2015-09-22, Deutsche Bundesbank, University of Applied Sciences
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This document summarizes a presentation on bank strategy in the context of complexity and dynamics, using the Westerwald Bank eG as a case study. It discusses how complexity has increased in the financial industry due to various drivers. While completely eliminating complexity is not possible, strategic responses can help banks deal with it. The presentation argues that developing a strong cooperative corporate culture based on trust, empowerment, communication and participation is an effective response that is difficult for competitors to imitate. The Westerwald Bank is highlighted as an example that has succeeded through this approach.
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2015-09-22, Deutsche Bundesbank, University of Applied Sciences
- 1. 18.10.2015 Folie 1 Sustainability Participation Independence Responsibility Folie 1 18.10.2015 Sustainability Participation Independence Responsibility Deutsche Bundesbank, University of Applied Sciences Hachenburg, September 22nd, 2015 Dr. Ralf Kölbach Bank Strategy in the Context of Complexity and Dynamics – the Westerwald Bank eG
- 2. 18.10.2015 Folie 2 Sustainability Participation Independence Responsibility I. The Westerwald Bank eG Page 1. Facts & Figures 4 2. The Bank in the Region 6 II. Basic Principles: „Strategy“, „Dynamics“, „Complexity“ 1. Strategy 12 2. Dynamics 13 3. Complexity 14 III. Complexity in the Financial Industry 1. Drivers of Complexity 16 2. Eliminating Complexity? 19 IV. Strategic Responses to Complexity 1. Five Responses to Complexity 23 2. The inimitable Response: Corporate Culture 24 V. Cooperative Corporate Culture: Westerwald Bank eG 1. Trust 26 2. Empowerment 28 3. Information and Communication 30 4. Participation 32
- 3. 18.10.2015 Folie 3 Sustainability Participation Independence Responsibility Folie 3 18.10.2015 Sustainability Participation Independence Responsibility I. The Westerwald Bank eG
- 4. 18.10.2015 Folie 4 Sustainability Participation Independence Responsibility Folie 4 18.10.2015 Sustainability Participation Independence Responsibility 1. Facts & Figures
- 5. 18.10.2015 Folie 5 Sustainability Participation Independence Responsibility Key Data as of 30.12.2014 Balance Sheet Total: 2.162 bn. EUR Receivables (Mortgages & Loans) 63.6 % Members: 73,340 Customers: 140,061 Employees: 493 (incl. 37 apprentices) Number of Branches: 25 Self Service Branches: 8 Equity: 186.6 Mio. EUR Cost-Income-Ratio (CIR): 65.1 % Labour Cost Ratio: 1.10 %
- 6. 18.10.2015 Folie 6 Sustainability Participation Independence Responsibility Folie 6 18.10.2015 Sustainability Participation Independence Responsibility 2. The Bank in the Region
- 7. 18.10.2015 Folie 7 Sustainability Participation Independence Responsibility Our Branch Network Folie 7
- 8. 18.10.2015 Folie 8 Sustainability Participation Independence Responsibility Nationwide Rank 16 in the Industry. First Place in Rhineland-Palatinate in the Industry.
- 9. 18.10.2015 Folie 9 Sustainability Participation Independence Responsibility The Foundation Experiencing What We Stand For!
- 10. 18.10.2015 Folie 10 Sustainability Participation Independence Responsibility Co-operative Values and Business » Values provide direction » Direction leads to effectiveness (= doing the right things) and efficiency (= doings things right). » Effectiveness and efficiency generate long-term economic success. » Economic success makes it possible to live your values!
- 11. 18.10.2015 Folie 11 Sustainability Participation Independence Responsibility Folie 11 18.10.2015 Sustainability Participation Independence Responsibility II. Basic Principles „Strategy“, „Dynamics“, „Complexity“
- 12. 18.10.2015 Folie 12 Sustainability Participation Independence Responsibility Folie 12 18.10.2015 Sustainability Participation Independence Responsibility 1. Strategy“ “Strategy means making clear-cut choices about how to compete.” Jack Welch
- 13. 18.10.2015 Folie 13 Sustainability Participation Independence Responsibility Folie 13 18.10.2015 Sustainability Participation Independence Responsibility 2. „Dynamics“ „These (dynamic structures) …don‘t simply wait for the person to react. They continue to develop, irrespective of whether this person appreciates it or not.“ Dietrich Dörner
- 14. 18.10.2015 Folie 14 Sustainability Participation Independence Responsibility Folie 14 18.10.2015 Sustainability Participation Independence Responsibility 3. „Complexity“ „Simple Systems feature little interaction and reliable forecasts.“ „Complicated Systems contain many dynamic elements, but exhibit predictable patterns.“ „In contrast, Complex Systems teem with processes which also follow particular patterns, but exhibit interrelationships undergoing constant change.“ Gökce Sargut / Rita Gunther McGrath
- 15. 18.10.2015 Folie 15 Sustainability Participation Independence Responsibility Folie 15 18.10.2015 Sustainability Participation Independence Responsibility III. Complexity in the Financial Industry
- 16. 18.10.2015 Folie 16 Sustainability Participation Independence Responsibility Folie 16 18.10.2015 Sustainability Participation Independence Responsibility 1. Drivers of Complexity
- 17. 18.10.2015 Folie 17 Sustainability Participation Independence Responsibility 1. Drivers of Complexity (Oliver Wyman, 2015)
- 18. 18.10.2015 Folie 18 Sustainability Participation Independence Responsibility Why is Complexity a Problem? „They ( = sources of complexity) cause opacity which undermines decision making and dilutes the influence that managers can exert over various parts of their firms.“ (Oliver Wyman, 2015) Therefore: Complexity causes Intransparency This Intransparency impedes the decision-making process Thus the influence mangement exerts on the business is reduced
- 19. 18.10.2015 Folie 19 Sustainability Participation Independence Responsibility Folie 19 18.10.2015 Sustainability Participation Independence Responsibility 2. Eliminating Complexity?
- 20. 18.10.2015 Folie 20 Sustainability Participation Independence Responsibility So, do we get rid of complexity? „But eliminating complexity completely is not an option. Economies of scale, risk diversification, technological advance and ongoing globalisation require financial firms to sustain a large number of diverse customers, to whom they offer many products through a range of channels.“ (Oliver Wyman, 2015)
- 21. 18.10.2015 Folie 21 Sustainability Participation Independence Responsibility The bottom line Thus: Reduction of Complexity throws the baby out with the bathwater. Competetive requirements inevitably lead to complexity. The alternatives are: Deal with complexity or face demise!
- 22. 18.10.2015 Folie 22 Sustainability Participation Independence Responsibility Folie 22 18.10.2015 Sustainability Participation Independence Responsibility IV. Strategic Responses to Complexity
- 23. 18.10.2015 Folie 23 Sustainability Participation Independence Responsibility 1. Five Responses to Complexity (Oliver Wyman, 2015)
- 24. 18.10.2015 Folie 24 Sustainability Participation Independence Responsibility 2. The inimitable Response: Corporate Culture
- 25. 18.10.2015 Folie 25 Sustainability Participation Independence Responsibility Folie 25 18.10.2015 Sustainability Participation Independence Responsibility V. Cooperative Corporate Culture: Westerwald Bank eG Set Yourself Apart Through Superior Corporate Culture!
- 26. 18.10.2015 Folie 26 Sustainability Participation Independence Responsibility Folie 26 18.10.2015 Sustainability Participation Independence Responsibility 1. Trust Your employees are intrinsically motivated
- 27. 18.10.2015 Folie 27 Sustainability Participation Independence Responsibility » Experience what we stand for! „The first thing contact centre and frontline staff need to succeed in doing is to take pride in their work and in their achievements, and build a desire to do great things for customers.“ Brett King, "Bank 2.0", 2010 Thanks for joining in!
- 28. 18.10.2015 Folie 28 Sustainability Participation Independence Responsibility Folie 28 18.10.2015 Sustainability Participation Independence Responsibility 2. Empowerment Your employees are able!
- 29. 18.10.2015 Folie 29 Sustainability Participation Independence Responsibility Quality Bank Experience: Staff Development “Quality Bank Experience“ Each employee comes to realise: 1. I must possess the suitable competencies! 2. Cutomers must be able to perceive my competencies! Methodological Competence Expertise Social Competence
- 30. 18.10.2015 Folie 30 Sustainability Participation Independence Responsibility Folie 30 18.10.2015 Sustainability Participation Independence Responsibility 3. Information and Communication Your employees are curious!
- 31. 18.10.2015 Folie 31 Sustainability Participation Independence Responsibility Social Media: Example Executive Blog
- 32. 18.10.2015 Folie 32 Sustainability Participation Independence Responsibility Folie 32 18.10.2015 Sustainability Participation Independence Responsibility 4. Participation Your employees want to contribute!
- 33. 18.10.2015 Folie 33 Sustainability Participation Independence Responsibility Advertising Projects Internally
- 34. 18.10.2015 Folie 34 Sustainability Participation Independence Responsibility Thank you for your attention! ralf.koelbach@westerwaldbank.de
- 35. 18.10.2015 Folie 35 Sustainability Participation Independence Responsibility Recommended Literature Braun, G., „Wissen schlägt Macht“, in: HBM 11-2011, S. 50-53. D´Aveni, „Hypercompetition – Managing the Dynamics of Strategic Maneuvering“, New York 1994. Dörner, D., „Die Logik des Misslingens – Strategisches Denken in komplexen Situationen“, Reinbek bei Hamburg, 2006. King, B., „Bank 3.0 – Why Banking is no longer somewhere You go but something You do“, Singapore 2013, Kindle Edition. Malik, F., „Strategie des Managements komplexer Systeme“, Bern 2008. Malik, F., „Strategie – Navigieren in der Komplexität der Neuen Welt“, Kindle Edition. Malik, F., „Systemisches Management, Evolution, Selbstorganisation“, Bern 2004. Mauboussin, M.J., „Vorbild Natur“, Interview, in: HBM 11-2011, S. 54-59. Morieux, Y., „Kontrolle ist gut, Vertrauen ist besser“, in: HBM 11-2011, S. 38-48. Oliver Wyman, „Managing Complexity – The State of the Financial Services Industry 2015“, 2015. Sargut, G./McGrath, R.G., „Mit Komplexität leben lernen“, in: HBM 11-2011, S. 22-34. Snowden, D.J./ Boone, M.E., „Entscheiden in chaotischen Zeiten“, in: HBM12-2007, S. 28-42. Welch, J./Welch, S., „Winning“, New York 2005.