Banking

Recent Developments

In the not too distant past, dynamic sectors of industry like the telecommunications business used to send a disparaging sideways glance at the world of banking, pointing out its lack of verve and hobbled innovation – whereas today, the banking sector is leading the way with ideals of consolidation, globalization and structural revolutions. Of course, the banking industry was not idle in the past when it came to internal optimization or sporadic mergers, but the speed of change has increased dramatically and the industry is becoming ever more professional.

• Central issues affecting change in the entire industry are
• Consolidation and mergers, now also crossing (albeit still cautiously) the different pillars of the banking sector.
• Increasingly professional, informed, and demanding clients.
• Ever slimmer margins for standard products.
• The industrialization and automation of procedures.
• Increasing globalization.
• The market-viable implementation of a multitude of regulatory requirements (such as MiFiD, MaRisk).

This is reinforced by other, more specialized developments in individual sub-sectors that need to be taken into consideration, such as:

• The resurgence of the high-street bank for retail banking and the consequent need for improved sales management.
• Factors like the importance of client rating or solutions-oriented product bundles in the corporate client business.
• Questions like the strategic role of direct banking at automotive lenders.
• The effects of changes in taxation on leasing companies.

As a whole, the banking sector is also moving from a longer period of cost optimization to a phase of substantial efforts at boosting revenues. While considerable potential for lowering costs still lies dormant in many banking houses, it is becoming clearer that the strategy of “slimming” the business can only go so far in view of the existing fixed costs. In this respect, many banks are asking the still unresolved question as to which parameters a bank could and should use for making its mark in the markets.

This also creates new challenges for banking consultants. More and more, considerable technical know-how, a profound knowledge of the structures and particularities of specialized sectors in banking and a sense for the factors of operational success need to be introduced into projects in this industry.

Our Consultancy Interests

With our consultancy portfolio, we can cover the entire value creation chain in the banking sector. We put a particular focus on:

Strategic-conceptual issues with special attention focused on understanding the factors for operational success (in particular IT and HR issues), such as

• The design of a target vision for the procedural landscape in market risk and post-market departments, which would be unsustainable without an awareness of their impact on the IT landscape.
• The conceptual design of distribution management, which cannot be effective without a sense for the human factor and the question of motivation.
• The development of bank controlling structures (indicator systems, balanced scorecards), which call for a particular awareness of the actual procedural restrictions and operational constraints like the availability of data.

Major structural changes with a substantial impact on the workforce and existing IT structures, such as

• The merger of two institutes.
• More substantial reorganizations of individual units.
• The consolidation of branches.
• Introduction of comprehensive procedural changes, e.g. workflow support.

Projects that require in-depth expertise in the loans, financing and leasing business

• For strategic and conceptual questions of specialist lenders, such as leasing companies or mortgage institutions.
• For strategic and conceptual questions in market risk or post-market departments at full-service banking houses.

Topics that call for in-depth expertise in sales or market development

• For the design of sales incentive models.
• For the setting-up of mobile sales units.
• For the definition of sales processes.
• For the development of sales-related leadership processes.

Our Client Portfolio

We can provide answers for strategic questions in all sectors of the financial services industry:

• Private and corporate banking.
• Regional or sector-specific institutions.
• Specialist lenders, such as leasing companies or brand-linked banks.
• Specialist institutes like capital investment companies.

Sample Projects

Sample Project 1: Direct Banking Strategy for a Automobile Financing Company

Background Situation:
A leading automobile financing provider intended to review and, potentially, expand its current standing in the direct banking market. Up to this point, the activities in this area were characterized by individual, product-driven offerings, with the role of direct banking remaining undefined in comparison to the core business of promoting car sales through financing and leasing solutions.

Our Consultancy Approach:
Starting with a review of the entire product portfolio, with particular attention for the specific factors of the umbrella car brand and the know-how available in the core business, a set of criteria for a target product range was developed. Profitability analyses for the target client groups supported a comprehensive business case study. Operational factors, like the interaction with outsourcing partners, were taking into consideration in the form of constraints or potential for the strategy design phase.

Project Results:
A final recommendation for a target product portfolio, including a holistic profitability survey, a step-by-step implementation plan, and a detailed product range for each product category that makes optimum use of the bank’s characteristic strengths.

Sample Project 2: Strengthening the Market Positioning Strategy of a Leasing Company

Background Situation:
In the course of an on-going merger, a provider of leasing services was faced with the need to identify the elements of the former business model that are decisive for its competitive capabilities and should therefore be maintained or expanded upon and those that might benefit from or could potentially be replaced by the particular strengths of the partner in the merger.

Our Consultancy Approach:
Beginning with a comprehensive analysis of the markets and an outside-in analysis of the two parties in the merger, intensive workshops were conducted as a forum for evaluating the characteristics of the market positioning and structure of the company. Above all, the elementary operational requirements were identified for all factors for the company’s success in its markets. A comparison to benchmark competitors enabled us to develop an unbiased outside evaluation of their relevance.

Project Results:
A clear market profile was defined, including all structures required for its establishment. Using this as a basis, a final strategy for the merger was proposed, defining the areas that could be unified as well as the areas that require differentiation. By finalizing this market positioning concept, a constructive arrangement with the partner in the merger could be coordinated.

Consultant Profiles

Our team includes:

Tomas Rederer (Principal):

• Over ten years of strategy consulting experience in banking (previously at Mitchell Madison and Diamond Cluster International) as well as line management experience at the Deutsche Bank.
• Consultancy focus on private and corporate business banks, regional institutions, specialist lenders and the Sparkassen group.
• Degree in business management from Mannheim University.
• Why Kienbaum: “At Kienbaum, I am given a degree of freedom that I could never achieve at our established competitors. This is not least due to the start-up nature of our work, that is, the exciting challenge of establishing the financial services team as well as the well-known Kienbaum brand in the area of strategic consulting and, at the same time, continuing to expand our strong consultant team.”

Hubertus Bitting (Senior Consultant):

• Three years of strategy consulting experience in banking (previously at Diamond Cluster International).
• Focus on brand-linked banks and state banks.
• Internships at Roland Berger, UBS Investmentbanking, Ernst & Young, training: Deutsche Bank AG
• Degree in international business management from Oxford, Madrid, Paris.
• Why Kienbaum: “Over the course of the last 12 months, our team has grown by 300 percent. With energy like this, our team offers me opportunities for taking on new responsibility and growing personally with the team – and all of that in an exciting line of work.”

Volker Rothfuss (Junior Consultant):

• With Kienbaum since May 2007.
• Vocational qualification as a banking clerk at the Volksbank Freudenstadt eG.
• Degree in business management from Mannheim University, with particular focus on banking, financing, and taxation. Internships and undergraduate placements at KPMG and Kreditwerk Hypotheken Management.
• Why Kienbaum: “It is the right balance. Exciting project work, young and dynamic teams and professional advice and support from internationally experienced strategy consultants – that is the right combination for me to enjoy my work and reach my personal goals.”

Contact

Tomas Rederer, +49 175 290 50 32, tomas.rederer@kienbaum.de