EFFECTIVE STRATEGIC FINANCIAL RESOURCE MANAGEMENT
Bank CEOs and senior executives need to evaluate and decide on important shifts in strategic direction. Is it the right time to add a product line, grow your assets with certain client segments, or pull back from some geographies? What do financial constraints and new regulations mean for returns?
We have been working with many of our large financial services clients to support effective transformation through an approach we call “Strategic Financial Resource Management (SFRM).”
SFRM is not an “optional” sophisticated analytical exercise for large and complex banks these days – it is an indispensable tool for making strategic decisions, managing binding regulatory and financial resource constraints, and allocating precious capital, liquidity, funding and other resources.
Why can’t most banks do this today? Managing returns on equity with constrained financial resources has become exponentially more challenging for the CEOs and CFOs of large financial institutions since the global financial crisis of 2008-2009. That disaster spurred a major expansion of regulatory requirements and new, more complex, and tighter financial resource constraints.
KEY SUCCESS FACTORS FOR SFRM
While the exact nature of the SFRM effort will likely differ significantly from bank to bank, based on the factors outlined in our report, we find the following success factors and principles hold true across most situations.