Retail Bank
MarketSim
In Bank Training – Invest in your best
Mike Allen - Biography
• 25 years experience in Banking in Product Management, Marketing
& Finance
• 1996 Graduate of CBA’s Executive Banking School
• Instructor at the CBA’s Executive Banking School since 1997
• On the development team for the Retail Bank MarketSim simulation
• University of Pittsburgh, MBA, Finance
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Course Objectives
Provide greater insight into the interplay between key retail
strategies in product lines and pricing, delivery channels, customer
segmentation, marketing and branding.
Evaluate trade-offs in decision-making while solving to a business
plan and Balanced Scorecard.
Inspire elevated cross-departmental teamwork and integration with
the greater goals of the retail bank.
Link content from the CBA simulation to key business objectives.
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Education Frame Work
4
Topics of Discussion
Objectives of MarketSim
Processes we will use
Workflow procedures
Expected outcomes/winners
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Your Scenario
You and your management team have just been
appointed to run retail for this bank.
Prior management has not run it very well.
You are not differentiated at all from your competition.
Your CEO has said “We need to make more money in
Retail and I Hope it works out for you!”
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Processes We Will Use
You are a team of retail bank professionals not
computer gaming professionals.
You will get a lecture on a subject and then your team
must decide who, what, how much, and how.
You are in a community with 4 other banks and
“monoline” national players.
A computer simulation will be used to simulate your
results.
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Starting Point HINTS
Starting Point was reviewed previously
Each bank starts at the same place
NOT a very well run retail bank!
Shows Customers, Delivery, Product, and Financial
data
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How will we keep score?
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MarketSim Ranking - BSI
A stock analyst will analyze each team in a
community. Results are based on balanced
scorecard fundamentals.
They will then rank each team against the other 4 and
compute a Balanced Scorecard Index (BSI) The
analyst uses this to HYPE Stocks.
The analyst then publishes this for all their sales force
to see.
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MarketSim Balanced Scorecard Index
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MarketSim Balanced Scorecard Index
• Bank Management
–
–
–
–
–
• Customer Satisfaction
– Product Breadth
– Access to Delivery
– Customer Service
Return on Equity
Provision to Assets
CRA
Return on Assets
Loan to Deposit Ratio
• Performance
Management
• Market Measures
–
–
–
–
– Market Share Index
– Customer Turnover
Ratio
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Efficiency Ratio
Cost per Transaction
Net Interest Margin
Non-Interest Income to
Assets
Conceptual View...Strategy
The original thinking behind a balanced scorecard was for it to
be focused on information relating to the implementation of a
strategy. That it:
1. Translates the vision into operational goals;
2. Communicates the vision and links it to individual
performance;
3. Feeds business planning and index setting
4. Provides feedback for learning, and for adjusting
the strategy accordingly.
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Conceptual View...Strategy
Balanced
Scorecards
were
“invented”
to
overcome
issues with
financial
data
It allows
focus on
controllable
stuff
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It allows
incentive
programs
to drive
behavior
It focuses
on the
longer run
Advantages of Balanced Scorecards
Focused on Retail Strategy
Look at Customers, Products, Delivery,
Financials and “Rules”
Contains both leading and lagging indicators
Factors in employees of your firm
Focused on LONG TERM value creation
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Disadvantages of Balanced Scorecards
• Doesn’t sync with traditional
accounting measures
• A series of numbers, not a series of
solutions
• Doesn’t link directly to bottom line
results & key stakeholder concerns
• Will the “Street” give you time for
your scorecard to show results?
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From the base case you must…
Segmentation
Product
Features
Marketing /
Advertising
Make
Decisions
Delivery
Configuration
Product
Pricing
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But of course you read all this in the
Getting Started section of the model!
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Framework
Customer Design
x
Team selects target markets
and invests in marketing
Product Price
Team selects products
and product features
= Product Revenue
-
Variable Costs
-
Fixed Costs
=
Income
Team determines pricing
Team defines distribution
architecture
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In case you thought
this is easy…
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Change Levers…
Change levers, such as
investing in customer
marketing, affect appeal
along one or more
dimensions
Checking Reg
Checking Gold
Savings
Investments
Loans
Just Starting
Working Poor
First House
Emerging Affluent
Blue Collar
Single Income
Pre-retired
Target marketing
decisions (e.g. to Blue
Collar Segment) affect
appeal across this band
High-income M&S
Money Mogul
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Change Levers…
Checking Reg
Checking Gold
Savings
Investments
Loans
Just Starting
Working Poor
First House
Emerging Affluent
Blue Collar
Single Income
Pre-retired
Product Change
decisions (e.g. to
Checking Gold) affect
product appeal across
this band
High-income M&S
Money Mogul
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Change Levers…
Checking Reg
Checking Gold
Savings
Investments
Loans
Just Starting
Working Poor
First House
Emerging Affluent
Blue Collar
Single Income
Pre-retired
Distribution Change
decisions (e.g. to Light
Industry area) affect
appeal to customers in
cells across this band
High-income M&S
Money Mogul
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Change Levers…
Checking Reg
Checking Gold
Savings
Investments
Loans
Just Starting
Working Poor
First House
Emerging Affluent
Blue Collar
Single Income
Pre-retired
High-income M&S
Money Mogul
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Changing Levers Impact
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Changing Levers Impact
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Now Let’s Discuss the Model
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Now Let’s Discuss the Model
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With all this, you need a process!
Time
Management
Communication
Focus via
Visual Aids
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Assignments
Pick Officers and input into the simulation
Reach a consensus on the condition of your
bank and fill out a Retail Bank Condition
Consensus Form
Reach a consensus on what you need to do and
fill out a Management Direction Consensus Form
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Assignments
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Assignment
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Assignment
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Assignment
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Retail Bank Condition Consensus
Focus on Retail Bank Start Point
Agree on Overall Condition
Hint: Banking is a team sport
Discuss as a team what they do well…could be short
discussion…and list these as strengths
Discuss as a team what they do poorly and list these
as weaknesses
Fill out Bank Condition Consensus Form
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Retail Bank Condition Consensus
Retail Bank Condition Consensus
What is the overall condition of retail at the bank?
What are the retail bank’s strengths and weaknesses?
STRENGTHS
WEAKNESSES
Customer
1.
2.
3.
4.
5.
1.
2.
3.
4.
5.
Product
1.
2.
3.
1.
2.
3.
Channel
1.
2.
3.
1.
2.
3.
GAAP
1.
2.
3.
1.
2.
3.
Management Direction Consensus Form
As a TEAM agree where you want the company to go.
High Level…i.e. Target Customers; re-price products;
realign delivery; etc.
Fill out Management Direction Consensus Form.
We will review with you.
You will use this form tomorrow to help you make your
decisions.
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Management Direction Consensus
Individually, consider the direction of the bank you will be managing in MarketSim. Then as a management team, come to a mutual agreement as
to the changes that need to be made. List below your consensus of the 4 or 5 actions required over the next year to preserve the bank’s strengths
and/or correct its weaknesses. This list forms the basis for your decision sets.
What is the most important action required next year?
CONDITION
1
2
3
4
5
ACTION
Management Direction Consensus
Officers
Chief Retail Officer
Duties are listed in
the manual
Chief Marketing Officer
Team decisions
versus Point of
View
Chief Product Officer
Details, details,
details…
Chief Delivery Officer
Chief Financial Officer
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My Team
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Next Steps
Go to your team location
Discuss your starting point and where you want to go. Fill out
Condition and Direction Consensus worksheets.
Pick Bank Officers and input into the simulation.
Report back to this room
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