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Shaping Up to Global Banking

Shaping Up to Global Banking. Leadership and Management Development Challenges Stephen Regan Cranfield University England s.regan@cranfield.ac.uk. Enter the Dragon: The Beginnings of Globalisation. 1985/86 Deregulation Banking Act Building Societies Act Financial Services Act

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Shaping Up to Global Banking

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  1. Shaping Up to Global Banking Leadership and Management Development Challenges Stephen Regan Cranfield University England s.regan@cranfield.ac.uk

  2. Enter the Dragon: The Beginnings of Globalisation • 1985/86 Deregulation • Banking Act • Building Societies Act • Financial Services Act • Creation of a single competitive arena • Impact of this on strategies • Leadership agenda

  3. The Basic Economics of a UK Retail Bank Business Consumer Retail Deposits Retail Lending Financial Intermediation Wholesale Lending Wholesale Deposits Structured Maturity Transformation Risk Transformation Aggregation/Disaggregation Competitive Advantage: Information

  4. Banks as Customer Focussed Businesses Sales/Products Asset Gathering Liabilities Management Credit Cards Personal Loans Mortgages Current Account Deposit Non deposit Attractor Manufacturer Wholesaler Increasing Competition Increasing Competition Enabler

  5. Strategies in the banking supply chain Channels Affinity CRM Attractor Call Centres, BPR, Automation, Cost reduction Manufacturer Risk averse lending Welcome borrowers Wholesaler Information-ERP.SAP.accenture Staff-ERM-Ulrich-accenture Customers-CRM Terradata Accenture Enabler

  6. The New Competitive Arena GUS Centrica RBS NatWest GE Capital Virgin Tesco Sainsbury Attractor Manufacturer RBS HBoS Wholesaler RBS(CBFM) Hbos Corp Enabler IBM IBM

  7. The Global Challenge Global Financial Services Brands: Amex, Fidelity,… Investec? Attractor An emerging superleague based on global scale HSBC, Citigroup Manufacturer Wholesaler Already Globalised: Bulge Bracket, Chase, State Street, Outsourcing Partners: IBM, Accenture, Experian Enabler

  8. An Objective assessment : UK banks readiness for the future Past strategies have amounted to Retrench into UK market Rely on customer inertia Expensive marketing mistakes: one stop shops internet banking International losses Branding! Regulatory mistakes: pensions misselling, Cruickshank report

  9. Competences of UK banks • What are they globally competitive in ? • Cost management • Outsourcing • Back office innovation (maybe) • Ruthless HR models • Process Improvement • Consolidation

  10. Current Structure and strategic direction of the Industry Established Citigroup HSBC HSBC Barclays, Lloyds HBoS RBS Abbey National Entrant Regional Global Domestic International

  11. The Leadership Agenda PEST Market Dynamics Investor Relations Governance CEOs Role Strategies Middle Management Behaviours Cultures Capabilities

  12. Cultural Leadership Leadership (Discretion) Discretion Vision(Strategy) Jobs Capability(Implementation) Senior managers in subsidiaries all add to performance if they do this

  13. OLD NEW 10 50 260 250

  14. Self Interest, Sympathy and Empowerment • Adam Smith in “The Theory of Moral Sentiments” • Sympathy: fellow feeling, regulates human affairs and is rational • Pure self interest is irrational: the unsocial passions lead to resentment and disorder • Approval is our strongest drive • Overrides material well being • Rank is a state of grace akin to love • Ambition is the driving force of private man • Abilty, prudence and virtue are its features

  15. Some Caveats • No society can continue without sympathy • Loss of sympathy (resentment) may be just but it is the hardest trait of all to sympathise with • The importance of justice at all times • And finally • Sympathy can be recommended • It can even be expected • But it can never be imposed

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