The Key to Overcome Increasingly Difficult Challenges as a Banking Executive
Becoming a banking executive is not an easy job. One has to invest years of hard and consistent work, education, and many other soft and analytical skills. Bank executive refers to the person who is in the decision-making position in the bank. He mainly focuses on the smooth running of the organization/bank, which can ultimately result in recognition and profitability.
Performing the duties and responsibilities of a banking executive is not a piece of cake. An executive is required to carry out those activities which decide the success or failure of an organization. The most crucial skill a banking executive must have is communication skills so that he can effectively assign the work to his subordinates. He must also possess excellent leadership, strategic problem solving, and critical thinking skills, etc. which helps him face and deal with critical situations.
Following are the challenges faced by banking executives and the keys to keys to overcoming them:
Challenges Faced By Banking Executives and Keys to Overcome Them
Bank executives, are frequently faced with many challenges. These challenges do not always have to deal with dollars and cents. There are significant subject matters associated with the job.
Below are the most common challenges faced by banking executives along with some solutions that can make their job comfortable:
Attracting New Customers and Retaining Existing Ones
- As per the Retail Banking 2020 Evolution or Revolution, 33% of the banking executives face the challenge of customer retention in the USA, 33% in Europe, 34% in Asia-Pacific, and 47% in the emerging markets. Every bank offers almost the same product line, but the difference is of cost and the services provided by banks.
- Executives should introduce strategies in their customer retention plans for overcoming this challenge. The retention plan should include added values to the products, removal of any barriers that hinder customers from dealing, an increase in products and services that draw loyal customers, and many other strategies should be approached, that lead to happy customers. However, it is not that easy; therefore, most bank executives face this challenge.
Rise in Customer Expectations
- The present client is more intelligent, savvier, and more educated than at any time in recent memory and expects a high level of personalization and accommodation out of their financial experience. Thus, their banking expectations are changing.
- Technology has sent cash to graves, and the birth of online banking has brought about a real revolution in the banking sector. This has created problems for executives to stay updated with the increasing expectations of the customers. A survey report states that every five out of six users keep in touch with brands and promotions through social media platforms, and 47% of people are found to be using mobile banking apps.
- The older generation, on the other hand, prefers traditional methods of banking. The real challenge for executives is to satisfy the needs of both younger and older generations at the same time. A hybrid banking model that integrates technology into the traditional physical branches of banks should be proposed.
Excessive Work and Technology Intervention
- Humans have been revolutionizing since the day they came into existence. From the Stone Age to the era that has turned the world into a global village, humans are still progressing. Technology has made things handy and accessible with just a click. Technology plays a very important role in every sector. Just as oxygen is essential for humans to survive, technology has become necessary for the survival of the banking sector, where excessive paperwork is still an issue and occupies most of the time.
- However, 74% of banking executives believe that a drastic change can be brought about in the banking industry if technology is intervened. The machine does the job of online banking, customer services, and detection of fraud, making it easier for executives to embellish their customer journey.
- Customers these days are comfortable dealing with their businesses from the comfort of their couch, and they expect the decision-makers of the organization to take such steps. Technology intervention can bring about significant ease in the lives of both executives and customers. Executives are supposed to take steps like building user-friendly apps that allow customers to perform transactions and avail other online services like shopping.
Customer Problems Should be Priority
- Clients need to feel secure while working with banks. They should be provided with the sense of warmth that their bank is working for them rather than working against them. Retail Banking 2020 Evolution or Revolution states that two out every five clients leave the banks after a terrible encounter, and 45% of them will restrain others from taking services from that bank, which obviously is a big challenge for bank executives.
- An executive should be capable enough to understand and transform these issues into chances of constructing loyalty into customers towards their organization. The negative encounters should be identified and fixed promptly to resolve the causes.
Rising Competition and New Product Lines
- Competition, like all other organisations, is one of the prominent challenges faced by the banking sector. Therefore, banks are always coming up with new product lines to beat the competitors which takes a lot of research, time, and also finances and is nothing short but a headache to introduce them and maintain their growth. New products and services allow the banking executives to deal with the competency and provide customers with a variety of options.
- Leonardo De Vinci had once quoted that ‘Simplicity is the ultimate sophistication,’ so the simpler the things, the better they are. Executives should go for a more straightforward approach when it comes to introducing new product lines that focus on what the clients need. Easier but on-merit loan policies, merit-based promotions, and other offerings should be offered effectively. These methodologies will help executives to stand incompetence with other banks.
- There is no workplace on the face of earth where corporate culture is not an issue. So, banks are no exception. Discouraged employees, inadequate equipment, conflict and tension, turnover rate, and communication flowing down and not up are some of the most common corporate culture issues in the banking sector. On the other hand, changes in consumer mixture and business development are established upon the authoritative structure and organizational culture.
- Thus, banks must have advanced hierarchical structures with an improved corporate culture. Aside from the conventional structure of the home office and branches, business divisions should be presented. To adjust to changes in the outer condition, executives should also encourage an adaptable and productive corporate culture.
- The numerous layers of announcing and top-down corporate culture are deficient in adapting to extraordinary market rivalry. Banks ought to likewise level the progressive structure to manufacture a data-driven framework and cultivate convenient correspondence among different branches and workplaces, consequently deftly changing their operational methodologies.
- Like corporate culture, legal issues make up a big portion of problems faced by banks and their executives.
- The weak legal framework supports a decrease in bank lending and loan deposit ratio and requires sound steps to improve the depth and outreach. Though many new laws are introduced and being introduced, they are facing early-stage struggles. The growth in the financial sector necessitates a thorough legal framework that can improve the ability of banks to operate and provide required services effectively.
- The effect of consenting to develop and changing instruction stays a top challenge in banks. As per 2020 Retail Banking, the USA banking executives face 47% of regulatory compliance challenges and 40% by Europe. Knocking over the regulatory compliance challenges requires banks to cultivate a culture of consistency inside the organization, just as execute formal consistency structures and frameworks.
- From Basel's risk-weighted capital requirements to the Dodd-Frank Act, and from the Financial Account Standards Board's Current Expected Credit Loss (CECL) to the Allowance for Loan and Lease Losses (ALLL), there are a developing number of guidelines that banks and acknowledged associations must agree for. Fronted with serious complications, non-compliance banks have brought about extra expenses. Innovation is a basic part of making this culture of flexibility.
Expectation of Investors
- To people, it seems that banks and financial institutions are making the right amount of profit, but in reality, many are unable to meet shareholders’ and investors’ expectations for return on equity. Or maybe this is how it is for the investors as they are demands are also on the rise and changing, which adds up to a big issue for a banking executive.
- However, a crucial reason behind this is the deficiency of considering the expectations of the customers. This leads to lower enrollment of investors and rates of retention. Executives can overcome this problem by taking the millennial generation seriously, knowing them, respecting their demands, and empowering them.
- However, it is still difficult to keep the investors happy, but with the right set of communication skills, you can do that.
New Business Models
If we say that changing business models are a major cause of almost all the issues discussed above, it will not be wrong. The new era expects new business models that should stand unchallenged in the age of modern banking. The financial administrators and executives should feel decidedly ready for what’s to come.
Business models drive banks to offer competing service, intellectualize business lines, and look for manageable upgrades in operational efficiencies for maximum and unceasing profits.
However, it is not easy to adopt every new business model, but the inability to adjust to the current requirements is nowhere a choice. Therefore, bank executives must be organized and be set up to turn when needed.
Round-the-Clock Customer Access to Banks
In 2008, in the UK, 35% of people accessed their bank accounts online. This number has drastically increased to 69%. Not many people are seen visiting the banks often as they used to in previous days. Many do not even bother to step into banks.
People prefer cashless payments, and the tradition of going to physical banks to make transactions has become unfashionable. Many surveys have even predicted that there is a chance of this millennial to go completely cashless in the next ten years or so.
Bank executives are therefore required to make round-the-clock frictionless availability of banking services to their customers.
Business Coaching and Consultancy for Better Banking Executive Experience
- Bank executives frequently face difficulties and challenges that mostly go overlooked by many and themselves. Apparently, they seem to exhibit capabilities in many ways, like adapting to everything that comes to their direction. Yet, internally, they might be struggling and dealing with many challenges likes work burden, boos and investor demands, managing workforce, working environment, and many other uncertainties.
- Though many people assume that creativity and innovation cultivate their job, a good number of more than two-thirds of senior-level decision making people claim that these challenges affect their lives in their work and homes and can even make them want to quit their jobs.
The issues can easily lead to:
- Issues with confidence
- Work burden
- Execution uneasiness
- Struggle with other executives or colleagues
- Contention and rivalry from partner
- Performance anxiety
- These problems can disturb a person, make him vulnerable, and affect his productivity and the organization as well as personal life. To overcome these issues, banking executives can go for consultancy and business coaching. Not only will it boost your confidence, increase productivity but also be good for the organization.
- It will help you learn new skills, polish your current, and offer a targeted solution to your problem. The consultancy focuses on the following points:
- It is extremely important for banking industries to have executives that have the ability to think critically and analytically. An executive should be perceptive enough to foresee market patterns, country budgets, monetary policies, markup rates, and much more.
- The stress of overcoming these challenges can impact an executive in a way that his abilities to cope up with the work and personal life get affected.
- Consultancy can motivate an executive to overcome his fears and build his skills that are essential in his own development and, consequently, development of the organization. Consultancy can help in de-stressing while coaching will help with a better focus on areas where you need improvement and which are mandatory for your success.
- According to an internal Personnel Management Association report, the company saw an incredible increase in employers’ productivity by an average of 86 % when training was combined with coaching as compared to 22% when individuals were given only given training.
- Another report shows similar results where 53% of business owners and managers found their productivity levels to be increased when they took business coaching. :
- With the rapidly moving world, innovation in the financial area is a frequently witnessed trend. The dynamic financial area needs executives who comprehend the refreshed innovation rapidly as well as get adjusted effectively to the new capacities in order to ensure the financial activities are completed easily.
- Consultancy and coaching can help by making you more open to change handle the challenges and other fundamentals energetically.
- Confidence is the key to success and is something that a bank executive should be filled with up to the brim. This is something that shapes the life of an executive both inside and outside of his corporate environment.
- However, difficult situation and continuous unfruitful efforts can make a person lose confidence. An organisational survey focused on a group of executives to find how much their confidence was affected while they were away from work revealed a vast majority of 71% of people claiming to have lost their confidence significantly. 19% claimed to lose a little, while only 10% thought of themselves as confident enough to get back to their work with minimal hesitation.
- Coaching has proved to be impressively helpful for banking staff to regain their lost confidence or build up confidence from scratch. This can be a game-changer in their lives and maximize their performance and leadership skills.
- It is an African proverb that “Smooth seas do not make skillful sailors.” Everybody’s life is full of challenges, and so is the life of a banking executive. The banking sector deals with people and their changing demands, whether they are investors, clients, policymakers or government bodies, and all of these factors pose great challenges. However, fearing them in sot a solution.
- A number of steps can be followed to overcome these challenges, counseling being one of them if you are looking to de-stress. Coaching, on the other hand, ensures the provision of necessary counseling to executives that help them control their work hurdles and obstacles effectively. It helps them stabilize their mental wellbeing to promote a healthy environment in their jobs and homes.