A Community Bank Directors Advisor

Issue #13 - July 2008  

 

Staying Relevant in a Competitive Market

By Arp D. Trivedi, DEI Incorporated

A friend once told me that relevance, and not just differentiation, is the key to a successful relationship. In a highly commoditized industry such as financial services, positioning oneself as a provider of customized products and consultative customer service, coupled with easy-to-do-business-with servicing, is a key.  How does a modern financial institution accomplish this? Careful operational planning can add tactical performance to long-term planning. Beginning with the end in mind – enduring relevance – will further cement your financial institution’s place in the market.

The bank’s true first calling is to revamp its approach to products and services. Bankers must engage clients at a level that establishes the banker as a confidant and creates an environment where the banker takes a much more proactive role as the planner/implementer, and even more so, as advisor. Though one must abide by all the various rules and regulations across product families (deposit versus securities versus insurance), there is clearly a broader role for the independent banker to be the independent advisor. It is no longer good enough to make the loan, insure the loan is collected, and to refill the loan. The independent banker must take a hard look at how it can position the bank in more and more aspects of consumers’ lives and businesses’ livelihood.

Second, financial institutions must seek the best sites in the market. Understanding the intersection of demographic, competitive and loyalty data is paramount to optimally prioritizing markets. Once markets are prioritized for deployment, picking the right delivery system and real estate option continues to build the case for relevance. Certainly many of the markets served by western independent bankers are limited in terms of options. Regardless, bankers must design into the chosen location the correct delivery system, be it a traditional retail environment, a fresher, more engaging environment such as Dialog Banking pods, or technology-centric models such as remote teller systems and enhanced web delivery.

Now, the independent banker is ready to determine the level and type of operations for the bank. Designing a bank’s process with a fresh perspective is incumbent upon the management team and directors. It does not mean wholesale restructuring and dismantling of age-old systems, processes, and most importantly, people. But it does mean change. This will not only influence branch design and development, but will be critical in understanding the requirements of back office operations.

An important aspect is determining the means by which products and services will be delivered. This process is not a one-time event, but rather a lifelong habit of understanding the needs of stakeholders and tailoring the institution to serve those needs.

Finally, results are truly where management and directors alike place most of their emphasis. As the team designs, or redesigns, the end-to-end system, a valid and relevant scorecard based on the input of the customer, management, directors, and perhaps industry advisors is paramount.  Four areas are of utmost importance: product innovation, operational integrity and performance, customer loyalty and satisfaction, and financial performance.

Differentiation is certainly an important aspect of banking these days. But this notion of differentiation must be coupled with an active pursuit of staying relevant in the lives and businesses of one’s customers. This will be the true differentiator.

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Arp D. Trivedi is vice president of strategic planning for DEI Incorporated in Cincinnati, Ohio . he may be contacted at atrivedi@dei-corp.com or 513-699-4727.