麦肯锡报告是什么【055麦肯锡2004年1月报告银行业发展能否超越兼并＆收购】

　 

　US banks will need to look beyond mergers for growth. Better earnings will have to be won from improved value propositions and productivity.

　KEVIN P. COYNE, LENNY T. MENDONCA, AND GREGORY WILSON

　The McKinsey Quarterly, 2004 Number 1

　The primary rationale behind the wave of mergers in the 1990s梩o achieve substantial economies of scale by exploiting technology and deregulation梚s naturally weakening. For most large banks, further expansion won抰 necessarily yield dramatic scale-based savings in systems and product-development costs. So although mergers will continue to take place, opportunities to create substantial value have diminished and relatively fewer deals will pack the punch of the 1990s. Executives of large banks must look for new ways to increase earnings.

　Until recently, the solution was falling interest rates, which fueled unprecedented profits from mortgages and credit cards.1 But with rates beginning to rise, banks will have to look elsewhere. More compelling value propositions are required if banks are to compete with the nonbanks and specialists that have flourished in many markets. Like the best retailers, banks must differentiate themselves by understanding the needs of their customers and giving those customers a distinctive experience. Banks should also boost their performance the old-fashioned way, by improving productivity梥omething that will become vital as their payments businesses, representing a substantial share of industry profits and operating expenses, shrink with the falling use of checks.

　To succeed in these tasks, banks must innovate in their formats, their customer targeting, their approach to lending and asset management, their operations, and their use of electronic payments. This agenda is challenging, and it calls for skills beyond those梥uch as identifying and valuing acquisition targets and driving integration梩hat served executives so well in the recent past. Significant changes lie ahead for managers working toward a new set of performance priorities.

　THE OLD GAME WINDS DOWN

　Although the banking industry抯 structure and regulatory framework will permit more mergers in the future, the reduced potential for synergies means that CEOs who make deals their primary strategic focus could be disappointed by the results. Some obvious pairings will realize worthwhile cost savings, especially among second- and third-tier banks, but for most large institutions the opportunities for consolidation are not what they were a few years ago.

　During the 1990s, the economic rationale for mergers was indisputable. Enormous efficiency gaps between the acquirer and the acquired often created cost and revenue synergies ranging from 30 to 100 percent of a seller抯 net income.2 New technology made many of these efficiency gains possible by facilitating the consolidation of branches. In addition, the Riegle朜eal Act of 1994, which allowed bank holding companies to acquire banks in any state, opened the door to pairings梥uch as

　 those between Bank of America and NationsBank, and Norwest and Wells Fargo梩hat previously would have been difficult or impossible.

　So successful was this wave of mergers that the industry progressed toward a natural endgame in which a handful of nationwide banks began to emerge. Although curbed by a regulation limiting an individual bank抯 share of US deposits to 10 percent of the total (which, with antitrust safeguards, ensured that thousands of community banks continued to thrive), the top ten institutions increased their share of US deposits from 27 percent in 1994 to 44 percent in 2002 (Exhibit 1).

　But the larger banks have picked most of the opportunities from consolidation. Today抯 possible combinations among the larger institutions present fewer geographic overlaps. While scale economies are always helpful, most leading banks are already big enough to support the systems, branding, and product-development costs of the next few years. To be sure, bank mergers are not a thing of the past. Under the 10 percent deposit ceiling, there is still room for the top 20 or 25 players to make substantial acquisitions and for two or three moves that would create the handful of truly national banks anticipated with the Riegle朜eal Act抯 passage. Moreover, many middle-tier regional banks have survived and prospered and will probably consolidate further. The rationale supporting big-bank mergers during the 1990s thus still applies, particularly given the geographic concentration of many regional banks: at least eight middle-tier banks do business in Alabama, Georgia, and Tennessee, for example.

　Yet the economics mean that many big deals will be more likely to exploit reduced valuations, opportunities for transferring skills, or the possibility of expanding into new businesses or geographies than the cost synergies that often justified significant premiums during the 1990s. Both managerial capabilities and economies of scope will be drivers of well-received deals. So M&A, while still a logical part of some banks?strategies in the years ahead, will be a less prominent source of value than it was in the recent past.

　IN PURSUIT OF GROWTH

　The consolidation of the 1990s enabled many financial institutions to expand their book value without significant organic growth. This development helped large banks, which for 25 years had lost ground in market after market to nonbanks and specialists, such as Charles Schwab and Merrill Lynch, that offered a more attractive value proposition and better service. Compared with these innovators, banks were slow to change, partly because in the days when competition was regional the rewards were smaller and it often paid to wait and see what happened in other states.

　Consolidation changed the equation by increasing the scale of banks relative to the costs of innovation. In other industries, particularly retailing, value-oriented companies have spent the past two decades developing new formats and relieving customers of the need to balance price and selection, quality and convenience (see "When your competitor delivers more for less"). Banks should now do the same by reinventing the experience they offer and improving their customer service. Opportunities can be found in both retail and wholesale banking, and the current branch-building boom makes this a good time to act.

　REINVENTING THE CUSTOMER EXPERIENCE

　Banks have invested heavily in efforts to keep their customers more satisfied, and all of them want strong relationships with their clients. Yet some leading institutions are poorly differentiated. What should big banks do? Our research suggests that three factors are particularly important to customers. The first is ease of use. A few years ago, a bank could stand out by having a number of points of access梡lenty of branches and ATMs as well as online services. But consumers now take these amenities for granted and are more interested in what happens at the service point: they want banks (like retailers such as Kohl抯 and Walgreens) to get them in and out quickly, with exactly the products and services they want. The second important factor is the accurate opening and fulfillment of accounts, both of which frequently give rise to errors. The third is the ability to correct these errors. Perhaps surprisingly, our research shows that customers are willing to forgive occasional mistakes if banks fix them quickly and transparently. When banks don抰, the level of satisfaction plummets.

　Providing the right experience goes hand in hand with redefining relationships. Our research shows that customers want a bank that understands their needs and provides timely, tailored solutions.

　Many transactions梩aking out a mortgage, arranging a small-business loan, buying an automobile梠ccur infrequently. Without deep knowledge of customers, banks are no more likely to win such business than are specialist competitors. One problem with customer relationship management and other cross-selling techniques, however, is that, for all the data they collect, they don抰 necessarily get at the most important pieces of information (such as the age of children destined for college for whom financial planning might soon be necessary).

　Some of this information still comes from personal interaction. Technology, though no substitute for it, can help by facilitating the capture and recording of vital data, by routing leads to the agents best equipped to help, and by improving the performance of back-office analytics. Such measures yield better

　 results than do scattershot sales calls and e-mail spam梬hich only annoy customers梐nd have helped some large banks make substantial branch and call-center sales breakthroughs.

　SERVING THE UNDERSERVED

　Banks, in addition to upgrading the experience they offer, should simultaneously reevaluate the customers they are梐nd are not梥erving. Underserved segments exist in the retail and wholesale businesses of many banks because for years they have focused on bigger clients, wealthier clients, or both. One important challenge for CEOs is persuading their organizations to look far enough ahead to allow new customer segments to become growth engines.

　One area that banks could consider is cheaper retirement advisory services at the lower end of the mass-affluent market. As the baby boomers retire and government and private-sector retirement programs come under strain, the accumulation of assets will slow and investors will shift the weighting of their portfolios from equities to fixed-income securities. Banks are well positioned in this respect because they have long provided certificates of deposit and money market investment vehicles; they are also skilled at serving the smaller customers some money managers shun. Further, many people place more trust in banks than in Wall Street brokerages or mutual funds.

　Less affluent market segments beckon, too. The US Federal Deposit Insurance Corporation estimates that 10 percent of the US population is "unbanked." Yet many relatively unsophisticated vendors earn attractive returns by focusing on transactions桝TM withdrawals at supermarkets, wire transfers, payday loans, tax-refund loans, check cashing, prepaid credit cards, used-car loans, and appliance loans梖or which unbanked customers are willing to pay above-average interest rates. Leading banks that leverage their scale, technology, risk-management systems, and delivery channels should be able to provide this group with simple transaction, savings, and credit products and to earn a profit.3

　Meanwhile, the large and rapidly growing Hispanic segment, currently numbering about 40 million, on average works with fewer financial intermediaries (1.5) than does the population as a whole (2.4). Some banks, including Bank of America, Citibank, U.S. Bancorp, and Wells Fargo, have been targeting Hispanic people, but it is not yet clear what approaches will win.

　OPPORTUNITIES FOR EXPERIMENTATION ABOUND

　In wholesale banking, the corporate middle market merits attention. Despite relatively low revenues per relationship, the market as a whole represents a $20 billion pool of potential profit and is growing by 8 percent a year梩wice the rate for lending to large corporations. Over the next few years, big volumes of this business may be up for grabs because a proposed Basel II provision requires certain banks to hold substantially more regulatory capital against loans to companies with lower risk ratings (see "The business case for Basel II," to be published on this site in late January 2004).

　BOOSTING PRODUCTIVITY

　To finance these customer initiatives, banks must wring more value from operations. Opportunities remain to generate revenue and cut costs by improving productivity. The payments business, which represents the bulk of transactions and is also changing rapidly, deserves special examination.

　UPHEAVAL IN PAYMENTS

　The payments business, accounting for 25 to 40 percent of the profits of most institutions, is commercial banking抯 "stealth industry." But the business is also an expensive one, with banks spending $50 billion a year servicing consumer and corporate accounts through a growing array of channels (branches, ATMs, telephones, the Internet, and point-of-sale devices) and of payment instruments (checks, cards, electronic fund transfers, bill-payment services, and account-to-account transfers). As the variety of channels, transactions, and payment types multiplied, so too did the underlying costs and complexities of servicing direct-deposit accounts.

　The economics of payments are under pressure on several fronts. Customers?cash balances have migrated to higher-yielding (and so, for banks, lower- margin) savings and investment vehicles. Rock-bottom interest rates have compressed banks?spreads from lending. Finally, the fee income from demand-deposit accounts has come under attack. Debit card fees fell by a third following the success of a recent class-action lawsuit brought by retail merchants against Visa and MasterCard, and in several states overdraft and other account-based fees have attracted regulatory scrutiny.

　A glimmer of hope is held out by the Check 21 legislation passed in October 2003. The number of checks written in the United States peaked in the mid-1990s and has declined by 2 to 3 percent a year as electronic payments have surged. Even so, people in the United States still write 40 billion checks a year. Check 21 will allow banks to provide check images with their customers?monthly statements rather than sort and return the actual checks. Truncating the process in this way could knock $2 billion to $3 billion off the estimated annual cost?8 billion梠f processing checks.

　New challenges accompany the opportunities created by Check 21. Electronic migration will alter the strategic dynamics in payments by making today抯 value drivers in checks梘eographic proximity, efficient manual labor, and the ability to maximize clearing balances梚ncreasingly irrelevant. Furthermore, the unit costs of processing paper checks will escalate rapidly as the electronic shift progresses, leaving behind large fixed infrastructure costs. Check 21 may be a two-edged sword for many banks; capitalizing on its productivity benefits will be vital for all of them.

　The shift to electronic payments creates opportunities for banks to develop new payment propositions with economics superior to those of cash and checks. Low-balance customers, traditionally unprofitable to serve, might look more attractive if their cash and check usage could be moved to debit or credit cards or to ATMs. As with credit cards, competitors will probably develop new products and services, from prepaid cards for the unbanked to sophisticated payables-processing algorithms for large corporations.

　BROADER PRODUCTIVITY OPPORTUNITIES

　In the absence of "big-bang" opportunities such as back-office automation, more banks will need to pursue Toyota-style lean techniques that have enabled pioneering institutions to enhance their service quality and efficiency ratios simultaneously. Working both the numerator and the denominator of the efficiency ratio, banks could improve the performance of their operations more quickly than they have in recent years (Exhibit 2). Initial improvements would be on the order of 2 to 5 percent, with the potential for more if systems were fully developed.4

　Productivity gains can also be had from reducing the number of wasted customer leads, refining treasury management and custody controls, and speeding up the processing of applications for credit or insurance. To capture such gains, banks must continue to strike the right balance between cost efficiency and revenue generation in their branches and call centers. A few companies, such as the main credit card players, are moving in the right direction, but it抯 not easy. Key challenges include redefining the roles of frontline sales, service, and supervisory jobs and redesigning processes and the supporting infrastructure so that decisions can be made on the spot.

　These opportunities are not new. But realizing value from them has been extremely difficult because the cost base of most banks is highly fragmented, which makes leveraging improvements across the organization tricky and time-consuming. Broad-based progress requires changes in the outlook and behavior of employees at all levels.5 Many programs have so far failed to realize this kind of change because the banks adopting them haven抰 created pressure to perform at all levels, addressed capabilities in areas such as capacity management, or changed the way frontline managers and employees are hired, motivated, and rewarded.

　Productivity initiatives interact in important ways with banks?offshoring efforts. The wage savings made possible by moving jobs to countries like India are so attractive that offshoring is a competitive necessity; over time, many financial institutions will offshore 20 to 40 percent of their cost base, thereby saving as much as 15 percent of their total noninterest expenses. Yet as banks evaluate offshore options, they will have to recognize the relationship between what they move abroad and the productivity of their operations at home. Banks often send easier, base-load calls offshore, for example, reserving domestic call centers to handle more complex requests and to cope with surges in demand. This approach can help domestic call centers improve the way they meet the needs of customers but also demands first-rate capacity management.6 In fact, sending functions to low-wage countries doesn抰 relieve banks of the need to make operations back home truly hum.

　Consolidation will continue, but growth and productivity initiatives will replace megadeals as the cornerstone of most strategies to create value梡roducing a more diverse and complex agenda for executives. Increasingly, CEOs will be orchestrating a number of initiatives that cut across businesses and involve frontline employees throughout the organization instead of making a few big portfolio decisions and driving their execution.

　Notes:

　Kevin Coyne is a director in McKinsey抯 Atlanta office, Lenny Mendonca is a director in the San Francisco office, and Greg Wilson is a principal in the Washington, DC, office. Copyright ?2004 McKinsey & Company. All rights reserved.

　 The authors wish to thank Andrew Appel, Andy Eichfeld, Jack Stephenson, and Corey Yulinsky for their contributions to this article.

　 1 Profits from retail banking rose by 35 percent and accounted for 68 percent of banking profits from 1996 to 2000. From 2000 to 2002, falling interest rates accounted for 37 percent of the credit card industry抯 profits. Mortgage refinance applications for 2001 and 2002 equaled the total for the previous eight years combined.

　 2 Madeleine James, Lenny T. Mendonca, Jeffrey Peters, and Gregory Wilson, "Playing to the endgame in financial services," The McKinsey Quarterly, 1997 Number 4, pp. 170?5.

　 3 For an international perspective, see David Moore, "Financial services for everyone," The McKinsey Quarterly, 2000 Number 1, pp. 124?1.

　 4 Anthony R. Goland, John Hall, and Devereaux A. Clifford, "First National Toyota," The McKinsey Quarterly, 1998 Number 4, pp. 58?8.

　 5 For details on how to effect changes of this kind, see Emily Lawson and Colin Price, "The psychology of change management," The McKinsey Quarterly, 2003 special edition: The value in organization, pp. 30?1.

　 6 For details on offshoring models, see Gautam Kumra and Jayant Sinha, "The next hurdle for Indian IT," The McKinsey Quarterly, 2003 special edition: Global directions, pp. 42?3, particularly Noshir Kaka抯 sidebar, "A choice of models