Action plans
Category: Branches
Explain that after the diagnosis and recommendations have been done objectives and strategies have been decided upon, then the action programme can be designed using the 5 P’s — product, price, place, promotion and people.
Main components of action plans:
Products and services
Pricing policy
Place (distribution channels)
Promotion policy
People (human resources) policy and Organisation
Products and services
The bank knows which clientele it wants to work with. What do customers need? What don’t they need? It is important to meet all expectations, but it is as well important to avoid wasting resources in designing products / services which will be used by nobody.
Cite an example of a French consulting house which made an analysis of banking offers in Western Europe in the mid 90s, which found out that 80% of products that were cited in banks’ offers were seldom or never used.
Pricing policy
It is of no use to have the right services if they are not correctly priced. Pricing policy is at the heart of a bank’s know how: in commercial banking, it consist in assessing the risk of selling money to a customer that shows a probability of not paying back.
Price includes many elements: cost of resources, commercial margin for those who have collected the resource, bank’s general expenses and structure costs, cost of risk and finally commercial margin.
Then, price is to be confronted with those offered by competitors. Are you too high? You may not work. Are you too low? If so, have you discovered a niche where competitors charge too high and you may develop, or did you assess a wrong cost for risk?
Finally, are you able to operate profitably with the commercial prices you are able to display?
Place (distribution channels)
Are your business units adequately located according to your customers?
Retail banking needs a large branch network, located in populated areas.
If you deal with small-medium companies, your presence will be developed in industrial areas.
Corporate banking and finance requires fewer units, and distance is less a problem. M&A advisory business needs no network at all since it consists of a small team of highly skilled professionals.
Promotion policy
This aspect mainly deals with retail banking. It consists in having identified selected products that the bank manages and sells well, and wants to develop aggressively. Strong communication and discount pricing will attract customers. Then it is up to the bank to retain them and make the relationship profitable by offering other products/services with higher added value.
People (human resources) policy and Organisation
How adequate are the people in the units? Do they have the local culture and understand well local requirements and habits? Or to the contrary, do they have a difficult time to adapt?
Also, is your organisation in line with the commercial policy? In particular, how long does it take to make a loan decision? To discuss the prices for a deal?
Exercise
Give the group 5 minutes to brainstorm on the first topic: product,
to identify the components of a banking offer included : financial and extra financial services emphasis with the potential markets and their expectations.
give a few examples:
Purpose of a loan agreement, a specific and reasoned credit corporate credit cards, specific insurance, monthly information letter, accounting software, gifts and discount prices associated to a club of customers.
The brainstorming should last 5 minutes and again expect feedback in a brief, concise format.