How can using the balanced scorecard be best suited to implement strategies and achieve long-term goals in a banking environment?
The industry is very mature and the services provided have been around for years. Although the banking and financial services industry has gone through some consolidation, the services offered are mostly the same. The larger players in the industry will survive with their proprietary products and strong franchisee. The barriers to entry will increase going forward. The players with huge financial muscle will be able to influence substantial power on the fringe players by their aggressive pricing, which will create hindrance for the smaller players. Economies of scale will play an important part too in the future.
Use of Balanced Scorecard to improve the performance of Banking organization
The Balanced Scorecard is one of many performance management measurement tools that have become very popular in recent years in order to improve the performance of the organization. The balance scorecard first came to prominence in the early 1990's. This system of performance management measurement was developed by Dr Robert Kaplan and Dr David Norton of the Harvard Business School.
It focuses on four main perspectives as described by Kippenberger (1996), these are: i. The Customer, ii. The Internal, iii. Innovation and Learning and iv. Financial
As opposed to most previous measurement tools, the balanced scorecard didn't just focus on the financial perspective. The balanced scorecard aims to have a balance over the four areas rather than one area being much more focused upon "The BSC (Balanced Scorecard) divides the business environment into four key business areas" (Hepworth 1998)
This solution explains how a balanced scorecard is effective for long term strategies in finance and banking.