Business — Banking — Management — Marketing & Sales

Business Orientations

Category: Strategy Implementation

A combined perspective

The main business areas (customers, products and others) are studied one by one, as a first level of performance indicators. It has to be underlined, however, that performance standards are very often combined at a second level of analysis. For instance, the absolute number of customers is often mixed with a product or market analysis (number of customers having a credit card or opening a savings account; wealthy clients subscribing to a customise new fund management activity).


Various and complementary approaches can be used, with target standards to be established by the bank according to its objectives:

Absolute number of clients of the banks, with an indication about the new clients.

Details about the profile of the private clients: total of the private clients, private clients with an indication about their financial situation (standard clients; clients with a level of resources above a pre-determined threshold; more detailed ranges of clients, with a given rank).

Details about the corporate clients: total of them, details by industrial sector, details by the size of the corporations.


The range of standards will cover all the products the bank is working on and intends to develop:

Retail products: current and saving accounts, credit cards, short-term loans, mortgages, currencies

Fund management products: if any

Investment bank activities: bonds and equities; new issues and increase of capital; listing of the corporations on the stock exchange; trading activities

Corporate business: number of accounts; loans; import and export credits

Services: treasury management specialised software, advisory services (fiscal optimisation, wealth management, brokerage)


Regarding both the customers and the product targets, performance standards are very often expressed in terms of volumes. A clear quantitative indicator, such as volumes, helps to monitor strategic objectives.

These performance standards can be numbers (of accounts, new customers), as well as volumes of credit or deposit. In that case, a strict monitoring of the volume of short-term and long-term credit and deposit is necessary, for instance to avoid too big mismatches in terms of funding. Lending mainly long-term with a short-term funding is dangerous, and is very often constrained by regulatory requirements.  This is also taken into account in the Asset — Liability Management policy of the bank’s head office.

Market shares

The market share, globally or by geographical area, product or customer category, can also be part of a strategy and therefore component of the set of the performance standards. Targets and progresses in that area are sometimes seen as good marketing tools. A bank showing a strong market presence in a specific field is supposed to show a comparative advantage, and should be able to attract even more customers.

However, it has to be underlined that market share targets could present some risks if not combined with other indicators, especially financial results. Market shares could be gained at the expense of the profitability, either by attracting customers with too low prices, or by lending too much compared to its financial strength. A change in the economic situation could then lead to a high rate of customers’ insolvency. The history shows several examples of banking bankruptcies due to this simple phenomenon.

Example: Cite the French banking sector. During the 70s and most of the 80s, the market share policy has been the main strategic guideline. As a former Bank President recognised: In the late 70s, the only data they monitored was the number of branches open by their main competitors, compared with how many they opened themselves, regardless profitability of business. The entire country became overbanked, and the French banking sector as a whole became Europe’s least profitable.


Finally, the time constraint is a good one to oblige a bank to see if there is a gap between expected and actual results. Having precise yearly objectives, for instance in a budget, with a monthly or weekly mid-term information, give an obligation of review, analysis and, if necessary, information and corrective action.


On each of the above items, the participants will work in a group discussion. They will give quantified examples, linked if possible to the strategic and action plans listed before.

It can be, for instance:

Reach, for their branches (presently 1000 clients), 10% more clients each year, on any type of product.

For its total clients, having the branch opening 100 new savings accounts within the budget year and 50% of the clients subscribing to a credit card

The total funds under management, a totally new activity, with the bank reaching 100 millions roubles in two years time

In the corporate financial services field, having a 10% market share in new bond issues for the corporate industry

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