Bank organization charts typically have lagged behind consumer and market forces. In many cases, banking units have been shaped by a â€œbricks-and-mortarâ€ structure, reflecting vertical business lines such as retail, commercial, mortgage, trust and insurance, and supported by operations, compliance and IT.Â Is it time for an extreme bank org-chart makeover? Industry analystÂ Terence Roche thinks so.
Terence asserts the traditional bank organization structure made sense as long as consumer behavior drove the new channel investments. For instance, as customer demand changed, banks evolved to add new areas, such as electronic delivery, internet banking, and supported these internally with risk and fraud units. Often these areas existed as a subset of an established operating group.
As weâ€™re seeing now, itâ€™s the new channel or technological capabilities outside of banking that are changing consumer behaviors and demands. Think of the impact of mobile, Groupon-like promotional programs and Peer-to-Peer payments to name a couple. Instead of banks proactively rolling out these channels to consumers, execs are waking up to such changes and are trying to figure out how, when and where to incorporate new channels. Much consideration is being given to the impact of new channels on bank sales, service and profitability.
Whatâ€™s the solution? As the bank branch becomes just one part of a multi-channel world, Terence says a bankâ€™s senior management organization chart needs to recognize this, adapt and change. In other words, banks no longer can chop up channel strategies among mid-level managers across different units.
Terence suggests itâ€™s time to change the structure of how banks manage channels, going so far as to recommend, â€œMeet your new senior executive â€“ The head of Channels.â€