As they plan for 2013 and beyond, many bank CEOs envision their companies as more focused on meeting the needs of businesses and business owners; having a greater percentage of commercial and industrial (C&I) loans on the balance sheet along with cash management fees on the income statement; and operating in new markets with stronger economies and higher concentrations of small and mid-sized businesses. Sound familiar to you? If this is the way your strategic plan is shaping up, you have a lot of company.
And so, it begs the question: why will you succeed and others will not? After all, not everyone can win in this business because there isn’t enough business to go around these days.
For many, strategic planning has become a predictable exercise. You start with the external environment: what’s happening in terms of competition, the regulatory environment and the economy? Then you move on to an internal focus: what are our strengths and weaknesses? Where can we hope to find growth opportunities? What’s missing, of course, is the why. Why are you in this business? Why should anyone choose to do business with you?
We’ve been working with financial services companies on their strategic plans for more than 20 years. When we are fortunate to land a new client and take a hard look at its vision for the business, its plan to get there, and the business model that operates on a daily basis, more often than not we see incredible similarity to what’s going on at other financial services companies. Given the challenges you face today, it’s time for a big change in the way you plan for the company’s future.
Instead of starting the planning process by setting financial targets and evaluating individual business lines or markets for their potential to help you hit those targets, start with a different set of questions:
Are your customers more successful as a result of doing business with you than they would be banking with someone else? This requires taking a longer-term view of your customer relationships and the ways in which you can bring value to them. For example, in consumer banking, it’s not about the lowest rate and fastest turnaround on a mortgage. It’s about helping that mortgage customer understand that, over time, managing the mortgage debt prudently with consideration of other debts and other important financial objectives (sending the kids to college; saving money for vacations; preparing adequately for retirement; etc.) will trump, from a financial success standpoint, the lowest mortgage rate any day. The combination of these efforts will help customers to be far more successful than will a low rate mortgage with fast approval – although, granted, you can’t be too far removed from the competition on these other factors.
Do the best-and-brightest want to work for you? This is especially important today on the frontlines. Revenue growth is the only means to sustainable performance and to being in a position to attract capital going forward. Despite what many prognosticators of doom and gloom suggest, financial services is a people and relationship business. At least, it will be for those who succeed long term.
The good news is that the best and brightest are increasingly motivated by things other than “just show me the money,” such as opportunity, education, work/life balance, job security and having fun. In addition, we need to educate and inspire younger people entering the workforce on the incredible ways in which they can make a difference and enjoy meaningful, highly fulfilling careers in financial services. The story of the difference bankers can make in the success of individuals, businesses, and communities has been lost amidst the negative publicity of recent years. We have to do something about that, and it can start in your own backyard.
What makes your company a choice in the marketplace? It’s critical to identify what is different and better about the experience your customers have with you. If you can’t put your finger squarely on this, it needs to be a focal point in your planning process this year. More than ever, the customer is king, and the king has options.
If your plan addresses these questions, you’re ahead of the game. You’ll have both a more compelling story and a far greater shot at success.
Ms. Sullivan is the managing partner of Capital Performance Group, a Washington, D.C. based management consultancy. She can be reached at [email protected].
