Credit Suisse Private Banking Strategy Design (leveraging existing customer relationships)

While I still continue to work on business models, innovation, strategy design and strategic management, my sectoral focus is now on the private banking industry. The reason for this is a longer consulting assignment with a big Swiss player, but also my interest in domains that are likely subjects to industry change and disruption. So don't be surprised if you will increasingly find my illustrations coming from private banking.

During my readings about the evolution and potential changes in the private banking sector I came across a couple of interesting examples from a business model design perspective. For instance, Walter Berchtold, CEO of the 2nd largest Swiss bank outlines an interesting case in the European Wealth and Private Banking Industry Survey 2005 by IBM.

Berchtold describes how the banking giant is aiming at leveraging the company's different business line's potential by bringing them closer together through an integrated business (re-) design. In this particular interview he explains how their private banking division can benefit from already existing investment banking business. With this he simply means that customers involved in an investment banking relationship with Credit Suisse have a lot of potential to become clients of their private banking operations. Berchtold outlines:

We look after bringing the bank closer together in terms of cooperation between the private bank and the retail and corporate bank with a view to exploit cross-business opportunities

and

We want to work more closely together with our investment bank particularly on an international scale and to attract further net new assets. We can capture the potential of the international markets by leveraging high-end clients through their investment banking business

In terms of business model design Berchtold has done nothing else than scan the company's existing customer segments to evaluate their mutual potential for Credit Suisse's other value propositions. Before the business re-design Credit Suisse offered private banking services to wealthy customers independantly from the investment banking division who offered investment banking products to their corporate clients. After the re-design the private banking division saw the investment banking division's corporate customers as a pool of potential customers to be leveraged (don't mix this up with cross-selling, which would mean that the investment banking division would sell private banking services).

DESIGN CHECK: Business Design for Optimal Customer Leverage

Though this may all sound relatively obvious, many companies do still not sufficiently leverage their various customer segments and relationships that are served by different business lines. They think in business line silos rather than company business models. So how can this be helpful for your business? I propose you go through the following steps:

  1. Make a list of all of your company's value propositions (product & service bundles). In the above example this would be "private banking services" and "investment banking";
  2. Make a list of all of the customer segments the company is interacting with. For the Credit Suisse case this would be "High Net Worth Individuals" and "individuels representing a corporation";
  3. Draw a line between each value proposition and the customer segments it is selling to. For our case this is sketched out in the above drawing and is "private banking services"- "High Net Worth Individuals" and "investment banking" - "individuels representing a corporation";
  4. Analyze why certain value propositions are not connected to certain customer segments and evaluate if it wouldn't make sense to connect them and thus leverage these existing customer relationships by doing more business with them (either by cross-selling or by referring them to other business lines);
  5. Finalize by connecting the missing dots.

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