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Business Rationale for Strategic Coverage Planning

Banks have lost their traditional knowledge advantage. The 'defining clients' of most banks are now highly sophisticated buyers of banking services. Key staff is often recruited from leading banks and these 'poachers turned gamekeepers' have access to market information which, a decade ago, was the exclusive preserve of the elite banks.

This reversal of banks' traditional knowledge advantage has compressed margins on historically profitable products and services - at a time when coverage costs are increasing as client organizations are becoming larger, more complex and more demanding. The result is declining productivity (i.e. constant dollar revenues / front office employee) in even the best performing banks over the past decade.

However, banks may still earn a relationship premium by competing on quality of coverage; provided they focus on what the client deems as 'critical to quality'. This means client planning and coverage activities require a renewed focus on understanding client issues, generating and selling ideas, and replicating these solutions across the client portfolio.

Collaborative enterprise planning is required - but not in its conventional form. To institutionalize coverage quality, banks must understand the five failure factors that have de-railed client management programs over the past decade and ensure that the program and the technology that supports it address the pre-requisites for success.

The challenges are significant; collaborative planning creates a 'client organization' that cuts across banks' traditional product and geographic silos. However, the rewards are equally significant: c. 10% increases in the return on a bank's client coverage investments, derived from increased revenues and / or elimination of non-productive coverage activities.