Business units within a financial institution can deliver unsatisfactory results for a variety of reasons. Sometimes the under-performance is due to costs. GBC can assist in making processes and procedures operationally efficient and profitable by reengineering them.
The business processes of large financial institutions are often complex, resulting in a high cost base. Sometimes, the costs are high due to shortcomings in IT and systems development.
There is a tendency to focus on costs to improve a business’s return, but often the key problem lies on the revenue side. Corporate and commercial lending is frequently a prime candidate.
As a result of shortcomings in the pricing approach and loan concentrations, the business unit can find itself consuming excessive economic capital and delivering less than desirable risk-adjusted returns.
GBC works with senior management to improve the profitability of under-performing businesses.
Working with individual managers, we first identify the reasons for low profitability.
If the costs are high due to complex processes, we streamline the processes to achieve cost savings.
Where revenue is inadequate due to pricing, we introduce the concept of risk- adjusted- return- on- capital (RAROC) to enable relationship managers to price an asset according to its risk and its potential return on risk-adjusted capital.
Our Associates have hands-on experience of building and managing businesses in financial institutions. This experience enables us to deliver bottom line results in under-performing business units.
The following example illustrates how the GBC team delivers bottom-line results in under-performing business units:
Turning Around Consumer Banking Business