INNOVATION IN BANKING - NEW STRUCTURES AND SYSTEMS

Despite a number of recent strategic manoeuvres, the retail banking se ctor is still suffering from symptoms of intra-type competition and co mpetitive intensity. Bank strategists are constantly seeking to develo p a unique service mix and new product lines in response to changing m arket demands, but have recently recognized that there are more fundam ental issues which need to be addressed within the sector. The old mod els of service delivery are cost-laden and outdated and new models for success are needed in order to alleviate the pressure on margins witn essed in recent years. This article examines the evolution of banks' d elivery programmes and organizational forms in the retail sector and d escribes the reasons underlying these changes over time. The authors t ake account of the problems and challenges that face these contemporar y structures and explain the rationale underlying the current requirem ents for further change. The servuction system is used as the basis fo r explaining the mediating effects of changes in a bank's governance s tructures (all internal and operational issues that affect the structu ral configuration of the bank) and their impact upon the delivery of s ervices to customers. In order to illustrate these issues, some govern ance structure responses from Barclays Bank plc, are described, and th e experiences and lessons from this example suggest that it is more th an fine-tuning of existing governance structures which is required. A new organizational mindset is necessary in banking which completely re appraises governance structures and retail service delivery programmes so as to balance the desire for operations efficiency with marketing effectiveness.