How can Banks grow profitably?
Despite rising assets worldwide, the pressure on margins in the banking industry is increasing.
On the one hand, this is due to the rising costs of implementing regulatory requirements, the high complexity of mapping a broad range of products and services for an individual customer experience and investments in the increased digitalization of customer service. On the other hand, customers expect falling fees due to an increasing degree of technologization, increased competition with non-banks and near-banks and an increasing degree of standardization.
A number of key measures in various areas help financial institutions to manage these challenges sustainably:
Growth programs
Successful growth requires a continuous and comprehensive review of one's own competitiveness and positioning along various business drivers. A comprehensive and systematic analysis of the business score card and a comparison with industry benchmarks are of central importance for this. The results allow the identification of initial starting points for optimization potential as a basis for further discussion and prioritization using scoring models. Impact simulations and holistic business case considerations allow conclusions to be drawn about additional revenue to be generated. The resulting targeted definition, implementation and performance measurement of business development measures form the basis for sustainable and positive business development.
Customer segmentation, profiling and journeys
Only the establishment, expansion and maintenance of long-term, stable customer relationships can lead to a sustainable and profitable business model. To achieve this, it is essential to understand customers and their needs and expectations in order to provide a suitable product and service offering via the appropriate channels at the right time and to address customers in an individualized manner. Systematic analysis of customer data, for example using statistical-mathematical models and AI, helps to identify customer segments, clusters and profiles, create intelligent "front-to-back" and, wherever possible, digitalized customer journeys and provide an effective and efficient product range.
Product and service range
It is not easy to find the right mix of modular, customer-specific, high-margin services on the one hand and a product and service offering that is as standardized as possible on the other. Both the breadth and depth of the offering must be critically scrutinized at regular intervals in light of the current and future customer portfolio. Digitalization can provide valuable assistance in the efficient provision of individualized services
Management of price and special conditions
Systematic price management with strategic, tactical and operational measures is an important earnings lever for successful companies. The joint development of strategic pricing principles and guidelines, the professional orchestration of price structures, models and levels, the supportive use of pricing simulation tools and the provision of special conditions calculators, workflows and guidelines offer a great deal of additional earnings potential. Pricing audits and health checks can help to quickly identify optimization potential and leverage it.
Profitability management
A holistic approach that focuses on the overall customer relationship in sales measures, measurement and management has advantages for customers, customer advisors, management and the organization as a whole. Systematic benchmarking of customer profitability, the definition of target margin bands, sales support through sales leads, the measurement of activities and success through a control cockpit and structured change management are guarantees of success for next-level sales. The full earnings potential can only be tapped if sales measures focus on the overall customer relationship in order to increase the average profitability per customer.
Consulting & sales management
Comprehensive 360-degree customer advice on all aspects of finance, pensions and protection, an understanding of different needs in different phases of life, access to information and advice when, to what extent and via which channel you want it; what customer wouldn't want that? In most cases, however, you receive product advice or sales and only average service quality across all sales phases. However, the goal must be a holistic consulting experience for the customer in order to systematically identify existing customer potential, to have the right services with the right benefit argumentation at hand, thus ensuring greater customer satisfaction and loyalty, and ultimately to be able to significantly increase revenues. Only a holistic 360-degree customer care approach makes it possible to identify individual customer needs and expectations and exploit the full earnings potential through targeted offers.
Campaign management
A structured campaign management process can significantly increase success and closing rates. In addition to the identification and definition of sales potential topics, it also requires an end-to-end view of all sales activities, the clear definition of tasks, roles, responsibilities, delivery objects and timelines as well as ensuring alignment across all sales channels.
Digital transformation
Increasing digitalization is leading to significant changes in the way hybrid customers think and act. In many cases, companies only manage to digitize individual elements of the value chain. However, the great potential of digitalization and digital transformation lies in the overall digitalization of all front-to-back processes based on customer needs, as well as the corresponding structural positioning of the company and an employee mindset that places the customer at the center of thought and action. Only by adapting and aligning the company to these "new" customers will it be possible to be in the "relevant set" of these customers, achieve the greatest efficiency gains while simultaneously increasing customer service orientation and thus ensure long-term success.
Example
Consileon supported a private bank in the introduction of a holistic profitability management approach for the systematic, targeted development of additional earnings potential and thus an increase in profitability.
The customer base was broadly diversified and highly heterogeneous in terms of relevant KPIs such as customer size (AuM), customer structure, product and service usage behavior, support intensity, earnings contribution, profitability and margin. The aim was to identify possible additional earnings potential, simulate business case scenarios and then implement a holistic profitability management approach.
Project approach at Consileon
- Creation of transparency regarding the systematics, breadth and depth of profitability/margin analyses and their distribution
- Identification of own margin-related position through benchmark comparisons against the market and competitor environment (analysis of the current margin situation along (customer) segments, products/services and RM portfolios)
- Generation of an overview of best/mid/worst performers along various dimensions
- Definition of benchmark-based margin target ranges for customers (portfolios)
- Provision of accompanying measures for customer advisors to systematically support the achievement of target margins for "outliers"
- Introduction of activity and results reporting as a management information and control tool
- Integration of central profitability/margin KPIs into the existing RM/management cockpit
Curious?
Consileon helps you to define and successfully implement the right measures in the right areas. Talk to us.