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Story URL: http://www.silicon.com/financialservices/0,3800010322,39166838,00.htm

FS businesses collecting the wrong data - report
Think of the customer...

By Julian Goldsmith

Published: Monday 23 April 2007

Financial services organisations are in danger of running bad business strategies based on inappropriate performance data, according to an eminent researcher at the Cranfield School of Management.

In a report commissioned by reporting applications specialist Actuate, Cranfield School of Management research fellow Bernard Marr concluded many banks have been lulled into a false sense of security by relying on historical financial information that no longer reflects the current commercial landscape.

Marr said the probable drivers of future performance for financial services organisations are based around reputation, key worker talent, customer relationships and organisational culture. Historical financial data, such as revenue and profit margins, fails to take these aspects into account, he said.

Cheat Sheets

♦ Basel II
♦ MiFID
♦ Sarbanes-Oxley

Many organisations appear to be plodding on with out-dated business plans, regardless of the results produced from existing performance data they do collect,, according to the report.

Many organisations appear to be plodding on with out-dated business plans, regardless of the results produced from the performance data they do collect, according to the report. Performance management systems are being further obscured by compliance-related measurements, even though these might have little bearing on the future health of the business.

Marr said in a statement: "Risk management activities are further clouding the picture. When these are not considered in the context of the wider goals of the business, organisations find themselves held back unnecessarily or exposed to far greater risk than may be worth it for the business. Risk is a key factor for banks but they are not good at analysing it from the perspective of risks to reputation, knowledge or succession planning."

The research, entitled Managing Strategic Performance in Banks and Financial Services Firms: From Going Through the Motions to Best Practice, surveyed between two and eight strategic leaders, from MD to COO and CEO, from 15 of the world's leading retail, investment and universal banks, and one central bank and a mutual financial services company.