Like many of today’s processes in banking, strategic planning is undergoing a dramatic shift. One of the core responsibilities of a bank board is to approve, support, and monitor its strategic plan.
The process usually includes hiring a facilitator, creating a SWOT grid, brainstorming, and executing a resulting document with success pillars and KPIs.
In many cases, the ensuing strategic plan looks more like a business plan and after time can rarely boast that all KPIs have been achieved.
While the goal of a strategic plan is to create sustainability and increase shareholder value, the path to achieve it has changed. Here are some of the reasons why:
Nationwide, four banks control over 40% of the deposits.
If measured by market value, PayPal® would be the 4th largest bank in the U.S.
Over $1 trillion sits outside the banking system today, on cards like Panera and Starbucks®.
Chime®, Rocket Money®, Ally® and many more fintechs are acquiring market share.
Today’s digital delivery and omni-channel access allow people to bank anywhere, anytime.
So, what’s the path to creating an effective strategic plan?
Step 1: Prepare to Succeed
Fix the things you already know are holding you back. If you don’t, you create an automatic excuse for failing to execute when your plan launches.
Find a peer bank, or a group of them, you respect and share candid, confidential information to improve your strategic insights.
Listen to your customers and your employees actively and regularly for product improvement opportunities and to identify pain points. Then, be able to showcase to your customers some of your ongoing improvements.
Step 2: Change Creating Goals to Answering Questions
Examples:
What keeps our customers with us? (Start by having a baseline for your current market share, share of wallet, and voice of the customer).
What are our customers willing to put up with?
Tolerance range is a direct reflection of your institution’s brand strength.
The best indicator of brand strength is the cost of funds.
Where – and with what – is our greatest opportunity?
How can we add value to our customers and communities?
What is our “Don’t Do” list?
Step 3: Create a Workflow Funnel
Start by broadly outlining desired outcomes. From there, create specific objectives and then add detailed responsibilities via Business Line tactics.
Step 4: Gather and Leverage What you Already Have – and Already Know
Identify what your current plan didn’t do.
Audit your technology needs/efficiency.
Create a viable data warehouse with quantitative data.
Step 5: Hire Your Quarterback
By taking care of the existing, obvious, and recurring issues with your internal team first, you can now engage with an enterprise-wide strategic planning partner on a go-forward basis and optimize your investment.
The result is a plan that, for at least one multi-billion-dollar bank I know, is a one-pager, with clear, concise, specific marching orders (five or less) that are the genesis of all those detailed business plans.
It’s a new world out there, and a powerful, relevant strategic plan is a key tool for directors to carry out one of our most vital responsibilities: to oversee successful outcomes for the bank we serve.