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5.7 Wrap Up: Management Tools

The key result of this chapter was the overview of the relevant instruments for controlling companies—and therefore also banks—strategically and structurally, and the application of these tools in the digital age.

Ø Instruments Strategically, the permanent analysis of environmental developments is essential in order to detect changes to the existing business model or the emergence of new influencing factors and the significance these might have. Then the questions of “what” and “how” must be clarified. A clear analysis of the future trends, expectations and activities of the stakeholders, as well as of market developments, is a necessary factor for survival.

The digital age is changing the foundations of financial intermediation in the long term, as the knowledge advantage that banks held over customers is eroding and the entry barriers for new market participants sinking. The informed customers place pressure on margins in the network age. In addition, there is growing regulatory pressure on banks as a result of the global financial and debt crises and growing transparency; this also increase the metamorphosis pressure.

Ø Structure Future-viable success positions depend on the competence not only to recognise effective customer needs in an open dialogue, but also to translate these into modern solution packages with attractive price/performance configurations. There are three core process steps in banking: the provision of customer advice, product allocation to meet customer needs, and transaction processing. Banking does not differ from any other sector in principle, so that analysis of the price/performance configuration can also be conducted in every bank according to usual standards and thus contribute to increased competitiveness.

The basic form of implementation is the interwoven exchange between those with responsibility, which should be regarded as motivating and sensible. By creating an agile process structure, the process costs can also be optimised rigorously by means of lean management. Existing bank services can be offered more efficiently through network-like price/performance configurations, new services become possible, and economies of scale in the processing areas increase. Organisational and functional boundaries are shifting successively and becoming more permeable, or are disappearing altogether. The organisational form of the future is based on the clear understanding of responsibilities along the individual steps of the performance configuration, which are being conducted increasingly in networks—with each individual concentrating on his core skills.

Industrialisation is a necessary answer to the key trends of the digital age for every bank—economies of scale and an improvement to the price/performance configurations are merely the admission ticket to the further metamorphosis of banks' business models. This requires a shifting of the previous, often purely vertical view of the organisational structure to a primarily horizontal (processfocussed) perspective and a merging of both by means of role and job profiles. This process-oriented view also allows the analysis of the question as to which competences should be provided in-house and which should be procured externally.

Ø Business Model The concept of the business model arises as a fusion of an external and internal strategic analysis and the derivation of suitable structures. In the digital age the classic concept is supplemented by the dimensions of the cooperation partner network and adequate channel management.

Ø Outlook: Customer Focus and Change Management as Key Success Factors Even if the significance of trends and expectations is assessed correctly and the right strategic decisions are made, success is still not guaranteed, for success arises solely from successful business activity on the market. Resources are scarce and their proper use in the price/performance configuration decides its success or failure. Therefore, following a clear analysis, three factors are crucial for the future success of a bank in the digital age:

• First the precise understanding of one's own business model and the adjusting screws for changing these—this will be addressed in Chap. 6.

• Then, how this is implemented into actual customer experience, in order to develop and maintain customer trust by fulfilling service promises. This key success factor will be analysed in detail in Chap. 7 of this book.

• On the other hand, the question of how this strategically, structurally and culturally complex transformation process is at its infant stage in many banks. If it is to succeed, future-viable change management will be the central success component. This topic will be addressed in detail in Part III.

 
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