Is there a need for a business review?
In the current market environment, increased levels of customer indebtedness is generating a substantial rise in the number of problematic accounts that organisations experience. There is a real requirement to effectively utilise available funds by offering the right products to the customers and ensure the lowest risk at the highest margin.
Currently, banks focus on the existing customer base and prioritise debt management to recover more funds, more quickly. There is also a need to invest in strategic projects with limited budgets in order to generate benefits in a very short term, to rationalise existing strategies and processes whilst ensuring that optimal decisions are made at each client contact point.
To meet the present challenging conditions, more and more financial institutions are performing business reviews with the aim of evaluating needs and opportunities to maximise the value created in their portfolios. Business reviews assess an organisation’s capacity to leverage on existing opportunities as well as identifying any additional capability that might be necessary to realise the increased benefits.
An effective business review covers the following four phases:
Problem definition: Establish and qualify what the key objectives of the organisation are, the most relevant issues to address, the constraints of the solution, the criteria for success and to summarise how value management fits into the company’s corporate and business unit strategies.
Benchmark organisation against leading practice: Strategies, Processes, Tools, Knowledge, and People have to be measured using a review toolset tailored to the organisations strategic objectives. The assessment should allow identification of gaps between current capability and desired future position, the strengths to be exploited and the weaknesses to be addressed. A sound benchmarking analysis has to be performed by a third party with a deep knowledge of the industry leading practice in comparison with the current organisation positioning.
Picture 1: Situational analysis delivered per business area
Picture 1 reports the results of the assessment of more than 30 companies. We observe that above all Collection departments are extremely far from the leading practice, especially in the strategic decisioning areas (Strategies, Models, and Decision engines).
Define the opportunities and create the roadmap: The elements required to implement the opportunities and migrating to the best practice should be scheduled in a phased strategic roadmap that includes the implementation plan of the proposed actions. Both 'Quick Wins' - easily implemented changes with limited work required as well as more complex changes that require longer timescales and efforts have to be defined, highlighting the difference between strategic changes, that generate great value, and 'nice to have' with lower cost-benefits ratio.
Achieve the benefits: An ROI-focused approach, founded on experience in peer organisations, will allow analysis of the cost-benefits of the recommended investments and quantify the potential savings and additional revenue generated. A continuous fine-tuning (i.e. impact of market changes, looking for the next competitive edge and proactively challenge solution boundaries) will ensure the benefits are fully achieved.
In the last year Experian Decision Analytics has delivered more than 50 business reviews for banks, financial services companies, telecoms and retailers with estimated clients benefits in excess of USD 100 Million.
Our fresh and innovative methodologies are applied to a diverse range of business challenges around the world and across the full risk management lifecycle, including acquisition, retention, cross-selling, collections and overall customer value management. We have conceived our business reviews in order to enable immediate and tangible results as well as longer term benefits. More importantly, we not adopt a 'hit and run' approach, but constantly support the client in the implementation plan and in the following on-going assessment and tuning.
Our approach has also been successfully applied to very present-day topics like mergers and acquisitions. In these instances we have leveraged on the expertise gained in various post-completion projects which we implemented in the risk management and marketing areas. In addition to the typical steps, our merger and acquisition reviews extend to the customer base review and integration, branch network rationalisation, and market segmentation that provide a strong insight of all opportunities brought by the expertise in terms of acquisition (market penetration), cross selling (product penetration) and channels usage.
Burak Kilicoglu
Global Consultant
Experian
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