Industrialization in retail banking E-Book

Heiner Offenbächer

• Herausgeber: GRIN Verlag
• Sprache: Englisch

Veröffentlichungsjahr: 2006

Beschreibung

Seminar paper from the year 2006 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,7, European Business School - International University Schloß Reichartshausen Oestrich-Winkel, course: Retail Banking in Europe, language: English, abstract: The German retail banking sector faces severe challenges. Global competitors are invading the market with new business models trying to win existing customers. At the very same time, customers become evermore demanding by means of price and quality and are willing to switch banks if it deems advantageous. If failing to act on these problems, the future of many German retail banks seems jeopardized. Other industries, in particular the manufacturing sector, have faced similar problems. In the 1980’s German manufacturing companies had to cope with similar challenges and managed to successfully overcome their crisis by developing and applying new concepts such as process management, focussing on core competencies and involving external providers into their operations. In the light of this success story, industrialization appears to be a very promising mean to respond to the current situation the German retail banks are facing. While foreign institutes have already initiated successful industrialization activities it has only recently come to the attention of German retail banks. This paper will therefore examine whether and how industrialization concepts can be successfully transferred and applied to German retail banks.

Leseprobe

Table of Content

1 Introduction. - 1 -

1.1 Problem and objective of the paper. - 1 -

1.2 Methodology and structure - 2 -

2 Underlying concepts and current situation. - 3 -

2.1 Status quo of the German banking sector - 3 -

2.2 Successful approaches of the manufacturing industry - 6 -

2.2.1 The history of industrialization - 6 -

2.2.2 The era of mass production and scientific management - 7 -

2.2.3 The era of lean production and value chain deconstruction. - 8 -

2.3 Transfer of industry concepts to the banking sector - 9 -

3 Application of industrialization concepts to retail banks. - 12 -

3.1 Key areas of industrialization - 12 -

3.2 Process Management. - 13 -

3.3 Outsourcing in the value chain of retail banks. - 18 -

3.3.1 Procurement and logistics - 20 -

3.3.2 Operations - 21 -

4 Implications for the retail bank of tomorrow - 24 -

4.1 Implications for retail bank customers and products - 25 -

4.2 Implication for retail banks - 26 -

5 Critical assessment - 27 -

6 Conclusion - 29 -

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Executive Summary

The German retail banking sector faces severe challenges. Global competitors are invading the market with new business models trying to win existing customers. At the very same time, customers become evermore demanding by means of price and quality and are willing to switch banks if it deems advantageous. If failing to act on these problems, the future of many German retail banks is jeopardized.

Other industries, in particular the manufacturing sector, have faced similar crises. They were able to overcome this situation by drastically challenging and rethinking their business logic through industrialization. This encompassed developing and applying new concepts such as process management, focussing on core competencies and involving external providers into their operations. In the light of this success story, industrialization appears to be a very promising mean to respond to the current situation the German retail banks are facing. While foreign institutes have already initiated successful industrialization activities it has only recently come to the attention of German retail banks. Rigorous process management and the concentration on a limited set of core competencies were identified as key areas of industrialization.

In a first step, the bank’s value chain and the underlying processes need to be optimized for improved transparency and manageability. Automation and standardization as parts of process management are major elements of this first step. In a next step, retail banks need to define their core competencies and identify the corresponding processes on which corporate resources can be concentrated. Non-core value chain activities might consequently be outsourced.

If successfully implemented, industrialization will significantly change the German banking landscape. Retail banks will become increasingly focussed on sales and distribution by outsourcing back-office activities. More efficient and focussed usage of resources allows banks to increase both the amount and quality of value creating frontline consulting and customer care. Therefore, industrialization in retail banks must be grasped as more than just plain cost-cutting: It provides the foundation upon which fu- ture growth and competitive advantage can be built.

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