Last month we discussed the alarmingly similar events and reactions that occurred in the periods of 1988-1992 and 2008-2012. Yes, strategic planning is perhaps needed more today than at any time since the 1980’s; however, the challenges are daunting, and the road ahead has gotten hazier each day.
The road has gotten hazier
The good news is that for the banks and bankers who stick it out and survive over the next five years, the future does look bright because the very pressures bankers feel today will eventually and inevitably squeeze out lower performing banks enabling a return to rational pricing. It is going to take some time for this to occur, but the path appears set.
A wise banker said recently, “there is a long way to go, and the journey has just begun.” Well, just how long is that journey and just what is the future? The regulators have given us a peak into their minds. Here is some of their thinking:
- The core deposit franchise will need to be nurtured and managed
- An efficient, lean operation will be critical
- Capital management will be essential
- Sound strategies will be critical
- Good financial skills and in-market knowledge will be required of Boards
- Credit and Operational risks will be equally challenging
There are a litany of challenges and issues that will need attention for the future. But, any way you slice it, making money in a prolonged low-interest rate environment, providing a decent return to your shareholders, dealing with over reactive regulations and returning to good old-fashioned fundamentals are the underpinnings of success in the future.
Strategic planning is not a panacea, but it is critical to survival. As we stated before, good planning establishes objectives to achieve desired future results. Though it cannot forecast the future, strategic planning does attempt to look at future possibilities so decision makers can rationally choose between courses of action that involve risk. Strategic managers are proactive managers. They tackle questions of structure and focus so they are prepared long before seismic activity is sensed.
Join the Conversation