Strategic Planning

The Banker’s “Crystal Ball”
By Jack Salvetti and Nancy Schell

Before de-regulation, the planning focus was on internal operations. In the present deregulated environment, regulators now stress strategic planning over their “bread and butter” requirements such as policy formation. However, in reality, strategic planning as a management tool remains foreign to many bank managers, who continue to plan focusing on internal operations and transactional thinking. For them, strategic planning remains an internally focused activity driven by SWOT analysis and other “blue sky” exercises that seem best suited for group discussions.

Today, Dynamic institutions view strategic planning as the primary management activity and thus an on-going event. Institutions that employ this approach are characterized by their sharp market focus, commitment to staff development, and their ability to consistently manage net interest margin and predictable diversified income streams. Generally, their ROE and growth rates greatly exceed competitors’, and the marketplace rewards them with a superior price/earnings ratio. They have satisfied their customers and attracted new ones – rewarding shareholders – rather than succumbing to aggressive market competition. In effect, they have pleased all of their stakeholders.

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