Serious business challenges

previous icon The factors that management identified as needing to be addressed fell into four areas; dealing with the consequences of the financial crisis and the global issues it threw up; new regulation of the sector; changing consumer behaviour and expectation and; the role of the bank in merchant and wholesale banking. Smet has definite views on where the industry, and hence Belfius needs to go. “The global crisis highlighted major issues on the way banks grew and conducted their business and the risk element involved in this process. Governments were no longer willing to just sit back and let them get on with it – public opinion wouldn’t have allowed them to anyway. New regulations on the way financial services operate dictate how and where you can develop and expand and we have to work within that structure. And consumer behaviour and expectation have changed and continue to do so. This is not just a response to the crisis and recession but also a result of developing technology; for example mobile applications are now the main source of interaction for younger age groups and moving quickly through other age groups also. A consequence of this is that the role of the bank is changing and becoming more consultative and advisory rather than merely providing services. We wanted Belfius to reflect this more progressive and engaging approach.”

What did all this mean in hard terms for the business? This was where the reality of the situation really hit the management and workers. “The business could not continue to operate the way it had been nor go back to the way things were 20 years ago. These were no longer tenable options. We had to find a new means of moving forward. Unfortunately that meant taking some very difficult and painful decisions,” Smet explained. “First we had to completely detach from the parent group and the services and support they provided – and then recreate these for ourselves. But we also inherited certain responsibilities and liabilities that we couldn’t just shake off. Now we’re in a situation where we know our income will drop, in truth because we have had to stop certain operations that had generated significant revenue in the past, and some of the business areas we’ve now moved into, to replace them, offer lower margins. So immediately we had a structural problem within the business – too many staff, insufficient revenue and an organisation and business model that didn’t necessarily reflect and support the new marketplace we were in.”

“We were faced with the task of adapting and preparing the business for a different environment while still trying to grow income and profitability in a difficult climate and from an unfavourable position in the market.”

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Serious business challenges

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