Bank strategies in today's competitive market

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Modern excessively competitive financial market provides adequate bank strategies for its challenges. Structurally, it consists of several markets: settlement and cash services, loans, foreign exchange and securities. They carry out more than 150 types of various banking operations. In the process of interaction between a commercial bank and the market, its virtual component is developing by leaps and bounds, which implies multi-channel and remote provision of services by clients. A revolutionary “180 turn o” has been made - from product-oriented technologies to customer-oriented (CRM).

If we turn to the "classics", then the bank's strategy can be based on one of two platforms: American (market with an exchange structure, a large number of shareholders and their rotation) and European (partnership, opposite to the first).

The development of a bank strategy begins with market segmentation and positioning of banking products on it. Only by fulfilling this condition, his management in real time will be able to navigate in a total competitive environment. That is, it will act prudently and in accordance with this plan, implementing it step by step, taking into account, on the one hand, commercialinterest, on the other hand, steadily adhering to the standards of the Central Bank, on the third hand, optimally using the features of regional economies.

Basic concepts - the alpha and omega of the bank's strategy is its deposit and credit policy, constant attention to the optimal structure of liabilities and assets, a clear definition of acceptable risks in lending.

The above criteria must be unfailingly maintained, since their clear identification directly affects the stability of the bank. Recently, the public position of the bank has become increasingly relevant for attracting customers: business cooperation with government agencies, as well as the development of public relations.

The domestic banking market falls under the category of a market situation - pure competition, characterized by many sellers offering the same type of goods and services. The strategy of a commercial bank in this environment cannot be carried out without constant managerial comparison of strategic goals and available resources: tracking the dynamics of equity capital (taking into account its structure), customer base, quality of tariff and product policy, compliance of the structure of the bank with its mission. The bank's mission should, reflecting the bank's strategies formulated by the management, clearly outline the circle of the most important clients (including promising ones), as well as the main areas of interaction with them, supported by planned indicators.

It should be noted that currentlybank strategic planning is undergoing a conceptual change. The prevailing practice of the calendar (fiscal) year is being criticized more and more, because it regulates processes not technologically, but in a stereotyped way. The position of banks that have revised the traditional linkage to last year's indicators deserves attention. They challenge an "impersonal approach" focused on short-term results without regard to maintaining and growing a personalized customer base. The following methods are used to build it up:

• pre-worked approach method;
• method of generating requests and needs of the client;
• Method of satisfying customer requests and needs.

The "traditional managers" who try to "evenly increase everything" because of the fear of "not fitting into the plan" are being motivatedly criticized.

The development of a bank's strategy is largely determined by planning, risk management methods and mutually beneficial building of business relationships with clients.

Concluding this brief review of modern strategies of commercial banks, we can conclude that the conceptual replacement of established, product-oriented strategies with new ones, customer-oriented ones, is imminent.