Holes in the Revenue Bucket.

• Author: Hall, Robert
• Position: Banking industry revenue problems - Brief Article

We recently visited several large banks outside the United States, sharing many of the concerns and ideas you have seen in this column. Near the end of one meeting, there was a silent pause broken only when the bank's retail head breathed--as much to himself as to us--"We just have to get revenue up--fast."

The irony was, we had just spent an hour talking about many initiatives he already had sponsored for that very purpose. Yet he obviously held grave misgivings and low expectations.

We spent the next half hour talking about why. It came down to this: Despite best efforts and intentions, a lot of revenue simply leaks away.

Conventional wisdom says bank revenue problems are an industry thing--"We're in a mature industry with overcapacity." But consider the growth of E-Trade, Schwab and others. Look at the gap between the revenue your best managers bring in versus your worst--or your best customers versus the others. Or our own experience, where clients commonly sign off on recommendations that add up to millions of dollars of new revenue.

The revenue is there. The question is: What is causing it to leak away?

Again, conventional wisdom says there are three main domains in any organization where revenue gets created or destroyed:

* In the back office, where your products are designed, priced and processed.

* In central marketing, where your decisions and actions impact customer segments, deliberately or inadvertently.

* In the front office, where your sales and services resources get allocated--again, either deliberately or by default.

In-domain leaks

Undeniably, a hunt for revenue would first take you to these domains, and it is within these domains that progress is being made. Product design, pricing and processing have all seen advances. Central marketers are increasingly focused on campaigns they hope represent revenue opportunities. Out in the channels, managers are more focused on motivating employees to do the same. Immense revenue opportunities are untapped, of course, but any revenue leaks are fairly discoverable.

But what happens when your...