The Art of Better Retail Banking: Supportable Predictions on the Future of Retail Banking


This new book on retail banking is both readable and innovative. Its analysis is unusually accessible in its style, and the book’s conclusions and predictions will be rightly thought provoking. The customer is gaining real power and this new book’s insights on the importance of leadership, the need to unleash creativity and to make a bank’s IT and people resource work together more effectively for customer satisfaction are important pointers to the shape of future competitive differentiation.
—Sir Mervyn Pedelty, Recently retired Chief Executive, The Co-operative Bank plc, smile, CIS and Co-operative Financial Services

"A stimulating read. A readable and lively book that is always informative, sometimes controversial and invariably challenging. The authors don't expect readers to agree with it all, but the readers will undoubtedly gain some fresh insights and perspectives on the multiple issues facing management in a rapidly changing industry."
Chris Lendrum CBE, Recently retired Vice Chairman, Barclays Bank

"This book is clear enough for the layman and thorough enough for any banker to obtain an excellent sense of the options for successful strategies for their retail businesses. The challenges of technology introduction, cost of production and scope of service are driving banks into responses increasingly similar to other industry sectors. These forces have been apparent for some years but are so evident now they can no longer be ignored. This book provides an excellent guide to mapping that future."
—Joseph DeFeo, CEO, CLS Bank.

"This is a useful guide to retail banking that provides a thought-provoking view on the state of The Art (of Better Retail Banking). Clearly retail banking can get better, and must! To steal an analogy from the conclusion, there is a sea change going on – consumers are looking more and more for greater simplicity and value, and so many banks are still making such heavy weather of it. This book does a good job of charting the current developments."
— Lindsay Sinclair, CEO, ING Direct UK.

"A whistle-stop tour of all aspects of retail banking. This is a very readable and insightful real world mix of theory, strategy, tactics and practice. They have even managed to make banking sound exciting. But mostly they have been able to cut through the complexity to remind us all that success in retail banking is not just about finance and efficiency – it is about customers and staff, who are all too often forgotten about."
—Craig Shannon, Executive Director – Marketing, Co-operative Financial Services.

"The authors live up to their promise of providing managers and students with a clear exposition of the retail banking sector and how banks can confront the challenging future they face. This book is a practical manual with lots of useful advice. I was looking for new insights in this book – and I found them!"
—Professor Adrian Payne, Professor of Services Marketing, Director, Centre for Services Management, Cranfield School of Management.

"A key determinant of any organisation’s success will be an enhanced understanding of ‘value’ as defined by customers, employees, shareholders and other stakeholders. Value can mean different things to these different groups, and this book has set itself the objective of identifying the approaches that will improve the value proposition for all of these interested parties. It achieves this objective."
—Professor Steve Worthington, Faculty of Business and Economics, Monash University.

"An enjoyable and useful read. It provides a good perspective on the role of IT and how IT suppliers and professionals need to contribute to future developments in retail banking strategy and implementation. It helps provide guidance for the significant challenges ahead for both suppliers and the Banks."
—Nick Caplan, Managing Director, Global Financial Services, LogicaCMG.

"Full of interesting insights into the real levers of successful retail banking, and how these might change in future. The authors’ practical experience and enthusiasm for banking shines through."
—Angus Hislop, Banking Advisor, Cisco Systems.

"The mix of marketing strategies and accessible economics gives an invaluable insight into how retail banking actually works and where banking may be going in the future. Anybody connected with retail banking should find this though provoking and inspirational. Some of the models predicted make great sense and should worry established institutions."
—Andy Annett, Managing Partner, Liquid Communications Ltd.

HUGH CROXFORD has had a career in banking and banking systems, primarily in the UK and USA. His first jobs were with Barclays Bank as a good old bank clerk, then as a computer operator, and then computer programmer. He joined Burroughs Corporation (now Unisys), where heworked on many sales and implementation assignments over eleven years, finally in their HQ in Detroit.
That was followed by a further ten years working with Citibank and HSBC in New York, where he was responsible for Customer Systems, and was a founding Executive Director of NYCE, the ATM/POS shared banking network.
Following a long interest in banking systems development, he joined ALLTEL Information Services in the US for several years, and was then relocated to the UK to develop European Sales. After ten years with ALLTEL he moved to Sanchez, both companies are now part of the Fidelity Group. Hugh continues to work in banking systems.

DR FRANK B. ABRAMSON’s career started in pharmaceuticals, where Night Nurse was his early claim to fame, and then through FMCG and retailing into personal/retail financial services at LTSB, Citicorp and RBSG.
Frank has a rigorous and challenging approach to business strategy and measurement, new/merged business ventures, facilitating change, and developing and implementing customer-led strategies. He co-founded The Relationship Consulting Group in 1992 and clients include UK and international companies, including banks.
Frank is the non-executive Chairman of Intramezzo, identifying senior executives and directors to recognise and implement solutions at critical times, and a director of Verdandi, working in change management.

ALEX JABLONOWSKI had an enjoyable 30-year career with Barclays Bank during which he served in the UK, Germany, France, Korea and Egypt in various roles involving planning, retail banking, offshore banking, corporate and institutional banking. He has been responsible for IT and operations including payments and cash management, global custody, mortgage and trade services.
In Barclays Alex has been MD Banque du Caire Barclays International SAE in Egypt, Group Strategic Planning Director, MD Barclays Global Services, which is a grouping of IT and operational service businesses, and MD Corporate International responsible for corporate and institutional banking outside the UK.
Latterly he was CEO of United Bank of Kuwait PLC a London based merchant and private bank.
He now spends his time advising and speaking on banking issues and has various non-executive directorships in both the private and public sector. He enjoys technology, management coaching, and venture capital work. A linguist by education, Alex speaks French, German and Russian and some Polish, Arabic and Korean.


Background and Acknowledgements.

About the Authors.


1 Introduction.

1.1 Objective.

1.2 Science and engineering.

1.3 Science, art and engineering.

1.4 A brief look back, and the culture of retail banking.

1.5 The view from the bridge.

1.6 We have to start from where we are.

1.7 Are banks ‘unpopular’?

1.8 The path to popular popularity.

1.9 And get this too . . . .

1.10 Change is in the air – confidence, simplicity, speed.

2 The Basic Model.

2.1 Profit and return on equity.

2.2 Capital requirements.

2.3 Interest spread and interest margin.

2.4 Non-interest income (fees and commissions).

2.5 Costs and the cost/income ratio.

2.6 Loan losses.

2.7 Taxation.

2.8 Our loan of £1000.

2.9 Performance measurements.

2.10 The different businesses within banking.

2.11 Assets, liabilities, treasury, capital markets.

2.12 Caveat – definitions.

2.13 To really understand it without it hurting.

2.14 Some further points.

3 Accounts, Services and Channels.

3.1 Accounts.

3.2 Payments.

3.3 Services – fee-based and commissions.

3.4 Delivery channels.

3.5 Bank cooperative channels.

3.6 And some other points.

4 Real Banks and Challenges.

4.1 Some lists of banks – international banks.

4.2 Globalisation.

4.3 UK banks.

4.4 A little more detail on some UK banks.

4.5 Building societies.

4.6 The challenges for banks.

4.7 Costs and the cost/income ratio.

4.8 Risks.

4.9 Differentiators.

4.10 Acquaintanceships.

4.11 Trends.

4.12 Competition.

4.13 Pricing.

4.14 Roundup.

4.15 Key observations.

5 Systems and Information Technology (IT).

5.1 Legacy systems.

5.2 Banks are dependent on data and information processing.

5.3 Information technology will become a major differentiator.

5.4 IT and the retail banking industry.

5.4.1 There are additional pressures now.

5.5 The IT industry is not without blame.

5.6 Resolving the legacy systems problem.

5.7 A new approach from the IT industry and from banks.

5.8 Applications solution/software licensing.


6 The RealWorld.

6.1 Basic findings on business strategy.

6.2 Investment intensity – a big difference.

6.3 The people, processes and technology of capital investment.

6.4 Product/service fitness-for-purpose.

6.5 Brand, service, fitness-for-purpose, price.

6.6 Products and price.

6.7 Reinvention and invention.

6.8 How big is the opportunity?

7 The Propositions.

7.1 Customers.

7.2 Customers – life events management and lifestyle choices.

7.3 The very different starting points of banks.

7.4 The strategies.

7.5 For established banks.

7.6 For new banks.

7.7 SWOT summary.

7.8 The starting point.

8 Preparing for the Future.

8.1 Evolution, tactics, limits – the obvious stuff.

8.2 The critical stuff.

8.3 Customers.

8.4 Marketing and brand power.

8.5 Costs.

8.6 Staff.

8.7 Deciding on the change itself.

8.8 Establishing the basic inputs.

8.9 Discovery process.

8.10 Establishing the business model.

8.11 Establishing the business plan.

8.12 Big banks in particular.

8.13 Is there really a choice?

8.14 Much of the writing is on the wall.

9 Predictions for Retail Banking.

9.1 A framework for the ‘simple’ predictions.

9.2 Simple ‘we know that already’ predictions.

9.3 Meeting customer needs at the lowest cost.

9.4 Research and development.

9.5 Winners and losers.

9.6 A look over the horizon – some braver predictions.

10 Conclusions.

Appendix A: List of Acronyms.

Appendix B: Glossary.



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