Service ops mgt IBM_Consulting_Optimizing_distribution_channels

Service ops mgt - IBM Institute for Business Value Optimizing distribution channels The next generation of value creation Following a decade of

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IBM Institute for Business Value Optimizing distribution channels: The next generation of value creation Following a decade of above-market performance, retail banks are feeling the fallout from strategies that, while fueling growth, failed to leverage the rich potential of these institutions’ customer-facing channels—fertile ground for growing and sustaining profitable, long-term relationships. By shifting their focus back to the customer, banks can set off a new wave of value creation. By Vikram Lund, Ian Watson, John Raposo and Christa Maver
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Optimizing distribution channels 1 Optimizing distribution channels IBM Institute for Business Value Introduction From 1994 through 2001, the S&P Banking Index grew at a compound annual rate of 1 In driving this period of prosperity, banks pursued three key strategies: revenue diversification through wide institution of fees, consolidation through mergers and acquisitions, and risk reduction through asset securitization. While these tactics allowed retail banks to create significant value for their shareholders, they came with a heavy price: weakened customer relationships. Today, with stabilization of noninterest income, slowing securitization and a lull in merger and acquisition (M&A) activity, banks are facing a sobering reality: While they were focusing on getting broader and bigger, their customers were becoming increasingly alienated by arbitrary fee hikes, inward-looking strategies and “one size fits all” service models. In the face of a bruised and unsure economy and growing numbers of dissatisfied customers, retail banks are searching for new sources of sustainable revenue and earnings growth. To find them, they will have to shift their focus and learn to look from the outside in—from the customer’s point of view. This will require developing and deploying fulfillment strategies that map tightly to customers’ buying patterns and optimize a bank’s capabilities in the right way, at the right time, through the right channel—from the branch, to the call center, to the ATM and to the Web. Contents 1 Introduction 2 The past decade: How banks prospered 4 Facing the point of diminshing returns 5 Unmet expectations for channel migration 7 What banks can do: A three-stage approach to channel optimization 11 Is your bank enhancing its value across channels? 12 Get started today 12 About the authors 12 Contributors 13 References
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Optimizing distribution channels 2 Optimizing distribution channels IBM Institute for Business Value The past decade: How banks prospered Over the course of the 1990s, banks relied on three strategies to create shareholder value: Revenue diversification —Banks sought to diversify and grow their revenue base with additional sources of noninterest income. In just four years—from 1997 to 2001—noninterest income grew over 50 percent to US$169 billion. A sizable amount of this incremental revenue was gleaned
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This note was uploaded on 01/25/2011 for the course MGT 4803 taught by Professor Staff during the Spring '08 term at Georgia Institute of Technology.

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Service ops mgt - IBM Institute for Business Value Optimizing distribution channels The next generation of value creation Following a decade of

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