Bank Solutions Group

Consumer and Small Business Banking Sample Project

Distribution Network Assessment and Geographic Market Expansion Plan

A high performing US regional bank wanted help in developing a geographic market expansion plan for consumer and small business banking.

The bank was very successful in its core market, where it enjoyed ubiquitous brand recognition, had the largest branch network and a dominant market share.  The bank had experimented with opening a handful of de novo branches each year in adjacent markets for seven years, but these branches were performing at less than half the level of the branches in their core market.

Their growth lagged behind the market and their local competitors’ branches. Management was being questioned by the Board and was told no additional capital investment would be made available for market expansion without an approved plan for turning around performance of the non-core market branches, including a revised expansion plan.

BSG consultants prepared an assessment of each market, dividing the markets into their component autonomous trade areas (where 70 percent or more of the population live, work and shop).  We further evaluated the attractiveness of each trade area based on competitive intensity, product potential, market segment composition, customer profitability and growth.  Finally, we overlaid the bank’s existing non-core branch locations to show how they were distributed among the trade areas.  We demonstrated to management that their resources and branches were too thinly spread across too many trade areas to provide a meaningful presence or network synergies.  Moreover, we showed which trade areas had the most attractive demographic composition and the highest profitability customer segments. We then worked closely with management to create a plan to reconfigure the non-core market branches — exiting unattractive trade areas with no growth potential where we had an insignificant presence, and investing in building and acquiring branches in attractive trade areas with profitable market segments and growth potential.  We also provided useful tactics to shorten the time-to-profitability for de novo branches.

Management and the Board approved the plan and the bank successfully implemented the approved plan with BSG’s assistance.

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Small Business Growth Plan Consultants

In BSG’s experience, there is significant “oil in the ground” in the small business banking market, especially for Community and Regional Banks.

BSG consultants have worked on numerous engagements with small-to-large domestic and international  banks to assess their small business banking programs, create effective, actionable strategic and tactical growth plans and provide ongoing support during implementation.  Every project starts with a thorough assessment of the market, the competition and the organization itself.  This sets the foundation for identifying the market potential (or “Size of the Prize”), and is a prerequisite for developing appropriate strategies and tactics.

Our engagements cover every key function involved in business banking, including segment definition, deposit, credit and ancillary product design and pricing, sales and support processes, organizational design, credit review and underwriting, and back office service and support. Our recommendations incorporate all of these functions, always with the objective of providing major improvements and results.