Operating and Financial Planning
Category: Strategy Implementation
Top-down and bottom-up approach
This level of planning is the first to actually detail precisely what is expected from the strategy. This is also usually the responsibility of the top management, in collaboration with the operational managers. It is both a top-down approaches, starting from the broad strategic plan, and a bottom-up process, integrating the organisation and resources existing in the different areas of the bank.
Qualitative and quantitative objectives
Some main qualitative objectives are defined, such as:
The markets: on which markets to be present? Private customers, small corporations, large industries, public sector, fund management?
The products: depending on the targeted markets, what are the products to be promoted? Deposits, loans, funds, credit cards, export credits?
Services: what are the services the bank would like to offer to its customers? Is it possible to list them?
It is also at this level that a financial plan will be defined, through financial statements, budgets and ratios. For each activity, expected revenue as well as expenses and investments are quantified, and will then be controlled.
Examples of precise targets could be: a minimum market share for a specific product in two years time, the number of loans per staff member in a given amount of time or having the clients queuing in a branch for no more than five minutes.
Conditions for efficiency
To be efficient, the objectives should not remain too vague or too frequently revised. They have to be relevant, specific, in the same time both challenging and attainable. To remain credible as a manager, executives should not mix wishful thinking and target setting.
Adaptation to each bank’s specificity
Each bank has its special environment, constraints, and strategic plan. Depending on all these factors, the qualitative objectives can vary from one banking organisation to another. This is one of the purposes of this training session, to have the participants thinking about the specificity of the bank they work for.
Introduce the issue of key indicators by type of business. For this issue, start a discussion with the participants to underline what could be specific objectives in their own environment.