BOSTON, February 4, 2013—Retail banks that achieve operational excellence throughout their organizations also deliver superior financial results, according to a report released today by The Boston Consulting Group (BCG).
The report, titled Operational Excellence in Retail Banking: Committing to Customers in the “New New Normal,” details the findings of BCG’s third annual benchmarking survey of the global retail-banking industry. The survey covered 18 of the 35 top retail banks in the Americas, Europe and Asia-Pacific, collectively referred to as “premier-league” banks.
The survey found that the operationally strongest retail banks in the premier league outperform their peers financially. Banks that excelled on a wide range of operational measurements had low cost-to-income ratios (CIRs), a key measure of efficiency and profitability. The leading financial performers achieved top ranking in at least two, and frequently three, of the four levers of operational excellence identified by BCG.
The survey also revealed that the operating models of the premier-league banks as a whole have become more productive. The banks achieved these efficiency gains even as they focused more staff time and resources on meeting the needs of customers.
The leading banks exhibited five key trends in the way they improved their operations, the survey found. All five trends contribute in some fashion to enhancing customer services. The trends are: strengthening the customer experience, increasing sales performance, improving end-to-end productivity, enhancing organizational efficiency, and reducing complexity.
“Customer-centricity has been seen as a best practice for a number of years,” said Robert Sims, a partner in BCG’s Toronto office and coauthor of the report. “But now—in the ‘new new normal’ environment-- it has become absolutely essential as far as the world’s top banks are concerned.”
The drive for customer-centricity was exemplified by operational changes made by premier-league banks to reduce the number and complexity of their products, the survey found. Offering fewer products and making them easier to understand minimizes customer confusion and also simplifies bank operations.
At the same time, the leading banks have improved data-mining techniques—allowing them to create more personalized customer services while improving sales performance.
Customers, meanwhile, have become more demanding, expecting banks to provide simplified interaction processes across multiple channels, when and where the customer prefers. For banks, providing a truly integrated multichannel customer offering is now just the minimum table stakes in the competition to win business, the research found.
“Taken together, the findings demonstrate how capable and resilient the world’s leading retail banks are,” said Michael Grebe, a partner in BCG’s Munich office and coauthor of the report.” In today’s challenging financial-services environment, that is a rare positive message.”
A copy of the report can be downloaded at www.bcgperspectives.com.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3701 or firstname.lastname@example.org.