Today I read a very interesting article in TheMcKinseyQuarterly. It is an interview with Jamie Dimon, president and CEO of J.P. Morgan Chase (JMPC). For all those, who do not have access to the online version of TheMcKinseyQuarterly (it is a premium article) I would like to recommend this website, where you can find the article as pdf-file.
Since I research for my PhD-dissertation in the field of strategic planning of retail banks (I know that JMPC is neither a pure retail bank nor a retail bank at all; retail banking is more a business segment for it) I recognized this description: JPMC “covers the most of the main banking segments: investment banking, consumer financial services” (what is very close to the European term “retail banking”), “small business and commercial banking”, financial transaction processing, asset and wealth management, and private equity”. Well, if you review the academic literature for the term “retail banking” you gonna find a variety of definitions. In some cases the “small business”–banking business belongs to retail banking business, too. Hence this distinction “consumer financial service” and “small business and commercial banking” is not that bad.
But there is no difference between theory and practice. Some paragraphs later “What business lines tend to collaborate?” you can find this statement by Dimon: “Card and retail do a lot of business with each other. And for all our middle-market clients we have retail branches” (?)… ”which actually service small businesses…”.
Basically that is not confusing; it is more the typical business situation of a bank that offers financial services to different types of customers within the same organisation. One can find the same situation in each an every branch within networks banks (e.g. credit cooperatives in Germany). Dimon describes it this way: “…when we organize around these six business lines, its really for three set of customers – consumers, private companies, and large companies and institutions…”
So what are the lessons learned for successful retail banking both from theory and practice? Employees in your retail banking branch always should be able (and trained) to understand and to manage different needs by consumers and small companies. Often I have observed that personal trainings and skills were focused on consumers but not on small businesses. Opposite to this very successful branches (that applies to very small branches, too) had a least one employee, who had the competencies to serve small business customers.