Banking is an industry where risk and reward are clearly present in day-to-day decisions. As the leading risk/reward management firm, Z/Yen is ideally suited to helping banks make decisions in the areas of strategy, systems, people and organisation. Z/Yen’s proprietary risk/reward methodology is not only culturally suited to the banking industry, but unifies banks’ strategies from the boardroom to the trading floor, from headquarters to the counter/ATM, from central office to the customer call centre.
Z/Yen’s work spans investment banking, retail banking, building societies, mutuals, larger financial services organisations’ credit card companies, central financial exchanges, financial information and financial system providers, including ‘front’, ‘back’, ‘middle’, ‘sell-side’ or ‘buy-side’. The type of work ranges from strategic planning, through information systems planning, transaction costing, market segmentation, new electronic market simulations, queuing models for counters, Y2K fixes, correspondent banking restructuring, computer systems installation, management information systems design, new product/Internet product design and outsourcing. For instance, working with one large investment bank, Z/Yen conducted an intensive risk review leading not only to changes in the financial risk management procedures, but also in a renewed emphasis on operational risks and the costs associated with transactions. The new focus on operational risk led to a large quantitative simulation study on transaction costs which highlighted major flaws in corporate strategy which had been based on erroneous information and customs developed over many years. The bank quickly cut costs amounting to nearly 15% and jumped markedly in profitability.
One larger case, which brought together the many elements of the bank beneath a risk/reward strategy, was the assistance Z/Yen gave a large mutual moving to banking status. Z/Yen’s involvement began with a strategic review of preparation and led to the development of a complete plan for the transition. Z/Yen later became involved in rationalising the balance between domestic and money market operations including the development of a strategy for captive insurance, risk management of money market operations and a review of the commercial credit risk. Z/Yen later became involved in formulating a response to regulatory issues and helped operationally with the development of a complete outsourcing strategy, including the relationship with back-office processing through competition. Throughout, Z/Yen was used in monitoring and controlling the implementation of strategy.
Z/Yen participates actively in organisations which are attempting to expand the boundaries of financial research, for example the Centre for the Study of Financial Innovation. Z/Yen was the founder and concept developer of a £1.9 million joint research initiative, The Financial Laboratory, which won a 1996 DTI Foresight Challenge award. Supporting organisations included the Ministry of Defence’s Defence Evaluation and Research Agency (DERA), Europe’s largest research and development organisation, Silicon Graphics, the Worshipful Company of Information Technologists and City University.
Banks cannot afford to stand still in a competitive market. With telco’s, retailers and others threatening disintermediation, a robust risk/reward response is vital. Z/Yen is the natural partner for banks seeking positive changes in response to their environment.