Opinion
Five keys to successful banks
By Xiao Gang (China Daily)
Updated: 2010-08-06 14:04
 |
Large Medium Small |
Banks - whether government controlled or privately held, whether specialized, regional or universal players - are still at the heart of the global economy, without any fundamental change in their main mission, customer needs, and core capabilities. To better cope with the above-mentioned challenges, banks are required to have five crucial capabilities to be ready to compete in this new era of banking and become tomorrow's winners.
Customer management capability: Customer base is an invaluable asset for banks. Banking sector leaders should seriously rethink how best to rapidly transform their service model from a traditional product-defined structure to a targeted customer-centric system, thus allowing them to engage, win over and retain customers.
To do so, banks need to improve their ability to capture customer information timely and analyze the customers' product holdings, preferences, behaviors and financial conditions. The breadth as well as depth of customer relations are equally important. Banks have to not only increase their customer numbers, but also focus on redesigning value chains to gain a greater wallet share.
Innovation management capability: It has been widely argued that over-innovation, particularly in the area of widespread securitization, was one of the root causes of the global financial crisis, but the fundamental ways and means to emerge from the crisis still lies in innovation. Cultivation of innovation capability was (and still is) the driving force for the banking industry's development.
What banks need to do is to seek the right direction and make innovation closer to the real economy and social development by satisfying a broad set of customers' needs. Carbon-related financial products may be one of the areas of innovation in the coming years.
Distribution management capability: Across-the-counter and Internet banking are banks' most important service channels. Banks need to establish more channels, as well as expand the existing ones, to provide their customers with the best services and increase cross-selling.
Furthermore, they should establish clearer customer segments and design differentiated customer processes. The upgrade of banks' branches should focus on the shift from routine to market-centric transactions, spending more time on service rather than on across-the-counter operations. Internet banking should be enhanced further to ensure the security and efficiency of bank products and services.
Risk management capability: This is vital for any bank's survival. Banks need to revitalize their risk management and pricing capability, ensuring that they are fully analyzing the high-risk prospects and incorporating this analysis into their pricing. Both the efficiency and effectiveness of risk management must be improved.
|
||||
These must be properly aligned with a bank's risk appetite and objective. What's more, the definition of risk management should be broadened, to include capital management, liquidity management, and even brand management and information technology management.
Human resources management capability: Human resources are a top priority for banks and crucial to their success. Banks should increase returns on human capital further by improving performance measurement and appropriate remuneration. It is very important for banks to develop a variety of training programs on an individual basis, reinforcing an already-existing shift from talent recruitment to talent retention and career development.
Human resources management departments play a vital role for banks; they train employees to build a strategic, professional and service-centric human resources team to meet the requirement of the new era of banking.
The basic function of banks - to support the real economy and social development - remains unchanged. What is most important for bankers to do is to focus on enhancing the core capabilities, regardless of changes in the new era.