time to look at the solutions. Such is the
case for the banking industry, which is now seriously
reconsidering strategies that seemed golden only a few
years ago. Executives have learned the hard way, for example,
that aggressive consolidation is fraught with risks. Mergers
can actually work against revenue growth, and savings
from efficiency crusades can be more than offset by damaged
customer relationships. The devil in the details has proved
formidable indeed.
Now, as this issue shows, two other
vaunted solutions — consultative selling and silo
integration — also are being called into question.
As detailed in our cover story, bankers are embracing
consultative selling as a way to revitalize their expensive
branches. They are anxious to pump up sales of traditional
banking products, as well as mutual funds, annuities and
insurance.
Institutions may be pushing too hard,
however, as pointed out by writers Bill Stoneman and Karen
Kahler Holliday. More than three-fourths of the customer
representatives and front line managers questioned in
a recent study by BAI and Xchange Inc. acknowledged pressure
to sell beyond customers' needs. Such feedback from key
employees bodes ill for an industry striving to strengthen
customer relationships.
Corrective measures will now be required
to more properly align sales with the market. Strategists
should eschew blunt force and go all out to master the
complex factors that permit a healthy balance between
customer needs and company objectives.
A different sort of conflict is simmering
among e-commerce strategists. Citing a need for seamless
customer service, some companies attempted forced integrations
of their business units. As writer Anne Bilodeau Zieger
notes, however, institutions still need departmental buy-in
for their Web ventures, which simply cannot succeed without
the resources and expertise residing in the much-criticized
silos. Thus, integration is being recast in a completely
different light, with business unit managers playing a
major role in deciding exactly where unified approaches
really have a payoff.
These examples underscore the dangers
of proceeding with a surface-level grasp of key strategic
issues. The managerial challenge is much the same with
consolidating, building a sales culture and providing
integrated service: doing so effectively requires going
behind the scenes to address the critical factors unique
to each circumstance. This has a price in terms of time
and resources, but absent such scrutiny, institutions
risk falling victim to the very strategies they are counting
on for rejuvenation.
Copyright © 2003 by Banking
Strategies, published by BAI.
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