Management

By Peter Robin, Senior Director, Financial Markets, Internet Business Solutions Group, Cisco

Managing customer relationships is a fundamental discipline in every business, but it is vital for investment banks serving global enterprises. Their customers demand a wide range of services, such as trading (in, for example, equities, bonds, foreign exchange, money markets, and derivatives), transaction banking (clearing and settlement), mergers and acquisitions, and asset management. They want a bank that is always available and that can quickly execute proactive, innovative solutions for the financial concerns they face. They want a coordinated approach to account management and a clear understanding of who is responsible for service delivery. And above all, they want a bank that listens to them and adapts to their needs.

These expectations are not easy to meet, but a solution that offers great potential for satisfying them is Global Account Management (GAM), a process that gives clients a "single point of access" for all of a bank's products and services. The idea is that, rather than confronting a confusing welter of people, services, and pricing models, customers deal instead with one or two highly skilled individuals or a small team of experts with an in-depth understanding of the customers' business and how each service can support it. Customers get the service they require, not only making it more likely they will remain clients but also expanding their relationship, and the bank gets higher revenue and profit by efficiently focusing its efforts on its best clients. It is costly for the bank to provide such a high level of service, forcing segmentation and selection activities ahead of application. Typically, less than 1 percent of clients receive the full treatment.

Cisco has been working with numerous major investment banks to help them discern and develop best practices in GAM, to determine and help implement the technologies needed, and to define the type of person required to act as a Global Account Manager. In the process, we interviewed representatives of many companies that have instituted GAM programs: not only banks, but large companies in other industries, including Cisco itself. We interviewed nonbank enterprises both as practitioners of GAM for their global enterprise customers and as recipients of such a service from their investment bank. We found that the practices, technologies, and personnel definitions we are discovering are applicable -- with suitable modifications -- to any company trying to implement Global Account Management, regardless of the industry.

Although this work is still in progress, what we have found so far supports our initial hypothesis, that there is a significant revenue and profit potential in using Global Account Management to get the relationship with global enterprise clients right. It is probably no coincidence that the most powerful financial institution we talked to also has the best GAM program.

In some ways the transition to Global Account Management probably would not significantly affect investment banks, because they already use a somewhat similar model, Key Account Management (KAM), when dealing with wealthy individual and corporate clients. However, this fact solves only part of the first element of the equation: identifying the clients important enough to warrant special attention. Actually delivering that attention in a way that will satisfy a global enterprise — including hearing and effectively acting on feedback from the client — demands that the person in charge has access to and influence in all areas of the bank, a stipulation that is far more demanding.

Several challenges are worth noting. First, the range and number of services offered by a larger bank is simply too much for a single individual to master. Banks seem to be taking one of three approaches to how the head of a GAM team functions: as a coordinator who applies bank resources to client concerns in the best possible way, as a "quarterback" who heads off the opposition and makes sure that the bank wins the best deals, or as a "goalkeeper" who tries to make sure the bank makes no mistakes serving the customer. The latter two are essentially negative; the coordinator function appears to be optimal, although more difficult to achieve.

Second, and of primary concern to investment banking, regulatory hurdles must be overcome. GAM requires coordination across different lines of business, but for obvious reasons banking regulations prohibit certain communications between the trading and M&A divisions of a bank (the so-called "Chinese Walls"). How do you coordinate two parts of the business that are forbidden by law to talk to one another? An effective solution seems to be to have two GAMs, with one managing strategic deal-making activity and a second managing transactional banking. Third, because each of the major services mentioned previously is delivered by a different division with its own P&L responsibilities, there is often a reluctance to yield any control to a Global Account Manager. Developing some sort of shared revenue arrangement is essential, both to overcome this reluctance and to make sure the GAM is properly motivated.

Fourth, there is a technical hurdle: a lack of integration in information and communication systems, at both the application and network levels. It is essential that banks restructure their reporting and dashboards to produce information rather than just data, and turn that information into knowledge; otherwise their GAM personnel will simply be overwhelmed. Of course Global Account Management by definition also requires a secure and reliable network, and efficient storage and data management. And, because the essence of GAM is interpersonal communication, all the technologies of unified communications are involved as well.

Finally, banks must find the right person to lead each of the GAM teams, each of which will probably handle between 2 and 15 clients. Beyond simple competence, this person needs that almost indefinable property called "gravitas", as well as respect both within the bank and with the client. A successful track record is important here. Of course, this history of success is not likely to be in Global Account Management itself in the early stages, but experience elsewhere, typically in investment banking, where a good proportion of GAMs start, is essential.

When you put all of these elements together, ideally you have a Global Account Management team, based in the same country as the client headquarters, that works proactively to deliver innovative financial initiatives based on an in-depth understanding of the customer's business. It offers 24-hour availability worldwide, with a fast-track escalation process to assure rapid response to critical problems, balanced by long-term planning to prevent the inefficient, opportunity-based selling characteristics of less-coordinated efforts. The GAM team is responsible for customer satisfaction, revenue, and growth, and collaborates with local or regional KAMs to this end.

Although no bank we are aware of offers a full cross-divisional GAM program (thus making this opportunity a continuing one for competitive differentiation), many are nonetheless coming up to speed rapidly, and their results illustrate the potential benefits of a well-executed GAM strategy. One of the top performers, for instance, reports a 30-percent growth in business since implementation, especially in the United States. Other benefits noted include improved geographic reach, a stronger brand image, improved customer retention and acquisition, a premium price for bank products based on the higher level of service offered, the ability to respond faster to opportunities, and, of course, improved relationships with important clients. The most important factors, to varying degrees, appear to be a larger "share of wallet" as clients become more willing to consolidate their banking business, and an increase in the number of products sold. And for the customers, the bank's greater stake in their profitability — that being one of the preferred metrics for measuring GAM success and a major responsibility of the Global Account Management team — is all to the good. Implementing the process is a winning situation for all concerned.