Innovation in banking: New structures and systems

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Despite a number of recent strategic manoeuvres, the retail banking sector is still suffering from symptoms of intra-type competition and competitive intensity. Bank strategists are constantly seeking to develop a unique service mix and new product lines in response to changing market demands, but have recently recognized that there are more fundamental issues which need to be addressed within the sector. The old models of service delivery are cost-laden and outdated and new models for success are needed in order to alleviate the pressure on margins witnessed in recent years. This article examines the evolution of banks' delivery programmes and organizational forms in the retail sector and describes the reasons underlying these changes over time. The authors take account of the problems and challenges that face these contemporary structures and explain the rationale underlying the current requirements for further change. The servuction system is used as the basis for explaining the mediating effects of changes in a bank's governance structures (all internal and operational issues that affect the structural configuration of the bank) and their impact upon the delivery of services to customers. In order to illustrate these issues, some governance structure responses from Barclays Bank plc, are described, and the experiences and lessons from this example suggest that it is more than fine-tuning of existing governance structures which is required. A new organizational mindset is necessary in banking which completely reappraises governance structures and retail service delivery programmes so as to balance the desire for operations efficiency with marketing effectiveness.