largely by evolving customer demands and sophistication, as well as technology advancements. In the United States, the key barrier was a regulatory environment where significant constraints slowed the movement to a converged financial services world. Today, with regulatory barriers shrinking, the battle for the consumer's wallet is dramatically increasing among retail financial services participants that have long operated in silos. New players with strong transaction processing, information, or electronic access are now adding to the convergence trend. To implement convergence through a life-cycle relationship management approach, an organization must grapple with seven issues: Legal or regulatory requirements that determine by whom and how a financial product is sold. Clearly, financial institutions need to follow the permissible activities. Fiduciary compliance is not only important from a legal perspective, but also tends to build stronger, long- term client relationships. Organizational structure. Generally, three models are used: *The silo model has each product group separately pursuing the retail customer for their own benefit, which often confuses the customer and wastes marketing expenditures. *The gatekeeper model relies on an individual to screen and funnel a customer to the appropriate channel or product group to meet their needs; however, this relies on the gatekeeper's instincts and access to information. Migrating the customer to the more appropriate organization then becomes a crucial issue. *In the relationship team model, the customer's interaction with the bank is built around a central relationship manager or account and an integrated series of product specialists. This approach is best suited for affluent customers, but can be applied to others using technology.
Performance measures, which must be readdressed. The typical measures for banks, securities firms, and insurers vary, and imposing these measures on the other's business would encourage inappropriate actions. The answer is to create new, common ones. This helps institutions view their new, converged business models and value-drivers in a concrete and linked fashion. Effectively capturing customer information from banking, investment, and insurance product groups.Harnessing this information is essential for cross-selling and relationship management to take off. The key is to ensure that the information is captured in a relational data base and is turned into knowledge - and that access to that knowledge is available to each product group as regulations permit. The deep cultural divide between sales-driven insurance and investment companies and service- oriented banks. While insurers and investment firms are solution-oriented, banks are procedure-oriented. Insurers tend to focus on growth, while banks emphasize customer satisfaction. Proactive securities selling contrasts dramatically with a responsive bank environment. The solution is not in adapting one culture to the other, but rather creating a new, blended culture. Skills and competencies that must be strengthened. Retail financial institutions need to develop: *Comprehensive skills for assessing customer needs. *Broad product awareness and understanding. *Product sales specialists who can deliver deep expertise to close sales and train others to identify qualified leads. *Integrated marketing and sales execution; financial planning, including retirement and estate planning. *Electronic delivery and customer service. Your pay and rewards system. This is often a key to performance. Financial securities institutions need to relate variable pay amounts and bonus structures to a customer segment focus. To serve more high-net-worth households with more revenue potential, the variable component of the pay plans generally increase to spur better performance. To move from an individual serving a customer to building a broader customer relationship through a team-based approach, the bonus structures move from individual commission plans to team performance-driven bonuses. How do you evaluate your own organizations' readiness to support pursuing convergence? Here are some questions to ask: Is your organization structure driven by customer relationships? Are your performance measures balanced among various financial products and services? Is your management information system based on customer or product information? Is your corporate culture driven by customer satisfaction as well as profit growth? How broad is your employees' understanding of financial services? How deep is your organization's expertise in each product specialty area? Does your reward system drive desired employee behavior? If your organization ranks low by such measures, do not despair; we in the United States are really at the beginning of the convergence race. However, it is crucial to get out of the gate early and position your organization to succeed. Mr. Landberg is a principal in New York with the financial services practice of Sibson & Co., a management consulting firm based in Princeton, N.J.