Magazine article American Banker

Clear Strategy Seen as Fundamental to Long-Term Success

Magazine article American Banker

Clear Strategy Seen as Fundamental to Long-Term Success

Article excerpt

Although Jack Daly made some good points in his article, "Cost Cutting Is Key to Success in the Long Term." which appeared in the Oct. 6 issue of American Banker, I strongly disagree with his basic premise.

Cost cutting and any other actions taken by management or staff must be based on a clear understanding of a lender's strategic objectives. Therefore, developing a well-defined strategy is the true key to success in the long term.

Strategic Issues

A well-defined strategy should at minimum address the following issues:

* Customer needs.

* Financial goals.

* Product offerings.

* Perceived strengths and opportunities.

* Perceived weaknesses and threats.

Benchmarking can be helpful in identifying potential opportunities for further analysis, but absence of strategic considerations can lead to inappropriate decisions. Lenders must make certain that benchmarks ultimately reflect how they conduct their business.

Business-Related Benchmarks

This includes considerations related to:

* Market-defined needs.

* Service level standards.

* Quality control and risk management.

* Sales and distribution channels.

* Skill sets within the organization.

Other important consideration in support of strategy are the processes used by the lenders.

Process improvement and process redesign that support strategy offer a much greater likelihood of effective cost reductions that will enhance overall operations and customer service. …

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