|Modern Middle Manager
Primarily my musings on the practical application of technology and management principles at a financial services company.
Forest from the Trees II - Shoring up the Defenses
Thursday, January 02, 2003 In the last post, I did a simple SWOT analysis for my company. In this post I'll examine the weaknesses and threats for each line of business.
The weaknesses and threats to the wealth management line of business (LOB) are primarily strategic in nature -- the product is long in the tooth and either needs to be made competitive or put on a timetable to be cash-cowed and eventually scuttled. My department is not in a position to fight for a truly competitive product mix or propose a new marketing strategy. So what can we do?
1. Drive expenses down. Margins are low so the more costs that can be cut the better our performance will be. The trust business is not high-margin unless you're dealing with very large accounts like Northern Trust, Comerica, et al. We are being driven into a low-cost provider niche. We need to continue focusing on streamlining our processes and reducing support expenses. The advent of a new trust accounting system with built-in workflow software will help us to streamline business processes. The implementation of thin clients and an open-source backoffice (where possible) will continue to reduce corporate overhead as a whole, as will reducing telecommunications expenses to network the new offices. This will help protect the organization from throwing away its real resource, "human capital."
2. Enhance the real estate support function. Our ability to handle real estate is our strength in a weak product mix. We readily accept accounts with large amounts of real estate that other companies would rather not work with. Strengthening that department and helping them "do more with less" will be a major goal in 2003.
3. Guerilla marketing. If we can't distinguish our product mix from other companies, where can we distinguish ourselves? Our technology. We will be revamping our client website this year. Our backoffice, as previously mentioned, is using some of the leading (not bleeding) edge technology to service our clients. We have a story to tell that, if our marketing whizzes can't get out to the financial community, the information services department can get out to the IT community. We've already started with interviews in various trade mags and will continue through the year. This focuses on a strength, our "technological edge," and tells the story through a non-traditional channel (for free).
Our commercial banking LOB is the more virile of our two businesses. It's been growing very quickly and with a much higher margin than the trust business. It, too, has weaknesses and threats. Most of those revolve around politics with our parent company. We can't add lending to the product mix because they said, "No." We can't change our brand identity because they said, "No." The manager of our parent company's banking relationships is also at odds with us grabbing more business -- obviously, because he'd be out of a job if we took all deposits and wires in-house. Without those strategic moves and with pressure from the banking relationship manager, we are in a bit of a pickle. What the IS department will be doing in the background:
1. Tie our current clients closer to us in a way other banks can't compete. Nobody else appears to be offering the same timely client wire notification we do. By letting the escrow officers know very quickly when an escrow deposit has hit the account, we shorten the escrow period. We're building on that next year, offering a new web-based version with even more features. It will be an open-source solution.
2. Guerilla marketing similar to wealth management.
I have no ideas beyond this. We really do have a major problem with the lending issue that technology can't address.
posted by Henry Jenkins | 1/02/2003 04:45:00 PM
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